Finweek English Edition - - Companies & markets - MICHAEL COUL­SON

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.


Source: I-Net Bridge

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