Key features of the performance included:

• New business volumes increased by 4% to R111 billion
• Net fund inflows of R23 billion compared to R19 billion in 2018
• Sanlam Group SAM cover percentage of 205%; Sanlam Life Insurance Limited SAM cover percentage for covered business of 214%

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with the performance considering the weak operating environment. The results reflect the resilience of our diversification strategy. We will remain focused on delivering synergies from the SAHAM Finances transaction as well as deliver value from the implementation of the package of B-BBEE transactions approved in December 2018. We are confident that we have the necessary depth of talent to continue delivering value to our shareholders and other stakeholders despite the current headwinds.”

Sanlam Emerging Markets (SEM) grew its net result from financial services by 50% including structural activity and exchange rate differences. Organic growth in constant currency amounted to 18%.

Namibia’s gross result from financial services declined by 2%, due to a lower profit contribution from general insurance. Claims experience normalised in the first six months of 2019, contributing to a decline in the underwriting margin to 6.5% and commensurately lower operating profit. The life insurance businesses achieved good profit growth, supported by an improvement in group life claims experience.

Botswana operations’ contribution to gross result from financial services increased by 10%. Life insurance earnings increased by 2% in constant currency, impacted by mismatch losses in the annuity portfolio.

SAHAM Finances’ gross result from financial services more than doubled in 2019, supported by the corporate activity in the second half of 2018.

The other African operations achieved a good turnaround in profitability. The results include a R83 million one-off impact (R33 million after tax and minorities) relating to a relaxation in the regulatory reserving basis in Kenya. Excluding this, gross result from financial services increased by189%, with most regions contributing good growth.

Gross result from financial services in India more than doubled to R1.1 billion. The credit businesses achieved strong growth of 45%, benefiting from good growth in the size of the loan books. Shriram General Insurance achieved exceptional growth of some 200% from R176 million in 2018 to R529 million in 2019. This is due to a major improvement in the performance of the third-party book. Life insurance profit was negatively affected by lower new business generated from the credit businesses’ client bases, in line with the lower level of disbursements in the last quarter of 2018.

High claims experience in both the Malaysian life and general insurance businesses, combined with higher new business strain in the life business, contributed to a soft operating profit result.

SanIam Investment Group’s (SIG) net result from financial services increased by 7%, a satisfactory performance under challenging conditions.

The Sanlam Investments 3rd party asset manager’s gross result from financial services increased by 72%. Excluding a few distinct transactions, the business achieved strong growth of 19% despite lower average equity markets over the period. Performance fees, stringent cost control and solid net fund inflows supported fee income.

Wealth Management gross result from financial services increased by 13%. Fee income rose by some 14%, attributable to a favourable change in mix of business from the prior year, augmented by good cost control. Brokerage income lagged due to lower overall trading levels in the uncertain environment.

The International business was impacted by lower brokerage income in the wealth business and bad debt provisions of some R30 million. This largely offset an otherwise strong underlying performance, with Nucleus performing strongly and the asset management businesses benefiting from higher assets under management.

Sanlam Specialised Finance had a difficult first six months in 2019. Lower average equity markets had a negative impact on the asset base and fee income of the Sanlam Asset Management business (incorporating Sanlam Portfolio Management and Sanlam Structured Solutions). The Central Credit Manager (CCM) raised provisions of some R140 million against a number of South African credit exposures (excluding Mayfair), reflective of heightened credit risk. The exposure to Mayfair declined from some R800 million at the time of the collapse of the Steinhoff share price in 2017 to R262 million at 30 June 2019.

SIG new business volumes increased by 3%, the aggregate of 11% growth at the South African asset management business, partly offset by a lower contribution from the international businesses and a flat performance from wealth management. New business performance was broad based in the South African asset management business, with pleasing institutional, retail and alternative flows. Wealth management flows reflected the lack of investor confidence in the target market. Net fund inflows increased by 86% to R10 billion.

Sanlam Corporate experienced an 18% decline in net result from financial services, as a result of weaker group risk claims experience as well as a lower contribution from Sanlam Employee Benefits Investments from a high base in 2018. Early signs of an improvement in group risk claims experience emerging in the last few months should support results in the second half of the year if sustained. ACA continues to perform well, contributing R25 million in the first half of 2019. Afrocentric maintained its earnings in line with 2018, despite pressure on its cost base.

New business volumes grew by 32%, the combination of 24% growth in life business and a 53% increase in new investment business. The umbrella fund and non-life investment lines of business contributed most of the growth. New business growth accelerated in the second half of 2018, with a few large mandates won after June 2018. This has resulted in an increasing comparative base for the remainder of the year, with the current level of growth commensurately not expected to persist.

Overall Group net fund inflows of R22.9 billion in 2019 demonstrated a satisfactory performance given the challenging market conditions.