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Sanlam achieved acceptable results in the context of a challenging operating environment we faced. New business volumes of R96 billion increased by 33% on the first four months of the 2019 financial year. The lockdowns and curfews imposed since the end of March 2020 and throughout April had a significant adverse impact on new business sales performance. Net result from financial services declined by 21% on the first four months of the 2019 financial year. Excluding the negative impact of investment market volatility caused by Covid-19, net result from financial services increased by a pleasing 13%. Net value of new business decreased by 22% (down 18% on a constant economic basis) largely due to lower new life business sales during the lockdown periods, with the higher margin businesses such as Sanlam Sky more severely affected.
Sanlam achieved a solid operational performance in 2019, despite facing a number of headwinds. The Group delivered growth of 14% and 15% respectively in net operational earnings and the net value of new covered business (VNB) written. The 37% increase in net fund inflows is a particular highlight. Our diversification across geographies, market segments and lines of business, supported by a highly motivated and skilled human capital base, allowed us to navigate these challenges to continue to deliver strategic value to Sanlam shareholders.
Looking back on the past year we can again be proud of the Group’s accomplishments amid major political and economic headwinds, particularly in South Africa. Our performance is testimony to Sanlam’s resilience and the quality and scale of our business. Also central to our success is the calibre and commitment of our employees and their ability to execute and deliver value for our stakeholders.
Sanlam delivered solid financial results in relative terms, supported by strategic initiatives that enhanced our market share and business performance. We attribute our performance to the five clusters’ sustained focus on executing our strategy diligently while striving to make a meaningful difference in the societies in which we operate. This enables us to remain relevant and competitive, and achieve our performance objectives over the medium and long term. Read more about specific initiatives, performance and prospects in the cluster operational reports.
Cluster Report 2019: Sanlam Personal Finance
Cluster Report 2019: Sanlam Emerging Markets
Cluster Report 2019: Sanlam Investment Group
Cluster Report 2019: Santam
Cluster Report 2019: Sanlam Corporate
Watch Heinie Werth, Chief Executive of Sanlam Emerging Markets, talk about the issues that impacted the cluster’s performance in 2019. Despite difficult market conditions and changes in leadership, Sanlam Emerging Markets remains committed to its African growth story.
Global real Gross Domestic Product growth moderated in 2019. A number of factors contributed to the softening in economic activity, including increased uncertainty, due to looming events such as the exit of the United Kingdom from the European Union (Brexit), geo-political risks, including the trade dispute between the US and China, and the fading impact of United States of America fiscal stimulus.
Increased trade protectionism proved especially damaging, dampening global trade and economic activity more generally in emerging market economies. That said, the latter benefited from easier global financial conditions as monetary policymakers in developed economies responded to the slowdown in growth.
2019 Economic and Financial Market Review
2019 Regulatory Environment
The Group maintained a solid operational performance in the 10 months to 31 October 2019, especially in the context of persisting challenging operating conditions in our largest markets. Highlights for the four month-period since the end of June 2019 include continued strong net fund inflows at Sanlam Investment Group, traction in Glacier’s new business sales, as well as a marked improvement in Sanlam Corporate and Santam’s risk underwriting profits. Overall new business volumes increased by 6%. The net value of new covered business (VNB) written increased by 13%, supported by a change in the mix of business to more profitable lines of business and a lower comparable risk discount rate at the end of October 2019. Net result from financial services grew by 12%, contributing to a 16% rise in net operational earnings. Saham continues to outperform its top-line target.