Listed financial services group Sanlam has reported a 99% increase in headline earnings per share for the year to the end of December 2005 to 229,8 cents from 115,3 cents a year earlier. The company declared a total dividend for the year of 65 cents per share, a 30% increase on the 50 cents per share distributed in 2004.
Announcing its annual results on Thursday, Sanlam said its earnings from financial services after tax totalled R2,3-billion, a 27% increase on the R1,81-billion reported in 2004. Its net result from financial services was 90,9 cents per share, 29% higher than the 70,5 cents reported a year earlier.
Core earnings rose by 23% to R3,28-billion from R2,66-billion a year earlier, and core earnings per share were 25% higher at 129,7 cents versus 103,4 cents in 2004.
Total new business volumes rose by 23% to R73,5-billion from R59,9-billion the previous year, while investment inflows were 29% higher at R53-billion, and the group experienced net fund inflows of R15,2-billion, marginally down on the R16,6-billion recorded in 2004.
Sanlam’s life-insurance new business (on an annual premium equivalent basis) rose by 10% to R2,15-billion from R1,96-billion a year earlier, while the value of new life business written declined by 9% to R291-million from R321-million. This was compensated for by the growth in the value of new non-life business.
Measured by embedded value, Sanlam’s embedded value per share came in at 1 615 cents, while return on embedded value per share was 24,4%, and the embedded value of the group’s new life business totalled R291-million. The new-business embedded value margin fell to 13,5% from 16,4% previously.
Sanlam made a provision of R620-million (before tax) in its 2005 results for the effect of enhanced early-termination benefits for previous policyholders resulting from the agreement between the Life Offices’ Association and National Treasury late in the year.
During the year, Sanlam bought back 13% of its issued shares for R4,4-billion at an average price of R12,39 per share, using a portion of the R10-billion in proceeds from the sale of its Absa stake to Barclays plc.
The company succeeded in reducing its administration cost ratio to 29,1% from 31,4% during the year, although its group operating margin also fell to 20,7% from 21,6% previously.
Sanlam’s life-insurance business had a capital adequacy requirement cover of 3,9 times, 8% higher than the 3,6 times seen a year earlier.
Commenting on its results, Sanlam said its acquisitions during the year, including African Life and a controlling stake in Channel Life, were on track with their integration plans and the group is confident that its operational and return targets for the businesses will be met.
Together with its strategic stake in Safrican, these operations will “form the bedrock” of the company’s entry-level life-market strategy. — I-Net Bridge