GEV is the aggregate of:
GEV is not an appraisal value of the Group as it does not place any value on future new life insurance business or prudence in our valuation bases.
GEV is a forward-looking measure that provides shareholders with a valuation for the major part of the Group’s appraisal value. The Shareholders’ information section provides sensitivities for the most important valuation assumptions as well as a full analysis of change in GEV. The disclosures separately identify the change in value due to differences between actual earnings for a particular period under review and those assumed in the valuation models at the end of the previous period, as well as the change in value attributable to changes in assumed future earnings. These disclosures provide shareholders with an indication of the accuracy of the assumptions used in determining GEV over time as well as sufficient information to enable shareholders to adjust GEV should they wish to use different assumptions.
The following valuation methodologies are applied in determining GEV:
RoGEV is equal to:
As GEV reflects the present value of future Group earnings, the key drivers of RoGEV are the same as those underlying the Group’s main sources of earnings.
Sanlam’s RoGEV target is to outperform its cost of capital of i+4%, with i being the South African nine-year risk-free rate. We have outperformed this hurdle on a cumulative basis since listing in 1998.
Our main sources of earnings are the net operating profit we earn from our different lines of business (Net result from financial services) and the net income we earn from investing discretionary capital and the capital allocated to our operations in the financial markets (Net investment return)
Financial Services Income
Underwriting Policy Benefits
Tax on Financial Services Income and Non-controlling Interests
Financial services income is driven by:
The main drivers of sales remuneration are the level of new business written and the commission rates payable, which are regulated in most markets.
Net result from financial services income is also affected by:
To maximise RoGEV, we need to actively manage the drivers of earnings over the long term. This is achieved through a number of strategic pillars which are primarily aimed at optimising relative value creation between shareholders and other stakeholders.
Profitable top-line growth through a culture of client-centricity
Extracting value through innovation and improved efficiencies
Enhancing Sanlam’s resilience and earnings growth through diversification
Responsible capital allocation and management
Read more about the operational responses to the RoGEV drivers in the cluster reports.