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The salient features of the Group’s performance for the four months to 30 April 2015 are:

  • New business volumes of R68 billion (excluding white label), up 15% on the first four months of the 2014 financial year.
    • Personal Finance recorded a 20% overall increase in new business sales. Sanlam Sky new business volumes increased by 13%, with a 22% increase in the individual life agency channel contribution somewhat offset by lower new broker channel and group life business. The latter was impacted by the termination of the Capitec credit life underwriting agreement early in 2015. Pressure on consumer disposable income is evident in the middle income market new business results. In this segment overall new business volumes were marginally down on the comparable period, with 3% growth in sales of recurring premium business being offset by lower single premiums. In the affluent market, Glacier continued on its strong growth trajectory to achieve a 28% increase in new business.
    • Emerging Markets achieved overall new business growth of only 2%. The Namibian operations experienced lower inflows of the more volatile unit trust business, which more than offset continued good growth in new life business. Pacific & Orient, the Group’s general insurance business in Malaysia had a slow start to the year. MCIS Insurance, the Malaysian life insurance business acquired during 2014, is performing well and is meeting its targets. New business volumes in the Rest of Africa region were negatively affected by temporary distribution instability during the implementation of a new life administration system. Excluding this, the region recorded strong growth in excess of 30%. Botswana and India achieved satisfactory growth in new business flows.
    • The Investments cluster increased its new business volumes by 15%, which includes 31% growth from Employee Benefits. The latter was driven by single premium investment products, with recurring premium risk sales declining in a very competitive market. Net fund inflows more than doubled to R4,3 billion.
    • Value of new life business (VNB) increased by 8% on the comparable period in 2014. Personal Finance and Emerging Markets achieved combined growth of 18%, but this was offset by a significant reduction in the Employee Benefits contribution due to the decline in the more profitable recurring premium risk business.
    • Overall net fund inflows (excluding white label) of R3 billion were down from the R10,7 billion achieved in the comparable four-month period in 2014. As communicated in the Group’s 2014 Annual Report, the Botswana Public Officers Pension Fund withdrew P9 billion of investments managed by our Botswana asset manager.
    • Persistency levels are generally holding up but the impact of the economic environment can be seen in some deteriorating trends.
  • Net result from financial services up 8% on the first four months of the 2014 financial year.
    • The growth in operating profit is in general supported by:
      • A relatively higher level of assets under management;
      • Sound cost management; and
      • Sustained positive mortality experience in most of the major market segments.
    • The following, however, had some negative impact on earnings growth:
      • Increased new business strain at Sanlam Sky due to the strong growth in new individual life business volumes.
      • Increased expenditure at Sanlam Investments on marketing and expanding capacity in the client facing units. The benefits from these investments will only reflect in future earnings.
      • Project costs incurred by Sanlam Investments relating to the outsourcing of collective investment administration services.
      • Lower performance fees earned by Sanlam Investments in respect of collective investment schemes and the Public Investment Corporation (PIC) mandates. The value-biased investment approach detracted somewhat from short-term performance in 2015 compared to the first four months of 2014 while the funds withdrawn by the PIC in 2014 also left a lower base on which fees can be earned.
      • Some earnings dilution following the effective exchange of a 2% direct stake in Shriram Transport Finance Company for a higher interest in the Shriram Group during 2014.
      • Bad debt provisions in Shriram Transport Finance Company’s equipment finance subsidiary. The delayed roll-out of infrastructure spending in India had a particularly negative impact on the bad debt experience in this niche credit business. Measures have been put in place to limit further losses.
      • A normalisation in Santam’s underwriting experience, with the first quarter of 2015 characterised by some large commercial, hail and drought-related claims.
      • Pressure on earnings in certain commodity driven markets.
  • Normalised headline earnings per share up by 17% compared to the first four months of the 2014 financial year.
    • Relatively stronger investment performance across all asset classes supported investment return earned on the capital portfolio.
  • Diluted headline earnings per share, which includes fund transfers recognised in respect of Sanlam shares held in policyholder portfolios, increased by 20% compared to the first four months of the 2014 financial year.


All of the Group operations remain well capitalised. Sanlam Life Insurance’s statutory capital covered its Capital Adequacy Requirements by 4.7 times on 31 March 2015.

The Group had excess capital of R3.3 billion available for redeployment at the end of December 2014. Since then some R2 billion was either utilised for or committed to a number of specific transactions. The balance of the discretionary capital was augmented by a special dividend paid by MCIS Insurance, the disposal of some illiquid investments, the excess dividend cover relating to the 2014 financial year and investment return earned on the discretionary capital portfolio. This resulted in available discretionary capital of some R2 billion at the end of April 2015 that remains earmarked for growth opportunities.


We expect that the economic and operating environment will remain challenging for the remainder of 2015 with a resulting impact on the Group’s key operational performance indicators. Shareholders also need to be aware of the impact of the level of interest rates and financial market returns and volatility on the Group’s earnings and Group Equity Value. Relative movements in these elements may have a major impact on the growth in normalised headline earnings and Group Equity Value to be reported for the six months to 30 June 2015. Relatively strong operating earnings growth experienced in the second quarter of 2014 also causes an increase in the comparable base.

We have a solid strategy in place that served us well over more than 10 years and will continue to do so into the future. Despite the short-term pressure on operating earnings growth, we remain confident that we will deliver on our longer term growth targets.

The information in this operational update has not been reviewed and reported on by Sanlam's external auditors. Sanlam’s financial results for the six months ending 30 June 2015 are due to be released on 3 September 2015. Shareholders are advised that this is not a trading statement as per paragraph 3.4(b) of the JSE Limited Listings Requirements.

Conference call

A conference call for analysts, investors and the media will take place at 17h00 (South African time) today. Investors and media who wish to participate in the conference call should dial the following numbers:

Audio dial-in facility

A toll free dial-in facility will be available. We kindly advice callers to dial in 5 - 10 minutes before the conference call starts at 17:00.

Access numbers for participants dialing live from their country:

South AfricaToll
021 819 0900
0800 200 648
USA and CanadaToll-free+1 855 481 5362
UKToll-free0808 162 4061
Other CountriesToll+27 11 535 3600
+27 10 201 6800

Recorded playback will be available for three days after the conference.


Access Numbers for Recorded Playback:

Access code for recorded playback: 35727

South AfricaToll011 305 2030
USA and CanadaToll-free+1 855 481 5363
UKToll-free0 808 234 6771
Other CountriesToll+27 11 305 2030

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