Sanlam investment case

 

Sanlam – provides a strong case for investors

 
       
> Driving increased returns 
> Growing profitability through (product and geographic) diversification 
> Vast agency networks offering scale, flexibility and efficiency in South Africa 
> Leading in emerging markets 
> Niche presence in developed markets, servicing existing clients 
> Solid risk management 
> Innovation resulting in market-leading solutions 
> HR talent providing stability and proven track record 
> Successfully implementing the growth strategy 
> Good operational performance over the long term 
> Creating shareholder value - outperforming competitors 
 

Clear strategy

Sanlam's strategy is two-pronged. Firstly, it aims to drive increased returns through a continual focus on optimising capital, cutting costs and maximising efficiencies. Since 2005, approximately R22,5 billion of existing capital (close to 40% of the current Group Equity Value) has been redeployed. 

The second part of the strategy is growing profitably through diversification by providing the full spectrum of financial services and diversifying revenue streams into new income markets and geographies, thus spreading the risk and underpinning a resilient performance in all market conditions. With a large stable life business at its core, Sanlam provides stability and consistency during difficult times, while its investment and capital market businesses capitalise on more favourable equity market conditions.

Our vision is to be a diversified financial services group that is unrivalled in wealth creation and protection in South Africa, leading in emerging markets, and specialised in developed markets.
 

Presence

Retail

An internal distribution network of 2 131 tied financial advisers in South Africa servicing the middle- and upper-income markets, and 2 034 agents deployed for the lower-income market in SA, provides scale, flexibility and efficiency in servicing our broad range of clients. In addition, there are more than 10 000 independent financial advisers (IFAs) who support our various businesses. Sanlam is also expanding its breadth of distribution, by moving into the direct market, thereby entrenching the Group's leadership position in the future.

There are approximately 3 million policyholders in Sanlam's SA core life businesses, Sanlam Personal Finance and Sanlam Sky Solutions, which equals about a quarter of the economically active population in the country. 

Sanlam also has a strong corps of tied financial agents in the emerging markets with 2 356 in the rest of Africa and close to 16 000 in India. It has a niche presence in developed markets, following its SA clients' money abroad, with Merchant Investors and Principal providing life, fund management and private client solutions in the UK.
 

Institutional

Sanlam has a vast footprint in the corporate market in South Africa with almost every large SA corporation being a client of one of our businesses.

Sanlam Investments is predominantly entrenched in South Africa, and has a presence in the US, Europe, Australia, rest of Africa and India. This presence includes traditional asset management, alternative investment solutions, collective investments (unit trusts), private client investment management and stockbroking, multimanager management and investment administration.

Sanlam Employee Benefits provides life insurance, investment and annuity solutions to group schemes and retirement funds. The Group's capital markets business, Sanlam Investments: Capital Management, provides risk management, debt and equity financing, structured product solutions, product development and associated capital market activities.
 

Core expertise

Solid risk management expertise is a core attribute required in running the Sanlam life and investment businesses, ensuring solid safety barriers in the operations. Sanlam centrally adopts conservative risk/return measures in all its pursuits, with a minimum hurdle rate being a prerequisite for all acquisitions and new capital allocations. Capital in existing businesses is also rigorously evaluated against these return hurdles. Not only is the Group planting the seeds for future growth through a disciplined and methodical approach to ventures, it also ensures that overall returns of the Group are enhanced over the long term. 

Innovation has allowed the Group to pre-empt changes in an uncertain regulatory environment through market-leading solutions such as Glacier International and the Sanlam Empowerment Fund, as well as to increase the breadth of solution and distribution offering through the solutions of Sanlam Liquid Splash Account, ICover and MiWay.

Sanlam has the human resources talent to boast a stable, proven track record, having operated for 93 years in life insurance. In addition, a relatively stable executive management team has some 170 years of combined experience in life insurance and investments.

The Group's employment standards have earned most of its businesses full accreditation from the international "Investors in People Standards". In working to attract, motivate and retain top talent, Sanlam encourages employees to make a difference at every level within the organisation through incentives which are directly aligned with the performance of the businesses.

Sanlam pioneered black economic empowerment in South Africa in 1993 and since then has been at the forefront, implementing its own empowerment and transformation strategies to ensure its long-term sustainability.
 

Delivery

Our vision is to be the leader in wealth creation and protection. Our leading position amongst our peers in this regard was confirmed by the December 2010 results of the Company Confidence Predictor (Campbell Belman) which also indicated our continuing improved confidence ratings in the markets. We were particularly pleased that, in addition to our overall improvement in the Ethics category, Sanlam's standing in the sub-category for "living up to its promises" improved from 4th to 1st position in our financial services peer-group in December. We believe this is a commendable achievement, in which investors are clearly acknowledging that Sanlam delivers.

Management has built solid foundations from which to grow the business by successfully implementing growth strategies in emerging markets in SA, the rest of Africa and India.

Good and improving operational performance over the long term is evident in new business flows, net life cash flows, change in the mix of offerings, strong growth in value of new business and new business margins.

In creating shareholder value, Sanlam has outperformed its competitors since listing and, on average, has generated close to 12% higher share price returns per annum over the past five years.
 

Creating shareholder value