Sanlam and Allianz aim to sign up 50-million African clients
Sanlam has set a target of reaching 50-million clients all over the continent by next year.
It is banking on its transformational tie-up with Egypt’s Allianz in line with the stated strategy to cast itself as a growing financial services company. “Life insurance penetration (outside of SA) is still very low, and that’s where the big opportunity lies, clearly, to grow in that space,” CEO Paul Hanratty told Business after the group issued its annual earnings report.
Founded more than a century ago to help Afrikaners left destitute by their defeat in the Anglo Boer War, Sanlam has grown into Africa’s largest financial services conglomerate with operations in about 30 countries on the continent and Asia.
Its pitch to investors rests on a three-pronged strategy to use its established, and cash-generative home base operations to keep investors on its side with rewards, expand aggressively elsewhere on the continent and build a scalable financial services institution in India. “We promise investors good longterm returns and a decent dividend, because the SA business supports the latter, and the African and Asian businesses support the growth leg strongly,” said Hanratty.
His pitch is supported by data. Life insurance penetration rate, or the ratio of insurance premiums to GDP, on the continent, excluding SA, ranges between 0.04% in Angola to 1% in Kenya. The average life insurance in the region is estimated at 0.5%, well below the emerging market average of 2.1% in a reflection of low-income levels, limited distribution channels and low trust.
Late last year, Sanlam, which already had 45-million insured lives on the continent, teamed up with Allianz, Egypt’s largest insurer, pooling most of their businesses on the continent to create a financial services joint venture worth about R35bn and opening the door to Sanlam to enter the coveted northern Africa region.
“We have set long-term growth goals of double-digit growth, strong profitability and margins, and we are confident
that we will achieve them together,” Hanratty said.
He was speaking to Business Day shortly after the company issued its annual earnings report with an upbeat 2024 financial year outlook, citing strong cash generation and the diversity of products, market segments and geography.
“We remain optimistic about future growth and performance, with the group being well-positioned to serve our customers across all our operations,” said Hanratty.
The financial services conglomerate’s rosy prospects come amid rising pressure on consumers’ disposable income as interest-rate hikes take their toll, leaving millions of people scrambling for cash by drawing from savings, borrowing and letting insurance policies lapse.
Still, Sanlam, which has a war chest of more than R2bn and serves everybody from the wealthy to the mass market, is confident about its prospects at home, elsewhere in Africa and Asia.
The earnings report for the year to the end of December showed strong momentum across all business lines. Sanlam said net financial services earnings — a widely watched measure of the company’s profitability from core activities — came in at 574c, or R12.4 bn, in the year to end-December compared with 474c, or R10.5 bn a year earlier, beating a consensus estimate of 568c in the company’s own poll of six analysts.
The group achieved strong earnings growth in all segments: 19% for life insurance; 21% for general insurance; 14% for investment management; and 29% for credit and structuring. New business volumes were close to R400bn, with solid sales growth in all lines of business. The group raised its dividend 11.1% to 400c per share.
“We are building leading market positions in all segments in SA, have created a new force on the African continent outside SA and continue to strengthen our presence in Asia, with a particular focus on India,” said Hanratty.
“This set of results reflects our focus over the past three years on improving the performance of existing operations while investing in the group’s long-term growth path,” he said.