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New R4.6b BPOPF mandate powers Sanlam’s Investment Business

Sanlam Emerging Markets (SEM), the South Africa’s financial services group said its overall new business grew owing to a number of factors including weaker rand of new portfolios from key markets like Botswana. The company said new business grew by 67%, supported by a weaker average Rand exchange rate and the impact of corporate activity.

It said that excluding corporate activity, new business volumes increased by some 50%. All major businesses contributed good growth, apart from Zambia and Malawi, that continue to struggle in difficult environments, and Malaysia, where general insurance premium growth are impacted by weak motor cycle sales and a slower than anticipated diversification of the product set.

“New life business volumes increased by 5%, the combined effect of lower annuity sales in Botswana and good growth in the other regions. Investment business grew by 96%, supported by a R4.6 billion new mandate from the Botswana Public Officers Pension Fund,” the JSE listed company revealed  in operational performance for the first 10 months of the 2016 financial year.

SEM is responsible for Sanlam’s financial business services (life assurance, general insurance, banking, credit, health, bancassurance and asset management) in emerging markets outside South Africa. Its objective is to ensure sustainable delivery and growth across the various businesses that make up this cluster.

It has businesses in Botswana, Namibia, Malawi, Kenya, Rwanda, Tanzania, Zambia, Ghana, Nigeria, Uganda, Mozambique, India and Malaysia and has an indirect presence via our associate companies in The Gambia, Burundi, Lesotho, Swaziland and the Philippines.

In Botswana, it is a majority shareholder in Botswana Insurance Holdings Limited (BIHL) with a 58% with the remaining 42% is held by Botswana citizens. BIHL in turn owns Botswana Insurance Fund Management (Bifm) and Botswana Life.

Sanlam’s value of new life business (“VNB”) on a consistent economic basis increased by 8% on the comparable period in 2015 (6% up based on actual 31 October 2016 economic basis). VNB margins have been largely maintained on a per product basis.

Overall net fund inflows of R32 billion were up from the R11 billion achieved in the comparable 10-month period in 2015, with most businesses contributing to the higher net inflows. The comparable 2015 period included the Botswana Public Officers Pension Fund withdrawal from Sanlam Emerging Markets and Sanlam Investments as well as the Public Investment Corporation withdrawal from Sanlam Investments.

In 2015, the Botswana Public Officers Pension Fund (BPOPF) withdrew R11,5 billion from the Bifm.

Sanlam Emerging Markets’ net VNB grew by a moderate 5% on a consistent economic basis. Lower individual life new business volumes in Zambia and Kenya resulted in negative VNB contributions from these regions, offsetting an otherwise solid performance. Sanlam Employee Benefits achieved an improved performance, supported by good growth in recurring premium Group Risk business.

Outlook

Sanlam said it expects the economic and operating environment to remain challenging for the remainder of 2016 with a resulting impact on the Group’s key operational performance indicators. It said a number of factors are likely to impact on the Group’s ability to maintain the 10-month growth rate in net result from financial services for the full 2016 financial year, including average investment market levels, the strengthening in the Rand exchange rate and the high comparable 2015 base for performance fees at Sanlam Investments.

“Shareholders also need to be aware of the impact of movements in the Rand exchange rate, the level of interest rates and financial market returns and volatility on the Group’s investment return and Group Equity Value. Relative movements in these elements may have a major impact on the growth in normalised headline earnings and Group Equity Value to be reported for the full 2016 financial year.”

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