South Africa’s largest insurer hits the brakes on the United States
Santam has paused its foray into the US as a decline in property premium rates in the world’s biggest economy forced South Africa’s largest general insurer to rethink its expansion plan.
It discontinued investments into Avatar Holdings, a London-based company that offers mid-market property insurance in the US, and opted instead to divert resources into its new UK business until market conditions improve.
“With the rapidly softening market cycle, particularly in North American property, we’ve taken the decision” on Avatar, Santam Chief Executive Officer Tavaziva Madzinga said in an interview Thursday. “Rates have fallen significantly.”
Santam, a unit of financial services group Sanlam, acquired a 51% stake in Avatar in July 2025 for £3 million.
US-based property and casualty insurers are facing a more complex operating environment, with softer pricing conditions and elevated weather-related losses hurting shareholder returns, Boston Consulting Group said in a report.
That halted five years of outperformance, with US firms expected to trail their European and Asia-Pacific peers for the first time since 2021.
Avatar is a new start-up with a unique technology platform that can underwrite and price mid-sized corporate risks more efficiently than traditional methods.
The investment was meant to help the insurer diversify its gross premiums outside its home market of South Africa, and lift the international contribution to as much as 30% by 2030.
“While we believe that the Avatar business would have been complementary to our strategy, I think the market conditions simply don’t allow us to continue their business at this point in time,” Madzinga said.
The insurer plans to utilize those resources on its new venture with Lloyds of London known as Syndicate 1918 — a marketplace where brokers place risks with multiple underwriting syndicates — that will allow Santam to accelerate its goals of international growth and diversification.
Syndicate 1918 began on 1 January and will allow Santam to underwrite property, marine, energy, cyber and political risk.
“We are quite pleased that we’ve been able to attract high-quality underwriters into the business,” Madzinga said. “Our capacity is to write £375 billion of business.”
Syndicate 1918 had R1.3 billion of gross written premiums in the six months through June, with 461 million rand of that recognised during the period.
It posted an underwriting loss of 230 million rand and is expecting a loss of as much as R550 million for the full year before breaking even in 2027.
Santam is also banking on the reinsurance business at India’s Gujarat International Finance Tec-City, focusing on areas including property, engineering, marine and liability.
Its venture aims to replicate the success Sanlam has had in India through its partnership with Shriram Group since 2005.
It also set up a specialist business that will provide risk-placement solutions.
The International Monetary Fund sees the Asian nation’s economy expanding 6.4% this year and 6.7% next, far outpacing the 1.1% growth expected for South Africa in 2026 and 1.3% in 2027.
The insurer, which generated 77% of its premiums in South Africa, wants its international operations to account for 30% of the total by 2030.
The international business expanded 25% in the six months to June, while its South African business grew 6% over the same period.
Santam shares retreated as much as 2.3% before paring losses to 1.7% by 11:52 a.m. in Johannesburg.
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