Santam expects its new Lloyd’s syndicate, Syndicate 1918, to post an operational loss of between R450 million and R550m in 2026, as the costs of building the business are recognised before much of the related premium revenue.
The forecast was contained in the group’s unaudited interim financial statements for the six months to the end of June 2026, released on 3 September.
Syndicate 1918 received final approval from Lloyd’s in December 2025 and began underwriting on 1 January this year. It forms part of Santam’s FutureFit 2030 international diversification strategy and writes US property, as well as follow-line capacity in marine, energy, cyber, financial lines, and professional indemnity.
By 30 June, the Syndicate had concluded new business with estimated premium income (EPI) of R1.3 billion. Only R461m of gross written premium (GWP) and R87m of net earned premium (NEP) had been recognised by the end of the period because much of the business is written through consortia and facility lines, for which GWP recognition is deferred.
Expenses, meanwhile, are recognised upfront. This produced a R230m underwriting loss and a R229m net insurance loss for the Syndicate and related entities in the first half. Santam says the business is expected to be profitable over the full risk-cover period.
Most of the additional business to be written in 2026 will only be recognised as earned revenue in 2027 and 2028, while Lloyd’s market costs, fixed costs, and additional staffing costs will be recognised this year. Santam expects monthly break-even in 2027.
The Syndicate has a promising pipeline and additional approved Lloyd’s capacity for the remainder of 2026.
Stronger earnings despite weaker underwriting
At group level, conventional GWP increased 10% to R23.053bn, while NEP grew 6% to R18.906bn. The group’s underwriting margin fell to 8.1% from 11.3%, with a combined ratio of 91.9%, compared with 88.7% in the first half of 2025.
The weaker underwriting result reflected a sharp increase in catastrophe and other large losses. Group catastrophe (CAT) and other large losses, net of reinsurance, reached R1.5bn, compared with R144m in the comparable period. Santam said the losses were mostly fire-related, with significant claims arising from storms in Limpopo in January and the Western Cape in May.
The claims burden was reflected in more than R12bn in gross claims paid to policyholders during the six months.
A R325m group earnings benefit from reducing reserve sufficiency from the 91st to the 87th percentile partly offset the large-loss experience. Attritional claims remained positive, while Santam said the underlying profitability of the in-force book had improved following underwriting actions and expense management.
Despite the deterioration in underwriting, group net income attributable to equity holders increased 7% to R2.192bn, from R2.045bn. Investment returns and the Alternative Risk Transfer (ART) businesses helped offset the decline in the conventional net insurance result.
Group investment return on capital increased from R35m to R727m. ART profit increased 12% to R466m, from R417m, while group profit before tax increased to R3.218bn, from R2.856bn.
The increase in investment return on capital included a R510m revaluation of Santam’s economic interest in Shriram General Insurance (SGI), compared with R145m in the first half of 2025. Santam says the revaluation is one-off and should be considered separately from underlying underwriting performance.
Commercial insurance bears the pressure
The pressure was concentrated in commercial insurance. The commercial business generated R13.876bn in GWP and R10.583bn in NEP, but its underwriting result fell to R186m from R1.164bn.
Personal insurance performed better, with GWP of R9.177bn, NEP of R8.323bn and an underwriting result of R1.350bn, up from R861m.
Motor also recorded positive growth. GWP in the motor class increased 5% to R8.684bn, from R8.257bn a year earlier. Santam said the motor book benefited from good contributions across both personal and commercial lines, although this was partly offset by a reduction at Santam Re following a change in its business mix.
Across the South African business, the underwriting result fell 12% to R1.611bn, from R1.836bn, while the net insurance result declined 7% to R2.068bn.
Growth across the group was supported by double-digit GWP growth at Miway, Santam Direct, Santam Re, and Santam Partner Solutions, together with the Syndicate’s first contribution. Miway’s GWP increased 13%. Santam said its Micashback proposition had been rolled out across all personal-lines policies and had contributed to an increase in average premium per policy, with positive effects on claims and persistency also beginning to emerge.
The group’s net acquisition cost ratio increased to 33.5% from 32.7%, while the net commission ratio increased to 14.2% from 13.9%. Excluding the Syndicate’s incremental impact, the group management expense ratio improved to 18.1% from 18.8%.
International growth comes with an early cost
International business accounted for 23% of group conventional GWP, up from 20%, with GWP from outside South Africa increasing 24.8% to R5.3bn, compared with R4.2bn in the first half of 2025. South Africa remained the largest contributor, accounting for 77% of GWP, with its GWP increasing 6.4% to R17.8bn.
