Sanlam achieves solid operational performance for the 10 months to 31 October 2017

Salient features of the Group’s performance.

• Net result from financial services up 7% compared to the same period in 2016 (10% in constant currency)
• New business volumes down 2% to R190 billion
• Net Value of New Life Business increased by 13% (17% in constant currency)
• Normalised headline earnings per share up 22%

The Sanlam Group today announced a solid operational performance for the 10 months to 31 October 2017 despite a sustained challenging operating environment in some of its key markets, including South Africa.

The Group reported that net result from financial services increased by 7% on the first 10 months of the 2016 financial year (up 10% in constant currency). This was attributed to improved contributions from Sanlam Personal Finance (SPF), Sanlam Emerging Markets (SEM) and Sanlam Investments (SI), which supported the overall acceleration in growth compared to the six months ended 30 June 2017.

SPF increased net result from financial services by 4%. Excluding the increase in new business strain, SPF achieved growth of 9% in the first 10 months of 2017 compared to the same period last year. SEM’s net result from financial services increased by 22% (35% in constant currency), supported by structural activity. Organic growth of 16% in constant currency was achieved. SI’s contribution to net result from financial services increased by 3% (up 8% in constant currency).

Santam’s net underwriting margin for the 10-month period was within the target range of 4% to 8% despite a number of catastrophe claims in 2017, reflecting the benefits of its well-diversified book of business and reinsurance strategy. Further weather-related large claims since June 2017 were partly offset by increased allowance for reinsurance recoveries in respect of the first-half 2017 catastrophes.

Sanlam Employee Benefits and Sanlam Healthcare achieved good growth of 14% in net result from financial services.

New business volumes were down 2% to R190 billion on the first 10 months of 2016. This was largely due to lower lump-sum inflows at Glacier and the Botswana asset management business.
Net Value of New Life Business (VNB) increased by 13% compared to the same period in 2016 (17% in constant currency). Overall VNB margins improved by some 20 basis points, in line with the change in mix to more profitable business.

Robust growth in SPF’s more profitable recurring premium risk business continued in both the entry-level and middle-income market segments. Sanlam Sky’s new business sales increased by 12% on the comparable 2016 period. Investor confidence, however, remained under pressure in the mass affluent segment in the uncertain economic and political environment, with discretionary and life business sales in this market exhibiting similar trends to the first half of 2017. As a result, Glacier’s new business volumes declined by 11% and overall new business volumes at SPF declined by 7%.

SEM recorded an overall decline of 3% in new business volumes. The net positive impact of structural activity (Saham Finances, direct stakes in Shriram Life and General Insurance, Sanlam Investments East Africa and the disposal of the Group’s stake in the Enterprise Group in Ghana) was more than offset by the base effect of the R4.6 billion Botswana Public Officers Pension Fund mandate received in the comparable 2016 period. Excluding these one-off impacts, new business volumes increased by 17% (25% in constant currency).

SI new business growth saw an improvement from an 8% decline at the end of June 2017 to a decline of only 2% for the 10 months to October 2017. Sanlam Employee Benefits achieved pleasing growth of 11% in its new business contribution.

Says Sanlam Group CEO, Mr Ian Kirk: “We are pleased that we have produced very solid results in a challenging operational environment and credit must go to our staff and executives who have kept their heads down and focused on executing our strategy. We believe this enables us to sustain performance in challenging times.”

As at 31 October 2017, the Group’s available discretionary capital was largely unchanged from the 30 June 2017 position of R2 billion.

Conference call

A conference call for analysts, investors and the media will take place at 17h00 (South African time) today. Investors and media who wish to participate in the conference call should register as indicated below.

Audio dial-in facility

A toll free dial-in facility will be available. Please register at

http://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=9103126&linkSecurityString=27d8aa5fa for the call. For assistance, please contact Sanlam Investors Relations at +2721 947 8455.

Recorded playback will be available for three days after the conference call.

Access Numbers for Recorded Playback:

Access code for recorded playback: 19032#