Our opinion on the current state of SANLAM(SLM)Sanlam (SLM) is one of the largest insurance and financial services groups in South Africa. It was established in 1918, demutualised in 1998, and then listed on the JSE and the Namibian Stock Exchange. It has operations in South Africa, the UK, America, Europe, India, and Australia, as well as a range of other African countries. Its product range includes general insurance, life insurance, asset management, banking, credit, health, and bancassurance.
The business has four essential elements:
1. Sanlam Investment Holdings (SIH) - now 25% owned by African Rainbow Capital.
2. Sanlam Emerging Markets - which includes its 84.5% interest in Saham.
3. Sanlam Personal Finance.
4. Santam - in which it owns 61%.
Outside of South Africa, it has operations in 11 other African countries and Malaysia. Saham has operations in 33 French-speaking countries with 3,000 staff members operating out of 700 branches, offering a similar product mix to Sanlam. Sanlam also owns 26% of Shriram, a leading provider of insurance products and financial services in India. It also made a deal to acquire 69% of Catalyst Fund Managers, a Cape-based manager of listed property assets, and 100% of an Irish company, CIG Fund Management.
About 50% of Sanlam's profits come from its personal finance operation, which is primarily based inside South Africa. It is therefore impacted by the low levels of consumer spending in this country as well as the economic recession. Sanlam is 18% black-owned and has initiated a partnership with African Rainbow Capital (ARC), in which it intends to focus on lower- and middle-income consumers and small companies. Sanlam will provide R2bn of seed capital.
On 14th June 2021, the company announced that it had acquired the Alexander Forbes group risk and retail life business for R100m. The company announced that, like Discovery, it would require employees to be vaccinated against COVID-19 from 2022.
In its results for the six months to 30th June 2024, the company reported headline earnings per share (HEPS) up 40%. The company said, "The group's earnings momentum continued, growing net result from financial services (NRFFS) by 14%, reflecting strong trading performances across our businesses. Our life and health insurance operations grew net results from financial services by 14%, general insurance reported a 16% rise, investment management performance was satisfactory with 10% growth, while the group's credit and structuring operations recorded growth of 9%. NRFFS per share increased by 19% due to a lower adjusted weighted average number of shares in 2024 relative to 2023."
In a trading statement for the year to 31st December 2024, the company estimated that HEPS would increase by between 30% and 40%.
Sanlam is one of the JSE's foremost blue-chip shares with a history of steady growth over a long period of time. After recovering somewhat from the fall in markets due to the coronavirus pandemic, it is currently trading on a P:E of 10.55. We consider it to be good value at these levels.
In a joint announcement on 18th June 2024, Sanlam agreed to buy 60% of MultiChoice’s insurance business for R1.2bn in cash.
