Johan van Zyl to quit Sanlam role at its 2020 AGM
FINANCIAL services group Sanlam said yesterday that its chairperson Johan van Zyl would step down from the role at the annual general meeting (AGM) next year as the group moved to calm shareholder concerns around the independence of some of its long-serving non-executive directors.
Sanlam in emailed responses to Business Report said Van Zyl requested to step down and that this request was handled through a consultative process with the board.
“Dr Van Zyl thought that it would be in the best interests of Sanlam, taking into account both personal factors and the Prudential Authority governance framework for insurers, which recently became available,” Sanlam said.
“These discussions have been ongoing for several months and have become more focused from the beginning of 2018. The board took a final decision here on Wednesday.”
Van Zyl would, however, remain a non-executive director of the board, but step down as a member of the nominations committee.
Asief Mohamed, chief investment officer of Aeon Asset Management, said the resignation of Van Zyl as Sanlam chairperson must be welcomed.
“He should have gone further and resigned from all other boards, as under his other directors’ watch at Steinhoff they presided over a significant loss of shareholder value and should take responsibility for it,” Mohamed said. Van Zyl was appointed to the role in June 2017 after Patrice Motsepe declined the unanimous nomination by the board, but instead proposed the appointment of Van Zyl.
Van Zyl is the chief executive of Ubuntu-Botho, Motsepe’s investment vehicle, which is the largest shareholder in Sanlam. He further serves as co-chief executive of African Rainbow Capital, Motsepes’s listed investment holding group.
Van Zyl previously served as Sanlam’s chief executive from 2003 to 2015 – he was formerly chief executive of Santam (Sanlam’s short-term insurance arm) from 2001 to 2003.
He is credited with transforming Sanlam from a primarily South African life insurer to a multinational diversified financial services group during his tenure as chief executive.
Asset manager Prudential took issue with Sanlam’s latest empowerment deal with Ubuntu-Botho due to “governance concerns”.
Business Report this week reported allegations that Van Zyl was at the centre of a mooted deal that would see Alexander Forbes sell its short-term insurance business to Santam.
ARC is the second biggest shareholder in Alexander Forbes.
Sanlam chief executive Ian Kirk said in the lead up to getting shareholder approval over its latest black economic empowerment with Ubuntu-Botho, issues of board independence were raised.
He added that Sanlam would appoint four or five independent board members with no connections to its empowerment shareholder.
“We now have a year to go through a process to find an independent chairperson.
“These are always sensitive things to go through, but we think we have done the right thing… we have addressed the issues that were raised (by shareholders).”
In another shake-up of its board, Sanlam said independent non-executive directors who have served on the board beyond nine years would come up for rotation at the AGM on an annual basis.
The group’s current independent non-executive directors Anton Botha and Sipho Nkosi have been on the board since 2006.
Kirk said Botha and Nkosi would stand for re-election at this year’s AGM as independent directors but that the situation would change next year.
SANLAM said yesterday that economic growth would likely remain weak in the medium term, which would stifle its efforts to grow its local insurance and investment businesses, but growth prospects were more promising in other markets that it operated in.
Its shares fell more than 3 percent yesterday morning immediately after it released weaker-than-expected results for the year to December 31, 2019, but the price regained some ground later and was only 0.16 percent weaker at R77.20 early yesterday afternoon. But the share closed 1.37 percent higher at R78.38 on the JSE yesterday.
Normalised headline earnings per share fell 10 percent to 431.7 cents after volatile global equity markets cut investment returns and the group was hurt by the weak local economy. Heps was also well short of a 457.7c a share consensus estimate made by five analysts on February 15, this year.
The group net investment return was down 57 percent to R707 million. Normalised headline earnings were 8 percent lower at R9.1 billion.
The dividend was nonetheless increased 7.6 percent to R3.12 a share – the payout was slightly above the analysts’ consensus dividend forecast of 310.1c a share.
Chief executive Ian Kirk said yesterday that negative investment market returns and higher interest rates in a number of markets had hurt earnings. This was aggravated by weak economic growth locally and in Namibia and currency devaluations in Angola, Nigeria and Zimbabwe.
However “we are satisfied with our performance in the challenging operating environment”, he said.
Substantial growth in the earnings of short-term insurer Santam, and satisfactory growth by Sanlam Emerging Markets and Sanlam Corporate, offset softer contributions from Sanlam Personal Finance and Sanlam Investment Group.
Kirk described the results as “very credible” given the environment that the insurer operated in – “we’d want to be able to do better, but we can only operate with the scale we are and the environment we’re in”, adding that there were areas of solid performance.
Sanlam’s performance was also hampered by rising interest rates in the US, Brexit uncertainties, trade tensions globally and volatile currencies.
There are plans to enter Morocco and Egypt. The emerging markets business benefited from new business growth of 68 percent.