interim results 2017 - sanlam · presentation. 30 2017 1 notes 2017/09/01 1 investor presentation...
TRANSCRIPT
INTERIM RESULTS 2017
INVESTOR PRESENTATION
Sanlam interim results for the six months ended 30 June 2017 1
Notes
2017/09/01
1
Investor Presentation2017 Interim Results
7 September 2017
Sanlam interim results for the six months ended 30 June 20172
Notes
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2
Sanlam Group Strategy
Operating environment
Strategic progress
Financial Review
Strategic priorities for remainder of 2017
Outlook
Sanlam interim results for the six months ended 30 June 2017 3
Notes
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Sanlam Group Strategy
Sanlam interim results for the six months ended 30 June 20174
Notes
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Inte
grat
ed s
trate
gic
and
oper
atio
nal m
anag
emen
t
An Integrated Approach to Sustainable PerformanceStrategy reviewed and refined
Our Purpose
Our Vision
Our Strategic Intent
Our Strategic Pillars
Sanlam interim results for the six months ended 30 June 2017 5
Notes
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Sustainable Sanlam
Resilient Organisations
Resilient Society
ResilientIndividuals
Our PurposeThe foundation of Sanlam’s long-term sustainability
To build a world of Wealthsmiths™, supporting people in living their best possible lives through financial resilience at the individual, organisational and societal level
Sanlam interim results for the six months ended 30 June 20176
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A sustainable strategyVision and strategic intent pursued through a four pillar strategy
Our strategic intentSustainable value creation for all our stakeholders
Profitable top-line growth through a culture of client-centricity
Enhancing resilience and earnings growththrough diversification
Extracting value through innovation and improved efficiencies Responsible capital allocation and managementSt
rate
gic
pilla
rs
Transformation
Our visionTo lead in client-centric wealth creation, management and protection in South Africa
To be a leading Pan-African financial services group with a meaningful presence in India & South-East Asia
To play a niche role in wealth and investment management in specific developed markets
Sanlam interim results for the six months ended 30 June 2017 7
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Focus remains on high-growth marketsAdditional stake in Saham Finances enhances diversification
India
Malaysia
Philippines
Ghana
The Gambia
KenyaUganda
RwandaBurundiTanzaniaMalawi
Zambia
BotswanaNamibia
SwazilandSouth Africa
Switzerland
United Kingdom
USA
Australia
Ireland
Mozambique
MoroccoAlgeria
Tunisia
MaliSenegal
GuineaBurkina Faso
Cote D’Ivoire
TogoBeninNigeria
CameroonGabon
Republic of the CongoAngola
Zimbabwe
MadagascarMauritius
Lesotho
Saudi Arabia
Lebanon
Niger
Niger
Luxembourg
France
Emerging Markets - Indirect presence
Emerging Markets - Direct presence
Developed Markets
Saham Finances presence
Sanlam and Saham presence
Sanlam interim results for the six months ended 30 June 20178
Notes
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Operating EnvironmentChallenging SA environment persists
Sanlam interim results for the six months ended 30 June 2017 9
Notes
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Global environmentMore supportive of emerging markets
Rebound in investor sentiment and risk
appetite
Sanlam interim results for the six months ended 30 June 201710
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Financial sector regulation bill passed, establishing twin peaks model
Prudential regulator by end-2017Market conduct regulator by 2018
Solvency Assessment and Management planned to be effective 1 July 2018Retail Distribution Review being phased inInternational Insurance Capital Standards field testing
Historic high levels of unemploymentWidening wealth inequalityTechnical skills development a priorityNeed traction on inclusive growth initiatives
