10 June 2020
Sanlam today reported solid results in the four months to 30 April despite challenging investment market conditions caused by the global impact of the Coronavirus.
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.”
Net result from financial services declined by 21% on the first four months of the 2019 financial year. Excluding the negative impact of investment market volatility caused by Covid-19, net result from financial services increased by a pleasing 13%.
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.
The Group remains well capitalised. The Sanlam Group Solvency Capital Requirement cover ratio amounted to 201% on 31 March 2020.