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Insurance | Financial Planning | Retirement | Investments | Wealth
GLACIER INVESTMENT SUMMIT
Jurie Strydom, Sanlam Personal Finance CEO
06 February 2020
1. Overview
2. Strategic focus for the Sanlam Group: 2020 and beyond
3. Operating environment
4. Outlook
Overview1.
A PROVEN STRATEGY THAT DELIVERS
Our purpose
Our purpose is to build a world of
Wealthsmiths™, that supports people
in living their best possible lives
through financial resilience and
prosperity at the individual,
organisational and societal levels
Our values
To:
Act with integrity;
Grow shareholder value through
innovation and superior
performance
Lead with courage
Serve with pride; and
Care because we respect one
another
Our strategic intent
Our strategic intent is to create sustainable value for all stakeholders.
Our vision in
Africa, India and Malaysia
To be a leading Pan-African
financial services group with
a meaningful presence in
India & Malaysia
Our vision in
developed markets
To play a niche role in
wealth- and investment
management in specific
developed markets
Our vision in
South Africa
To lead in client-centric
wealth creation,
management and protection
Transformation
Continuous transformation is central to Sanlam’s ability to adapt to a
changing world and underpins all of the strategic pillars.
Enhancing resilience and earnings
growth through diversification
Profitable top-line growth through a
culture of client-centricity
Extracting value through innovation
and improved efficiencies
Responsible capital allocation and
management
Our strategic pillars
Executed through five clusters SEM SIG SNT SCSPF
OPERATIONAL STRUCTUREOur decentralised structure provides us with a competitive advantage
100% 100% 100% 100% 62%
Sanlam Group
Group office
Sanlam Personal
Finance
Sanlam Emerging
Markets (SPA & SSI)
Sanlam Investment
Group
Sanlam
Corporate
SA Retail: life
insurance, investment
& other financial
services
Emerging markets ex-
SA: life insurance,
general insurance,
investments, credit &
banking
SA & developed
markets: investment
management, wealth
management, credit &
structuring
SA & EM corporate:
employee benefits,
health
Santam
General insurance,
reinsurance & co-
investor in SEM
general insurance
businesses
SUSTAINABLE SHAREHOLDER VALUE CREATION
Du
al fo
cus o
n fu
ture
gro
wth
and
div
iden
d flo
ws
0
200
400
600
800
1000
1200
1400
1600
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
Consistent outperformance of RoGEV target
Target Actual
0
50
100
150
200
250
300
350
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
Stable dividend growth
Dividend Cash earnings
Target: SA 9yr risk free + 4% Target: 2% - 4% real growth
10yr CAGR 12.3%10yr CAGR 15.6%
India
Malaysia
PhilippinesGhana Kenya
UgandaRwandaBurundiTanzania
MalawiZambia
BotswanaNamibia
SwazilandSouth Africa
Switzerland
United Kingdom
USA
Australia
Ireland
Mozambique
MoroccoAlgeria
Tunisia
Mali
Senegal
GuineaBurkina Faso
Cote D’Ivoire
TogoBenin
NigeriaCameroon
GabonRepublic of the Congo
AngolaZimbabwe
MadagascarMauritius
Lesotho
Saudi ArabiaLebanon
Niger
Luxembourg
France
Developed Markets
Emerging Markets - Direct presence
Emerging Markets - Indirect presence
Future Expansion
Ethiopia
Egypt
AN UNMATCHED PAN-AFRICAN FOOTPRINTDiversification within Sanlam strengthens financial and operational capability
SPF (SA RETAIL) VNB MARKET SHARE
Large 5 peer
group
SANLAM
OLD MUTUAL
LIBERTY
MMI
DISCOVERY
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
2013 2014 2015 2016 2017 2018 2019H1
SPF IN-FORCE POLICY NUMBERS
Entry Level Market
Middle Market
2014 - 2021
1 451 537
1 538 066
1 624 655
1 753 059
1 879 681
2 027 336
2 197 296
2 390 380
2 100 458
2 025 129
1 952 973
1 889 064
1 841 966
1 795 804
1 753 353
1 712 237
543 384
573 025
585 745
592 662
601 347
615 241
631 968
651 369
0 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000
2014
2015
2016
2017
2018
2019
2020
2021 Total: 4 753 986
Total: 4 582 617
Total: 4 438 381
Total: 4 322 994
Total: 4 234 785
Total: 4 163 373
Total: 4 136 220
Total: 4 095 379
Glacier
PROFITABILITY DRIVERS
74 88 129 138 174 263382 371 365
244 357521 618 696
-4
936
7467 62
103 98150
211
263 249 288296
287
352408
457
169 258 186198 260
280 208249
301
405 424 460410
513280
251226
20
81
120
14 5754
6785
94
127
144
187 250301
338
323
604
526473
Value of New Business per SPF Business
Glacier
BrightRock
Middle Market
Sanlam Personal Loans
Digital (MiWay Life & Indie)
Entry Level Market
PERSISTENCY IN CHALLENGING CONDITIONSSA middle income market
Lapses,
surrenders & fully
paid-ups as % of
in-force per half
year
4.8
3.9 3.9 3.6
3.4
3.8 3.9
3.0 2.9 2.9 2.8 2.9 2.9 3.0 2.9 2.7
4.2 4.0
3.8 3.7 3.6
4.2
3.4
2.9 2.8 2.7 2.9 2.8 2.8 2.9
2.7 2.7
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
H1
H2
PERSISTENCY IN CHALLENGING CONDITIONSSA lower income market
H1
H2
Sanlam Sky
(Excluding Capitec)
– NTU’s, lapses and
surrenders as % of
in-force
17.5
14.1
12.7
11.4
11.1
9.9 11
.3
11.3
10.7
10.0
10.3
10.5
16.8
14.5
12.6
11.1
10.4
11.0
10.7
10.0
11.9
10.7
10.0
-
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Sanlam Group strategic focus 2020 & beyond
2
KEY PRIORITIES FOR THE GROUPSA and beyond
Entry level market