Business and investor confidence under pressureEconomy in technical recessionPedestrian growth outlook for 2017 and 2018Risk of further sovereign credit rating downgradesInvestment market and currency volatility
Economic Environment
Regulatory Environment
Political Environment
Social Environment
Political and policy uncertaintyAllegations of state captureANC elective conference in December
South AfricaPolitical environment not conducive to economic growth
Sustainable Sanlam
Sanlam interim results for the six months ended 30 June 2017 11
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Risk-based capital regimes on the agenda of a few countriesTCF and RDR following international trends
Technical skills shortageFavourable demographic profile over long termIncreased need for insurance and investments
Rest of Africa
Improved terms of trade for commodity-based economiesOil-based economies adapting to structurally lower oil price (Nigeria & Angola)Much higher growth prospects than SA in medium to long termNamibia liquidity constraintsCompetitive pressures in Botswana in unsecured lending and life annuities
General improvement in growth prospects
Economic Environment
Regulatory Environment
Political Environment
Social Environment
Elections in a few countriesPolitical and policy uncertainty arising from time to time
Sanlam interim results for the six months ended 30 June 201712
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Economic growth in India affected by demonetisation, but gaining traction
Growth of 7% expected for 2017Malaysian economy accelerating on back of competitive Ringgit
Manufacturing output improvingExports
India and MalaysiaEconomic growth gaining traction
Sustainable Sanlam
Demonetisation in India during 2016 impacted economy and credit providers
Temporary setback for Shriram CapitalGoods and Services Tax in India may impact transport sector over short-termDe-tariffing of insurance sector in Malaysia
Opportunity to price more efficientlyMarket response uncertain
Favourable demographic profile over long termIncreased need for insurance and investments in lower segments
Economic Environment
Regulatory Environment
Political Environment
Social Environment
Stable relative to 2016
Sanlam interim results for the six months ended 30 June 2017 13
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Strategic progressSustainable strategy supported resilient results
Sanlam interim results for the six months ended 30 June 201714
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Strategic progress in 1H17
Strong growth in recurring premium risk business in SASanlam SKY business mix continued to improveDouble-digit growth in middle and mass affluent segments
Solid growth at SEM in constant currency despite pressures in Namibia and Botswana
17% growth in VNB in constant currency; overall increase in VNB margin
Persistency holding up well under difficult conditions
Positive experience variances of more than 3% of VIF on annualised basis
Execution remains a key differentiator
Stra
tegi
c pi
llars
Transformation
Profitable top-line growth through a culture of client-centricity
Enhancing resilience and earnings growththrough diversification
Extracting value through innovation and improved efficiencies Responsible capital allocation and management
Sanlam interim results for the six months ended 30 June 2017 15
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Strategic progress in 1H17
Resilient overall performance in 1H17 confirms benefits of diversification strategy
Additional 16.6% stake in Saham Finances further enhanced Group profileExpansion in higher-growth marketsIncreased exposure to general insuranceLarger participation in synergies
Acquisition of PineBridge’s Kenyan asset management operationsEast-African asset manager of scale
Good progress with Central Credit Manager initiative
Execution remains a key differentiator
Stra
tegi
c pi
llars
Transformation
Profitable top-line growth through a culture of client-centricity
Enhancing resilience and earnings growththrough diversification
Extracting value through innovation and improved efficiencies Responsible capital allocation and management
Sanlam interim results for the six months ended 30 June 201716
