Reuters
South Africa‘s largest insurer Sanlam Ltd said on Thursday it expected continued growth in emerging markets boosted by newly acquired Moroccan unit SAHAM Finances, after posting a 32% drop in half-year profits due to one-off costs.
Last month, the company had flagged that its earnings could fall by as much as 35% as a result of costs, including a 1.7 billion rand ($111.57 million) expense related to a black economic empowerment transaction and a 200 million rand amortisation charge.
Sanlam said on Thursday it did not expect a major economic recovery in South Africa for the rest of the year, while growth in its emerging markets business would remain strong supported by its acquisition of SAHAM Finances in Morocco.
Its headline earnings per share – the main profit measure in South Africa – stood at 170.7 cents in the six months to June 30, compared to 251 cents a year earlier.
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“The results reflect the resilience of our diversification strategy,” Chief Executive Officer Ian Kirk said, adding that the company was “satisfied” given the economic context it was operating in.
The South African economy suffered its worst contraction in a decade during the period, while global markets continued to remain volatile amid political tensions around Brexit and Sino-U.S. trade war.
Meanwhile, the company‘s net result from financial services rose by 13% compared to 2018, a performance the insurer described as “credible”.
It attributed that to the performance of SAHAM Finances, in which it gained full ownership in March last year for $1 billion, as part of its plan to become a pan-African insurance group.
The fast-growing unit, with operations in 26 countries, was helped by activity from its corporate clients in the second half of the year, Sanlam said, and more than doubled its gross result from financial services.
($1 = 15.2369 rand)
(Reporting by Onke Ngcuka; Editing by Emma Rumney and Rashmi Aich)
