Skip Ribbon Commands
Skip to main content

Skip Navigation Linksbusiness-model Our Business Model

Our Business Model

Our business model has a strong geographic approach based on the 44 countries where we operate. We have a specific vision for each geographical region, with a portfolio of solutions, distribution channels and partnerships to execute on our strategic pillar aimed at enhancing resilience and earnings growth through diversification.

We have a partnership model to enable efficient value creation and transformation. South Africa still dominates in terms of profit contribution, but we are gaining market share in Africa following the acquisition of Saham Finances. The net result from financial services contribution from the Rest of Africa is expected to grow considerably in the next five years.

We want to lead in client-centric wealth creation, management and protection in South Africa

Client-centric solutions

Client-centric channels

In South Africa our preferred model is to have wholly owned subsidiaries except where a partner can offer a complementary capability – then we take a smaller stake in the business or venture. Examples include BrightRock and EasyEquities.

Cluster operations

We want to be a leading Pan-African financial services group with a meaningful presence in India and Malaysia

Client-centric solutions

Client-centric channels

In Africa our preferred model is majority ownership but with a meaningful shareholding by our in-country partner. We are prepared to take minority stakes where necessary to execute on our growth strategy.

Cluster operations

We want to play a niche role in wealth and investment management in specific developed markets

Client-centric solutions

Client-centric channels

In the UK we have mostly wholly owned operations but will consider partners to scale the business.

Cluster operations

Our partnership model provides us with a competitive advantage:

  • Our distribution partnerships with banks, telecommunication companies, affinity groups, international brokers and other financial and non-financial players enable us to improve access to financial services in the entry-level market segments where we operate, introducing a broader spectrum of society to the benefits of financial resilience and prosperity. These partnerships also support market share gains in the other segments where our partners operate. Key new partnerships in 2018 include the Capitec credit life and funeral distribution agreements in South Africa and the package of BBBEE transactions approved by Sanlam shareholders in December 2018. These transactions will improve Sanlam’s competitiveness and ability to gain market share in those areas where we do not have a leading position in South Africa, namely third-party asset management, employee benefits, health and the entry-level market segment. Read more about these transactions in the Group Chief Executive’s strategic review.
  • Our general preference in emerging markets outside of South Africa is to have local partners as equity investors in our businesses. These partners provide us with distribution capability, an understanding of the local market conditions and culture and in many instances existing relationships with regulators, independent brokers and institutional clients. Sanlam in turn has a wealth of experience in product development, financial and actuarial support, risk management and sound governance, thereby fulfilling the role of technical partner. Our decentralised operating model allows for flexibility in how we manage these partnerships, which proved to be a key differentiator for Sanlam’s success in operating across our chosen emerging markets compared to other multinationals. This is a unique model, making Sanlam more competitive and better placed to extract the future opportunities emanating from the shifts in demographic profiles.

Sanlam has a unique Pan-African footprint following the conclusion of the final phase of the Saham Finances acquisition. Extracting the synergies embedded in the acquisition is a key priority, in particular using the combined footprint to provide holistic, ‘one-stop’ financial solutions to multinational companies operating across the African continent, wrapped around the local retail and institutional offering. This will be a compelling offering to improve ease of doing business not only for the multinational companies operating in Africa, but also for international insurance brokers and developed market insurers that need to provide their client base with insurance and employee benefits solutions in Africa.

Our Key Financial Measure for Success

Our primary performance target for measuring shareholder value creation is Return on Group Equity Value (RoGEV), which reflects our success in growing the value of Sanlam’s operations over the long term. Group Equity Value (GEV) provides an indication of the value of Sanlam’s operations and is therefore a forward-looking metric. It includes: the value of Sanlam’s in-force book of life insurance business, the value of non-life operations based on longer term assumptions and the fair value of discretionary and other capital not allocated to our operations. It does not represent an appraisal value of the Group as it does not place a value on future new life insurance business.

RoGEV is a more appropriate performance measure (compared to traditional return on capital and earnings metrics) for a business such as Sanlam where earnings from a particular client solution emerges over a number of years. It combines current year earnings compared to expectations (short term performance) and changes in future expected earnings (long term performance) in a single performance metric. RoGEV measured over time not only reflects shareholder value creation but also indirectly our success in creating value for all other material stakeholders due to the direct relationship between shareholder earnings and value creation for other stakeholders over the long term. This makes RoGEV a robust composite value measure for a diversified group such as Sanlam.

RoGEV measured against a minimum performance hurdle is the primary quantitative performance benchmark in evaluating the success of our strategic execution.

Read more about RoGEV performance in the Financial Review.

Our Key Non-Financial Measures for Success

The intended outcome of our stakeholder value creation is to create financially resilient and prosperous individuals, organisations and societies. We measure our performance through a number of indicators per material stakeholder group that reflects our contribution to their financial resilience and prosperity.

Read more about our performance in 2018 per stakeholder group.

Our Key Capabilities

We create competitive advantage by:

  • employing some of the best-skilled and most experienced people in the industry;
  • offering competitive and diversified financial solutions;
  • having a track record of responsible and efficient capital allocation;
  • having an unmatched footprint with scale and presence in developed and emerging markets;
  • having a strong and trusted brand; and
  • having a presence in all forms of distribution channels.

The Key Trade-Offs That We Manage

  • Product profitability vs the value proposition for clients
  • Profitability vs investment in employees
  • Investing in innovation and new growth initiatives at the expense of short term profitability as these initiatives typically take a few years to become profitable
  • Balancing the one-off cost of transformation initiatives with potential future gains in market share and long term profitability
  • Potential impact of responsible investment practices on short term investment returns
  • Optimising the level of retained shareholder capital vs sustained solvency

Our Key Enablers

  • Mutually beneficial partnerships
  • Diversification across geographies, market segments and lines of business
  • Continuous transformation to adapt to a changing world
  • Continuous mitigation of risk and pursuit of opportunities
  • Continuous focus on ethical leadership, values and culture

Our Key Opportunities

Sanlam is an emerging market player with a unique footprint, spanning countries with high economic growth potential and low financial services penetration outside of South Africa, our home market.

This provides us with a leveraged future growth opportunity as we are well positioned to meet the demands for financial solutions that follow when demographic profiles change and aspirational lifestyles develop due to economic growth, urbanisation and young people entering the formal economy.

Our Material Stakeholders

Our material stakeholder groups are shareholders, clients, employees, business partners, governments, regulators and the broader society in which Sanlam operates. Our business philosophy is built on optimising value creation for our material stakeholders. This includes understanding and managing the sometimes conflicting expectations and trade-offs between the various stakeholders through active engagement and stakeholder participation.

Sanlam Life Insurance is a licensed financial service provider.
Copyright © Sanlam