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Strategic opportunities and future focus

The five clusters have their own targeted strategies in support of the Group strategy.

The Sanlam strategy in action section explains the strategic intent for each cluster. Here we set out their contributions for 2017.

SPF is developing a strong partnership approach that includes affinity groups, retailers and telecommunication companies. Simple, on-demand and self-directed products – such as the mobile GoCover product launched last year – are most attractive for these partnerships, as they offer brand exposure and new client growth.

The distribution business will continue to drive an evolving omni-channel client interaction model, while maintaining the importance of face-to-face advice. We focus on providing intermediaries with digital tools and data to optimise the strengths of the different interfaces. Our investment in digital and data analytics capability will enable us to understand customer journeys, and improve our ability to price and enhance products effectively. This, in turn, will improve our client experience.

Fintech offers increasing opportunities, supported by the Sanlam Design Studio, which drives “design thinking” throughout the business. This will be further entrenched through a design thinking course developed in collaboration with the University of Cape Town, to be rolled out in 2018.

Robotics remain an opportunity over the medium term as we phase out mundane and error-prone tasks, enabling us to overcome legacy systems challenges and run the business more efficiently.

Other strategic focus areas include:

  • Increasing productivity through an improved worksite offering in the entry-level market
  • Increasing market share in the middle income and affluent segments through product innovation and leveraging the portfolio (e.g. MiWay Life and BrightRock)
  • Offering best-in-class customer value for savings products
  • Integrating the Glacier value chain through our Sanlam Investments partnership
  • Fully leveraging available enablers: our omni-channel and expanded distribution footprint, platform agility, cost leadership through value optimisation and Sanlam Reality integration
  • Rolling out Capitec and other partnerships

SEM expanded rapidly over the past 10 years, with the Shriram Capital investment in 2012 and the Saham Finances transactions in 2016 and 2017 as the most significant milestones in terms of profit contribution. The cluster reached a strategic milestone with the March 2018 announcement of the acquisition of the remaining stake in Saham Finances, which repositions it for the next phase. This phase is orientated towards organic growth through existing partners and in-country bolt-on acquisitions. The cluster is adopting a regional approach to execution, with the aim of achieving our vision of Pan-African leadership through regional dominance. Appropriate support from the centre will be a key enabler.

SEM’s growth plans are also supported by a continuous review of brand positioning, cultural alignment and organisational capacity.

Our collaboration with Saham Finances remains key to SEM’s success as it combines Saham Finances’ presence in 26 countries with SEM’s presence in 23 countries – with only three countries overlapping. The complementary nature of the relationship continues to create new opportunities. To realise existing and new opportunities for growth and synergies, Saham Finances is focusing on the following:

  • Optimising re-insurance within the Group via a Pan-African structure
  • Cooperating on bancassurance and broker partnerships
  • Cooperating on third-party administrator and health insurance
  • Leveraging its footprint for multinational offerings in life, general and health insurance
  • Building Saham Ghana as part of the re-entry into this market
  • Building the life insurance presence in Cameroon, Senegal and Ivory Coast
  • Exploring the assistance business for Southern Africa
  • Optimising capital and investments

We are analysing the capital in our partner businesses to better understand the quantum of excess capital and to identify opportunities to optimise the capital base of these businesses and enhance dividend flows. Other strategic focus areas include continued appropriate support for Shriram Capital and improving performance of both Malaysian businesses.

To maintain consistent superior investment performance for our clients, Sanlam Investments is exploring improved offerings in non-traditional asset classes. This will be complemented by our initiative to increase Sanlam’s exposure to credit assets and to build a strong third-party credit offering. This will enhance Sanlam Investments’ competitiveness in the third-party market to grow net inflows.

The cluster will use the new Group business intelligence capability to apply data analytics in pursuit of product innovation, to enhance client and intermediary experience and support operational efficiencies, while further leveraging capabilities across businesses to provide holistic solutions for retail and institutional clients.

Several initiatives for closer cooperation between Sanlam Investments and SPF are being implemented to enhance the proportion of SPF’s open architecture flows into Sanlam Investments’ portfolios.

We continue to focus on transformation and people development, which are key requirements to compete in the institutional market in South Africa.

Other strategic focus areas include:

  • Dealing with fee income pressures through targeted operational efficiency initiatives
  • Driving retail flows through outcomes-based fund management
  • Seizing the passive and alternative opportunities
  • Strengthening the turnaround of Sanlam UK, positioning the business for future growth, and enhancing offerings for our African client base

Santam’s focus remains on profitable growth in South Africa, and on increasing its international diversification through the Santam Specialist business and Santam Re. With SEM, it aims to realign its interests in SEM investments in line with a focus on reinsurance and specialist lines.

Efficiency initiatives include further optimising the claims and procurement value chains. In South Africa, there are particular opportunities to improve the non-motor claims channel.

Collaboration between Santam, the Department of Cooperative Governance and Traditional Affairs and the Emthunzini Broad-based Black Economic Empowerment Community Trust, resulted in an acceleration of the Programme for Risk and Resilience (P4RR), which has been extended from five to 53 local municipalities in order to reach more than five million people between now and 2020. The focus of P4RR is to identify and reduce systemic risk at municipal level through on-the-ground initiatives that protect the lives of vulnerable communities and people living in disaster-prone, high-risk areas.

Read more about P4RR in the Resilience Report.

Other strategic focus areas for the cluster include:

  • Implementing omni-channel strategy across key businesses
  • Establishing Santam Re as a Pan-African re-insurer
  • Focusing on underwriting management activity in Santam Specialist
  • Utilising access to A-rated paper to expand international specialist and reinsurance businesses

Significant growth in commercial umbrella funds, new market entrants, potentially far-reaching regulatory reforms, changes in benefit design and member communication, as well as an unusually high number of disability claims, all impact South Africa’s employee benefits industry. Given these conditions, SEB requires scale to achieve sustainable profit in the retirement fund administration business. The acquisition of 100% of the issued share capital of Absa Consultants and Actuaries (ACA) provides us with increased scale and presence in a market where the opportunities to exponentially grow the administration and consulting parts of the business are limited. ACA has a substantial book of more than 100 stand-alone funds and a commercial umbrella fund, 339 614 members (active and inactive) and assets of approximately R84 billion under administration. The transaction is still subject to regulatory approval.

Other key focus areas within Sanlam Corporate include:

  • Progressively improving our market positioning in Employee Benefits and Healthcare
  • Providing a “One Sanlam” solution to targeted corporates
  • Driving collaboration opportunities (SEB and Healthcare) to increase clients’ employee value propositions
  • Enabling profitable growth in SEB: balance cross-cluster pricing to win and retain business while maintaining adequate margins
  • Supporting SEM over the longer term with in-country support for targeted corporates

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