DURBAN – Sanlam chief executive Paul Hanratty said on Thursday that tough times lay ahead economically as the financial services group swung into an interim loss of 170.9 cents a share, hurt by the Covid-19 outbreak on its operations.
Last year the financial services group reported basic earnings per share of 166.2c.
The group did not declare an interim dividend.
Sanlam said it had started the 2020 financial year from a solid base, with growth accelerating for most businesses in the second half of 2019.
“However, the outbreak of the Covid-19 pandemic, followed by the declaration of states of disaster and emergency in a number of countries where we operate, abruptly transformed the operating environment into one of the most challenging periods faced by the group and our stakeholders,” the group said.
Hanratty said Sanlam was satisfied with the resilience reflected in its underlying operational performance despite the challenging operating environment.
“Our prudent approach to capital management served us well during the turbulent times, with a group solvency cover ratio of 187 percent at the end of June and with the ratio remaining resilient throughout the worst of the market turbulence. This positions us favourably to take advantage of opportunities that may emerge from the current challenging environment,” Hanratty said.
In the six months to end June its net result from financial services decreased by 22 percent to R3.9 billion, hit by the downturn in equity markets across its largest markets, however, excluding the impact of Covid-19 on certain earnings components the financial services would have increased by 18 percent.
Net operational earnings decreased by 39 percent to R3.51bn.
Its new business volumes increased by 40 percent to R157bn and all clusters contributed strong growth, with the exception from Santam.
Sanlam Personal Finance’s net result from financial services decreased by 12 percent and Sanlam Emerging Markets net result from financial services declined by 28 percent, while Sanlam Investment Group net result from financial services slid by 77 percent.
Life insurance sales were the most severely impacted, with monthly sales volumes lagging targets by between 50 and 90 percent across many lines of business in April, May and June.
During the period Sanlam provided almost R4.5bn to help clients and to rejuvenate the economy.
Looking ahead, Hanratty said all of its key markets were currently experiencing a period of contraction, with a recovery to 2019 levels of economic activity only expected in the medium term.
“Our focus will remain on strategic execution and utilising the strength of Sanlam’s balance sheet to pursue value-enhancing opportunities. We have the necessary depth of talent to continue delivering value to our shareholders and other stakeholders despite the current headwinds,” Hanratty said.
Sanlam shares declined by 0.27 percent on the JSE on Thursday to close at R56.41.