Annual report 2016 |


Introducing the 2016 reporting theme: resilience in uncertain times

In the past decade, we have experienced the ways in which systemic shocks such as the financial crisis of 2008, climate disasters and war, can disrupt and destroy value. We have also come to appreciate how a stable and strong financial system can absorb and mute these shocks.

Where a well-established infrastructure of insurance companies, banks, investment groups and stock exchanges exist, individuals and businesses are to some extent protected, and thus better able as a society to manage risks. In these markets, members of society have a choice of life and asset insurance, safe payments systems, access to credit and the ability to trade in any currency with a high level of trust.


South Africa is fortunate to have such a financial system: established and stable, well governed and respected. South Africa is, for example, a forerunner in corporate governance (King IV Report on Corporate Governance for South Africa™, 2016 (King IV™)) has been released on 1 November 2016 and will be effective from 1 April 2017) and the Johannesburg Stock Exchange has been rated as one of the top-ranking stock exchanges in the world. The quality and governance of the auditing profession in South Africa are also highly regarded globally. The recent World Economic Forum Global Competitiveness Report 2016/2017 ranks the strength of South Africa’s auditing and reporting standards first out of 138 countries.

These grounded and respected systems have contributed to South Africa’s ability to prevent a foreign sovereign ratings downgrade to junk status despite the political, economic and financial uncertainty.

This stands in sharp contrast to countries where citizens have to individually deal with systemic shocks, where they are hindered in access to finance, subject to the limitations caused by strained public finance – all leading to losses of jobs, income, wealth and security.

As one of the largest financial services groups in Africa, Sanlam is a key pillar within the financial infrastructure and our resilience and sustainability are therefore of utmost importance to maintain stability – a responsibility that is unremittingly recognised by the Sanlam Board and which underpins the Group’s prudent management and financial reporting approach.

Sanlam’s philosophy of WealthsmithsTM means we are determined and resolute, solid and sensible and we take pride in our legacy as ‘safe hands’ to be in. It’s an attitude that helps us navigate the ups and downs of the financial market and keeps us resilient in challenging times, acting with caution and always treating our clients’ money with the respect it deserves to ensure they keep making the most of what they have.

From humble beginnings in 1918, Sanlam is today classified as an internationally active insurance group (IAIG). There are two criteria for an insurance group to be identified as an IAIG:

1. International activity – premiums are written in at least three jurisdictions, and the percentage of gross premiums written outside the home jurisdiction is not less than 10% of the Group’s total gross written premium; and

2. Size – based on a rolling three-year average, total assets of not less than USD 50 billion, or gross written premiums of not less than USD 10 billion.

This positions Sanlam as one of the 50 biggest IAIGs in the world.

Sanlam is also classified as a domestically systemically important financial institution (D-SIFI) in South Africa. This means that it can have a significant impact on the economy in any material instance of failure or impairment. It is also the South African listed insurer with the highest exposure to emerging markets – a further perceived market sentiment risk.

Therefore, Sanlam’s resilience is a priority beyond the financial results delivered to shareholders – it is a national and international imperative.

Sanlam has an institutional history of almost 100 years. It has proven its resilience by continuing to be a stable and growing investment. We continue to make good progress during tough times through the high premium we place on looking after our clients, diligently executing our strategy, and by further strengthening our position as a Pan-African diversified financial services group. Sanlam was the most sought-after share in the insurance sector in South Africa after the financial crisis in 2007 – evidence of investors’ trust in the resilience of the Group.

The 2016 financial year tested our resilience in many ways. This report captures some of the events, challenges and opportunities that we continue to find, despite uncertain times.

View Sanlam’s resilience factors

Introducing the 2016 Integrated Report

Sanlam Limited (Sanlam) is the holding company of the Sanlam group of companies (or the Group). Sanlam is committed to transparent and relevant stakeholder reporting. The Group’s Annual Reporting Suite constitutes a combination of reporting elements – including our Integrated Report – and is addressed primarily at our shareholders.


It includes information relevant to other material stakeholders, including clients, employees, agents, brokers, regulators and the broader society in which Sanlam operates. In developing the content for the Annual Reporting Suite, these stakeholders’ considerations and priorities were taken into account.

