Sanlam’s earnings rise 40% after robust first half
Life insurance new business volumes were strong across all regions
05 September 2024 - 10:12
byJacqueline Mackenzie
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Sanlam's offices in Parktown, Johannesburg. Picture: FREDDY MAVUNDA/BUSINESS DAY
Sanlam has delivered robust operating performance at the halfway stage, with 40% growth in headline earnings reflecting strong trading performances across its businesses.
Positive movements in shareholders’ fund reserves, including the acceleration of profit recognition of the Capitec funeral joint venture (JV) reinsurance recapture fee, resulted in headline earnings per share (HEPS) increasing 40% to 473c, it said in a statement on Thursday. Headline earnings rose to R9.84bn from R6.9bn, it said.
Total new business volumes were up 7% at R204bn, as a 15% increase in sales in the life insurance operations underpinned growth. Life insurance new business volumes were strong across all regions.
Net value of new covered business was up 10%, with a net new business margin of 2.73%.
Total net client cash flows grew by 111% to R23.97bn.
Business Day TV discussed the performance with Sanlam's Finance Director, Abigail Mukhuba.
“The group’s earnings momentum continued, growing net result from financial services (NRFFS) by 14%, reflecting strong trading performances across our businesses,” the group said.
The life and health insurance operations grew net results from financial services by 14%, general insurance reported a 16% rise, investment management performance was satisfactory with 10% growth, while the group’s credit and structuring operations recorded growth of 9%, it said.
NRFFS per share increased by 19% due to lower adjusted weighted average number of shares in 2024 relative to 2023.
Attributable earnings increased by 25% to R9.9bn. The lower increase relative to headline earnings is due to lower accounting profit on disposal of operations in 2024 compared with 2023.
Return on group equity value (RoGEV) per share and adjusted RoGEV per share was 9.3% and 10.7 %, respectively, for the first six months of 2024, ahead of the hurdle rate of 7.5%.
Positive contributors to RoGEV were strong value of new business, risk experience, working capital and credit spread experience in the life insurance operations, and in the non-life operations, higher valuation of the Indian credit business (Shriram Finance) due to improved performance and outlook, strong operating results from Santam, and cost efficiencies in the SA asset management operations, it said.
The group’s portfolio is diversified across SA, Pan-Africa and Asia. Sanlam said the retail mass segment in SA had reported an improvement in persistency trends since the second quarter of 2024, with fewer policy cancellations and lapses recorded in the individual life business.
Management’s focus on improving persistency in this segment would remain in place. The affluent segment has maintained stable persistency.
The conclusion of the Capitec funeral JV at the end of October 2024 was expected to result in a reinsurance recapture fee of R1.9bn being paid to Sanlam’s retail mass business in November.
While International Financial Reporting Standards required that the group recognise part of this recapture fee in attributable earnings at the half year, consistent with shareholders’ fund reporting, this amount would not be recognised in NRFFS until the cash payment was received in November 2024.
The proposed acquisition of Assupol would require focus and attention within the SA life insurance operations, with limited to no disruption to operational results, it said.
In its Pan-Africa operations, SanlamAllianz’s businesses are focused on integration and realising synergies. It remained positive about the growth prospects for the African countries in which it operated, despite the short-term challenges of high interest rates and inflation in many countries, as well as continued pressure on currency exchange rates.
The diversification of this portfolio was expected to provide some buffer to the regional performance volatility.
In Asia, Sanlam was “very positive” about the prospects of its Indian operations, with continued momentum in the economy and the expansion of distribution channels in the Shriram insurance businesses.
“With our strong momentum and continued investment in the business, we have confidence in the group’s overall performance for the remainder of 2024,” it said.
The earnings growth rate in the first half of the year was, however, slightly ahead of its full-year expectations. The group expected NRFFS for the second half to be at a similar level to the first half, excluding the Capitec reinsurance recapture fee.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Sanlam’s earnings rise 40% after robust first half
Life insurance new business volumes were strong across all regions
Sanlam has delivered robust operating performance at the halfway stage, with 40% growth in headline earnings reflecting strong trading performances across its businesses.
Positive movements in shareholders’ fund reserves, including the acceleration of profit recognition of the Capitec funeral joint venture (JV) reinsurance recapture fee, resulted in headline earnings per share (HEPS) increasing 40% to 473c, it said in a statement on Thursday. Headline earnings rose to R9.84bn from R6.9bn, it said.
Total new business volumes were up 7% at R204bn, as a 15% increase in sales in the life insurance operations underpinned growth. Life insurance new business volumes were strong across all regions.
Net value of new covered business was up 10%, with a net new business margin of 2.73%.
Total net client cash flows grew by 111% to R23.97bn.
Business Day TV discussed the performance with Sanlam's Finance Director, Abigail Mukhuba.
“The group’s earnings momentum continued, growing net result from financial services (NRFFS) by 14%, reflecting strong trading performances across our businesses,” the group said.
The life and health insurance operations grew net results from financial services by 14%, general insurance reported a 16% rise, investment management performance was satisfactory with 10% growth, while the group’s credit and structuring operations recorded growth of 9%, it said.
NRFFS per share increased by 19% due to lower adjusted weighted average number of shares in 2024 relative to 2023.
Attributable earnings increased by 25% to R9.9bn. The lower increase relative to headline earnings is due to lower accounting profit on disposal of operations in 2024 compared with 2023.
Return on group equity value (RoGEV) per share and adjusted RoGEV per share was 9.3% and 10.7 %, respectively, for the first six months of 2024, ahead of the hurdle rate of 7.5%.
Positive contributors to RoGEV were strong value of new business, risk experience, working capital and credit spread experience in the life insurance operations, and in the non-life operations, higher valuation of the Indian credit business (Shriram Finance) due to improved performance and outlook, strong operating results from Santam, and cost efficiencies in the SA asset management operations, it said.
The group’s portfolio is diversified across SA, Pan-Africa and Asia. Sanlam said the retail mass segment in SA had reported an improvement in persistency trends since the second quarter of 2024, with fewer policy cancellations and lapses recorded in the individual life business.
Management’s focus on improving persistency in this segment would remain in place. The affluent segment has maintained stable persistency.
The conclusion of the Capitec funeral JV at the end of October 2024 was expected to result in a reinsurance recapture fee of R1.9bn being paid to Sanlam’s retail mass business in November.
While International Financial Reporting Standards required that the group recognise part of this recapture fee in attributable earnings at the half year, consistent with shareholders’ fund reporting, this amount would not be recognised in NRFFS until the cash payment was received in November 2024.
The proposed acquisition of Assupol would require focus and attention within the SA life insurance operations, with limited to no disruption to operational results, it said.
In its Pan-Africa operations, SanlamAllianz’s businesses are focused on integration and realising synergies. It remained positive about the growth prospects for the African countries in which it operated, despite the short-term challenges of high interest rates and inflation in many countries, as well as continued pressure on currency exchange rates.
The diversification of this portfolio was expected to provide some buffer to the regional performance volatility.
In Asia, Sanlam was “very positive” about the prospects of its Indian operations, with continued momentum in the economy and the expansion of distribution channels in the Shriram insurance businesses.
“With our strong momentum and continued investment in the business, we have confidence in the group’s overall performance for the remainder of 2024,” it said.
The earnings growth rate in the first half of the year was, however, slightly ahead of its full-year expectations. The group expected NRFFS for the second half to be at a similar level to the first half, excluding the Capitec reinsurance recapture fee.
mackenziej@arena.africa
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