Notes
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Strategic progress in 1H17
Cost efficiencies key in low-growth environmentSavings extracted at Sanlam Investments
Good progress with technological and product innovation, raising the base constantlyBrightRock acquisition finalised in SPF – innovative risk product platformEasyEquities acquisition in SI – award-winning fintech disrupter in investments sectorBusiness Intelligence project at Group level – advanced analyticsAward-winning Sanlam Design Studio
Execution remains a key differentiator
Stra
tegi
c pi
llars
Transformation
Profitable top-line growth through a culture of client-centricity
Enhancing resilience and earnings growththrough diversification
Extracting value through innovation and improved efficiencies Responsible capital allocation and management
Sanlam interim results for the six months ended 30 June 2017 17
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Strategic progress in 1H17
Strategic investments of R4.8 billion finalised (Saham Finances; PineBridge East Africa)
R2.7 billion of discretionary capital extracted; further opportunities under considerationLower capital allocation to Sanlam Personal FinanceCentral Credit Manager initiative released capital from SCMDisposal of stakes in Enterprise Group in Ghana
Excess dividend cover added R805 million to available discretionary capital
Proposed acquisition of ABSA Consultants and Actuaries
Execution remains a key differentiator
Stra
tegi
c pi
llars
Transformation
Profitable top-line growth through a culture of client-centricity
Enhancing resilience and earnings growththrough diversification
Extracting value through innovation and improved efficiencies Responsible capital allocation and management
Sanlam interim results for the six months ended 30 June 201718
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Financial Review
Sanlam interim results for the six months ended 30 June 2017 19
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Overview of 1H17 performanceResilient overall performance
HIGHLIGHTS LOWLIGHTS
Adjusted RoGEV of 8.1% exceeded the target of 6.4% Significantly lower single premium inflows at Glacier and Sanlam Private Wealth
Strong growth in new recurring premium risk business and VNB at Sanlam Personal Finance
Increased claims experience at Santam
Strong overall new business growth at Sanlam Emerging Markets in constant currency
Lower annuity new business volumes and VNB in Botswana
Improvement in Sanlam Investments institutional net inflows
Adverse change in life insurance new business mix in Namibia, resulting in lower VNB
Strong VNB and operational earnings performance at Sanlam Corporate
Higher life claims experience in Namibia
Progress with capital and balance sheet management Under performance in Kenya and Malaysia
Discretionary capital back to R2 billion
Sanlam interim results for the six months ended 30 June 201720
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Key Performance Indicators
Earnings per shareNet operating profit per share increased by 1% (5% constant currency)Normalised headline earnings per share up 5%
Business volumesNew business volumes declined by 4% to R110bnNet fund inflows of R19bn compared to R22bn in 2016Net life VNB up 11% (17% constant currency)Net VNB margin of 2.61%, up from 2.44% in 2016
Group Equity ValueGroup Equity Value of R54.69 per shareAnnualised RoGEV per share of 11.7%, adjusted 16.2% - above hurdle rate
Sanlam shareholders
Sanlam interim results for the six months ended 30 June 2017 21
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Reporting environmentSignificant impact from stronger Rand, demonetisation and catastrophe claims
Sustainable Sanlam
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
11,0%
Dec-15 Jun-16 Dec-16 Jun-17
SA bond yields & short-term interest rates
9 year Avg ST
-350
-150
50
250
450
650
Santam underwriting result (Rm)
2017 2016
9 200 9 700 10 200 10 700 11 200 11 700 12 200 12 700 13 200
40 000 42 000 44 000 46 000 48 000 50 000 52 000 54 000 56 000
Dec-15 Jun-16 Dec-16 Jun-17
