Sanlam’s positive momentum continued and financial services and net cash results both increased by 19%, an operational update said on Friday.
Operational earnings increased 35%. New business volumes increased 13%. Life insurance new business volumes were 8% higher on a present value of new business premiums (PVNBP) basis, for the 9 months to September.
“Net results from financial services trends in life insurance, credit and structuring as well as investment management operations, remained solid and broadly in line with the run rate for the first half of 2023,” group directors said.
New life insurance business was also written at improved profitability - the value of new life insurance business (VNB) increased 28% and the VNB margin improved. The solvency position remained strong.
Life insurance net result from financial services increased 24% buoyed by continued favourable risk experience across the portfolio and improved asset-based income.
The credit portfolio backing life insurance liabilities performed well, as a narrowing of credit spreads on international bond portfolios and reduced hedging costs more than offset higher credit provisions.
“Persistency remains stable in the retail affluent business while retail mass continues to show stress in longer duration business. Management actions have stabilised persistency, but the challenging economy continues to impact affordability in this market segment,” the directors said.
Weather and fire events impacted general insurance, resulting in a weaker third quarter relative to the first half of 2023.
The investment return on the shareholder capital portfolio was much stronger as a result of higher market levels.
“New business trends in the life insurance operations improved in the third quarter of 2023, with growth in new business profitability, as measured by value of new business, improving from the first half.”
General insurance new business trends remained robust, as strong premium increases in response to high claims inflation and frequency were dampened by management actions to remove unprofitable business.
Net inflows into the South African asset management business improved strongly in the third quarter. This supported reduced investment management net outflows from that reported in the first half.
The closing of the Absa LISP transaction on November 1, 2023, added R66 billion of assets under administration to the Glacier affluent retail platform.
In August preference shares of the broad-based black economic empowerment special purpose vehicle were acquired from Standard Bank for R2.4bn.
The Capital Legacy transaction was concluded at an outflow of R904m.These outflows were partly offset by the special dividend from Santam on October 9, 2023 of R1.2bn.
The group discretionary capital position decreased to R1.1bn from R3.2bn at June 30, 2023, as a result.
The Sanlam Allianz joint venture (JV) started operations in September, and would be reported on in Sanlam's accounts from October 1, 2023.
The Pan-Africa portfolio’s net insurance margin was broadly in line with that reported at June 2023, as a marginal weakening in the underwriting performance was offset by an increase in the investment return margin on insurance funds.
India benefited from book growth and positive claims experience variances, while Malaysia experienced higher claims in the motor book.
General insurance net result from financial services increased by 11%. In South Africa, Santam recorded an underwriting margin below its 5% to 10% target range, impacted by claims arising from the Western Cape floods in June and September 2023 and some large fire claims.
Santam's overall performance was however assisted by investment return on insurance funds, which increased significantly relative to 2022.
The South African asset management operations recorded strong growth in the Satrix, multimanager and collective investment businesses, which was augmented by the inclusion of Absa asset management.
This more than offset weaker performance fees in the active asset manager and lower fund establishment fees in the alternatives business. The wealth business benefited from increased brokerage income while pan-Africa benefited from increased fee income due to growth in assets under management.
Sanlam’s share price closed 0.78% lower at R69.56 on Friday.