Hilary Joffe Editor-at-large
Ian Kirk. Picture: RUSSELL ROBERTS
Ian Kirk. Picture: RUSSELL ROBERTS

SA will still account for more than half of Sanlam’s profits within four to five years, but its contribution will decline from about 65% now as the group builds its businesses in emerging markets, particularly Africa.

"We are dialling up on Africa," Sanlam CEO Ian Kirk said in an interview last week, following the release of annual results.

They showed Sanlam Emerging Markets posted a 30% rise in net operating profits to R1.5bn for the year to end-December, making it the group’s second-most significant cluster after its Personal Finance business in SA, which increased net operating profit 7% to R4bn. Emerging market new business volumes rose 63% to R23bn.

With the group putting in one of the best showings of the large listed life assurers for the latest period, analysts are asking how it is going to consolidate and grow the businesses it now has in Africa and other emerging markets, as well as where the growth will be in the more mature South African market.

 In 2016, Sanlam took its stake in Morocco’s Saham Financial Services to almost 47% in a $1.3bn deal, after it first bought into Saham three years ago.

Sanlam started expanding in Africa in 2005. Through its own direct stakes and the operations of Saham, which is Africa’s largest insurance company outside SA, the Sanlam group now has a presence in more than 30 countries in Africa outside SA.

Kirk said the only markets in Africa that it still wanted to break into were Egypt and Ethiopia. Saham would take the group into Egypt, while Sanlam itself would go into Ethiopia when the opportunity presented itself, though Ethiopia’s insurance market was still very closed to foreign investment.

Though Sanlam has significant operations in India and Malaysia, Kirk said the real focus was on Africa.

Over the past three years, the group’s strategy has been to position itself as the "go-to market for corporates", providing South African corporates and others in Africa with insurance for their premises (via subsidiary Santam) and other liabilities, as well as retirement fund, asset management, health and individual insurance products.

The group targets the big international brokers (such as Marsh and Aon, which service corporate clients) as well as networks of brokers in Africa, enabling them to place cover with Sanlam across their networks on consolidated terms.

In SA, each segment of the market is growing but the main movement is from entry level to the middle market segment. There was very little movement from the middle market to the affluent segment, Kirk said.

He was not surprised at the Treasury’s estimate that just 103,000 individuals earn upwards of R1.5m and so are affected by the new top tax bracket of 45%. He said the top end of the market was small and fiercely contested. But Sanlam’s operations at that end of the market did particularly well.

Sanlam has the largest affluent market share, market players estimate. Old Mutual dominates the mass market, followed by Sanlam. Sanlam, Old Mutual and Metropolitan lead the middle market.

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