Sanlam paid out a staggering R22 billion in mortality claims in 2021 due to the Covid-19 pandemic waves in South Africa, across Africa and India, yet still netted record new business volumes.
The mortality claims payout was 76 percent higher than in 2020. The group also paid out R3.2bn in contingent business interruption claims through short-term insurance subsidiary Santam.
The group, which released its annual results yesterday for the 12 months to December 31, has increased its discretionary capital by R2.9bn. Chief executive Paul Hanratty said in a presentation that they would hold high levels of discretionary capital until risks associated with the Covid-19 pandemic subsided, and given the short-term risks of the crisis in Ukraine,
The R4.2bn net excess claims recorded for 2021 were being funded by repricing of the corporate life book, the effects of which were not yet fully felt on the books, and discretionary reserve releases.
Other actions taken by the group included risk-based repricing of all group schemes, redesign of retail-risk products, using new underwriting protocols and strengthening of the mortality basis.
Hanratty said 2021 was nevertheless an important year for them with new business volumes exceeding R350bn for the first time, up 14 percent on 2020 and 43 percent higher than in 2019.
The strong results appeared to cheer the market, as the share price leapt by up to 6.9 percent to R64.94 on the JSE yesterday morning.
“We laid the foundations for future growth by strongly developing our platforms and delivering a strong operating performance in a difficult environment,” he said.
Operating profits had returned to pre-pandemic levels. The net result from financial services increased by 13 percent over 2020 and was 4 percent compared with 2019, excluding one-off items, he said.
Net client cash-flows improved substantially despite the increase in mortality claims. Net fund inflows of R78.3bn were 27 percent higher than 2020, and 38 percent higher than 2019. Volume growth was bolstered by strong profitability and margins.
Sanlam announced in December that it is in talks with international financial services group Allianz SE about their African business units.
Hanratty remained mum on further details about this potential deal when questioned about it yesterday, but said that Sanlam, the biggest insurer on the continent, had a clear focus to expand further into Africa.
The Sanlam Pan Africa Life portfolio increased new business volumes by 23 percent and net value of new covered business by 88 percent to over R450 million in the 2021 financial year.
Hanratty said the group had been able to gain market share in virtually every market line and product segment.
“We managed to restore our metrics to 2019 levels which takes us to the base we had before the outbreak of the Covid-19 pandemic. That creates a tremendous platform for us to operate off going forward,” he said.
A dividend of 334 cents was declared, up 11 percent compared with 2020.
The group’s South African operations were strengthened by the development of the Sanlam Investments platform as the leading black-owned asset manager in South Africa during the year.
The intended merger with Absa Investments was aimed at further strengthening the asset management offering and scale.
The corporate platform would be strengthened through the intended deals with Alexander Forbes and the launch of a new set of health insurance offerings with AfroCentric.
The Alexander Forbes Life transaction was expected to place Sanlam in a leading position in group-risk underwriting.
BUSINESS REPORT