Pan-African financial services group Sanlam stood firm as it navigated a tough 2022 of “extreme turbulence” amid high insurance claims and investment volatility.
Challenges it faced last year included significant volatility in global equity, credit and interest rate markets as well as flooding in KwaZulu-Natal.
In its results for the year ended December 2022, life insurance new business volumes slid 10% to R64.8bn, while the value of new covered business fell 14% to R2.4bn.
This as the group increased its dividend by 8% to 360c per share, while its headline earnings increased by 2.8% to R 9.3 billion.
Its general insurance net result from financial services declined by 32%, impacted by several factors including significant claims inflation, adverse weather conditions as well as investment market volatility.
Sanlam said although the South African economy remained relatively resilient for 2022, supported by buoyant commodity prices, economic activity was impacted by the significant KwaZulu-Natal flooding in April and the most severe electricity supply disruptions on record.
"The surge in inflation over the period had a more severe impact on clients with lower incomes, who spend a larger proportion of their incomes on food and transport, impacting their ability to retain payments on existing policies," the insurer said.
It said the economies in its emerging markets portfolio experienced similar economic headwinds, but the diversity of the group’s portfolio assisted, with resource-producing countries across its portfolio, including Nigeria, Angola, and some of the Southern African countries benefiting from higher commodity prices.
Sanlam CEO Paul Hanratty: “We are delighted with the group’s performance, the strength with which we have emerged from this period of extreme turbulence, and the strategic platform developed for future growth.
“We have been successfully focusing on the delivery of our new ambitious strategy, which was adopted in 2020, despite the external challenges posed during the period. This will create a better path for future growth for the company.”
Sanlam delivered an 8% increase in its net results from financial services, its key earnings metric, which rose to a record high of R10.191bn in 2022. It said life insurance rose by 25%, credit and structuring operations increased by 19%, and investment management operations rose by 18% on a comparable basis.
Net results from financial services reached a new historic high, exceeding R10 billion for the first time, it said.
Sanlam’s investment management business saw a 56% drop in net flows to R21.97bn in 2022, compared to 2021's R49.7bn.
In the new business segment, it said volumes in life insurance operations were 5% lower than in 2021, excluding the disposed UK businesses, but remained well above pre-pandemic levels.
"Volume growth declined as savings rates returned to more normal levels following the cessation of the Covid lockdowns. The net value of new covered business was only 1% lower on a comparable basis. The emerging markets portfolio made a strong contribution to the group’s new business growth," Sanlam said.
The group said approvals for Allianz JV, a German financial services group, remained on track, and the group expected implementation around mid-2023. Sanlam entered into this joint venture, in a bid to expand its Pan African business.
Sanlam expected the consumer environment to remain challenging, but expected some recovery in the global economic environment later in 2023.
Looking ahead, Hanratty said Sanlam was in a strong position competitively and financially as it began 2023.
"Following a period of turbulence in the environment and corporate activity aimed at re-positioning the group, we are in a position to capitalise on any recovery in the environment. We are also in a position to return a small amount of excess capital to shareholders in due course,” said Hanratty.
Sanlam’s shares yesterday were largely flat, down 0.02% at R58.37 in the later afternoon.
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