Swix
All S
hare
JSE Indices
All Share Swix Avg Swix
-24,8%
-14,3%
-8,6%
-14,8%-12,4%
-20,0% -20,0%
UnitedKingdom USA Botswana Morocco India Malaysia
Rest ofAfrica
Average Rand exchange rates
EV economicassumption changes:
+R150m
Net profit: -R168mNet VNB: -R40mROGEV: -0.7%
Santam net catastrophe
claims: -R102mIndia
demonetisation: -R110m
EV investment variances: -R271mPressure on fee income
Sanlam interim results for the six months ended 30 June 201722
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Financial ReviewSanlam Personal Finance
Sanlam interim results for the six months ended 30 June 2017 23
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R million 2017 2016
New business volumes 28 614 30 806 -7% Sanlam Sky 675 588 15%
Risk 631 504 25%Savings 44 84 -48%
Individual Life 6 137 5 975 3% Glacier 21 802 24 243 -10%
Life 8 398 8 371 0%Non-life 13 404 15 872 -16%
Net flows 3 961 8 680Sanlam Sky 1 768 1 556Individual Life (2 674) (2 576)Glacier 4 867 9 700
Sanlam Personal Finance
Sanlam interim results for the six months ended 30 June 201724
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Sanlam Personal Finance
R million 2017 2016
Value of new life business 585 499 17% Sanlam Sky 203 129 57% Individual Life 294 251 17% Glacier 88 119 -26%
New business margin 2,76% 2,49%Sanlam Sky 7,79% 6,20%Individual Life 2,88% 2,61%Glacier 1,05% 1,42%
Sanlam interim results for the six months ended 30 June 2017 25
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R million 2017 2016
Gross operating profit 2 978 2 904 3% Sanlam Sky 637 611 4% Middle-income segment: life and investments 1 900 1 855 2% Glacier 268 249 8% Personal loans 175 174 1% Other (2) 15 >-100%
Net operating profit 2 133 2 088 2%Constant new business strain 2 247 2 088 8%
Group Equity Value* 41 665 41 878 RoGEV (6 months) 8,5% 13,9%
Sanlam Personal Finance
* Comparative information as at 31 December 2016
Sanlam interim results for the six months ended 30 June 201726
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Financial ReviewSanlam Emerging Markets
Sanlam interim results for the six months ended 30 June 2017 27
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R million 2017 2016 CCY
New business volumes 10 068 8 487 19% 32%Excluding structural growth 8 104 7 672 6% 17%
Namibia 2 635 2 731 -4% -4%Botswana 3 261 2 633 24% 35%Rest of Africa 2 796 2 135 31% 61%
Excluding structural growth 1 416 1 320 7% 38%India 1 093 558 96% 124%
Excluding structural growth 509 558 -9% 4%Malaysia 283 430 -34% -18%
Net fund flows 1 859 2 562Namibia (1 486) 308Botswana 1 397 599Rest of Africa 1 424 1 322India/Malaysia 524 333
Sanlam Emerging Markets
Sanlam interim results for the six months ended 30 June 201728
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R million 2017 2016 CCY
Value of new life business 235 277 -15% 1%Excluding structural growth 212 271 -22% -7%
Namibia 44 71 -38% -38%Botswana 72 109 -34% -28%Rest of Africa 77 60 28% 78%India 27 4 575% 675%
Excluding structural growth 12 4 200% 250%Malaysia 15 33 -55% -39%
New business margin 4,88% 4,87%Namibia 4,29% 4,30%Botswana 5,30% 7,12%Rest of Africa 6,13% 4,81%India 4,41% 1,12% Malaysia 2,65% 3,66%
Sanlam Emerging Markets
Sanlam interim results for the six months ended 30 June 2017 29
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Sanlam Emerging Markets
R million 2017 2016 CCY
Gross operating profit 1 423 1 404 1% 17%Namibia 256 283 -10% -10%Botswana 396 493 -20% -12%Rest of Africa 368 214 72% 119%
Excluding structural growth 144 56 157% 245%
India/Malaysia 419 426 -2% 16%Excluding demonetisation and structural growth 460 426 8% 23%
Corporate expenses (16) (12) -33% -33%
Net operating profit 771 788 -2% 14%Excluding demonetisation and structural growth 713 697 2% 18%
Group equity value* 28 171 22 097RoGEV (6 months) 6,6% 1,5% 7.7%* Comparative information as at 31 December 2016
Sanlam interim results for the six months ended 30 June 201730
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Financial ReviewSanlam Investments
Sanlam interim results for the six months ended 30 June 2017 31
