SANLAM, South Africa’s biggest insurance company, closed stronger on the JSE as the market cheered the group’s strong operational performance for the four months ended April compared to a year earlier.
Among the highlights for the period was the 20 percent increase in new business volumes up 81 percent in the Value of New Business, the more than doubling in net fund inflows, and the strong performance of the African General Insurance business.
Sanlam said the current rate of new business growth had received a boost from improved savings due to the Covid-19 pandemic shifting spending patterns.
“In due course we would expect this supportive situation to normalise and therefore expect the growth in new business volumes to moderate at some point,” Sanlam said.
Net result from financial services increased by 18 percent in the period under review compared to a year earlier on the improved equity and credit markets over the period, which offset the impact of weaker mortality experience in the South African life insurance business.
The group said it was satisfied with Santam’s performance, as it began processing contingent business interruption claims in January. Sanlam also said that the increase in the loss ratio ratio weighed heavily on MiWay’s underwriting performance.
Group chief executive, Paul Hanratty, said the insurer was satisfied with the performance for the period under review.
“Our performance continues to demonstrate the passion of our workforce and the strength of the underlying operations, built on a foundation of a sound capital base, robust cash generation and a diversified growth profile,”Hanratty said.
Sanlam said that the second wave of Covid-19 in South Africa was more severe than the first wave and had a significant impact on mortality claims in Sanlam Life and Savings (SLS) business during the first four months of 2021.
The group told investors that mortality claims for the first four months of 2021 were R2.7 billion higher than the corresponding period in 2020 . It said however that the negative claims experienced were buffered by a R1.2bn release of discretionary reserves, neutralising the impact of excess claims on profits for the first four months of 2021.
Sanlam said it had not yet experienced a notable increase in mortality claims from the onset of the third wave of Covid-19 in South Africa, but the experience was likely to deteriorate from this month.
“ We expect that Sanlam will be able to absorb an increase in claims in the remainder of 2021 from further discretionary margins and other reserve releases together with the positive impact that repricing of group risk business in Sanlam Corporate and SA Retail Mass will have on earnings in the remainder of the year,” said the group.
Sanlam shares rose 4.18 percent to R64 a share.