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Key financial features for 2017

Key features and commentary on our financial performance for 2017 are provided in this section.

The full audited Annual Financial Statements and Five-year review are available in the download centre of this site.

Earnings

  • Net result from financial services increased by 7% (up 10% in constant currency)

Business volumes

  • Net value of new covered business up 15% to R1,8 billion (up 17% in constant currency)
  • Net new covered business margin of 2,94% (2,69% in 2016)
  • New business volumes declined by 1% to R230 billion (in line with 2016 in constant currency)
  • Net fund inflows of R35 billion compared to R41 billion in 2016

Group Equity Value

  • Group Equity Value per share of R59,40
  • Return on Group Equity Value per share of 14,8%
  • Adjusted Return on Group Equity Value per share of 15,8%; exceeding target of 13,2%

Capital management

  • R4,2 billion of capital released; R2,8 billion deployed in strategic investments
  • Unallocated discretionary capital of R2 billion at 31 December 2017
  • Sanlam Group Solvency Assessment and Management (SAM) cover ratio of 2,2 times; Sanlam Life Insurance Limited SAM cover ratio of 2,7 times
  • Sanlam Life Insurance Limited Capital Adequacy Requirement (CAR) cover ratio of 5,8 times
  • Acquisition of remaining 53,4% stake in Saham Finances announced

Dividend

  • Dividend per share of 290 cents, up 8%

Sanlam’s strategy has remained largely unchanged since 2003. We highlighted before that our strategy is by no means unique, but that our ability to execute has set us apart from our peers. This diligent focus on execution enabled us to achieve satisfactory growth in 2017 and double-digit average growth rates in all key performance indicators over the last 10 years, apart from new business volumes.

Financial highlights for 2017

RoGEV

14,8% (10-year Compound Annual Growth Rate (CAGR)): 14,2%)

Dividend

8,2% (10-year CAGR: 12%)

Net result from financial services per share

7,1% (10-year CAGR: 12,1%)

New business volumes

-1,3% (10-year CAGR: 8,5%)

Net Value of New Business (VNB)

14,7% (10-year CAGR: 14,1%)

Net VNB margin

2,94% (2007: 2,25%)

Read more about our strategy and long-term performance.

We anticipated that we would face significant headwinds in 2017. Our core South African market has experienced significant political and policy uncertainty since 2015, which severely suppressed business and investor confidence. Private sector investment largely stalled as a result, with the economy entering a period of pedestrian growth. Downgrades in South Africa’s sovereign credit ratings to below investment grade amidst regular reports of the extent of corruption in the country, dealt further blows to an already fragile environment. This largely prevented South Africa from sharing in the benefits of an improved global economic environment. Sentiment changed abruptly in December 2017 following the outcome of the African National Congress’s national elective conference and renewed optimism that South Africa’s challenges will be addressed through close cooperation between government, business and labour. The local equity and bond markets responded with year-end rallies after remaining subdued for a large part of the year. The rand also strengthened further from its end-2016 closing position, contributing to much stronger average exchange rates in 2017 against most of the major currencies.

The economies of oil-dependent countries where we operate, in particular Nigeria and Angola, experienced pressure from low oil prices, negatively affecting economic growth, currency exchange rates and liquidity. High levels of government debt in Namibia impacted on public sector expenditure, liquidity in the banking sector, and economic growth. Operating conditions elsewhere where we operate were, however, in general more supportive of growth in 2017. India in particular started to recover from demonetisation and the introduction of Goods and Services Tax, while non-oil commodity-based economies benefited from improved terms of trade.

Read more about Our economic and operating environment and the outlook for 2018.

The following also impacted on our performance in 2017:

  • The South African general insurance market experienced the highest level of weather-related claims in recorded history during 2017. Santam, being the largest general insurer in South Africa, commensurately experienced a significant deterioration in the underwriting results of its property line of business.
  • Internal challenges in Kenya and Malaysia have not been fully resolved, affecting both top-line and operational earnings growth in these countries. Internal challenges in Kenya are being addressed, while Malaysia has launched a number of operational initiatives to improve performance. Both countries have significant future growth potential and turnaround strategies in these operations are high on the agenda for Sanlam Emerging Markets (SEM) management.

Despite these challenges, the Group delivered robust overall growth in all key performance indicators. Progress on all strategic pillars contributed to the resilient performance.

Read more about our strategic execution in 2017 in the Strategic Review by the Group Chief Executive.

This section provides an overview of the Group’s performance, focusing on the key shareholder performance indicators. More detailed information is available in the Shareholders’ information section, including balance sheet and income statement information for the shareholders’ fund reconciled to the IFRS Statement of Financial Position and Statement of Comprehensive Income. Reconciliations between the IFRS net asset value and GEV are also provided.

Sanlam Life Insurance is a licensed financial service provider.
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