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Sanlam Investments
R million 2017 2016
Net investment business flows 9 566 6 793Investment management SA 11 088 8 530Wealth management (2 464) 1 268International 942 (2 973)Capital management – (32)
New life business 1 383 2 029 -32%Constant currency 1 838 2 029 -9%
Net life business (334) 121
Value of new life business – 11 -100% Margin – 0,50%
Sanlam interim results for the six months ended 30 June 201732
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Sanlam Investments
R million 2017 2016 CCY
Gross operating profit 743 787 -6% 1%Investment management SA 277 320 -13% -12%Wealth management 101 108 -6% -4%International 194 153 27% 56%Capital management 171 206 -17% -16%
Net operating profit 573 580 -1% 6%
Group Equity Value* 16 828 15 807 Covered business 2 316 1 137 Other 14 512 14 670 RoGEV (6 months) 4,0% -0,1%
* Comparative information as at 31 December 2016
Sanlam interim results for the six months ended 30 June 2017 33
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Sanlam Investments
Percentage of SIM’s benchmark-managed funds exceeding hurdle
Investment performance
2011
2012
2013
2014
2015
2016
Jun-17
Rolling 3 year Rolling 5 year
100% 80% 60% 40% 20% 0% 20% 40% 60% 80% 100%
Sanlam interim results for the six months ended 30 June 201734
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Financial ReviewSantam
Sanlam interim results for the six months ended 30 June 2017 35
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Santam
R million 2017 2016
Net earned premiums 10 551 9 700 9%
Gross operating profit 861 983 -12% Underwriting surplus 422 616 -31% Working capital & other 439 367 20%
Net operating profit 337 388 -13%Excluding June catastrophe claims and forex 456 388 18%
Underwriting margin 4,0% 6,4%Excluding June catastrophe claims 6,2% 6,4%
Group Equity Value* 16 228 15 868RoGEV (6 months) 4,7% 23,8%
* Comparative information as at 31 December 2016
Sanlam interim results for the six months ended 30 June 201736
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Financial ReviewSanlam Corporate
Sanlam interim results for the six months ended 30 June 2017 37
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Sanlam Corporate
R million 2017 2016
New business volumes 2 041 2 142 -5%Recurring risk 142 46 209%Single risk 4 – –Investment & retirement 1 895 2 096 -10%
Net fund flows 529 179
Value of new life business 26 11 136%
New business margin 0,69% 0,39%
Sanlam interim results for the six months ended 30 June 201738
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Sanlam Corporate
R million 2017 2016
Gross operating profit 343 257 33% Employee Benefits 244 196 24% Healthcare & other 99 61 62%
Net operating profit 244 186 31%
Group Equity Value* 6 420 6 385 RoGEV (6 months) 9,2% -0,3%
* Comparative information as at 31 December 2016
Sanlam interim results for the six months ended 30 June 2017 39
Notes
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Financial ReviewSanlam Group
Sanlam interim results for the six months ended 30 June 201740
Notes
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Business flows
Gross NetR million 2017 2016 2017 2016
by businessPersonal Finance 28 614 30 806 -7% 3 961 8 680 Emerging Markets 10 068 8 487 19% 1 859 2 562 Sanlam Investments 58 983 64 218 -8% 9 232 6 914 Santam 10 551 9 700 9% 3 298 3 411Sanlam Corporate 2 041 2 142 -5% 529 179
by licenceLife insurance 21 267 21 853 -3% 4 935 6 034 Investment 75 716 82 054 -8% 9 694 11 680 General insurance 13 274 11 446 16% 4 250 4 032
Total 110 257 115 353 -4% 18 879 21 746
Sanlam interim results for the six months ended 30 June 2017 41
Notes
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Business flowsNew business volumes
12 1
59
14 9
56
17 5
36
18 6
20
21 8
53
21 2
67
36 7
59
52 4
36
55 2
51
71 3
59
82 0
54
75 7
16
7 85
6
8 40
4
9 04
6
9 90
0
11 4
46
13 2
74
56 7
74 75
796
81 8
33 99 8
79
115
353
110
257
-
20 000
40 000
60 000
80 000
100 000
120 000
140 000
160 000
2012 2013 2014 2015 2016 2017
Life insurance Investments General insurance Total
CAGR = 14.2%