Sanlam’s reporting practices continue to evolve in line with global trends and best practice, and is informed by feedback through our engagement with key users of our reports. In recent years, the Group produced separate Annual and Sustainability Reports with di erent focus areas, guiding frameworks and target audiences. This year, the content of the Annual and Sustainability Reports was fully integrated as part of a single Annual Reporting Suite, which is available on the website and includes the following components:

  • This Sanlam Integrated Report that provides a review of the material aspects of the Group’s performance in accordance with the International Integrated Reporting Council’s International Framework;
  • Corporate Governance Report, that provides detailed information on the Group’s governance practices and the functioning of its Board and Board committees;
  • Remuneration Report, that expands on the Group’s remuneration policy and practices and provides an analysis of all payments made to Directors and members of the Executive committee;
  • Annual financial statements for the Sanlam Group and Sanlam Limited; and
  • Five supplementary reports, that more comprehensively report on non- financial aspects with a material impact on the sustainability of the business.

The Sanlam Integrated Report is the core of the Group’s annual communication to shareholders, with the other reports expanding in more detail on the aspects covered in the Integrated Report. Feedback on this report and the Annual Reporting Suite is welcomed. Please contact Sanlam Investor Relations on

Scope and boundary of our reporting

Sanlam is a South African based diversified financial services group, originally established as a life insurance company in 1918. Sanlam is listed on the Johannesburg Stock Exchange (JSE) with a secondary listing on the Namibian Stock Exchange (NSX) since 1998. It operates through a number of subsidiaries, associated companies and joint ventures.


Sanlam Life Insurance Limited (Sanlam Life) is the largest operating subsidiary of Sanlam and the holding company of most of the Group’s operations in emerging markets. Sanlam and all of its subsidiaries, associated companies and joint ventures are referred to as the Sanlam Group or the Group.

The report relates to the financial year from 1 January 2016 to 31 December 2016. It covers the activities of the Group in South Africa, the Rest of Africa, India, Southeast Asia and selected developed markets, with the emphasis on South African operations, which contribute 77% to net result from financial services.

All subsidiaries, joint ventures and associated companies recognised in the annual financial statements are included in the report, apart from investments in consolidated funds (collective investment schemes and similar investment funds). These are consolidated in terms of IFRS by virtue of the Group’s shareholding, but do not form part of the Group’s strategic operations.

For some non- financial metrics, only the South African operations are included, based on their relative size. The metrics to which this limitation applies are indicated.

As a separately listed entity, Santam’s employee data is not included in Group numbers, however, it is included in Financial Sector Charter (FSC) Scorecard reporting and where Group-wide programmes are discussed and in scope 1 and scope 2 carbon emissions.

There has been a slight change to the entities reported on with the addition of a fifth Group cluster, the Sanlam Corporate cluster. The clusters are responsible for the management of Sanlam’s various operations. They are managed on a federal basis and have delegated authority levels, within the boundaries of governance principles and standards set by the Sanlam Limited Board and the respective regulatory regimes in which they operate. The clusters all have their own boards of directors governing the execution of these principles and standards. The clusters are supported by a shared Group office, which sets the tight standards within which the clusters must operate.

Refer to the downloads for a glossary of terms, definitions and major businesses referenced in the report.

The content development process

The content of this report is comparable to the 2015 report in terms of the entities covered, the measurement methods applied and time frames used for financial and non- financial data. However, readers should keep in mind that the contributions of Afrocentric (from 1 January 2016), Saham Finances (from 1 March 2016), the Zimbabwean operations (from 1 January 2016) and the additional 23% direct stakes in Shriram Life Insurance and Shriram General Insurance (from 1 October 2016) are included for the first time in the 2016 results.


The information provided covers all material matters relating to business strategy, risks and areas of importance to stakeholders. Materiality was determined taking quantitative and qualitative aspects into account:

  • For financial information, materiality is based on whether the item is of such significance that it could affect financial decisions made by shareholders of the Group (current and potential). The amount and nature of an item is considered. In general, materiality for financial information is set equal to that of the Shareholders’ information and Annual Financial Statements.

  • For all other information, materiality is based on whether an item, resource or stakeholder is of such significance that it can prevent the Group from achieving its Return on Group Equity Value (RoGEV) target over the short, medium and long term.

Materiality was determined during a process that included focus groups and individual interviews with a range of internal stakeholders and executives.

This was aimed at identifying content for the Integrated and Supplementary Reports. The determination of materiality was further informed by the Group’s enterprise risk management and Own Risk and Solvency Assessment (ORSA) reporting processes. Sanlam continuously strives to achieve full alignment between internal and external reporting in content and format of reporting – this also ensures that all matters that are considered material from an internal management perspective are included in the external reporting framework.

Five sustainability themes were confirmed as focus areas for Sanlam to ensure value creation over the short, medium and long term. For each sustainability theme a set of enablers were identified according to the “core” reporting requirements of the Global Reporting Initiative’s (GRI) G4 guidelines. The G4 aspects were expanded to include matters that are unique and pertinent to Sanlam and South Africa at present.

