JOHANNESBURG (Reuters) -South African insurer Sanlam said on Thursday its full-year profit rose 3% as the benefits from lower claims in its life insurance business were offset by a weaker general insurance performance.
The company said its headline earnings per share, a profit measure, stood at 454 South African cents in the year to Dec. 31, compared with 438 cents a year earlier.
South Africa, the largest and the most advanced insurance market in Africa, is home to companies that account for more than two-thirds of total premiums collected across the continent.
But a substantial part of those premiums is invested in local government bonds, corporate debt and equity, making returns unpredictable, especially when South Africa is being battered by high inflation, low commodity prices and crippling power cuts.
Sanlam, the country’s top life insurer, said while its annual earnings from its life insurance business increased by 25%, its general insurance profit declined by 32%.
Its general insurance business, which contributes roughly 15% to overall profits, took a hit due to a local factors which coincided with an increase in inflation globally.
Floods in the eastern part of the country, heavy rains, claims related to power surges after blackouts end and luxury car thefts ate into its general insurance earnings, CEO Paul Hanratty told Reuters in an interview.
“And then the big story around the world was inflation,” he said.
The insurer has a “pretty optimistic” view of 2023, with the environment to be tough in the short term but by the end of the year the situation would get better, Hanratty said.
The company announced an 8% increase in its dividend to 360 cents per share.
Its share price in early trade was marginally up as against the broader all share index, which was slightly down.
(Reporting by Promit Mukherjee; Editing by Himani Sarkar and Jane Merriman)