Sanlam interim results for the six months ended 30 June 201742
Notes
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Operational efficiencies
Persistency – SA middle-income market
Solid persistency in difficult environment
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
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
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 1H17
Lapses, surrenders & fully paid-ups as % of in-force per half year
H1 H2
Sanlam interim results for the six months ended 30 June 2017 43
Notes
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Operational efficiencies
Persistency – SA lower income market
Solid persistency in difficult environment
9,6 8,7
10,6 9,8
9,1 9,2 8,5
9,6 9,2 9,9 9,6
0
2
4
6
8
10
12
2012 2013 2014 2015 2016 1H17
Lapses, surrenders & fully paid-ups as % of in-force per half year
H1 H2
Sanlam interim results for the six months ended 30 June 201744
Notes
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44
Value of new covered business
Value of New Business MarginR million 2017 2016 CCY 2017 2016
Personal Finance 585 499 17% 17% 2,76% 2,49%
Emerging Markets 235 277 -15% 1% 4,88% 4,87%
Sanlam Corporate 26 11 136% 136% 0,69% 0,39%
Sanlam Investments - 11 -100% -100% - 0,50%
Total 846 798 6% 12% 2,71% 2,60%
Net of minorities 782 702 11% 17% 2,61% 2,44%Excluding structural growth 759 696 9% 14% 2,57% 2,42%
Sanlam interim results for the six months ended 30 June 2017 45
Notes
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45
Value of new covered businessLong-term interest rates and business mix supporting margin
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
0100200300400500600700800900
1 000
South Africa Rest of Africa Other International Margins - rhs
Sanlam interim results for the six months ended 30 June 201746
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Net operating profit
R million 2017 2016 CCY
Personal Finance 2 133 2 088 2% 2%
Emerging Markets 771 788 -2% 14%
Sanlam Investments 573 580 -1% 6%
Santam 337 388 -13% -9%
Sanlam Corporate 244 186 31% 31%
Corporate & other (2) (2) – –
Total 4 056 4 028 1% 5%
Sanlam interim results for the six months ended 30 June 2017 47
Notes
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Income statement
R million 2017 2016
Net operating profit 4 056 4 028 1%* Per share 197,9 196,8 1%
Net investment return 586 377 55% Other (161) (149) -9%
Normalised headline earnings 4 481 4 256 5% Per share 218,7 208,0 5%
Fund transfers 84 1 341
Headline earnings 4 565 5 596 -18% Per share 225,3 277,2 -19%
* 5% in constant currency
Sanlam interim results for the six months ended 30 June 201748
Notes
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Equity Value RoGEVR million 2017 2016* Rm %
Group operations 109 312 102 035 7 050 6,8% Personal Finance 41 665 41 878 3 535 8,5% Emerging Markets 28 171 22 097 1 550 6,6% Investments 16 828 15 807 655 4,0% Santam 16 228 15 868 747 4,7%Sanlam Corporate 6 420 6 385 563 9,2%
Discretionary & Other 2 788 8 682 (100) -1,4%TOTAL 112 100 110 717 6 950 6,3% cps 5 469 5 407 329 6,1% Adjusted RoGEV cps 8,1%Return target 6,4%
Group Equity Value
* Comparative information as at 31 December 2016
Sanlam interim results for the six months ended 30 June 2017 49
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Group Equity Value earnings
6 950
782
2 315
59592 745
597
5 126
4 210
100
9 236
150 394
2 042
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
6,1%
8,1%
Sanlam interim results for the six months ended 30 June 201750
Notes
9/1/2017
50
Experience variancesRisk, working capital, credit spreads major contributors
636
468
681
555
1 021 991
1 081
75
595
908
0
200
400
600
800
1000
1200
2009 2010 2011 2012 2013 2014 2015 2016 1H17-0,2%
0,3%
0,8%
1,3%
1,8%
2,3%
2,8%
3,3%
3,8%
4,3%
4,8%
R m
illio
n
% o
f VIF
ann
ualis
ed
983
1H 2H
816
438
80261
174
-11 -99 -114
288
354
151
191
89
170
-197
113
-57
87
FY15 FY16 1H16 1H17-400
-200
0
200
400
600
800
1000
1200
1400
R m
illio
n
Risk experience Persistency Working capitalCredit spreads Other
Sanlam interim results for the six months ended 30 June 2017 51
Notes
