Tak­ing San­lam global… slowly

Finweek English Edition - - Companies & markets - FROM THE AN­NUAL RE­PORT BRUCE WHIT­FIELD

SHARE­HOLD­ERS IN fi­nan­cial ser­vices group San­lam will ap­plaud its healthy ob­ses­sion with driv­ing re­turns in an in­creas­ingly reg­u­lated and com­pli­cated tra­di­tional life in­sur­ance in­dus­try.

Its 2006 an­nual re­port high­lights the trans­for­ma­tion of San­lam from a stodgy, fairly re­cently de­mu­tu­alised life in­surer in 2001 to a di­ver­si­fied fi­nan­cial ser­vices group to­day.

Its di­ver­si­fi­ca­tion into an in­creas­ing spread of fi­nan­cial ser­vices busi­nesses through­out a grow­ing num­ber of ge­ogra­phies is see­ing share­hold­ers who sup­ported the firm in the dark days of 2002 hand­somely re­warded.

San­lam has con­sis­tently traded at a dis­count to its embed­ded value.

How­ever, last week the share by­passed its end-of-year embed­ded value of 2 047c, trad­ing at lev­els close to 2 100c.

An in­vest­ment in San­lam at end-2002 at 760c trans­lated to 1 830c/share by year-end 2006 and the share has seen fur­ther growth since.

But a word of warn­ing: much of that per­for­mance is linked to the group’s un­der­ly­ing in­vest­ment port­fo­lio. As eq­uity mar­kets show signs of in­creas­ing volatil­ity it will also af­fect San­lam’s share per­for­mance.

Roy An­der­sen, in his chair­man’s re­port, says prospects re­main good de­spite the mar­ket volatil­ity.

Prepa­ra­tions for 2010 and Gov­ern­ment’s com­mit­ment to in­vest­ment in ser­vices and in­fra­struc­ture bode well for SA’s rep­u­ta­tion as an in­vest­ment des­ti­na­tion, An­der­sen says.

Un­like Old Mu­tual, San­lam has been con­tent to fo­cus on its home mar­ket de­spite some ten­ta­tive for­ays into in­ter­na­tional mar­kets.

But CEO Jo­han Van Zyl is now pre­par­ing to spread the com­pany’s wings.

“Cer­tain emerg­ing mar­kets of­fer high growth op­por­tu­ni­ties that fit San­lam’s com­pet­i­tive ad­van­tage in high­vol­ume, low-value re­tail fi­nan­cial ser­vices. Our strat­egy re­mains to part­ner with lo­cal and global play­ers to help us ex­e­cute any ge­o­graphic ex­pan­sion,” writes Van Zyl.

In­vestors will hope he’s been fol­low­ing the tri­als and tribu­la­tions of Dis­cov­ery’s costly ex­pan­sion in the US.

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