The Sanlam Group yesterday reported solid results in the four months to 30 April despite challenging investment market conditions caused by the global impact of the coronavirus. 

The group had a solid start to the 2020 financial year but the operating environment deteriorated substantially from the end of February as governments around the world implemented strict measures to control the spread of Covid-19.  These included the declaration of states of disaster and emergency in several countries where Sanlam operates, as well as severe limitations on people movement and preventing face-to-face sales in most operations. These were in line with similar measures implemented globally. Global growth estimates were revised down sharply, driving significant volatility in investment markets across the world. The group’s new business volumes across the board were up on the previous period. However, they were significantly impacted since the last week of March. 

This was as a result of restrictions on intermediary activity imposed under Covid-19 lockdown regulations.  Fortunately, investment in digital businesses such as MiWay and Sanlam Indie, as well as digital sales tools for Sanlam advisors, alleviated pressure to some extent. The available digital sales tools are, however, targeted at the middle-income and affluent market segments.  The Sanlam Sky intermediated distribution channel and many other emerging markets channels are still predominantly based on personal interaction, with a commensurately more pronounced negative impact on new business sales in these areas. 

The new business slowdown will impact new business volumes for the financial year. Despite these challenges, Sanlam achieved solid operational results and responded rapidly to the lockdown measures in South Africa, its largest market, from 27 March 2020 as well as the lockdowns and curfews implemented in the group’s other markets. Close to 90% of office staff were enabled to work from home. The group is carefully managing the employees’ return to work in line with the amendments to lockdown levels, with the health and safety of staff being the priority.

Sanlam Group Chief Executive Officer, Ian Kirk said: “We are pleased with our results for the four months to 30 April 2020, in the context of the operating environment we faced. This bears testimony to the resilience of our diversified operations and the skills and exemplary dedication of our employees under challenging conditions.” The group’s net results from financial services declined by 21% in the first four months of the 2019 financial year. Excluding the negative impact of investment market volatility caused by Covid-19, net result from financial services increased by 13%.

Sanlam Personal Finance’s net result from financial services declined by 13%, largely attributable to lower income from life investment products in Glacier where the business shares in the actual return earned on the underlying portfolios, which were depressed by the negative investment market performance in the first four months of the year. Excluding this, net result from financial services increased by 5%.
Risk profits in the recurring premium business increased strongly, supported by growth in the size of the book as well as continued positive claims experience. No Covid-19 mortality claims have been received up to the end of April 2020.
 
Outlook
The group continues to actively manage the consequences of the Covid-19 pandemic. The priority remains the health and safety of employees, as well as supporting clients, intermediaries and vulnerable suppliers across the businesses. Kirk said: “We are well positioned to weather the headwinds with a robust balance sheet and solvency position, diversification across geographies, lines of business and market segments, and an admirable depth of skills in our businesses as well as at a board level.
“We are, however, cautious about prospects for the remainder of the 2020 financial year given uncertainty around the eventual impact of Covid-19 across all our operations. Average investment market levels, the relative strength of the Rand exchange rate, and the level of new business production are some of the key factors that could have an impact on the growth of our key performance metrics to be reported for the six months to 30 June 2020 and the 2020 full year,” Kirk stated.