6 June 2012
The Group achieved pleasing results in a difficult operating environment for the four months ended 30 April 2012, with the identified growth markets delivering particularly satisfactory results:
As anticipated in our 2011 annual report global economic prospects for 2012 remain weak, as reflected in the instability in global investment markets and, in particular, on-going weakness in developed economies. Even though investment markets started the year on a positive note, recent renewed concerns around Eurozone debt and political change in a number of key European countries again fuelled increased volatility. These conditions impacted negatively on the economies of the markets in which the Group operates.
Salient features of the Group’s performance for the four months to April 2012 are set out below. As anticipated, underwriting margins earned by Santam Limited (“Santam”), the Group’s short-term insurance operation, pulled back to its longer term target range. Sanlam Capital Management’s operating earnings also declined from the high base in 2011. This had a marked impact on the growth in earnings reported for the period.
All of the Group operations remain well capitalised. Sanlam Life Insurance Limited’s statutory capital covered its Capital Adequacy Requirements by 3.7 times on 31 March 2012.
As at the end of December 2011, the Group reported discretionary capital of some R1,9 billion. An additional R1 billion was added since year-end through the special dividend paid by Santam and the disposal of illiquid property investments. No significant utilisation of discretionary capital occurred since the end of December 2011. Discretionary capital held within the Group thus amounts to some R3 billion, which will be redeployed in line with the Group’s capital management strategy. Progress is being made with the finalisation of the R2 billion Shriram Capital transaction announced in the second half of 2011, with final regulatory approval being the major outstanding item.
As indicated above, our expectation of a slow global economic recovery remains. The Group’s major exposure is still to the South African economy and investment market, which are not shielded from international events. The African economies in which the Group operates are also impacted by the demand for resources created through economic growth in the developed world and major emerging economies. Our operating environment is therefore expected to remain challenging and is likely to impact on growth in the Group’s key operational performance indicators.
Shareholders 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 earnings to be reported for the six months ended 30 June 2012.
The information in this operational update has not been reviewed and reported on by Sanlam's auditors. Sanlam’s financial results for the six months ending 30 June 2012 are due to be released on 6 September 2012. 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:
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.
South Africa and other countries Toll +27 (0)11 535 3600 Toll-free 0800 200 648
Toll 1 412 858 4600 Toll-free 1 800 860 2442
Toll-free 0800 917 7042
Recorded playback will be available for three days after the conference.
Access code for recorded playback: 2560#
South Africa and other countries Toll +27 (0)11 305 2030
Toll 1 412 317 0088
Toll 0808 234 6771
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Sponsor Deutsche Securities (SA) (Proprietary) Limited