SECURING TOMORROW - JSE MAGAZINE

SECURING TOMORROW

A century of ensuring financial futures for generations to come

On 8 June 2018, Sanlam turned 100 years old. From its inception in 1918 with just seven founders to now more than 21 000 multinational employees, the company has grown exponentially. Today, it is the largest non-banking financial services company in Africa.

In 2017, the group paid out R3.5 billion in claims, achieved an 18% increase in normalised headline earnings per share, 14.8% in return on group equity value per share, and new business volumes of R230 billion. Overall, the net result from financial services per share increased by 7%, the value of new life business increased by 15%, and net fund inflows totalled R35 billion.

The first four months of 2018 showed a strong operational start, with an increase of 11% in net result from financial services per share, 5% in normalised headline earnings per share, and 2% in net VNB (value of new business).

Group CEO Ian Kirk says that while the legacy of the last 100 years has enabled the business to demutualise, diversify and entrench resilience, Sanlam remains future-focused, with the goal of continuing to build a better world for generations to come. This is the overarching theme for Sanlam’s centenary celebration, ‘because no matter who we are or where we come from, all we really want as human beings is to leave the world – and the people close to us – in better shape, with more opportunity than we were given’.

That’s why Sanlam has spent the last 100 years building a better world for others to inherit – and it will continue to do so for future generations. Kirk adds that Sanlam has always and will always be proudly African, and its acquisition of Saham Finances is testament to its vision to be the biggest non-banking financial services group on the continent.

‘Our goal is to secure financial futures to enable people to live their best lives – today and tomorrow,’ according to Kirk. ‘While we’re now based in 44 countries, with businesses in India, Malaysia and the UK, certain things will always be prioritised in our decision-making: our people, our continent and creating a legacy we’re proud of.’

It takes a solid strategy for a business to remain relevant for 100 years. Kirk believes it comes down to being prepared to persevere and adapt. ‘You need to have a strategy and be able to execute it. Crucially, you can’t rush things; you need to keep building on and reiterating processes; you have to keep building on success.’ Part of looking forwards means looking backwards and learning from the past.

Sanlam was founded by a small group of people who were trying to change the financial futures of SA’s marginalised communities through collective savings. The idea was to take small financial contributions from large groups of people to empower individuals to become economically active.

This approach was expanded to include small businesses with such success that by the 1980s, Sanlam was investing in almost every sector of the economy. Its founding principle also enabled Sanlam to be one of the first businesses to unbundle its assets, and to be responsible for SA’s first major BEE transaction, via the sale of Metropolitan in 1993. Five years later, Sanlam demutualised and listed on the Johannesburg and Namibian stock exchanges – the first insurer in Africa to do so, trebling the number of shareholders on the JSE and turning more than 2 million policy holders into shareholders.

Today, the drive to make a difference remains a core focus for the business. Sanlam prioritises multiple initiatives and strategic partnerships that catalyse sustainable societal change. As a responsible corporate citizen, the business is committed to projects such as Blue Ladder Schools (a partnership with schools and communities to improve maths tuition and all aspects of the school environment, and which has assisted 71 693 learners to date) and its ongoing partnership with the WWF, which focuses mainly on water security and conservation. Sanlam is also part of the CEO Initiative, which supports President Cyril Ramaphosa’s Youth Employment Service.

Looking ahead, Kirk says the company has a very clear vision. ‘We want to lead in all the main segments in South Africa – and further afield, across Africa, India and Malaysia. To entrench our leadership position, we need to expand our unique footprint in all the countries we operate in.
‘International diversification is a primary focus, especially in partnership with Santam – the short-term insurer within the broader Sanlam Group.’

The Santam/Sanlam partnership facilitates an exchange of skills that has been highly successful in acquisitions in India, Malaysia and Africa. Between 2016 and 2018, the partnership acquired 100% of Saham Finances – at $1 050 billion, this is its largest transaction to date, cementing Sanlam’s position as the insurer with the largest pan-African footprint.