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Return on Group Equity ValueOut perform growth target of long-bond rate +400bp
13,4 12,4 12,2 10,8 12,2 12,1 14,1 13,2 12,6
4,8 3,3
9,8
6.2 6,3
0,7
-2,3 -1,5
3,4
- 5
0
5
10
15
20
25
2010 2011 2012 2013 2014 2015 2016 2017 Avg
Target Out performance
Sanlam interim results for the six months ended 30 June 201752
Notes
9/1/2017
52
SA Traditional 52%
SA Entry-level 26%
Rest of Africa 18%
Other international 4%
1H17R782m
Geographic diversification
Net VNB Net operating profit
Group Equity Value
SA Traditional 64%SA Entry-level 11%
Rest of Africa 13%
Other international 12%
SA Traditional 61%SA Entry-level 7%
Rest of Africa 17%
Other international 15%
1H17R4.1bn
1H17R112.1bn
Sanlam interim results for the six months ended 30 June 2017 53
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9/1/2017
53
Life business48%General insurance
23%
Investment management
13%
Credit & structuring10%
Admin, health & other5%
1H17R112 100m
Life business63%General insurance
12%
Investment management
11%
Credit & structuring11%
Admin, health & other4%
Line of business diversification
Group Equity Value Net operating profit
1H17R4 056m
Sanlam interim results for the six months ended 30 June 201754
Notes
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Financial ReviewCapital management
Sanlam interim results for the six months ended 30 June 2017 55
Notes
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Capital efficiencyDiscretionary capital
550 858
2 000 805
1 598 1 863
260 28
792
350
-
500
1 000
1 500
2 000
2 500
3 000
3 500
Available1/1/2017
Excessdividend
cover
EnterpriseGroup
SahamFinances
Othertransactions
Investmentincome &
other
Availablebefore capital
releases
Releasedfrom Sanlam
Life
Releasedfrom SCM
Available30/6/2017
Sanlam interim results for the six months ended 30 June 201756
Notes
2017/09/01
56
Solvency positionSolvency cover at upper end of target range
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
Sanlam Life31/12/2016
Sanlam Life30/6/2017
Sanlam Lifecovered 31/12/2016
Sanlam Lifecovered 30/6/2017
Sanlam Group31/12/2016
Sanlam Group30/6/2017
SAM solvency cover
Own funds SCR
2.2x
2.2x 2.1x
3.1x 3.0x
2.2x
Target: 1.7 – 2.1
Sanlam interim results for the six months ended 30 June 2017 57
Notes
9/1/2017
57
- 200 400 600 800
1 000 1 200
Net VNB RoGEV (Indexed: 2012 =500)
R m
illion
1H12 1H13 1H14 1H15 1H16 1H17
CAGR = 9.8% CAGR = 14.3%
Strategic progressGood progress on all pillars
- 1 000 2 000 3 000 4 000 5 000
Net result from financial services
R m
illion
CAGR = 16.1%
SA Traditional61%
SA Entry-level7%
Rest of Africa17%
Other international15%
GEV
Life business48%
General insurance23%
Investment management
13%
Credit & structuring10%
Admin, health & other5%
GEV
Prof
itabl
e to
p-lin
e gr
owth
thro
ugh
a cu
lture
of c
lient
-ce
ntric
ity
Enha
ncin
g re
silie
nce
and
earn
ings
gro
wth
th
roug
h di
vers
ifica
tion
Sanlam interim results for the six months ended 30 June 201758
Notes
2017/09/01
58
Strategic progressGood progress on all pillars
Sanlam Design Studio
-
20 000
40 000
60 000
80 000
100 000
120 000
GEV 2005 GEV Jun 2017
Composition of GEV
DiscretionarycapitalOther capital
Non-lifeoperationsValue of in-force
Life RequiredCapital
- 5 000
10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000
Capital released Capital deployed
Capital redeployed since 2005 Discretionarycapital
South Africa
Developedmarkets
Emergingmarkets
Share buyback/specialdividend
Extra
ctin
g va
lue
thro
ugh
inno
vatio
n an
d im
prov
ed e
ffici
enci
es
Res
pons
ible
cap
ital
allo
catio
n an
d m
anag
emen
t
BI & Big Data
Sanlam interim results for the six months ended 30 June 2017 59
Notes
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59
Strategic Priorities for 2017
Sanlam interim results for the six months ended 30 June 201760
Notes
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Sanlam Personal Finance
Continue to adapt to regulatory changes, evolving consumer demands and technology trends
