JOHANNESBURG: South Africa-based general insurer Santam Ltd plans to expand in Asia to diversify its premiums and counter tepid growth at home.
The insurer, a subsidiary of financial services group Sanlam Ltd, generates 82% of its premiums in South Africa.
“We are looking at Asia and the Middle East from a reinsurance perspective,” Santam chief executive officer Tavaziva Madzinga said in an interview.
“Our expertise and understanding works well in emerging markets, and we also find that those are also growth markets and so we want to tap into some of that growth.”
The move would follow on the success of its parent Sanlam in India.
Sanlam has partnered with the Shriram Capital Group in the south Asian nation since 2005 and that country generates about 17% of profit.
Economic growth for the Middle East and central Asia is projected at 2.8% in 2024 and 4.2% next year, compared with 0.9% and 1.2% respectively for South Africa.
“We’re a market leader by market share, we have a depth of skill sets and experience, and we believe that that skill set and experience can be exported and it can be leveraged into some of those markets,” Madzinga said.
“Insurance is almost a global business by its nature anyway, and so you can write a business in new territories on a syndicated basis.”
Santam plans to expand organically and through opportunities, Madzinga said.
“Even the 18% of that we currently write into the rest of the world, we’ve done it on our existing capabilities and so we’re not talking about mergers and acquisitions-type growth. It’s effectively an organic plan,” he said.
Outside South Africa, Santam operates in Namibia and several other emerging markets.
It serves more than one million policyholders, ranging from individuals to commercial and specialist business owners and institutions. By expanding its business, the insurer aims to boost its net underwriting margin to as high as 10% in the long term from 6.5% currently.
“We believe that the underwriting range that we’ve guided the market on is attainable, is sustainable,” Madzinga said. — Bloomberg
