The Group had a solid start to the 2020 financial year as communicated to shareholders in the Covid-19 update released on the JSE News Service in March this year. However, the operating environment deteriorated substantially from the end of February as governments around the world implemented strict measures to control the spread of Covid-19. These included the declaration of states of disaster and emergency in several countries where Sanlam operates, as well as severe limitations on people movement and preventing face-to-face sales in most operations. These were in line with similar measures implemented globally. Global growth estimates were revised down sharply, driving significant volatility in investment markets across the world.

The Group’s new business volumes across the board were up on the previous period. However, they were significantly impacted since the last week of March. This was as a result of restrictions on intermediary activity imposed under Covid-19 lockdown regulations. Investment in digital businesses such as MiWay and Sanlam Indie, as well as digital sales tools for Sanlam advisors, alleviated pressure to some extent. The available digital sales tools are, however, targeted at the middle-income and affluent market segments. The Sanlam Sky intermediated distribution channel and many other emerging markets channels are still predominantly based on personal interaction, with a commensurately more pronounced negative impact on new business sales in these areas. The new business slowdown will impact new business volumes for the financial year.

Despite these challenges, Sanlam achieved solid operational results and responded rapidly to the lockdown measures in South Africa, its largest market, from 27 March 2020 as well as the lockdowns and curfews implemented in the Group’s other markets. Close to 90% of office staff were enabled to work from home. The Group is carefully managing the employees’ return to work in line with the amendments to lockdown levels, with the health and safety of staff being the priority.

Sanlam Group Chief Executive Officer, Mr Ian Kirk, said: “We are pleased with our results for the four months to 30 April 2020 in the context of the operating environment we faced. This bears testimony to the resilience of our diversified operations and the skills and exemplary dedication of our employees under challenging conditions.”

Business Volumes

New business volumes of R96 billion increased by 33% on the first four months of the 2019 financial year. The lockdowns and curfews imposed since the end of March 2020 and throughout April had a significant adverse impact on new business sales performance, which will impact volumes in the full financial year.

The impact of the lockdowns and curfews are not yet fully reflecting in these results due to timing differences between the writing and recognition of new business. New business production in April and May were in general between 50% and 70% lower than targets across many businesses.

• Overall new business volumes at Sanlam Personal Finance increased by a healthy 18% in the first four months of 2020.
  • Sanlam Sky new business sales grew by 19%, supported by the Capitec Bank funeral business and a good start to the year for group recurring business. The lockdown since the end of March 2020 had a severe impact on the traditional individual life intermediated channel, which is primarily focused on worksites and face-to-face sales. New business volumes through this channel declined by 5%, with a further deterioration expected in the months to follow.
  • The Recurring Premium sub cluster, primarily focused on the middle-income market, reflects the pressure on disposable income in this market segment, aggravated by the Covid-19 lockdown. New business volumes increased by 1%, with strong growth at BrightRock, Sanlam Indie and MiWay Life largely offset by lower sales of traditional risk and savings solutions.
  • Glacier grew its new business sales by 19%, benefiting from sound demand for traditional life annuities, living annuities and international products.
• New business volumes at Sanlam Investment Group increased by 42%, with the value of new mandates awarded to the South African Investment Management business increasing by 33%, while Wealth Management delivered more than doubled the 2019 level of new business. New business at the International businesses exceeded expectations and rose by 59%.
• The lockdown and economic slowdown negatively impacted premium growth at Santam. Despite these conditions, satisfactory growth in gross written premium was achieved.
• Sanlam Corporate achieved 68% growth in new business volumes for the four months to April 2020 despite a marked slowdown in April 2020 due to the Covid-19 lockdown. Sales were, however, skewed towards low margin business.
• Sanlam Emerging Markets recorded overall new business growth of 43%. The African general insurance portfolio exceeded its budget for the period. Life insurance and investment new business volumes in Africa increased markedly on 2019, with the latter benefiting from large new mandates in Kenya and Namibia. North West and East Africa were the main contributors to the growth in new life business. The Other International region achieved double-digit growth in life and general insurance business, exceeding targets for the period.