Sanlam Navigates Challenges to Post 15% Earnings Growth

Sanlam has released its interim results for the first half of 2025, revealing a period of consistent earnings growth and strong cash inflows, balanced against strategic restructuring and challenges in key business areas. While the group's core life, health and general insurance operations performed well, overall results were shaped by a decline in the value of new business, muted performance in investment management, and a volatile global economic environment. The company's balance sheet and strong solvency position it to handle these challenges while pursuing its long-term growth strategy.

Key Financial Metrics

●     Net result from financial services (NRFFS) per share: Increased 15% to 382 cents.

●     This is Sanlam's core measure of operating profit generated from its insurance and investment businesses, presented on a per-share basis. The 15% increase shows that the company's fundamental business operations became more profitable during this period.

●     Net operational earnings per share: Increased 15% to 439 cents.

●     This metric is broader than NRFFS and includes the investment returns earned on the company's own capital. The strong 15% growth indicates that both the core business and its investment activities performed well.

●     Value of new business (VNB): Declined 18%.

●     VNB is a crucial indicator of future profitability, representing the estimated profit from new policies sold during the period. The 18% decline, even when adjusted for structural changes, signals a challenge in acquiring new, highly profitable business.

●     Return on group equity value (RoGEV): 18.2% per annum.

●     This is a key measure of how effectively Sanlam is using its capital to generate value for shareholders. An annualised RoGEV of 18.2% is a strong return, indicating efficient and profitable use of the company's resources.

●     New business volumes: Grew 7% to R217.8 billion.

●     This represents the total sales achieved during the period, measured in terms of new premiums and investments. The 7% growth shows that Sanlam was successful in attracting more business and growing its top-line sales.

●     Net client cash flows: More than doubled to R48.5 billion.

●     This metric tracks the difference between money coming into the business and money going out. The fact that it more than doubled is a strong signal of client confidence, showing that Sanlam attracted significantly more new investments than what was withdrawn.

●     Group solvency cover: Remained strong at 170%.

●     This is a measure of the company's financial resilience and its ability to meet long-term obligations to policyholders. A solvency cover of 170% is well above the regulatory minimum, indicating that Sanlam maintains a strong capital buffer to withstand financial shocks.

Analysis & Outlook

Sanlam’s first half of 2025 highlights both resilience and challenges, offering investors a mixed picture of Africa’s largest insurer. Core earnings grew 15%, supported by general insurance with +42% and solid contributions from life and health at +15%. Net client cash inflows more than doubled to R48.5 billion, underscoring strong client retention and demand for its offering. Yet, the decline in value of new business at  -18% signals potential future profitability pressures, largely due to the end of the Capitec partnership, reduced exposure to SanlamAllianz and a product mix shift away from high-margin annuities. Investment management also faced challenges from outflows, lower-fee products and once-off Glacier tech costs. Looking forward, management remains cautiously confident, citing volatility from tariffs, rates, and inflation, alongside execution risks in Pan-African markets and the integration of Assupol.

Disclaimer:
*Any opinions, views, analysis or other information provided in this article is provided by BCS Markets SA trading as BROKSTOCK as general market commentary and should not be viewed as advice according to the FAIS Act of 2002. BCS Markets SA does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information provided by third parties. You must rely upon your judgement in all aspects of your investment decisions and all decisions are made at your own risk. BCS Markets SA and any of its employees shall not be responsible for and will not accept any liability for any direct or indirect loss including without limitation any loss of profit which may arise directly or indirectly from use of the market commentary. The content contained within the article is subject to change at any time without notice. BCS Markets SA is an authorised financial services provider FSP No. 51404.
** This article was prepared by BROKSTOCK analyst Maboko Seabi