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5 March 2009
Dr Johan van Zyl, Group Chief Executive of Sanlam comments on the results:
"Sanlam delivered a solid operational performance under challenging circumstances in 2008. This is a result of the diversification strategy the Group embarked upon some five years ago, which provided the resilience to perform well in a year characterised by one of the biggest crises the world's financial markets have ever faced.
"Our diverse portfolio of investment, life insurance and short-term insurance business achieved good stability for the Group. Our life insurance operations in particular proved their ability to withstand tough and volatile conditions and as a result outperformed the non-life operations. This represents a change from the past few years when non-life businesses did very well in the favourable economic conditions.
"In addition, Sanlam's operational efficiencies contributed to the bulwark needed to withstand the challenges of 2008. Despite the negative impact of the turmoil in financial markets, as well as the high interest rate and inflation environment on our clients, the Group exceeded expectations and reported an outstanding 23% growth in the value of new life business.
"However, the economic conditions of 2008, particularly the substantial drop in equity markets, put a damper on Sanlam's earnings, especially in respect of investment returns.
"Our focused business strategy continues to centre on five pillars: optimal capital utilisation, earnings growth, costs and efficiencies, diversification and transformation. This strategy has served us well and we remain committed to it. Our aim is to deliver solid and consistent performance for shareholders and policyholders, not only in favourable times, but also when conditions are tough."
Dr van Zyl goes on to say that Sanlam made substantial progress in the earlier part of 2008 towards achieving capital efficiency through share buy-backs and investments in growth initiatives. " However, poor equity market performance and extreme volatility have led us to shift our emphasis towards a prudent approach of preserving capital. In line with this we have suspended our share buy-back programme. Our capital position, however, remains healthy enough to enable us to seize opportunities that may offer value."
He added that one of Sanlam's major focus areas in 2008 included achieving employment equity and training. "We can proudly announce that for the first time, more than 50% of our employees were black last year. However, achieving targets at middle and senior management level remains challenging and in 2009 we will be investigating ways of speeding up progress."
Looking ahead Van Zyl said that the biggest risks for 2009 remain the volatile markets and the decline in the real economy, both locally as well as in the major developed markets.
" Although we believe that 2009 will be another tough year full of challenges, we are not changing our strategy – only the manner in which we are executing it. We have therefore taken a strategic decision to take our foot off the accelerator on the investment for growth side this year and to focus intensely on transforming Sanlam into an even more efficient and well-diversified operation.
"Our diversification strategy remains key to achieving this, but this year there will be greater focus on expanding and diversifying through strategic partnerships rather than through major acquisitions."
Referring to the global financial crisis, Van Zyl concluded that South Africa and its financial services sector weathered, and continue to weather, the global financial markets crisis well.
"I would like to congratulate the financial services industry of South Africa and its regulators and policy-makers for a job well done.
"Obviously the long-term fall-out from the crisis will only be fully understood in months to come, but a complete overhaul of the global regulatory superstructure under which financial institutions and markets operate, is inevitable. In South Africa we are no strangers to tough regulations and last year proved that we are on the right track", he said.
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