Sanlam Group cautions as new business volumes surge by 33%
JOHANNESBURG – Sanlam Group saw new business volumes surge by 33 percent to R96 billion during the first quarter, but warned yesterday that Covid-19 restrictions would dent volumes for the 2020 financial year.
Sanlam’s shares fell 3.21 percent to close at R59.74 on the JSE on Wednesday.
The JSE-listed insurance giant said the lockdowns and curfews imposed since the end of March and throughout April had taken a toll on new business sales performance.
“New business production in April and May were in general between 50 and 70 percent lower than targets across many businesses,” said the company.
However, the effect of the lockdowns and curfews was not yet fully reflected in these results due to timing differences between the writing and recognition of new business.
Sanlam said at group level, overall new business volumes in April had declined to 12 percent lower than the average for the three months to March 31.
Sanlam Sky was more severely impacted, with new business sales some 90 percent lower than the target.
But Sanlam chief executive Ian Kirk said the results were pleasing considering the context of the operating environment faced by the group.
“This bears testimony to the resilience of our diversified operations and the skills and exemplary dedication of our employees under challenging conditions,” Kirk said.
The net result from financial services declined by 21 percent in the first four months of the 2019 financial year. Excluding the negative investment market impact highlighted above, the net result from financial services increased by 13 percent.
Sanlam Personal Finance’s net result from financial services declined by 13 percent, largely due to lower income from life investment products in Glacier Excluding this, net result from financial services increased by 5 percent.
The company said risk profits in the recurring premium business increased strongly, supported by growth in the size of the book as well as continued positive claims experience.
“No Covid-19 mortality claims have been received up to the end of April 2020. A small number of sickness benefit claims were lodged,” it said.
Sanlam said that Santam’s earnings for the period were affected by the Covid-19 pandemic as a number of claims for events cancellation and travel insurance were covered in terms of its policies and were in the process of being settled in line with the policy conditions.
It also said eventual claims experience from Covid-19 also remained uncertain, both at Santam and its life insurance operations.
The group had set aside a pandemic reserve of some R760 million to absorb any increased claims due to Covid-19 at the life insurance businesses.