Despite the South African economy forcing most consumers to cut their expenditures, and numerous companies announcing retrenchments, people are holding on to their insurance policies, Sanlam's trading update showed on Wednesday.
The country's largest insurer, which also has operations abroad and in 33 other African countries, said its divisions continued to attract new money from consumers even as local economic production contracted in the first and second quarters of 2019.
SA's GDP contracted by 3.2% in the first quarter, recovered and expanded by a revised 3.2% in the second quarter, only to contract again by 0.6% in the three months to September.
"We continued to grow strongly in all of our South African businesses, testimony to the quality of our business and our people, their ability to execute in tough times and delivery from the new growth initiatives that we launched in recent years, such as BrightRock, Sanlam Indie, MiWay Life and the Capitec Bank partnership," said Sanlam CEO, Ian Kirk.
However, Sanlam's biggest business unit in SA, Sanlam Personal Finance - which contributes more than 50% of the group's profits - felt the strain of an ailing economy and attracted new business volumes in line with 2018.
"The recurring premium sub cluster, primarily focused on the middle-income market, reflects the pressure on disposable income in this market segment," said Sanlam.
The division nonetheless did not negatively affect the company as new business volumes for the entire group increased by 6% to R199bn. Value of new business - which measures how much new products and investments sold attracted in rand amount - increased by 13%.
Both volumes and value of new business were boosted by operations outside SA but also by some local divisions.
In SA, more investors saved their money with the Sanlam Investment Group and Glacier.
Sanlam's business serving low-income earners, called Sanlam Sky; the short-term subsidiary, Santam and Sanlam Corporate, which administers pension funds and medical aid schemes, among other things, also had a better 10 months compared to the same period in 2018.
Sanlam Sky's new business sales grew by 9%, with stellar performance from Capitec, which contributed R900m in new funeral cover volumes.
Sanlam said the relationship it forged with Capitec in May 2018 continues to exceed its expectations, selling roughly 100 000 policies a month.
"It's been a truly wonderful story, much better than we expected," said Kirk adding that it turned out to be a "quality" business, meaning fewer lapses than the insurer anticipated.
Outside SA, Sanlam Emerging Markets recorded 37% growth in new business. It benefited from the inclusion of Sanlam Finances, the Moroccan insurer that Sanlam took over 14 months ago.
Sanlam acquired the remaining 53% interest in Saham Finances on October 1, 2018.
The insurer said Saham is outperforming its targets "by a considerable margin".
Sanlam Emerging Markets CEO, Hernie Werth, said the group is targeting double digit growth in Saham this year.
Sanlam said its headline earnings per share were, however, down 20% compared to the first 10 months of 2018. Kirk said this was due to the financial impact of a black economic empowerment deal that the insurer concluded with Patrice Motsepe’s Ubuntu-Botho Investments last year. Excluding the effects of that deal, the headline earnings would have increased by 2%.