Santam Falls on Fitch Warning, Heavy Rains: Johannesburg Mover

Santam Ltd. (TKG), South Africa’s largest property and casualty insurer, declined for a third day after Fitch Ratings said the nation’s insurers may struggle to maintain profits and as heavy rains added to potential claims.

Santam (SNT) fell as much as 6.4 percent to 174.06 rand and closed 2.6 percent lower at 181 rand in Johannesburg trading. The shares have slid 4.7 percent since Jan. 16.

South African insurers “may struggle to maintain the same level of profitability” in a tougher operating environment, Fitch said last week. Tourists were evacuated and camps were closed at the Kruger National Park following heavy rains this weekend, SANParks said in an e-mailed statement today. Santam’s net underwriting margin was below its medium-term target range of 5 percent to 7 percent after “adverse weather conditions” in the Eastern Cape and Gauteng provinces and “extensive fires” in St Francis Bay in the Eastern Cape, the company said on Dec. 20.

“That’s pretty much where most of their claims are going to come from; floods in the Eastern Cape and the fire in St Francis Bay toward the end of last year,” Byran Taljaard, a Johannesburg-based analyst at Avior Research Pty Ltd. said by phone. “I’m expecting a lot of claims to come through. I don’t expect these next results for 2012 to be very good.”

The insurer is scheduled to report final results for 2012 on Feb. 27. First-half net income increased 83 percent to 578 million rand ($65 million), the company said Sept. 1.

Santam’s 30-day historical volatility, a measure of stock swings, increased to 23.88 from 23.04 the previous trading day. The FTSE/JSE Africa All Share Index’s 30-day volatility gauge was at 8.19 from 8.05 previously. A higher reading means an asset price can have bigger moves.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editors responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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