The international underwriting result was a loss of R75m, compared with a R189m profit in the comparable period. That figure includes the R230m loss from Syndicate 1918, a R35m loss from treaty reinsurance and a R190m contribution from other international business.
International treaty business was affected by run-off claims from business cancelled in prior periods, although the in-force book was performing well. Santam said other international business continued to produce strong margins despite declining from a high comparative base.
India investment delivers stronger underwriting
The group has a 14% effective economic share of Shriram General Insurance, with Santam’s share of SGI’s results based on the six months from 1 October 2025 to 31 March 2026.
SGI’s own GWP increased 20% in rupees, while its underwriting margin improved from 1.7% to 5.9%. Santam attributed the improvement to higher new-business volumes, stable claims ratios and continued cost control.
The stronger rand reduced the contribution when translated into Santam’s reporting currency. The average rand exchange rate against the rupee was 16% stronger than in the comparable period. Investment returns on SGI’s insurance funds also declined after Indian bond yields rose sharply at the end of March, resulting in unrealised losses on debt instruments.
Santam’s strategic investment in SGI was valued at R2.735bn at 30 June 2026, compared with R2.225bn at December 2025. During the period, Sanlam Emerging Markets Mauritius increased its SGI shareholding from 40.25% to 50.99%, transferring control of SGI to the Sanlam Group. The change removed the liquidity discount and reduced the minority discount applied in the valuation.
GIFT City opens a new route into India
The group’s India strategy also includes a new reinsurance operation. Santam opened its GIFT City office on 1 April, following regulatory approval to establish a reinsurance branch.
The operation is intended to strengthen Santam’s position in India’s reinsurance market. Santam says its presence in GIFT City has improved its tiering as a reinsurer, giving it better access to the market and its future growth opportunities.
Read: Santam names head for new India reinsurance business
Santam has cautioned that this is a long-term opportunity rather than a move to chase premium growth in the current market. Management said reinsurance rates in India have fallen sharply, making pricing discipline important as the new operation builds its book.
Avatar strategy shifts as US property rates soften
The group also has a 51% investment in Avatar Holdings, a UK-based underwriting technology business.
Santam acquired the stake for £3m in July 2025. Avatar is a start-up platform designed to price and manage mid-sized corporate risks more efficiently, including in the US market. The business had been viewed as a potential source of future business for the Syndicate.
The US property market has since changed. Santam says the sharp decline in US property rates has reduced the availability of profitable business in Avatar’s niche segments. It has therefore diverted resources into Syndicate 1918 and released Avatar’s capacity back to providers until market conditions improve.
Capital and dividend
Santam’s group economic capital coverage ratio was 167% at 30 June, down from 169% at December 2025 but above its target range of 145% to 165%. The interim dividend is expected to bring the ratio back within the target range, at the top end.
The group’s annualised return on capital was 27%, above its 24% hurdle rate. The board approved an interim dividend of 650 cents a share, up 10.2% from 590 cents.
At Santam Ltd, the primary operating entity, the economic capital coverage ratio was 165%, compared with 160% at December 2025, while its regulatory capital coverage ratio was 184%, compared with 190%.
A different level of assurance
The interim financial statements are unaudited, and there is a change in the assurance process from previous interim reporting.
The current condensed consolidated interim financial statements were not reviewed by Santam’s external auditors. In previous interim periods they had been subject to an external review. Santam said management had determined that its existing financial reporting, governance and assurance processes provided an appropriate level of oversight. As a result, no independent auditor’s review conclusion has been expressed on the current interim financial statements.
Outlook
Santam expects the operating environment to remain challenging in the second half, with low economic growth, pressure on disposable income, and investment-market volatility weighing on growth. Competitive pressure in intermediated and specialty lines is also expected to persist.
For Syndicate 1918, the timing difference between premium recognition and costs will continue to affect the 2026 result. Santam expects the operation to contribute meaningfully to earnings in future financial years, with monthly break-even still anticipated in 2027. Much of the revenue from business written in 2026 will only be recognised in 2027 and 2028.
Management says it will remain focused on pricing discipline, risk selection and expense efficiencies, alongside execution of the FutureFit 2030 strategy.
In the absence of further abnormal CAT and other large-loss events, Santam expects to operate within its 5% to 10% group underwriting-margin target range.
Santam also expects future growth to benefit from the roll-out of its CashBack offering, which was launched across the intermediated channel on 1 July.
Read: Santam joins insurers rewarding claim-free customers with cashback
The group said the offering strengthens its client value proposition as it seeks to defend market share amid competitive pressure.
