The group said that despite the tough environment in which the economy contracted by 3.2 percent in the first quarter of 2019, new business volumes increased by 4 percent.
New business volumes had increased by 4 percent to R111 billion, and net fund inflows were R23bn compared to R19bn in 2018.
Sanlam chief executive Ian Kirk warned yesterday that lower-than-expected progress on operational and financial challenges faced by state-owned enterprises, in particular Eskom, together with persistent political uncertainty, had continued to hamper any hope of improvement in South Africa's business and investor confidence.
He said that corporate governance failures in the private sector had also tarnished South Africa's investment case as an investment destination for foreigners.
“Coupled with volatile investment markets, higher unemployment and low growth in household disposable income, these issues severely limited new business growth prospects,” Kirk said.
Kirk said this was especially evident in the company's mass affluent and high net worth client segments and was consistent with its experience in the last three quarters of 2018.
“The weak economic conditions also increased credit risk at a number of corporate debt issuers, requiring a strengthening of credit provisions in Sanlam Specialised Finance (Sanfin),” Kirk said.
Other highlights of the interim period included the 13 percent increase in operating profit to R5bn, with good growth at all major businesses, apart from Santam, Sanlam Corporate, Sanfin and Saham Finances.
Most major businesses contributed to the growth.
Sanlam Personal Finance grew its net result from financial services by 9 percent, attributable to strong earnings growth at Glacier and Sanlam Sky.
Sanlam Sky grew its gross result from financial services by 8 percent and its new business increased by 3 percent, up 96 percent excluding the Capitec Bank credit life business of R566 million that did not repeat in 2019.
“The Capitec Bank funeral product, launched in May 2018, continued to exceed expectations, reaching new business sales of some R470m in the first half of 2019,” Kirk said.
Group operations yielded an overall return of 5.3 percent for the six months to June 2019, the combination of 9.6 percent return on covered business and 2.1 percent on other group operations.
The group said Santam’s net result from financial services declined by 13 percent.
Kirk said the group was satisfied with the performance considering the weak operating environment.
“The results reflect the resilience of our diversification strategy.”