Presenting results to the market this week, one couldn’t help but notice how Sanlam’s cleverly packaged “net result” was up 22%. Digging a little deeper, it is clear that net operational earnings were down 7% to R4.4-billion, and net client cash flows fell 2% to R37-billion.

Referring to the recent raid on several life insurers — including Sanlam — by the Competition Commission, group chief executive Paul Hanratty says neither Sanlam Life nor Brightrock has received any information from the Commission on this. 

“Sanlam values the trust of its customers highly and conducts its business in a manner that has regard to the highest ethical standards, adhering to all relevant legislation,” says Hanratty. 

“We do not believe that the work of the Competition Commission will result in any processes at Sanlam being highlighted as problematic, although we are concerned about the damage that the publicity from the media release will do to our reputation as a leading player in the industry.  (We are) considering the various options for resolution and will keep shareholders informed.” 

Significantly fewer deaths compared with last year as vaccination rates increased and Covid strains became less deadly underlined a significant rebound in Sanlam’s life insurance earnings for the six months to the end of June. Life insurance net flows were up 65% to R14-billion.

On the short-term insurance side, Santam absorbed the impact of the April KZN floods, increased claims costs and negative investment returns on insurance funds.  

Santam’s net result from financial services plunged 61% to R244-million. Surging inflation proved to have a significant impact for Santam because the cost of claims escalated well ahead of premium increases.

Sanlam Investment Management shone with a 66% increase in net results, moving to R171-million. 

Hanratty noted that the division thrived on the back of higher asset-based revenue, as well as performance and fund establishment fees. Sanlam Wealth Management proved another star performer, with higher brokerage income boosting its “net result” 12% to R102-million.

Hanratty says the underlying businesses had good organic growth characteristics with new business and net client cash flows showing strong performance. 

“The merger of the Absa asset management business into Sanlam will create an even bigger business. Acquisition of the Alexander Forbes life insurance book has proved profitable. Sanlam’s Wealth Bonus system is not a rewards programme, but a way for customers to translate their loyalty into meaningful future value,” he says.

Looking ahead, management expects consumer pressure from elevated inflation and market uncertainty to result in muted levels of new business growth over the remainder of the year, largely impacting on investment business. 

“However, the resilience of the South African and broader Pan-African economies, especially those that benefit from higher commodity prices, coupled with our diverse product offering, market segment presence and strong distribution capabilities, should continue to provide support to the absolute level of sales volumes. 

“In the medium term, we expect consumers will be able to review their life insurance and general insurance coverage, supporting medium-term growth in volumes in these areas,” Hanratty reassured media and analysts. BM/DM