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Power please

09 March 2006 Angelo Coppola

Johan van Zyl, group CEO of Sanlam the R36bn market cap financial services business, which has an embedded value of R38.2bn, says that IFRS has played its part on the results that the company reported on, although it did report a 99% growth in headline e

He says that they are establishing a presence in Johanneburg, and not because of the power outages that have plagued Cape Town recently, but because they want a piece of the action, and its seems to be paying dividends - they have grown sales in Gauteng, by 20%, mainly from the broker network.

Turning to the numbers he said that the business received R10bn from the sale of their Absa stake, of which R4.4bn was spent on a share-back. Van Zyl also confirmed that they would continue with the shares buy-back.

In terms of acquisitions Sanlam bought the remaining shares that they didnt own in African Life and a 51% acquisition of Channel Life, and the Safrican Life Assurance business for the piece of the action in the entry level market.

Entry level
The entry level market has received a lot of attention. This has been focused on following the sale of the Metropolitan business more than 10 years ago. The acquisitions during the past year have seen a strong shift in focus to this sector and the footprint has been increased.

Van Zyl also announced that Heinie Wert has been appointed as the CEO of their entry level markets at a group level.

The African Life numbers arent in the numbers yet though, and the same applies to the 51% Channel Life stake, which will appear in the numbers in January, Van Zyl said.

African Life
The integration of African Life in Sanlam was a challenge, as it had a top heavy management structure. The group solutions business and the Aflife business have been merged, and the management has been focused and split into South African and non-South African business, while the asset management business has been moved to SIM.

The asset liability matching is now in line with the rest of Sanlam, and R1bn in access capital has been identified in Aflife, 50% of which is available and liquid, with the rest locked into longer term assets. According to Van Zyl the integration has already saved R50m.

The future in terms of branding is still under research, although it does show that there is still huge value in the Aflife brand, while there is still strong value in the Sanlam brand. He confirmed that a decision was imminent, in terms of the branding.

In terms of the middle market Van Zyl said that the advisor numbers had been grown from 1703 to 1976 brokers, while their productivity is up and recurring premium per policy has also increased.

PFA exposure
On the question of the PFA rulings he said that Sanlam had been affected, as was the whole industry. He also proudly announced that the company fully supported the SOI, and that it was recently ratified by their board, although Van Zyl says that there are still some uncertainties.

In terms of their exposure Van Zyl confirmed that the Sanlam exposure was R500m in terms of the embedded value loss.

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