Sanlam: The Dominant Force in African Insurance

“We contribute to financial resilience and prosperity in all the markets where we are present,” Sanlam sets out. Headquartered in South Africa, this diversified financial services group operates across a number of selected global markets. In its more than 100-year existence Sanlam has been able to grow into one of the biggest internationally active insurance groups worldwide, and is classified as a domestic systemically important financial institution in South Africa. 

“Our purpose is to empower generations to be financially confident, secure and prosperous. Our vision is to distinguish ourselves as the most admired financial services group in Africa,” the group explains. Established as a life insurance company, today Sanlam is a diversified financial services provider, with an extensive product offering catering for all market segments and the biggest non-banking financial services footprint on the African continent.

Designed to be there for a lifetime of financial assistance, the group’s expertise spans life and general insurance, financial planning, retirement and employee benefits, investments and wealth management. “We offer our clients a large and diversified range of solutions,” Sanlam affirms. “Omni-channel distribution ensures that clients are reached and serviced through their preferred channel with increased focus on developing our digital capability.”

AFRICAN DOMINANCE

The Group has consistently grown its local as well as an international footprint with a presence today in more than 10 African countries, but has diversified too into others including India, Malaysia, Switzerland, the UK and Australia.

As CEO Paul Hanratty recently told The Africa Report, Sanlam’s decision to focus on Africa was an easy one. “We’ve got a billion people living in Africa,” he pointed out. “Very few of them have financial services – that’s a reality. If you want the economy to grow, you need financial services. Financial services is like the railroad, you need to put in the railroad.”

Sanlam has remained steadfastly committed to its African operations throughout its long lifetime, and in recent years has reaffirmed this confidence through the acquisition of SAHAM Finances, the former insurance subsidiary of the SAHAM Group. A well-established and leading insurer present in 26 countries in Africa as well as in Lebanon, Sanlam took over its control in three phases between 2015 and 2018.

Now called Sanlam Pan Africa (SPA) General Insurance, and based in Casablanca, at the close of 2020 Hanratty spoke of his enduring positivity surrounding the addition.

“SAHAM Finances brought a complementary footprint and has expanded our continental business presence,” he explained, “and given us particularly strong property and casualty insurance businesses in a number of African countries outside South Africa. We have got to know and appreciate this business over the last five years, and it is an outstanding business in every sense.

“We are fortunate to have acquired this business from the SAHAM Group who put in place a very sound set of operations and financial processes. We are working hard to expand and widen the product set to be distributed through the SPA General Insurance network across Africa.

“In time we will build the business as the region is set to grow economically, while making life insurance an equally strong component of the offering.”

AFRICAN RAINBOW CAPITAL DEAL

“South Africa is a vital market for us, and what I wanted to emphasise is that we still see a tremendous opportunity to grow in South Africa,” Hanratty was at pains to add. “The acquisition of SAHAM Finances has created a new long-term platform for growth, as has our Indian investment, but we still see tremendous opportunities for value creation in South Africa.”

Last year’s announcement of an agreement signed with African Rainbow Capital Financial Services (ARC FS) was the perfect example of the potential Hanratty describes, with the transaction establishing one of the largest black-empowered asset management companies in South Africa.

“We are absolutely delighted with the creation of a new powerful asset manager in South Africa in partnership with Ubuntu-Botho Investments and African Rainbow Capital,” Hanratty effused. “The relationship between Sanlam and our partners continues to create value for Sanlam shareholders and the wider community that we serve in South Africa.

“This transaction takes Sanlam a step further on the journey to becoming South Africa’s leading asset manager.” The deal sees ARC FS own an approximate 25% economic interest in Sanlam’s South African third-party asset management business. It is also key in enabling Sanlam to explore opportunities to further develop its third-party asset management business, in partnership with Ubuntu-Botho Investments (UBI) and African Rainbow Capital.

“ARC Financial Services through its parent company Ubuntu-Botho Investments (UBI) has been Sanlam’s partner for more than 15 years,” Dr Patrice Motsepe, founder and chairman of Ubuntu-Botho Investments, commented. “With the latest transaction, I am of the firm belief that it will enhance Sanlam’s business as a serious contender in this highly competitive asset management space.”

Rumours now abound of further movement by Sanlam, in this instance to close a deal to see South Africa’s banking conglomerate Absa offload its Asset Management Unit. Absa, which had at the close of last year about R270 billion under the management of its Asset Management wing, was reported by IOL News to be carefully considering the deal, which would create one of the country’s largest money managers, second perhaps to only the Public Investment Corporation.

STRENGTH IN UNPRECEDENTED TIMES

The release of its 2020 results shows Sanlam to stand financially strong and resilient throughout the unprecedented health, economic and market challenges posed by the Covid-19 pandemic.

Reflecting the diversity and underlying durability of the Group’s businesses, the group achieved overall net fund inflows of R62 billion, an increase of 8% on the prior year, while new business volumes increased by 25% to R311 billion exceeding R300 billion for the first time, supported by strong investment business sales. 

Various measures were taken to assist clients, intermediaries and partners in weathering the storm of the pandemic and adjusting their financial plans accordingly, including unprecedented levels of client communication and financial plan reviews, premium holidays and direct financial support.

“Covid-19 caused pain for our employees, clients and communities,” summarised Paul Hanratty. “We lost loved ones, friends and colleagues. Many people remain concerned about their financial situation, their employment and health.

“Sanlam has been there to provide support and advice. We are satisfied with our financial position which remained strong throughout 2020 as we implemented our strategy, while helping clients and other stakeholders to ensure a resilient future.”