A firm in fine fettle

None of the company’s business units is in intensive care. But its diversification into health may raise eyebrows

Sanlam is a juggernaut that writes more than R220bn in new business every year. And under Ian Kirk, a former PWC partner, it does so in a sustainable manner: it has a return on group equity value (net worth as adjusted by actuaries) of 18.2%, ahead of its entire peer group, and is assisted by the strong underwriting management of its subsidiary, Santam. Its new business margin of 2.46% on its SA life business shines next to the dismal 0.7% for Liberty and MMI.

“Among our strategic pillars are responsible capital allocation and resilience through diversification,” says Kirk.

The group has met its target of the SA nineyear bond plus 4% since the 2008 global financial crisis. “But there are still areas in which we need to close the gap, such as entry-level life [insurance], third-party asset management, employee benefits and health,” he says.

Unlike some of its peer group, none of Sanlam’s businesses are in intensive care. Of its five pillars — Sanlam Personal Finance, Santam, Emerging Markets, Sanlam Investments and Sanlam Corporate — the personal finance cluster remains the largest contributor, though earnings were flat at R2.1bn. There are a number of moving parts in this cluster, which includes the SA life businesses across the income spectrum.

Quite small changes in product mix can depress growth: in the upmarket Glacier book, for example, there was a higher proportion of low-margin third-party unit trusts and a lower number of high-margin on-balance-sheet prod-

Sanlam