Sanlam earnings jump as investment returns skyrocket

Insurer Sanlam’s comprehensive income skyrocketed over 200% for the first six months of the year as it benefited from better returns on investments, lower claims and client growth. 

Sanlam released its interim results for the six months ended 30 June 2023 today, which revealed a significant earnings boat for the insurer.

Sanlam’s comprehensive income for the period increased from R2.89 billion to R11.04 billion in the six months.

The insurer’s net operational earnings of R7.5 billion grew by 64%, while its cash net results from financial services grew by 30% to R6.26 billion.

Sanlam said the higher growth relative to the net result from financial services is due to increased investment return.

Sanlam’s investments in the period swung from a deficit of R36.87 billion in H1 2022 to a surplus of R39.08 billion in H1 2023.

The insurer saw an investment return of R1.5 billion (H1 2022: negative R120 million) as it benefited from the recovery in local and international investment markets over the period. 

The company’s headline earnings per share grew to 339 cents – a 118% increase from the comparable period.

The company said this is due to “non-economic and accounting mismatch profits and losses recognised in terms of IFRS, lower amortisation of value of business acquired as well as the reversal of the specific shareholders’ fund adjustments made to net result from financial services”. 

The insurer’s basic earnings per share grew from 249.6 cents in 2022 to 388.6 in 2022 – an over 55% increase.

In a trading statement released prior to the results, the insurer said its results benefited from the following in H1 2023 –

• Life insurance benefitted from positive risk experience, increased asset-based fee income and improved performance from the credit portfolio backing life insurance liabilities.
• General insurance benefitted from improved underwriting performance and higher investment return on insurance funds.
• Credit and structuring benefitted from stronger performance from the Indian operations.

The insurer said it delivered a strong financial performance for the first six months of 2023, with the earnings pattern back on track after the series of what the company classifies as one-in-25/100-year events during the period from 2020 to 2022.

“The group has shown compound annual growth in net result from financial services (7%), life new business volumes (7%), total new business volumes (14%) and the value of new covered business (8%) since the first six months of 2019, on a comparable basis,” the insurer said.

“This growth from the pre-pandemic basis indicates that the underlying growth engine of the group remains intact.”