South Africa’s largest insurer on a hot streak

Sanlam has expanded its business significantly in recent years, and its dominance is set to continue through strategic partnerships and acquisitions in Africa and India.

This is feedback from Camissa Asset Management investment analyst Edward Mtsweni, who outlined why the insurer’s acquisitions are set to boost its performance in the coming years. 

Santam first launched Sanlam more than a century ago to meet the growing demand for life insurance in South Africa. It has since grown into one of Africa’s largest financial institutions. 

Since listing on the JSE in 1998, Sanlam has rapidly diversified into a financial services giant and now has operations across Africa and India. 

It is no longer a plain old life insurer – it has significant businesses in investment management and even retail lending. 

The company has used the annuity earnings from its life insurance division to expand first into general insurance, which is dominated by its stake in Santam and then asset management through Sanlam Investment Management. 

These expansions have been well-thought-through and executed by management, with Sanlam gaining a reputation for prudent capital management and providing predictable returns. 

Mtsweni explained that this is the typical reason for investing in the company, as it is viewed as a critical part of investor portfolios. 

However, in recent years, the company has faced numerous headwinds from increased mortality rates and an extremely weak consumer amid economic stagnation in South Africa. 

This has pushed Sanlam to focus on taking market share from its competitors and diversify its product offering through acquisitions to reduce its reliance on insurance premiums. 

It has pushed into the Retail Mass segment, which typically focuses on funeral insurance and targets lower-income consumers. 

This has been a key growth area for Sanlam, largely fuelled by a successful joint venture with Capitec since 2018. 

This partnership combined Sanlam’s insurance expertise and Capitec’s banking infrastructure and client reach to offer affordable funeral cover to the bank’s customers.

After selling their part of the joint venture to Capitec in October 2024, Sanlam has turned to acquiring Assupol to maintain its presence in the mass market. 

By targeting Assupol’s established customer base and utilising its branch network, Sanlam can now pursue cross-selling opportunities in savings plans, health insurance and short-term insurance.

This has been coupled with another partnership in South Africa, targeting wealthier clients that have substantial assets to invest. 

Here, Sanlam teamed up with Capital Legacy to offer enhanced estate planning solutions to affluent clients and Absa to offer individuals a wider array of investment products. 

More recently, the insurer announced it would merge its investment management division with Ninety One, promising significant economics of scale. 

Mtsweni said these initiatives enable Sanlam to offer a full suite of financial services at scale and enhance its cross-selling opportunities. 

African expansion

In Africa, Sanlam has partnered with Allianz to enable it to distribute its products across the continent and prevent the two insurers from taking market share from each other. 

This joint venture is highly diversified geographically, positioned in the top three in 16 of the 27 countries in which it operates, with the largest exposures to Morocco and Egypt.

Sanlam’s general insurance division is among the top five in Morocco, which has a fast-growing economy and a crucially stable regulatory environment. Its partnership with Allianz is set to make it the dominant player in the market. 

Despite the dominance of banks in life insurance distribution, the joint venture is focused on expanding its agency force and other distribution channels to reach a broader client base. 

Egypt is completely different, with Allianz holding the dominant position in the country and being the number one life insurance provider. 

The Egyptian market is characterised by high savings rates and a preference for life insurance products, but it offers substantial growth opportunities in other products. 

Demand for insurance products in the region is expected to grow due to a rising middle class and an expanding economy. Sanlam is set to capitalise through its general insurance offerings. 

Looking ahead, Sanlam’s extensive agency force across Africa, combined with Allianz’s established bancassurance channels, enables a broader reach in a region where insurance penetration is lower than the global average

Indian opportunities 

Established in 2005, Sanlam’s partnership with the Shriram Group, a formidable player in India’s financial sector, positions it well to capture value from the world’s fastest-growing major economy. 

This partnership operates through several divisions, namely Shriram Life Insurance, Shriram General Insurance and Shriram Finance.

Shriram Finance is one of the largest non-banking financial companies in India. With a credit book exceeding R1 trillion, it is a leader in financing pre-owned commercial vehicles and two-wheelers. 

It also finances passenger vehicles and construction equipment and offers personal loans. It has built a reputation for community-based financial services. 

Given the specific niches in which Shriram operates, prudence has been shown in growing the company’s lending book, which has helped maintain low levels of bad debt experience.

Shriram Life Insurance has rapidly expanded its footprint in India. Initially distributed solely through Shriram Finance’s branch network, its offering has increased to include broker and digital distribution methods. 

A sprawling distribution framework enables this division to penetrate the market deeply, offering products ranging from traditional term insurance to endowment plans and savings policies. 

Sanlam owns 42% of the life insurance business and brought essential intellectual property in insurance to the partnership. 

Despite its early stage, the life insurance division has an impressive reach, servicing over eight million clients to date, and Mtsweni said there is a significant runway for growth. 

Similarly, Shriram General Insurance operations benefit from cross-selling opportunities within the lending ecosystem, especially through Shriram’s vehicle finance business. 

Mtsweni said these carefully considered acquisitions and partnerships across Africa and India have positioned Sanlam well for long-term growth, particularly in fast-growing and underpenetrated markets.