Sanlam benefits from SAHAM acquisition


Sanlam benefits from SAHAM acquisition

Published Date: 2019-09-06 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sanlam benefits from SAHAM acquisition

The purchase of the remainder of the Moroccan-based business last year contributed to a decent rise in operating profit.

Sanlam says its first-half performance has been pleasing in the face of weak operating environments in SA and Namibia, as well as the general adverse effect of international political and economic rifts on emerging markets.

Releasing results for the six months to end-June, the insurance group said solid organic growth, boosted by corporate activity at SAHAM Finances in the second half of last year, contributed to a 13% rise in net result from financial services, 19% growth in the value of new covered business written and 19% higher net fund inflows.

The net result from financial services, which amounts to net operating profit, increased by 13% to R5 billion.

Last year it bought the remaining stake in Morocco's SAHAM in a move it said would give it a competitive advantage across the continent to drive future growth. It said SAHAM's corporate activity increased growth by about 3% over the period.

New business volumes across the group rose by 4% to R111 billion despite low investor confident at home and weaker investment flows in Namibia and Kenya. Life insurance new business volumes increased by 2%, investment business inflows were in line with 2018, and general insurance earned premiums increased by 25%.

Headline earnings per share declined by 32% to 170.7c due to a number of one-off factors, including charges linked an a top-up empowerment deal last October that saw it selling 5% of its issued shares to new and existing black shareholders. Under International Financial Reporting Standards, it recognised a once-off expense of R1.7 billion due to shares issued under the empowerment deal. On top of that it booked an amortisation charge of R200 million related to the first-time consolidation of Saham Finances and Nucleus as group subsidiaries.

The group started the year with negative discretionary capital of R3.7 billion, after payment for the SAHAM Finances acquisition. The empowerment deal raised a net R4.5 billion. Several transactions during the six months affected the balance of available discretionary capital, which amounted to R570 million at the end of June.

Its shares rose 2.8% to R73.87 yesterday.

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