Cape Town - Financial services group Sanlam [JSE:SLM] announced a 4% increase in normalised headline earnings per share with net fund inflows of R7bn for the six months to June 30 2015.
Net value of new covered business rose by 5%, while new business volumes went up by 22% to R100bn compared to the same period in 2014, said the company in a statement released on Thursday.
The net result from financial services increased by 5% on the first half of 2014, up 11% excluding certain one-off items. The annualised return on group equity value per share of 13% exceeded the target of 12.1%. Return on group equity value is the company's primary performance target for measuring shareholder value creation.
Sanlam Personal Finance increased new business volumes by 23% in a solid first half, with strong growth in the entry level (15%) and mass affluent (30%) market segments. However, the middle income market segment showed signs of economic strain, achieving more subdued growth of 4% in new business sales.
Sanlam Personal Finance’s net result from financial services went up by 11%.
Sanlam Emerging Markets grew new business volumes by 34%, supported by an exceptional performance in Botswana and the first-time contribution of acquisitions concluded after June 30 2014. Among these are MCIS Insurance in Malaysia, Enterprise General Insurance in Ghana and the Soras Group in Rwanda.
Net result from financial services declined by 10%. This was largely due to a particularly difficult operating environment in Zambia, and abnormal bad debt experienced at Shriram Equipment Finance in India.
The operational performance of Sanlam Investments was impacted by several factors. These included lower performance fees and higher administration costs relating to outsourcing projects and capacity building, which resulted in a 2% decline in the cluster’s net result from financial services.
If these factors are excluded, the cluster increased net result from financial services by 12%. Sanlam Investments increased new business volumes by 23%, with most business units contributing to the growth.
Santam increased gross written premium by 7%. MiWay performed well with gross premium growth of 17%. Santam’s net result from financial services rose by 17%, with an exceptionally favourable claims experience in the second quarter of 2015.
However, due to weather-related events traditional in the fourth quarter, the current favourable claims environment is not expected to continue for the rest of the financial year.
A net amount of R285m of capital was utilised in the six-month period for several small transactions, while a further R2bn has been earmarked for transactions in an advanced stage of completion.
About R1.6bn was added to surplus capital from investment return earned on the discretionary capital portfolio, excess capital released from group businesses and the realisation of some illiquid investments. This left unallocated discretionary capital of some R2.5bn at June 30 2015, which remains earmarked for investment in value-accretive investment opportunities.
Sanlam's new group chief executive Ian Kirk said: “We are satisfied that we were able to deliver an overall sound operational performance despite unfavourable conditions. The medium- to long-term growth potential of all the regions remains intact.”
Turning to the group's outlook for the remainder of 2015, Kirk said he expected the operating environment to remain challenging for the rest of the financial year, and that this is likely to impact on most performance measures.