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8 June 2022
The Group posted creditable earnings, with strong results in the life insurance and investment management businesses offsetting weak general insurance and credit business results.
Although Life Insurance recorded much lower COVID-19 excess mortality claims, Santam was impacted severely by several weather and fire-related events in the first quarter of 2022, as well as the major weather catastrophe in KwaZulu-Natal in April.
The Group’s operations remain robust, with a strong capital position and further growth in Life Insurance new business volumes, despite the high base from 2021, as well as satisfactory growth in General Insurance new business volumes.
The Group remains focused on executing its purpose-led strategy. Management has significantly strengthened the business through the agreement to combine Sanlam’s Pan-African operations outside of South Africa with Allianz SE, subject to regulatory and other approvals. This partnership will support Sanlam’s objectives of creating shared value and driving financial inclusion across the continent.
The Group completed several transactions that finalise Sanlam’s partial exit from the UK, with only a focused international asset management business remaining. The acquisition of the Alexforbes retail and group life businesses was completed in the period.
Earnings were impacted by catastrophe events and market volatility
New business volumes remain robust
Strong capital position
Given the continuing uncertainty around COVID-19 and continuous economic and financial market pressures, the Group believes it prudent to maintain a higher than usual level of discretionary capital to provide a buffer against any significant weakening in mortality experience and financial markets. Discretionary capital increased from R2.9 billion on 31 December 2021, to some R6.5 billion on 30 April 2022; including proceeds of £153 million from the UK asset sales.
Sanlam Group CEO, Mr Paul Hanratty, said: “While Sanlam encountered various operating challenges in 2022, I am pleased that we posted creditable earnings, with strong results in the life insurance and investment management businesses. These results demonstrate that Sanlam is a trusted partner that is committed to continue delivering long-term value to all stakeholders.”
Consumers are likely to face increased financial pressure from higher food and transport inflation, as well as higher short-term interest rates. This is likely to result in lower savings rates and higher persistency risk as disposable incomes come under pressure.
Sanlam expects new business growth rates to be muted over the remainder of the year. The resilience of the South African and broader Pan-African economies, especially those benefitting from higher commodity prices, should however provide some support.
“Our overall capital strength, diversified portfolio and track record of execution remain key differentiators and we remain well-positioned, despite the difficult operating environment that is likely to persist for the remainder of 2022,” concludes Mr Hanratty.