Sanlam warns on job losses

2010-03-11 09:16

Johannesburg - Financial services group Sanlam [JSE:SLM] declared itself "well positioned" to grow, but warned that economic difficulties, including the spectre of further job losses, were not behind South Africa.

"We would like to share the view of the optimists in their outlook for 2010, but remain concerned that the worst is not necessarily behind us and that the South African economy may still see further job losses this year," said Sanlam CEO Johan van Zyl.

Other areas of concern for the economy was the impact of the proposed Eskom price hikes, as well as the rise in oil price and wage demands.

Nearly one million jobs were lost in South Africa during 2009.

Van Zyl was commenting in notes to the company's full year to end-December results announcement on Thursday.

Sanlam posted a 133% increase in headline share earnings of 218c and a 12% increase in group equity value to 2 473 cents per share. The dividend, at 104c/share, was 6% higher.

Group equity value (GEV) is the measure by which Sanlam values its insurance business operations and assets under management and resembles the "embedded value" figure represented by other insurers.

Sanlam has seen a sharp rise in the value of its share price in recent weeks, up from 2 250c to 2 540c per share. This puts it at a premium to the GEV figure, indicating that it is potentially expensive or that the market is factoring in better growth in the coming year.

Said Van Zyl: "While 2010 will not be an easy year, we do believe that we are well placed to deliver another set of solid results this year.

"We remain well positioned to achieve the sustainable growth for which we have positioned the group over the past seven years," he said.

New business volumes were 3% higher at R103bn, while the group reported a 70% increase in net fund inflows of R15.5bn. These inflows are a continuation of the trend from 2008 where Sanlam saw net inflows of R9.1bn.

The group continued to focus on diversifying its operations internationally. It had expanded into India and other parts of Asia and has exposure to the UK markets.

In 2009, Sanlam Investments bedded down its joint venture with SMC, India`s fourth-largest securities broking house.

Another business in the group, Sanlam International Investment Partners, partnered UK-based investment manager FOUR Capital Partners after Sanlam took a 29.9% stake in the firm.