Sanlam reserves R760m for Covid-19

By Sandile Mchunu Time of article published Mar 31, 2020

Share this article:

DURBAN - Financial services group Sanlam yesterday flagged that it had coronavirus (Covid-19) reserves of R760 million to fight the pandemic.

The group said in a business guidance for the two months to end February that the reserve was created specifically for an event of this nature some few years back.

“This reserve is available to cover increased mortality experience emanating from Covid-19,” Sanlam said.

Sanlam said its portfolio remained resilient to the threatening external conditions as it reported a double-digit growth in its new business volumes, up 30percent compared to the first two months of 2019.

The group said the surge came on the back of Sanlam Emerging Markets and international business.

It said the economic growth in all of its markets would be lower than anticipated, partly because of the Covid-19 outbreak, adding that it expected some markets to enter recessions, including South Africa.

“This poses risk to growth in new business volumes as well as persistency experience. Increased pressure on corporate earnings will also heighten credit risk. New business volumes are furthermore restricted by the lockdowns in a number of markets, limiting advisers’ ability to conduct business,” Sanlam said.

“We do have a number of digital sales channels across the group, which include digital enablement of advisers. Sales through these channels will provide some relief.”

The group said that equity, interest rates and currency markets were expected to remain volatile in the foreseeable future.

It said Moody’s downgrading of South Africa’s sovereign rating to below investment grade would add to volatility in the country’s markets.

“Average investment market levels, the relative strength of the rand exchange rate, and the level of long-term interest rates are key factors that might have an impact on the growth in net result from financial services, operational earnings and group equity value to be reported for the six months to end June, and the year to end December,” the group said.

The group committed to pay a final ordinary dividend of 334 cents a share that was declared on March 11 for the year to end December. It said it would pay the dividend on April 20.

Sanlam shares rose 1.84percent on the JSE yesterday to close at R48.82.

BUSINESS REPORT 

Share this article:

Related Articles