The sustainability themes provide a framework to establish concrete links between non-financial and financial performance.

Managing the Group’s impact on the environment is an important part of being a responsible corporate citizen, in particular through environmentally responsible investing as custodian of our clients’ and shareholders’ wealth. However, it does not materially affect the Group’s ability to create value for shareholders given the financial services industry’s relatively lighter direct environmental impact, and is therefore not covered in the Integrated Report. Detailed information is available in the supplementary report online, for interested stakeholders.

View Sustainability themes and Sustainability enablers

A supplementary report for each sustainability theme is available online.

How useful is the integrated report for Sanlam’s providers of capital?
Feedback from our largest shareholders

During the year, Sanlam requested feedback from the Group’s largest local and international shareholders (with a combined shareholding of 48%) on the content of the Integrated Report and supplementary information. Summarised feedback per topic indicated the following (Sanlam response in (brackets):

  • Understanding the strategy of the Group after reading the report: the respondents were positive, with one request for more information per cluster. (Strategic initiatives per cluster expanded on in the Group Chief Executive’s strategic review.)
  • Priority given to sections when reading: the financials were the most visited section, followed by the Chairman and Group Chief Executive’s reports, with less attention on corporate governance and remuneration.
  • The materiality of reporting content: satisfied, with suggestions to include, for example, quantification of long term opportunities and risks, more granular detail per country and performance tracking per investment. (Disclosure expanded. Performance per key business provided in the Shareholders’ information chapter – disclosure per investment not feasible due to restructuring of businesses over time.)
  • The importance of environmental, social and governance factors: all indicated that these are very important, with dedicated teams assessing content and sourcing detail not included in the integrated report.
  • Forward orientation of the report: fairly satisfied although in one instance perceived as too high level. (Detailed financial forecasts not provided due to the sensitivity of key performance indicators to operating environment, interest rates, investment market returns and currency exchange rates.)
  • Balanced reporting: all respondents were in agreement that content is balanced (containing positive and negative aspects).
  • The quality and usefulness of the report compared to peers: respondents indicated that the report is above average, and in one instance: “the best of the insurers which I look at”.

Calendar of 2016 events



    Johan van Zyl appointed to the Board as a non-executive director effective 18 January.



    Junior John Ngulube appointed as Chief Executive Officer (CEO) of the Sanlam Corporate business cluster and member of the Executive committee effective 1 February.

    All conditions precedent for the acquisition of an effective 30% interest in Saham Finances, the largest insurance group in Africa (excluding South Africa), is fulfilled and the transaction is effective 29 February



    The Tax Laws Amendment Act effective 1 March.




    African Life Assurance Limited in Zambia rebrands to Sanlam Life Insurance on 3 May.



    18th annual general meeting of Sanlam shareholders is held on 8 June, with all resolutions passed.



    Sanlam Investments acquires 49% of FIRSTGLOBAL Asset Management effective 1 July.

    The Water Risk Filter tool is launched in partnership with WWF-SA on 20 July.



    Santam announces the acquisition of RMB-SI Investments effective 23 August.

    Pan Africa Insurance Holdings Limited rebrands to Sanlam Kenya PLC.



    Kobus Moller retires as Financial Director and from the Sanlam Board on 30 September. He will continue to be involved in the Group’s governance structures.

    Sanlam Investments acquires Brackenham Holdings, effective 1 September.



    Heinie Werth, CEO of SEM, succeeds Kobus Möller as the Group’s Financial Director and executive Director of the Sanlam Board on 1 October 2016.

    Junior John Ngulube appointed as CEO of SEM.

    Sanlam acquires a further 23% direct stake in Shriram Life and Shriram General Insurance in India, effective 4 October.



    King IV™ launched on 1 November. Santam acquires the Absa Insurance Company Limited intermediated commercial book of business, effective 1 November.



    Sanlam and Santam announce that they will increase their stake in Saham Finances by a further 16.6% to 46.6%.

    Sanlam announces Board changes to be implemented in June 2017 with the retirement of Chairman Desmond Smith.

    Johan van Zyl announced as Chairman elect.

    Sipho Nkosi elected as lead independent director.

Sanlam’s value creation map

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Group at a glance

Sanlam is a financial services group, based in South Africa but operating worldwide. It was originally established as a mutual life insurance company in 1918, but demutualised and listed on the JSE and NSX in 1998. The Group provides comprehensive and tailored financial solutions to individual and institutional clients. Sanlam’s areas of expertise includes life insurance, financial planning, retirement, trust, wills, general insurance, risk management, capital market activities, investment and wealth management.

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