Sanlam reports resilient 2020 annual results

Cape Town - Sanlam has today reported solid annual financial results for the 12 months ended 31 December 2020. In releasing its results, Africa’s biggest insurer stated that its performance reflects its diversity and the underlying resilience of the Group’s businesses, which remained financially strong throughout the unprecedented health, economic and market challenges posed by the Covid-19 pandemic.

In a statement released today, the insurer said in dealing with the Covid-19 pandemic, it was guided by its purpose: Empowering Generations to be Financially Confident, Secure and Prosperous. The Group rolled out technology and support to ensure that clients could be provided with appropriate advice to deal with the financial impacts of the pandemic. It said premium relief was provided to clients and financial support to intermediaries. The insurer said it also committed R2,25 billion to seed three impact funds named the Investors’ Legacy range, with the core objective of preserving and creating jobs.

Santam made relief payments of R1bn to clients in the hospitality and leisure sector and set up a provision of R3bn to settle all the Contingent Business Interruption claims. In association with key partners, Sanlam also supported communities across Africa with over R1bn of direct Covid-19 relief, while also paying an unusually high number of death claims.

“Sanlam continued to manage its operations across the Group prudently while continuing to implement its long-term strategic plans. As a result, the Group remained strongly capitalised despite stock and bond market turbulence. Group solvency cover ratio was 191% at 31 December 2020, which is at the top end of the target range set and is indicative of the security provided to customers.

“Net result from financial services, the Group’s key measure of operating earnings performance, declined by 13%, affected by several factors owing to the Covid-19 pandemic. These included the downturn in equity markets across most markets where the Group operates, an increase in doubtful debt provisions regarding the Group’s institutional and retail credit books, Santam’s CBI claims experience, higher mortality claims from the Covid-19 pandemic, as well as substantial Covid-19-related relief offered to clients and intermediaries.”

The Group stated that its new business volumes increased by 25% to R311 billion exceeding R300 billion for the first time, supported by strong investment business sales. “The Capitec partnership continued to deliver positive growth, reflecting the mutually beneficial partnerships Sanlam seeks to build.”

“The Group achieved overall net fund inflows of R62 billion, an increase of 8% on the prior year, a particularly satisfactory performance in the challenging economic conditions of 2020.”

Strategy

The Group stated that it has made solid progress formulating and implementing its revised strategy. Its business in Africa (excluding South Africa) made strong progress with improvements in operational performance while posting strong growth. The underwriting margin increased from 2% in 2019 to 6.1% in 2020. Within South Africa, the Group concluded one transaction with Ubuntu-Botho (UB) / African Rainbow Capital (ARC) aimed at strengthening the Group’s competitiveness and earnings in institutional asset management.

Together with its partners, the insurer has established South Africa’s largest black owned asset manager. It is in the process of concluding another transaction with Ubuntu-Botho / ARC which enhances exposure to health insurance and employee benefit segment income streams for Sanlam. Progress continued at pace on digitalisation of the business to improve customer outcomes and to improve operational efficiency.

Outlook

Sanlam stated that it expects a slow recovery of real GDP across our markets and that there will continue to be impacts from further waves of the Covid-19 pandemic.

“We continue to proactively manage the consequences of Covid-19. Despite a tough 2020 and realisation that we have much to do going forward, we are optimistic about what we can achieve in 2021. The environment will continue to be extremely difficult, but we have a strategy, committed people and some momentum behind our strategic plans,” said Mr. Hanratty.

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