Sanlam reports flat first-half earnings

South African insurer Sanlam reported flat first-half earnings on Thursday, as volatile markets offset strength in its underwriting business, and stuck to a cautious outlook.

South Africa’s second-largest insurer and one of the country’s largest fund managers said normalised headline earnings per share totalled 80,5 cents in the six months to end-June, compared with 78,9 cents a year earlier.

Headline EPS is the main gauge of profit in South Africa and excludes certain one-time items.

Sanlam, which has been targeting growing demand for insurance in Africa, said market volatility and risk aversion limited profitability in its capital management business.

South African insurers have largely posted stronger earnings in 2010 after a sharp drop in profits a year earlier, when debt-burdened customers lapsed on paying their policies.

Sanlam, which outperformed several of its rivals last year, is struggling with an uncertain outlook for equity markets. Market movements during the second half of the year are likely to have a major impact on earnings performance, it said.

Last week Discovery, South Africa’s largest health insurer, posted a 23% rise in full-year profit and said it was positioned for further growth.

Shares of the company have risen nearly 7% so far this year, compared with a 0,7% decline in South Africa’s Top-40 index.—Reuters



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