Earnings boost for South Africa’s largest insurer – BusinessTech
Sanlam, the largest insurer in South Africa, has posted a robust operating performance for the six months ended 30 June 2024.
The group said that its earnings momentum continued in the first half of the year, growing net result from net result from financial services (NRFFS) by 14%, highlighting the group’s strong trading performances across its businesses.
The group’s health and life insurance operations grew net results from financial services by 14%; general insurance saw a 16% rise, investment management saw 10% growth, while the group’s credit and
structuring operations recorded a growth of 9%.
“The NRFFS per share increased by 19% due to lower adjusted weighted average number of shares in 2024 relative to 2023,” said the group.
“Net operational earnings increased by 8% (12% per share) to R8.1 billion, underpinned by the strong
performance in NRFFS and a decline in project expenses.”
“The lower growth rate relative to NRFFS is due to lower investment return on shareholder capital of R1.2 billion (2023: R1.5 billion), mainly attributable to foreign exchange movements.”
Headline earnings and diluted headline earnings per share both increased by 40%, with the higher growth relative to earnings due to favourable movements in shareholders’ fund reserves, including the acceleration of profit recognition of the Capitec funeral JV reinsurance recapture fee.
Attributable earnings increased by 25% from R7.9 billion in 2023 to R9.9 billion in 2024, but the increase was lower relative to headline earnings due to lower accounting profit on disposal of operations in 2024 compared to 2023.
Despite this jump, the group did not declare an interim dividend.
“Total new business volumes were strong for the first six months of 2024, at R204 billion. Growth was
underpinned by the life insurance operations, growing sales by 15%,” said the group.
“Life insurance new business volumes were strong across all regions. Net value of new covered business increased by 10%, with a net new business margin of 2,73%.”
“The strong asset-gathering ability of the group resulted in net client cash flows more than doubling to
R24 billion, with all lines of business recording positive net flows.”
| Financials | FY23 | FY24 | % Change |
| Net result from financial services (Rm) | 6 177 | 7 056 | +14% |
| Net operational earnings (Rm) | 7 486 | 8 087 | +8% |
| Headline Earnings (Rm) | 6 902 | 9 838 | +43% |
| Net result from financial services per share (cents) | 280 | 333 | +19% |
| Net operational earnings per share (cents) | 340 | 382 | +12% |
| Headline earnings per share (cents) | 339 | 473 | +40% |
Tymebank deal
Sanlam also plans to buy a 25% stake in African Rainbow Capital (ARC) Financial Services Holdings, which controls the ARC’s Holdings in TymeBank, AI Fund, CrossFin Holdings and Ooba, in a deal valued at R3.9 billion.
Sanlam will pay R2.413 billion in cash and swap its 25% shareholding in African Rainbow Capital Financial Services Investments—valued at R1.492 billion—for an equivalent number of shares in the investment holding company.
“The transaction adds value for shareholders as Sanlam is swapping its current investment for a higher-returning one at a reasonable price,” Adrienne Damant, an analyst at Avior Capital Markets, said.
“Additionally, we believe Sanlam can leverage TymeBank’s distribution network to sell insurance products to South Africa’s mass market.”
With reporting from Bloomberg
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