Abstract
Ph.D. (Finance)
At the turn of the twentieth century, the South African short-term insurance industry was dominated by foreign, mostly British, insurers. Almost a century later, all insurers were registered in South Africa in accordance with regulatory requirements and by 2011, the leading insurers and brokers were traditional South African companies. The political environment had shaped the future of this insurance industry, following the voluntary exit of foreign investors during and after periods of political turmoil. Until then, the regulatory environment in South Africa had primarily been directed at protecting policyholders by means of minimum asset and solvency requirements; however, direct government intervention was seen in 1963 and 1976 to counter the large outflow of funds resulting from disinvestment. This led to the domestication of the short-term insurance industry in South Africa. This research explains the transition from foreign dominance within the context of the development of Santam, a leading short-term insurer. Santam traces its origins back to 1918, almost a century ago. In 1967, when foreign and local insurers shared equal market control, Santam was recognized as the largest short-term insurer (measured in terms of gross premium), and again in 1976, when a large reduction in foreign company branches occurred. Measured in terms of premium income, Santam remained the dominant short-term insurer in South Africa at the end of this period under review. This study investigates the almost century-long development of Santam from short-term insurer and trust company to bank holding company and manager of various subsidiary financial services companies, until the company returned to its original core business of short-term insurance in the late 1970s. Santam subsequently emerged as the largest short-term insurance company in South Africa. After some years of lost focus, the company regained strategic direction and ultimately outperformed its competitors. Santam was finally placed under the controlling shareholding of its erstwhile subsidiary, Sanlam. This change in management and control structure represented a reversal of control yet Sanlam chose to provide strategic guidance to allow Santam independent management control. This study encompasses the developmental history of the local financial services industry of South Africa, as represented by the case of Santam.