Market stability props up Sanlam

Johannesburg - South Africa's second-biggest insurer Sanlam reported a rise in first-half profit on Thursday thanks to relatively stable equity markets in the period, but said trading conditions would remain challenging for the rest of 2009.

The firm, one of the biggest asset managers in South Africa, said normalised headline earnings per share for the six months to end June climbed 34% to 78.5c, compared to 58.8c in the previous corresponding period.

Sanlam said its earnings had been boosted by marginally positive returns on local equity markets, which tracked higher global markets as sentiment improved over a financial crisis.

New business rose 1% to R51bn, helped by its operations in the institutional and entry-level markets.

Sanlam said new business at its personal finance and private investments units dropped as its middle-income retail target market remained under pressure.

South African insurers have taken a hit from the global slide in equity markets, as well as a reduction in consumer demand due to relatively high interest rates, inflation and rising personal debt.

Sanlam said trading conditions were expected to remain challenging for the rest of its 2009 financial year and said an improvement in economic conditions would only show in its operating results from 2010.

The firm said in June volatile market conditions would have a major impact on its full-year earnings, after it posted a drop in four-month profit.

Rival Metropolitan posted a drop in first-half profit on Wednesday as more customers lapsed on their life policies, while Santam, majority-owned by Sanlam, said first-half returns were hit by a rise in high-value property fire claims.

- Reuters