Sanlam. Picture: SUPPLIED
Sanlam. Picture: SUPPLIED

Insurance group Sanlam suffered a 7% decline in interim top line, but still managed to grow its bottom line by 3%.

Sanlam has overtaken Old Mutual as the JSE’s largest life insurance group with a market capitalisation of R171bn. Old Mutual’s market cap has fallen to R147bn following its separation from Quilter.

Sanlam reported net income (top line) of R44bn for the six months to end-June, 7% down from the R47bn in the first half of its 2017 financial year.

Net profit was R5.5bn, 3% up from R5.4bn in the matching period.

The group does not pay an interim dividend.

"A lack of growth in formal employment, higher tax rates and inflationary pressure dampened disposable income and demand in our core middle-income market in SA," CEO Ian Kirk said in the results statement.

The group’s investment division suffered from a "larger than benchmark exposure to Steinhoff" in 2017.

Sanlam Investment Group was the only division to suffer a drop in after-tax income. Its contribution fell 12% to R522m.

"Solid overall new business growth was achieved by all clusters apart from Sanlam Investment, where improved investor confidence is not yet reflecting in an increased allocation of institutional mandates. Below-benchmark performance also contributed to the muted net inflows," Kirk said.

"Our portfolios were not well positioned for the run in the South African market post the political changes at the end of 2017 and beginning of 2018, while the larger than benchmark exposure to Steinhoff in 2017 also detracted from the performance levels."

Steinhoff Investment’s poor performance was offset by a 23% jump in profit to R644m from independently listed short-term insurer Santam.

Sanlam, via its Satrix division, competes in the index-tracking exchange traded fund market against more modern companies such as Sygnia.

"Strong inflows were experienced in Satrix index-tracking funds, with Satrix Managers consolidating its position as the leading business in the retail segment of this market," the company said.

But, "on the negative side, Sanlam Investment received notice of an R8bn outflow of low-margin index-tracking funds managed on an outsourced basis."

Kirk said: "Focus also remains on addressing the few areas within the wider group that failed to deliver to target in the first six months, so as to get them back on track for the financial year."