6 March 2008

Sanlam reports solid performance for 2007

The financial services group Sanlam reported a solid performance for the year ended 31 December 2007.

Earnings

• Net result from financial services up 16%
• Core earnings per share up 27%

Business volumes

• Total new business volumes up 26% to R102 billion
• Net fund inflows of R11, 4 billion

Group Equity Value

• Group Equity Value per share of R23,50
• Return on Group Equity Value per share of 18,8%
• Value of new life insurance business up 31% to R567 million
• Life new business margin of 2,37%

Capital management

• 5,5% of issued shares bought back during 2007 for R2,9 billion
• Discretionary capital of R6,1 billion at 31 December 2007

Dividend

• Dividend increased by 21% to 93 cents per share

Dr Johan van Zyl, Group Chief Executive of Sanlam comments on the results:

"Our solid results in 2007 reflect a company that has started to reap the benefits of a focused business strategy, implemented four years ago. The fact that we reached two important milestones during the 2007 financial year - new business volumes exceeded R100 billion for the first time and core earnings passed the R4 billion mark - is a clear indication that we are on the right track with this strategy.

"Our strategy continues to centre around five pillars: capital efficiency, earnings, costs and efficiencies, transformation and diversification. However, two of these pillars attracted additional focus last year for strategic reasons, namely transformation with regard to people and diversification. Only five years ago more than three quarters of all inflows were generated by our life insurance business. Last year, less than a fifth of our inflows came from the life side - a direct result of our successful diversification strategy," he says.

Van Zyl goes on to say that it was significant that all the businesses in the Group contributed to its solid performance and that most of the Group's growth emanated from new efforts such as:

• Focusing on the Gauteng market where Sanlam was under-represented.
• Venturing into the South African entry-level market with African Life, Channel Life and Safrican.
• The Group's diversification into Africa where some 1 500 intermediaries are selling Sanlam.
• Expansion into India where about 16 400 accredited agents are representing Sanlam through its interest in Shriram Life as well as the UK market where Sanlam has more than 500 people on the ground.
• Focusing on the institutional market where Sanlam Investment Management and Sanlam Capital Markets have grown their income base substantially by leveraging off the life platform.

Van Zyl adds that in an ongoing focus on capital efficiency Sanlam succeeded in freeing up a further R3 billion in capital last year.

"This has increased the current level of our discretionary capital to just over R6 billion, a substantial part of which we will invest in new projects that will spearhead the growth of this business well into the future. The remainder will be returned to shareholders in the most efficient form. Much of our focus this year will be on pursuing and bedding down these initiatives."

Looking ahead Van Zyl says that a number of significant challenges started creeping onto the South African investment horizon towards the end of last year and at the beginning of 2008. These include the Social Security and Retirement Reform process, regulatory issues, volatility in equity markets, increasing inflation and interest rate hikes.

"Sanlam as a Group will be impacted by these challenges but we are confident that our robust strategy will make a difference and assist performance in what will be a challenging year," he concludes.

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