Sanlam’s Big Green new guy
Who better to appoint than your rival’s former top dog? But Sanlam’s new CEO throws the Old Mutual door open, again
Ten months after dismissing Peter Moyo, Old Mutual still doesn’t have a CEO.
But it took less than three months for the board of its biggest rival, Sanlam, to choose its new head — ironically enough, a former Old Mutual lifer, Paul Hanratty.
Hanratty worked at Old Mutual for more than 30 years, but was turned down for the group CEO job in 2015. Not long after his term of restraint ended in 2017 after he had left the company, he joined the Sanlam board.
He’s been quick to sing Sanlam’s praises. "Over the past two decades Sanlam has successfully demonstrated that it is able to unlock value for shareholders and the rest of its stakeholders consistently," he says.
It has certainly been far more successful than his old shop since the two life offices demutualised in 1998/1999. Before the current market crisis Sanlam had provided a total return of 2,000%; Old Mutual’s was less than 500%.
But Hanratty says significant shifts in the operating environment in SA and elsewhere in its key markets in Africa and Asia will make it tougher for Sanlam to achieve its business objectives. "We’ll be guided by the group’s existing strategy and we’ll consider the necessary shifts where required and relevant," he says.
Kagiso chief investment officer Gavin Wood believes Sanlam’s exposure in the rest of Africa needs to be recalibrated, especially to oil-producing states such as Angola and Nigeria.
"But the general trend of the group, away from capital-intensive smoothed-bonus and guaranteed products, should be continued."
Coronation senior portfolio manager Neville Chester says Hanratty has a rare combination of strategic and operational experience, having run key areas such as product development and distribution. He has also had extensive experience in mergers & acquisitions in the now dismantled multinational Old Mutual Plc.
Hanratty became a Fellow of the Institute of Actuaries in 1987. He joined Old Mutual in 1984 on graduating from the University of Cape Town and went on to head Old Mutual SA in 2006.
His predecessor, Roddy Sparks, describes him as a "take no prisoners" manager.
Within a few months, Hanratty had moved the head office from Pinelands, Cape Town, to Sandton, a move Sparks had resisted.
Hanratty also decentralised the monolithic Old Mutual Asset Managers to a range of self-contained boutiques.
He moved to London in 2009 to take over the long-term savings cluster of the greater Old Mutual Group, which was everything in the company except Nedbank and Mutual & Federal. He then became COO, and was widely considered heir apparent to then CEO Julian Roberts. But at the final hurdle when Roberts retired, former Liberty chief Bruce Hemphill was brought in to head the group.
Says Wood, who worked for Hanratty as a junior actuary, developing the Old Mutual Investment Frontiers range of investment products in the late 1990s: "Paul is very smart, a good thinker and decisive. But I wouldn’t call him a people pleaser. Bruce, a much more patient and tactful person, was probably the right choice in 2015 for the task of dismantling the dysfunctional Old Mutual group."
Cromwell Mashengete, co-head of equities at Sanlam Investment Management, says he was surprised when Hanratty was not appointed Old Mutual CEO in 2015.
"But he is full of energy, and I am sure he is fully immersed in the Sanlam culture already."
Wood adds that Hanratty certainly won’t want to see through his five years or so in the job plodding away, looking for consensus.
Current Sanlam group CEO Ian Kirk’s contract ends in December 2020, but he is planning to step down in June. "With Paul’s experience he could take over tomorrow," says Kirk, "but it would be a bad time to hand over in the middle of the Covid-19 crisis." He adds, however, that Hanratty needs to be in office before the annual board strategy meeting in August.
"And I’ll continue to work on behalf of the industry at Asisa [the Association for Savings & Investment SA] until the end of the year as we navigate the unprecedented times we live in."
Kirk says the life industry needs to stand solidly behind the interests of its clients and ensure that it does all it can to live up to its promises. "Which is not to say we will start to collude. We will still seize any opportunity which comes our way."
Kirk says he inherited a strong business from his predecessor, Johan van Zyl, at the beginning of 2016. "I added to this by setting up the corporate cluster to give focus to our employee benefits and medical aid operations. And I concluded the acquisition of control of [Moroccan-based] insurer Saham, which Johan initiated."
Kirk says he definitely will not take a directorship of a competing financial services company. "I have been with the group for 15 years and don’t want to turn my back on it."
After the cooling-off period he will consider coming back to the Sanlam board. But he doesn’t rule out directorships at noncompeting industrial or mining companies.
Ideally, Sanlam would like Patrice Motsepe to accept the role as chair: he is surely by far the most powerful member of the board. But he has turned this down as his disparate business interests come into conflict.
Kirk believes that in Elias Masilela the board has made a good choice of chair. "As a regulated entity we need a good relationship with the National Treasury, the Financial Sector Conduct Authority and, of course, our primary regulator, the Prudential Authority."
Masilela is the former CEO of the Public Investment Corp and was a senior executive at the Treasury in its "dream team" days under minister Trevor Manuel and director-general Maria Ramos. He also worked for Sanlam as its primary lobbyist when there were extensive debates about setting up a national pension fund.
Masilela is a consummate networker: he was a member of the board of the Reserve Bank, the Government Employees Pension Fund, Airports Company SA, Absa Financial Services and the Eskom Pension & Provident Fund. Until recently he was chair of Economic Research Southern Africa. He was also a key player in several strategic initiatives, such as the financial sector charter and social security retirement and reform.
"Elias will be most valuable as our link to the public sector," says Kirk. "We think we punch below our weight when it comes to our state sector client profile in employee benefits and asset management."
Previous chair Van Zyl stays on as a nonexecutive director. His move from CEO to chair was contrary to the King governance principles, but he remains on the board as one of the representatives of Ubuntu-Botho, Sanlam’s largest shareholder along with Motsepe and Rejoice Simelane.
The appointment of African Rainbow Minerals (ARM) finance director (FD) Abigail Mukhuba as the new Sanlam group FD might seem odd. But Kirk says that all three of the previous Sanlam group FDs — Flip Rademeyer, Kobus Möller and Heinie Werth — learnt their trade at the now defunct Gencor mining group.
"She will have strong support from the current acting FD, Wikus Olivier [now head of group special projects], and the chief actuary, Anton Gildenhuys, so I am sure she will quickly get up to speed."
Kirk admits that it counted in Mukhuba’s favour that, as a senior executive of ARM, she is well known to Motsepe, who is, after all, Sanlam’s deputy chair and empowerment partner.
Old Mutual Equities fund manager Neelash Hansjee says Mukhuba potentially has a long tenure ahead at Sanlam as she is just 40.
Ironically, given Sanlam’s new appointments, all eyes will now be on whom Old Mutual decides to name CEO. First prize would be that a strong executive tipped for the Sanlam top job, such as Santam CEO Lizé Lambrechts, is so disappointed that she jumps ship — though that seems unlikely.
Chester says the current Old Mutual interim CEO, Iain Williamson — widely considered the strongest internal candidate — is a technocrat and not a leader, and he believes that Old Mutual has invested a lot of credibility in its promise to choose a black CEO.
There is speculation that former empowerment partners such as Gloria Serobe of Wiphold and Fred Robertson of Brimstone could come forward, but they don’t have the hands-on experience to run such a complex group. Before he became deputy governor of the Reserve Bank, Daniel Mminele was approached, but he is surely out of the picture now, so soon after joining Absa.
Hansjee says it is unfair to compare the speed with which Sanlam appointed its CEO to the snail-like pace at Old Mutual. "They have been distracted by some court cases, after all."