Insurance: Quantifying Recent Extreme Weather Events

Research evidence excerpt

Insurance: Quantifying Recent Extreme Weather Events

Idea

May 18, 2026 01:00 AM GMT

RMB Morgan Stanley Proprietary Limited+MInsurance | Europe Warwick Bam

Equity Analyst

Quantifying Recent Extreme Warwick.Bam@rmbmorganstanley.comNicole Player, CFA +27 11 587-0815

Research Associate

Nicole.Player@rmbmorganstanley.com +27 11 587-0807

Weather Events

Insurance

Europe

What’s Changed Industry View In-Line

Santam Ltd (SNTJ.J) From To See exhibits 8 & 9 for summary of changes to

Price Target ZAc 41,800 ZAc 41,900 earnings

Multiple storms across the Western and Eastern parts of South

Africa have caused wide spread flooding and wind damage. We

consider SNT most exposed through property, crop and business

interruption claims. We cut FY26e earnings by 10% for SNT and

1% for OUT. We reiterate our Overweight on OUT.

Key Takeaways

SNT’s exposure to commercial and agricultural risks increases its earnings

sensitivity to catastrophe events relative to OUT’s mostly personal-lines mix.

We estimate gross losses for SNT between R750m and R1bn based on previous

events in the same region.

However, SNT's reinsurance retention level has increased from R150m in FY22 to

R1bn in FY26, adding to earnings volatility compared to OUT's at R200m.

Although SNT's catastrophe cover is limited, we expect other reinsurance

programmes and a claims reserve to offset losses, limiting the net impact to

~R475m.

We estimate a more benign 1% impact to OUT's FY26 earnings.

From 4 to 12 May 2026 a series of storms caused flooding, mud slides and damaging

winds across the Western, Eastern and Northern Cape in South Africa. The

magnitude and severity of the resultant damage triggered the government to

declare a National Disaster. Flooding across the garden route was cited by officials

as the worst in 30 years.