Our opinion on the current state of SANLAM(SLM)Sanlam (SLM) is one of the largest and most established insurance and financial services groups in South Africa, with a rich history dating back to 1918. The company demutualised in 1998 and is listed on both the JSE and the Namibian Stock Exchange. Sanlam has a wide range of operations spanning South Africa, the UK, the USA, Europe, India, Australia, and several African countries. Its product offerings include general insurance, life insurance, asset management, banking, credit, health, and bancassurance.
Sanlam's business is divided into four key divisions:
1. Sanlam Investment Holdings (SIH) – Now 25% owned by African Rainbow Capital.
2. Sanlam Emerging Markets – This includes an 84.5% stake in Saham, which operates in 33 French-speaking countries.
3. Sanlam Personal Finance – This is a core area contributing about 50% of Sanlam's profits, primarily focusing on the South African market.
4. Santam – Sanlam owns a 61% stake in Santam, the largest short-term insurer in South Africa.
Sanlam also has international interests, including a 26% stake in Shriram, a prominent provider of insurance products in India, and various other investments in the UK, Ireland, and Malaysia. Saham is a significant part of its African operations, with 3,000 staff members across 700 branches.
The company's partnership with African Rainbow Capital (ARC) is aimed at growing its presence in the lower- and middle-income markets, with Sanlam providing R2 billion in seed capital for these efforts. This partnership is expected to help expand its business to underserved markets.
In its financial results for the six months ending 30th June 2024, Sanlam reported a strong performance with headline earnings per share (HEPS) rising by 40%. The company showed solid growth across its core businesses, with net result from financial services (NRFFS) up 14%, driven by a 14% rise in life and health insurance, 16% in general insurance, 10% in investment management, and 9% in credit and structuring operations. This reflects broad-based operational strength and earnings momentum.
Sanlam continues to be one of the JSE's blue-chip stocks, with a long track record of consistent growth. Its current price-to-earnings (P:E) ratio of 12.17 makes it an attractive value proposition at current levels, especially as it continues to expand its operations both locally and internationally.
On 18th June 2024, Sanlam announced a significant acquisition, agreeing to buy 60% of Multichoice's insurance business for R1.2 billion in cash. This deal should further bolster its insurance operations and provide new opportunities for growth.
