5 June 2019
Notwithstanding the challenging operating conditions, the Group delivered some worthwhile accomplishments. This included the recent SAHAM Finances acquisition complementing pleasing organic growth by contributing to 10% growth in the value of new covered business (VNB) written, 30% rise in net fund inflows, and a 9% increase in net result from financial services. The Group is satisfied about its progress on bedding down the SAHAM Finances acquisition.
In addition, as announced in March 2019, the Group concluded the 5% share issuance to the new Broad-Based Black Economic Empowerment (B-BBEE) entity, approved by Sanlam shareholders in December 2018. The transaction positions Sanlam as the foremost-empowered insurance and investment management group in South Africa.
The Group issued the shares at a price of R70 per share, representing a discount of some 10% to the three-day volume-weighted average price (VWAP) at the time. The issuance restored the discretionary capital portfolio to an appropriate level.
Sanlam Group Chief Executive Officer, Mr Ian Kirk commented: “We are satisfied with our performance achieved under challenging operating conditions. Our continued prudent implementation of our diversification strategy, together with our focus on implementing the strategy again, supported the delivery of resilient results. We will remain focused on the SAHAM integration: delivering shareholder value, while at the same time controlling our costs given pressure on revenues, and executing future growth strategies.”
The salient features of the Group’s performance were:
Headline earnings reflected the combined effect of the following:
The Group’s operations remain well capitalised. The Sanlam Group Solvency Capital Requirement (SCR) cover ratio amounted to 2.3 times on 31 March 2019 (Sanlam Life Insurance Limited: 2.5 times).
Sanlam ended April with R1.3 billion discretionary capital. This included the capital raised from the B-BBEE issuance, excess dividend cover in respect of the 2018 dividend paid in 2019 and excess investment return earned on the Sanlam Life covered business operations.
The Group does not expect a major recovery in the economic conditions in South Africa and Namibia for the remainder of 2019. The business therefore anticipates that new business growth potential will remain under pressure. Management also expects investment market volatility to persist, aggravated by increased tensions in the trade war between the United States and China.
Mr. Kirk concluded that the Group remains focused on delivering results from the SAHAM Finances acquisition as well as delivering value from the package of B-BBEE transactions approved in December 2018, once implemented.
The operational update will coincide with Sanlam’s Annual General Meeting (AGM) to be held 5 June, 14h00, at the Group’s head office, CR Louw Auditorium, 2 Strand Road, Bellville, Capetown. AGM queries should be directed to the Sanlam company secretary on 021 947 3430.