Sanlam still has Nenegate headache

Sanlam was forced to repatriate funds invested offshore, on behalf of South African clients, after the rand weakened in 2015.

The depreciation of the local unit, triggered by the shock dismissal of Nhlanhla Nene as finance minister, caused breaches in the 35% foreign investment allowances in some of the group’s South African funds.

Sanlam chief executive Ian Kirk did not this week disclose the value of the assets repatriated, only saying it added pressure on the group’s international business in the year to end December.

“We had negative cash flows of R2.8 billion in 2015 and R4.4 billion in 2016 because we lost some business in the UK market and on top of that once the rand depreciand ated so much, we were forced to repatriate some money,” he said.

The impact saw net operating profit from financial services in the group’s international business fall by 38% in 2015.

The group’s emerging market businesses provided much needed support, boosting financial services’ contribution by 30%.

As Nigeria’s shrinking oilbased economy beggared the naira, growth in Sanlam’s Nigeria operations exceeded expectations, rising 52% to R407 million.

“I’m so proud of what we’ve been able to do in Nigeria. We are number two now in life insurance – the business has only been running for six-years,” said Kirk.

In India, financial services revenue rose 65%.

At group level, Sanlam reported a 10% increase in its net result from financial services to R8 billion. Normalised headline earnings fell by 6% to R8.4 billion, partly due to a 65% decrease in net investment returns earned on its capital portfolio. New business volumes increased by 11% to R233 billion. Sanlam lifted its dividend by 9.4% to R2.68 per share.

Kirk said tough trading conditions are expected to continue, adding that South Africa must not score own goals in 2017.

I’m so proud of what we’ve been able to do in Nigeria