Sanlam to pay dividend as it reports strong start to new year
New business volumes are up almost a third in first two months of 2020
New business volumes rose almost a third in Sanlam’s first two months to end-February, and the insurer said it would pay its 2019 dividend despite the Covid-19 outbreak further threatening SA’s fragile economic outlook.
The insurer said in a trading update on Monday it had a strong start to its 2020 year, with growth across most of its businesses.
The group will pay a dividend of 334 per share on April 20, while many JSE-listed counters have opted to delay or cancel dividends to preserve cash.
New business volumes rose 30% to end-February, but the group warned that economic growth in all its markets will be lower than anticipated, with some, including SA, expected to enter recessions.
Although significant volatility is being experienced in global financial markets, the group said the capital portfolio backing Sanlam Life’s R8bn in requirements was invested in zero cost collars — and therefore volatility had minimal effects.
Zero cost collars refer to a strategy of capping both losses or gains through call and put options, to ensure an asset is within a certain price range.
The group said it also had a pandemic reserve of R760m, that was created specifically for an event such as Covid-19, which was available to cover increased mortality as a result of the viral outbreak.
Sanlam said it remains well capitalised and resilient despite the volatility being experienced on global markets.
“This is an outcome of our prudent reserving basis and capital management philosophy, well-embedded and appropriate risk management processes, as well as our diversification across geographies, market segments and lines of business,” the group said.
In morning trade Sanlam’s share price fell 2.90% to R46.55, having lost 41.26% so far in 2020. Over the same period, the JSE’s life insurance index has lost 40%.
Update: March 30 2020
This article has been updated with additional information