‘NO FRILLS’ EXCELLENCE
CLIENTELE LIFE, 81% owned by the Hollard insurance group, claims to have a unique distribution model, using the telephone, TV and computer to market “no frills”, low-cost insurance products directly to the consumer.
It’s also developed an Independent Field Advertiser (IFA) distribution channel, which it says has empowered thousands of previously disadvantaged entrepreneurs. In the year to 30 June last year, 90% of new policies were issued to previously disenfranchised individuals.
In the six months to December 2006, headline earnings per share were 157c, against 125 the year before, making a rolling 12-month 317c. Embedded value was 2 484c/share. The 2006 dividend was raised by only 10c to 260c, but Clientele expects a resumption of “strong dividend growth” this year. OPPORTUNITIES • The company serves a largely untapped sector of the life assurance market so long-term growth prospects are excellent. Its unique distribution channel gives it a marketing edge. RISKS • The share has substantially outperformed the market in recent years, rising from a trough of 1 000c in 2002 to a current all-time high of 7 852c. That’s more than three times embedded value, with a price:earnings ratio of 24,8 and yield of 3,3%. That makes it by a huge margin the most highly rated life assurance share on the JSE. The downside risk from any unexpected deterioration in results is thus considerable. Trading in the stock is tight – just 1,1% of its issued equity changed hands in 2006.