(funeral)
3rd party asset
management
Employee benefits
Health Deliver on the Pan-African opportunity via SEM &
Santam
Delivering on the Saham acquisition
Continue to accelerate market share gains in high opportunity areas
Execute on our advantage in SA
Transformation and societal impact – being the very best of what Africa has to offer
Execute on the partnership opportunities
Capitec, MTN, ARC
Competing through people
Harnessing technology through digital transformation
CAPITEC COLLABORATIONSales performance to date
12
31
47 56 59
74
60
45
74 69
75 79
88 88
102 97 96
116 113
77
-
20
40
60
80
100
120
140
May
-18
Jun
-18
Jul-
18
Au
g-18
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan
-19
Feb
-19
Mar
-19
Ap
r-1
9
May
-19
Jun
-19
Jul-
19
Au
g-19
Sep
-19
Oct
-19
No
v-19
Dec
-19
Policy sales since launch in May 2018 (in '000)
• Sales exceeded
2019 target by
40%
• 1 075 000 policies
sold in 2019
• Active book
960 000 policies
• Collections, NTU
and claims on or
better than target
INNOVATION & GROWTH
Investment Hub
Matrix Risk Cover repositioned
Sanlam Indie
DIGITAL: PORTFOLIO OF INITIATIVES
SCAN, TEST AND LEARN
NEW BUSINESS
TRANSFORMATION OF
CORE BUSINESS
Robotics
Find an intermediary
Sanlam Now Risk
Cover
Savings Goal Manager
Glacier Investment Hub
Business intelligence
Sales & marketing Operations Technology
THE SANLAM FOUNDATION
3. OPERATING ENVIRONMENT
GDP growth averages 1.5% with
periods of recession
Unemployment never falls below
25%
The interest rate increases towards
the end of the 2020s
Income inequalities skyrocket
Destructive battles within major
political parties with oppositions
forming coalitions between 2024-
2029
Key institutions are only partially
liberated and are quickly recaptured
by the newly emerging elite
Individual freedoms are becoming
curtailed
GDP growth averages 2.2% to
2030
Slow but persistent depreciation in
the rand and increasing
government debt risk
Unemployment is reduced to 22%
A growing separation of South
Africans by class and income level
Under-investment in agriculture
sees declines in food production
and security
Market-led interventions in
education, health and SOE’s
produces mixed results
GDP growth averages 4.5% to
2030 with growth becoming more
solid and predictable from 2020
onwards
Unemployment in 2030 stands at
16%
The 1st six years of education
improves, and university education
becomes more affordable
Public sector becomes more
capable and which increases trust
in key institutions
Faster urban and rural land
redistribution
Agricultural production and food
security is boosted
SOUTH AFRICA’S REALITY3 possible scenarios for 2030
A nation torn between immobility and restless
energy
A nation torn by deepening
social divides, daily protests
and cynical self-interest
A nation with an expanding
economy, social cohesion
and a renewed spirit of
constitutionalism
OPERATING ENVIRONMENTGoing forward, political will, political alignment and implementation capability will determine the SA economic
landscape
Market risk and volatility
higher
Pedestrian economic
growth, with GDP
expected at 0,8%
Eskom bail-out undoes
fiscal consolidation, with
a debt trap now possible
SOE risks remain
(SAA, Denel, PRASA,
etc.)
Risk of SARB
nationalisation remains,
but mandate intact
NHI risk to economyCurrent fiscal trajectory
not possible
Unemployment rates
increasing including high
levels of unemployed
youth
Possible VAT hike on the
cards
Moody’s downgrade now
more likely than ever
before
Revenue shortfall of
R52bn projected for the
current fiscal year
THE REALITY
• Moody’s last decision to downgrade the outlook from stable to negative• Reflects the "material risk" that the government will not stop deterioration of its
finances
• Concerned high unemployment and inequality precludes the necessary policy action
• Notes that “the 2020 budget in particular will be a key indicator of whether or not the government is committed to [fiscal consolidation]”
• Moody’s sending a strong signal that Government should stop talking about structural reform and should start implementing policy that will attract investment
• Continued inaction will likely ensure a downgrade ±March 2020• This will lead to outflows and an increase in the cost of borrowing
• Very negative for investor confidence and growth outlook
CRITICAL ACTIONS NEEDEDWhat is needed at the SONA / February Budget Speech
• Implement a blueprint to revive the economy focusing on strategic sectors and interventions.
• Key aspects and clear milestones to be covered in the plan to include:
• Security of energy supply
• Fiscal consolidation by cutting government expenditure and energy supply
• Reform SOE’s
• Government to refrain from announcing any new big policy initiatives that could further erode investor confidence
Outlook4.
LOOKING FORWARD
We believe SA is on the right path, we will not fail, but it may take time to right the ship
A slow recovery in SA will require Sanlam to up its game continuously
We have conviction that Sanlam has the required strategy and execution capability to do this
We need to benchmark ourselves against the best in the world
As Sanlam we need to lead by looking through the noise and restoring confidence
questions