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Most of the commodity-based economies where the Group operates experienced slower economic growth, investment market volatility and weaker currency exchange rates emanating from the significant decline in commodity prices during 2015. Uncertainty around global growth and interest rate changes in the United States as well as geo-political risks placed further pressure on operating conditions.

Some of the highlights for the 2015 financial year included:

  • The Return on Group Equity Value (RoGEV) exceeded the Group’s hurdle rate by a healthy margin – RoGEV is the Group’s main measure of shareholder value creation;
  • Group Equity Value exceeded R100 billion for the first time;
  • Net result from financial services increased by 6%;
  • Dividend increased by 9% to 245 cents per share;
  • Net fund inflows of R19 billion.

A strategic highlight was the acquisition of a 30% stake in Morocco-based Saham Finances, which will be closed shortly. This transaction further expands Sanlam’s footprint across the African continent, with entry into new attractive markets. It also makes the Group the financial services company with the biggest footprint on the continent and supports Sanlam’s vision of being a leading Pan-African financial services company.

The Group reported net operating profit of R7,3 billion, up 6% compared to 2014, with strong performances from Sanlam Personal Finance and Santam.

New business volumes grew by 16% to R211 billion from a high base in 2014. Excluding the large R8,3 billion bulk annuity policy written by Sanlam Employee Benefits in 2014, new business volumes were up 21%. The Group has attributed its performance to the resolute execution of its five-pillar strategy, with its diverse operations a hallmark of the Group’s success.

Says Sanlam Group Chief Executive Officer, Mr Ian Kirk: “We are satisfied that the Group has sustained delivery despite challenging market conditions. Our diversification strategy has once again stood us in good stead in the face of challenging conditions in our key operating environments. Our management and our people, who remain committed to clients and stakeholders, continued to play a key role in the success of this strategy and our resilience.”

Sanlam Personal Finance (SPF) achieved solid growth for a mature business, increasing its net result from financial services by 10%. Sanlam Individual Life remains the largest contributor to SPF’s operating earnings, growing its net result from financial services by 7% in 2015. Glacier grew its profit contribution by 21% after tax, with fund-based fee income benefiting from an increase in assets under management due to strong net fund inflows and solid investment market performance in prior years. Sanlam Sky’s net result from financial services increased by 19%, benefiting from growth in the size of the in-force book, positive investment variances and economic basis changes; as well as improved persistency and premium variances.

Sanlam Emerging Markets (SEM) experienced challenges in its Indian, Malaysian and Zambian operations, which contributed to a 4% decline in its net result from financial services. Excluding these, SEM achieved satisfactory growth of 14% in its operating earnings contribution.

Sanlam Investments’ (SI) net operating profit declined by 3% to R1,4 billion. The cluster’s results were negatively impacted by lower performance fees in the investment management businesses; one-off administration costs; abnormal marked-to-market losses in the capital markets business from the volatile equity and interest-rate markets; and one-off items in the comparable base.

Santam had an exceptional year, with its underwriting margin improving from an already high base of 8.7% in 2014 to 9.6% in 2015. The benign claims environment of 2014 persisted into 2015, which together with disciplined underwriting action contributed to 16% growth in Santam’s net result from financial services.

The Group deployed capital of R6 billion during the course of the year on transactions which include, among others:

  • The acquisition of the 30% stake in Saham Finances;
  • The acquisition of an effective 28% stake in Medscheme, which improves the Group’s healthcare proposition for clients in addition to offering a number of potential synergies;
  • The acquisition of additional stakes of 23% in each of Shriram General Insurance and Shriram Life Insurance in India; and
  • The acquisition of a 25% stake in Indwe Brokers Holdings, a general insurance intermediary, which has been transformed into a black-owned company through the disposal by Santam of a 51% shareholding in the business to African Rainbow Capital, a wholly-owned subsidiary of Sanlam’s Broad-based Black Economic Empowerment partner, Ubuntu-Botho.

As at 31 December 2015, Sanlam had unallocated discretionary capital of R2,3 billion. This is earmarked for further expansion and diversification as the Group maintains its focus on utilising the available discretionary capital on value-accretive investment opportunities.

Going forward, Kirk said the Group had marginally refined the strategy, retaining the five pillars and five enablers while focusing on two geographic approaches:

  • In South Africa, the Group aims to retain and extend a leadership position in financial services; and
  • Outside South Africa, and in particular on the rest of the African continent, the Group aims to deepen and enhance its existing relationships and product ranges to become a leading player in targeted territories through accelerated organic growth. This is augmented by the continued focus on identifying further opportunities for expansion to new businesses and territories.

“While we expect the challenging economic climate to persist in 2016, we continue to place a high premium on strategy execution and we believe we have the people and the expertise to support us to deliver value for our shareholders and other stakeholders,” Kirk concluded.

Details of the results for the year ended 31 December 2015 are available at www.sanlam.com.

Sanlam Life Insurance is a licensed financial service provider.
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