South African financial services firm Sanlam expects 2009 to be challenging after it posted a 59% drop in full-year normalised headline earnings per share on Thursday.
Sanlam, one of the biggest asset managers in South Africa, said normalised headline earnings per share for the year to end December fell to 93,9 cents from 228,7 cents, in line with its forecast of a 55% to 65% drop.
Total new business volumes fell 2% to R100-billion, and Sanlam said it expects a further slowdown in new business flows in 2009.
It added its investment management and life insurance operations were likely to be worst hit due to their bigger exposure to volatile market conditions.
”This sets the stage for a challenging 2009 and although we are confident that our businesses are robust enough to weather these challenges, it will impact on our ability to repeat our 2008 operational performance,” Sanlam said in a statement.
Insurance companies worldwide have seen sliding markets shrink the value of their investment portfolios.
South Africa’s largest insurer Old Mutual posted a 38% drop in 2008 statutory profit on Wednesday and said it would scrap its dividend in 2009, while Santam, majority-owned by Sanlam, expects to remain under pressure in 2009 after it reported lower earnings last month.
Its rival Mutual & Federal reported it had swung to a full-year headline loss per share, while Liberty Holdings forecast a tough first-half in 2009 after reporting lower annual earnings.
Headline earnings per share is the main profit gauge in South Africa and strips out certain one-off, financial and non-trading items. — Reuters