‘While it’s important for us to take a moment to acknowledge our centenary and all our people who helped us reach this point – our employees, clients, intermediaries and other stakeholders – we’re also extremely excited about the next 100 years,’ says Kirk. ‘In the next decade, we aim to penetrate the emerging markets of Ethiopia and Egypt via our Cape to Casablanca strategy. Saham has opened up exposure to over 34 African countries, enabling us to cement our position in the market and deepen our presence across the continent. While many companies have this kind of strategy, few are able to efficiently enforce it. Ultimately, that is what sets us apart, and it will continue to drive our profitable growth for the forthcoming 100 years and more.’

Key initiatives to build a better world
On 27 March 2018, President Ramaphosa launched the Youth Employment Service (YES). Currently, 6 million young South Africans are out of work. YES aims to improve young people’s prospects of finding employment and, through this, to contribute to developing a more inclusive and sustainable economy in SA.

  • Sanlam contributed to the operational costs required to set up YES
  • With other corporates, it helped fund the building and IT infrastructure of a community hub in Tembisa to deliver broad skills training and computer skills
  • The group is identifying new job opportunities to accommodate approximately 350 youth as part of YES’ one-year internship programme. It’s also looking for opportunities within its supply chain businesses and the SMEs in its enterprise and supplier development (ESD) programme
  • As part of the CEOs Initiative, Sanlam also supported the SA SME Fund and Ikusasa Student Financial Aid Programme.

Using education to change lives for generations to come
The Sanlam Blue Ladder Schools project has empowered 71 693 learners to date. The project aims to help children learn what they are taught so that they can be what they want to be – today and for generations to come.

Sanlam has partnered with respected NPOs and disadvantaged schools countrywide to improve maths competency, create supportive learning spaces and grow levels of effective teaching and learning of maths.

To support Blue Ladder Schools, Sanlam launched Shop for Good, and an ongoing initiative that enables South Africans to shop and give Blue Ladder Schools the essentials they need. People can browse a catalogue of school supplies and use Snapscan to donate towards a specific category of essentials. Shop for goods online at www.shopforgood.co.za.

Catalysing a sustainable environment for a sustainable future

  • Sanlam has a long-standing partnership (dating back to 2007) with WWF-SA to catalyse concerted action from all sectors around the responsible management of freshwater resources.
  • Working with WWF is one of a number of meaningful partnerships Sanlam has formed to add value with key players in the environmental space
  • In 2017, Sanlam Investments created a global climate fund asset manager, Climate Fund Manager, in partnership with the Development Bank of the Netherlands, FMO and Phoenix InfraWorks. This initiative culminated in the launch of a global climate fund, Climate Investor One, with R5.7 billion in capital raised in 2017. This capital will be deployed to combat the detrimental effects of unmitigated climate change by facilitating developments in renewable energy projects in emerging markets
  • Sanlam also has a number of internal initiatives to reduce its impact, including minimising water consumption, the zero-waste-to-landfill goal and the evergreen project.

Promoting skills development and job creation
The Sanlam Enterprise and Supplier Development (ESD) programme, in partnership with Santam and the Association for Savings and Investments South Africa ESD Fund, focuses on transformation within our supply chain and distribution networks. It creates shared value for Sanlam and the country’s SMEs by providing business development support as well as access to funding, which helps to promote sustainable development and job creation. It utilises the services of Edge Growth, Encore SA and Platinum Black to achieve these goals.

  • In line with the SA government’s prioritisation of entrepreneurship and SME advancement, Sanlam recognises the value of a transformed supply chain for a more equitable society. Currently, around 30% of its total procurement spend goes to SMEs. Increasing the number of sustainable black-owned and black women-owned enterprises in SA remains a top priority
  • Sanlam’s approach to ESD centres on nurturing the entrepreneurial talents of individuals and unlocking opportunities in high-growth businesses through customised and dedicated business development support and access to funding. The impact of this partnership has been felt in the 210 new jobs created and the 1 400 jobs supported by Sanlam in the programme since inception. The businesses also saw an average revenue increase of around 21%, which speaks to the economic value that was added.

www.sanlam.co.za