Share Earnings Expected to Drop at Santam Insurance

August 7 - One of South Africa's largest insurance companies, Santam Insurance, has announced disheartening expectations for its share earnings from the first half of 2008. According to the company, attributable earnings per share and headline earnings could drop as much as 95% in comparison to the same period recorded exactly a year ago.

Big drop in expected earnings Problematic performance of its investment portfolio and large industry claims to take its toll on Santam's earnings.

Santam's underwriting margin in its corporate business unit was severely affected by several large industrial accident and fire claims during the first half of the year. "This unit recorded a loss for the six months compared to a profit in the corresponding period," said Santam Insurance.

Santam commented on the performance of its investment portfolio which has been problematic in the six months ending June 30th. "Although the higher interest rates had a positive impact on cash related investments, the equity portfolio performed significantly below the exceptional performance in the first half of 2007, especially due to a severe reduction in the value of financial and industrial stocks," said Santam.

Santam continued in its policy to disinvest from its European insurance operations, and this seemed to be having a positive impact on its investment portfolio. The company also bought into the Australian investment management company, Atom Funds Management, although the sum paid for the majority stakes into the company was not yet disclosed when the announcement was made earlier this week.

The company added that the Asia-Pacific region was a focus area in its long term plans.

Commenting on the Australian acquisition, Santam said: "The transaction is in line with the cluster's international expansion strategy aimed at developing competitive investment management capabilities that will enhance growth and asset gathering internationally and in South Africa.".