Sanlam's Annual Results for 2009

The Sanlam Group delivered a solid and stable performance in 2009. The resilience of Sanlam’s business model stood out clearly with its persistence commended by both shareholders and analysts.

The Group’s full results are available on its website http://www.sanlam.co.za/ and a summarised performance review follows at the end of this release.

Salient features

Earnings

· Net result from financial services per share decreased by 1%

· Core earnings per share down 3%

· Normalised headline earnings per share up 133%

· Dividend per share up 6% to 104 cents per share

Business volumes

· New business volumes up 3% to R103 billion

· Value of new covered business down 1% to R689 million

· New covered business margin of 2,61%

· Net fund inflows of R15,5 billion, up 70%

Group Equity Value

· Group Equity Value per share up 12% to R24,73

· Return on Group Equity Value per share of 16,2%

Capital management

· Discretionary capital of R3,5 billion at 31 December 2009

· Sanlam Life CAR cover of 3,1 times

Dr Johan van Zyl, Group Chief Executive of Sanlam comments on the Group’s strategy behind these results:

“In the context of the challenging environment caused by the turmoil in world financial markets, the Sanlam Group achieved a pleasing operational performance for the 2009 financial year.

“Our strategy, which has proved to be resilient and sustainable, was fundamental in distinguishing our performance from that of many of our peers in 2009. Our strategy will therefore continue to centre around five pillars: optimal capital utilisation, earnings growth, costs and efficiencies, diversification and transformation.

“We maintained our prudent approach to the application of discretionary capital and focused on further optimising the capital base of the Group. Limited investments were made in existing operations and future growth markets during the period under review. As a result Sanlam now has access to discretionary capital of R3,5 billion. While it was prudent to use this capital as a buffer during 2009, we will be looking for profitable growth opportunities and other ways of efficiently redistributing some of this capital in 2010.

Van Zyl said that the Group’s ongoing focus on reducing costs, while at the same time upping efficiencies, significantly buffered its operations when the economy and financial markets were placed under intense pressure by global events. Given the increased strain on capital in 2009, the Group intensified its cost-saving efforts. Sanlam Investments and Sanlam Personal Finance, which have been impacted most by lower assets under management and new business volumes, made a concerted effort to reduce costs even further. Containment of costs in all other business units was also a priority, although not to the detriment of future growth opportunities.

“Diversification is key to ensuring sustainable future growth. The successful diversification of our business since 2003 has helped us achieve a significant rebalancing of our mix of new business, with an increasing contribution (83%) channelled via our non-life operations. Our geographic diversification through Sanlam Developing Markets once again paid off. The majority of operations within this business cluster delivered reasonable new business results in 2009 despite the tough economic conditions experienced by most of the markets in which these businesses operate,” Van Zyl added.

“In 2009 Sanlam International Investment Partners formed an investment partnership with UK-based investment manager, FOUR Capital Partners. The transaction is in line with our strategy of acquiring stakes in specialist asset managers in selected global markets.”

Van Zyl said that transformation remains one of the key pillars of Sanlam’s business strategy, because only true qualitative change across all spheres of our business will facilitate sustainable growth into the future and it therefore remains a focus area for the Group.

“While 2010 will not be an easy year, we do believe that we are well placed to deliver another set of solid results this year. We remain well positioned to aim for growth and will therefore start accelerating slowly to start achieving the sustainable growth for which we have positioned the Group over the past seven years”, Van Zyl concluded.