Sanlam reported a robust operating performance for the six months to June 30 based on continued implementation of strategy over four years that has seen organic growth complemented with acquisitions, CEO Paul Hanratty said yesterday.
The net result from financial services (NRFFS) increased by 19% to a new high of over R7 billion. This reflected strong trading performances across the group, advantages of scale and market positions, diversification by geography and line of business, and continued focus on operational efficiency, the group said in a statement yesterday. The interim dividend was passed.
Hanratty said in an online presentation the results were achieved in a local economy that was indicating a small recovery so far, and renewed optimism, a step-up in the other African economies where the group operates, and its India business continuing to be supported by one of the fastest growing economies in the world.
“The strategy to concentrate our efforts on fortifying our South Africa operations through leveraging our scale and competitive edge, alongside focusing on Pan-Africa and Asia where we already have robust market positions in rapidly growing economies, continues to position our business favourably,” he said.
Adjusted return on group equity value (RoGEV), a key metric the group uses for creating value for shareholders, was 10.7% for the six-month period, above the six-month hurdle rate of 7.5%.
The improved performance was due to robust new business and positive risk, working capital and credit spread experience in the life insurance operations.
Non-life operations benefited from a positive performance from the Indian credit business, strong operating results from Santam, and cost efficiencies in the South Africa asset management operations.
Life insurance and health operations grew NRFFS by 14%, new business volumes by 14% and value of new business by 10%.
General insurance reported a 16% rise in NRFFS following a robust performance from Santam, where management actions and lower attritional losses offset the impact of adverse weather-related claims.
The investment management operations saw 10% growth in NRFFS and net client inflows of R4.1bn. Credit and structuring operations grew NRFFS by 9%.
In February 2024, Sanlam announced plans to acquire South African mass market insurer Assupol Holdings for R6.5bn. The transaction received Competition Tribunal approval on August 22, 2024 and was subject to an employment related condition. Remaining regulatory approvals were imminent.
In April Sanlam said it would increase its shareholding in Shriram Life Insurance and Shriram General Insurance in India, to more than 50%, to increase the group exposure to the fast-growing Indian insurance sector.
In June, the acquisition of 60% of the insurance business of MultiChoice was announced. The deal, still subject to regulatory approval, offered Sanlam cross-sell opportunities into MultiChoice’s client base across the continent.
Meanwhile, conclusion of the Capitec funeral joint venture at the end of October 2024 was expected to result in a reinsurance recapture fee of R1.9bn being paid to Sanlam in November 2024.
Acquisitions undertaken in 2023 were making “valuable contributions.”
The BrightRock and Capital Legacy transactions contributed positively to the group’s performance. The Absa and Alexander Forbes investment platform businesses, both acquired in 2023, contributed 5% to group new business volumes.
The final step of the Absa asset management integration into Sanlam’s investment operations took place with the merger of the Absa Fund Managers platform into the Sanlam Collective Investments platform, in March.
AfroCentric continued to experience challenging trading conditions, but Sanlam management was confident of the value it would add in the long run. A R910m impairment was reported on the value of healthcare unit AfroCentric, which underperformed.
Hanratty said the SanlamAllianz joint venture integration in other Africa markets was progressing well. SanlamAllianz recorded strong performance for the half year.
Sanlam said it was prepared for the implementation of the two-pot retirement fund legislation in South Africa. The group expected a modest outflow of assets from retirement funds in the short-term, but for improved asset accumulation in the long term through increased preservation.
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