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Operational Update – December 2012
Sanlam Limited
(Incorporated in the Republic of South Africa)
Registration number 1959/001562/06
JSE share code: SLM
NSX share code: SLA
ISIN: ZAE000070660
(“Sanlam” or “the Group”)
Operational Update – December 2012
The Group achieved a solid operational performance in the ten months to 31 October
2012. Global as well as local financial conditions remained uncertain with an adverse
impact on the business environment in most of the economies where we operate and
consequently on the results reported for the ten months. This has in part been
compensated for by relatively strong South African equity and bond markets.
Results
The salient features of the Group’s performance for the ten months to October 2012
are:
- New business volumes of R102 billion (excluding white label), up 16% on 2011.
o Personal Finance recorded a 16% increase in new business sales. Entry level
new individual life recurring business increased by 17%, partly offset by a decline
in group life business. Middle income volumes increased by some 16%,
supported by strong growth in single premium business, with a 17% increase in
new business in the affluent market segment.
o Emerging Markets continue to achieve strong new business growth. The Rest of
Africa businesses, in particular, recorded aggregate growth in excess of 50%,
which is somewhat offset by lower growth levels achieved in the relatively mature
businesses in Botswana and Namibia.
o The Investments cluster achieved new business growth of some 16%, supported
by a similar level of growth in both Employee Benefits and the investment
management operations. Net business flows of R7.7 billion (excluding white
label) were down on the R8.7 billion achieved in 2011, but still a satisfactory
result in the current environment.
o An increase of 32% in the value of new life business to date (at a marginally
better average new business margin) reflects strong growth in new life insurance
business but also benefits from a lower risk discount rate and some positive
basis changes made towards the end of 2011.
o Net fund inflows (excluding white label) of R21 billion were achieved compared
to R19 billion in the comparable 10-month period in 2011.
- Net result from financial services up 10%.
o Overall increase is as expected at a lower level than the 13% reported for the six
months to June 2012 due to an increasing 2011 base.
o Strong earnings growth contributions continued from Personal Finance and
Emerging Markets.
o Growth in the Investment cluster’s operating earnings is negatively impacted by
once-off items in the 2011 comparative base.
o Santam had some exposure to recent hail and flooding events which impacted
adversely on its underwriting results.
- Normalised headline earnings per share up 19%.
o The investment return earned on the capital portfolio benefited from the strong
equity market performance in the first ten months of 2012 compared to the same
period in 2011.
Capital
All of the Group operations remain well capitalised. Sanlam Life Insurance Limited’s
statutory capital covered its Capital Adequacy Requirements by 4.2 times on 30
September 2012.
The Group had excess capital of some R6 billion available for redeployment at the end
of June 2012. Utilisation since then included the cash settlement of the Shriram Capital
transaction announced in the latter half of 2011 for R2 billion, as well as a number of
smaller transactions totalling some R250 million, including the acquisition of the 50%
interest in Satrix Managers that the Group did not own. Net of capital earmarked for the
recently announced potential acquisition in Malaysia, the resultant discretionary capital
balance amounts to some R3 billion. A number of opportunities are being investigated
that could utilise a substantial portion of available discretionary capital.
Outlook
We do not anticipate any easing in the strained global economic conditions for the
remainder of the year and the operating environment are therefore expected to remain
challenging. This is likely to impact on growth in the Group’s key operational
performance indicators. The Group also achieved a very strong operational result
towards the end of the 2011 financial year, both in respect of new business sales and
operating profit. This was partly attributable to some positive operating assumption
changes at year-end.
Shareholders also need to be aware of the impact of financial market returns and
volatility on the investment return component of the Group’s earnings and Group Equity
Value. Relative market movements may have a major impact on the growth in Group
Equity Value and normalised headline earnings to be reported for the full 2012 financial
year.
The information in this operational update has not been reviewed and reported on by
Sanlam's auditors. Sanlam’s financial results for the year ending 31 December 2012 are
due to be released on 7 March 2013. Shareholders are advised that this is not a trading
statement as per section 3.4 of the JSE Limited Listings Requirements.
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 dial the following numbers:
Audio dial-in facility
A toll free dial-in facility will be available. We kindly advise callers to dial in 5 - 10
minutes before the conference call starts at 17:00.
Access numbers for participants dialing live from their country:
Toll +27 (0)11 535 3600
South Africa and other
Toll-free 0800 200 648
Toll 1 412 858 4600
USA
Toll-free 1 800 860 2442
UK Toll-free 0800 917 7042
Recorded playback will be available for three days after the conference.
Access Numbers for Recorded Playback:
Access code for recorded playback: 2560#
South Africa and other Toll +27 (0)11 305 2030
USA Toll 1 412 317 0088
UK Toll 0808 234 6771
For further information on Sanlam, please visit our website at www.sanlam.co.za
Bellville
5 December 2012
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
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