Severe weather and a strong rand hit Sanlam’s profit

Sanlam’s profit dropped as weather-related claims in South Africa increased, and a stronger rand trimmed the translated value of earnings from its businesses outside its home market. 

So-called adjusted headline earnings fell 22% to R7.7 billion in the six months through June, the Cape Town-based company said in a statement on Thursday. 

The impact of weaker equity markets and higher interest rates on bond valuations, particularly in Morocco and India, weighed on performance, the report said. 

Adverse unrealised mark-to-market movements on the group’s investment in Ninety One — which involved Sanlam transferring much of its traditional active asset-management business to the firm — as well as losses on an Indian rupee hedge for insurance transactions in that nation, also affected profit.

Sanlam has grappled with an increasingly volatile operating environment as conflict in the Middle East raised energy prices and interest rates.

Severe weather-related events across parts of Africa increased catastrophe claims in the group’s general-insurance operations.

Despite this, Sanlam raised new-business volumes by 22% to R224 billion, and net client cash flows increased 42% to R78 billion, reflecting the strong customer focus and competitiveness of the group’s operating businesses.

Sanlam has been on a years-long plan to fortify its South African operations while expanding into markets in the rest of the continent and in Asia.

The net result from financial services — the company’s preferred profit measure — climbed to R8.08 billion. Its adjusted return on equity was at 18.4%.