Focus on profitable sales growth throughProduct innovation aimed at greater simplicity and outcomes-driven designAdopting digital to improve customer experience and advanced analytics capabilityImproving speed to market of new offeringsExpanding distribution footprint through range of intermediary models
Strong drive on operational efficiencies and delivering value for money
Bedding down BrightRock acquisition
Sanlam interim results for the six months ended 30 June 2017 61
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61
Sanlam Emerging Markets
Shift in focus from acquisitive to accelerated organic growth through superior execution, enhanced strategic alliances and improved distribution
Increased visibility of Sanlam brand as partnership brand for markets and our employees
Drive synergies with Saham Finances
Deliver on corporate opportunities in Africa in support of retail and commercial business growth
Increased collaboration on human resource development across the cluster
Continued focus on governance, compliance and ethics
Industry consolidation/increasing shareholding/strategic partnerships where it makes sense
Sanlam interim results for the six months ended 30 June 201762
Notes
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62
Sanlam Investments
Maintain consistent superior investment performance
Enhance competitiveness in third party market to grow net inflows
Focus on operational efficiencies to address fee income pressures
Leverage capabilities across businesses to provide solutions for both Retail and Institutional clients
Growth in non traditional asset classes, e.g. Passive and Alternatives
Leverage Credit capabilities in Credit Manager across Sanlam Investments and Sanlam Group
Continued focus on transformation and people development
Further align UK businesses to enhance competitiveness in international market
Sanlam interim results for the six months ended 30 June 2017 63
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63
Santam
Underwriting actions focused on commercial and corporate property
Optimisation of the non-motor claims channel
Development of full multichannel capability in South Africa
Balancing profitable growth with continued efficiency drive to optimise cost ratio
Together with SEM unlock value in general insurance partners
Continue with Internal Model Approval Process (IMAP) application
Work with local municipalities to reduce risk and improve resilience
Innovate for long-term sustainability across the business portfolio and the value chain
Work with industry on wider economic transformation
Sanlam interim results for the six months ended 30 June 201764
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64
Sanlam Corporate
Provide a coordinated ‘One Sanlam’ solution to targeted corporates by addressing Employee, Employer Income Statement and Balance Sheet levers
Implement strategy, bed down operations and leadership
Build best of breed EB and Health businesses
Drive growth in EB and Health to achieve fairer market share
Drive collaboration opportunities (EB + Health) to increase clients’ employee value propositions
Profitable growth: balance cross-cluster pricing to win and retain business while maintaining adequate margins
Progress acquisition of ABSA Consultants and Actuaries
Sanlam interim results for the six months ended 30 June 2017 65
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65
Outlook
Sanlam interim results for the six months ended 30 June 201766
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66
Outlook for 2017
Challenging SA business environment will persistNo real improvement in economic growth prospects for remainder of yearRisk of further downgrades in sovereign ratingBusiness and investor confidence likely to remain under pressure in uncertain environment
More promising growth prospects outside of SA
Risk of currency, interest rate and investment market volatility
Growth in all key performance indicators expected to be muted for full year
Sanlam interim results for the six months ended 30 June 2017 67
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Sanlam interim results for the six months ended 30 June 201768
Notes
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68