Sanlam Predicts Sluggish Growth

June 13 - Sanlam, considered one of South Africa's biggest life insurance entities, posted good results for the first quarter of 2011, showing that life insurance business volumes grew by 12%.

However, the group surprised the market by predicting that its future operational performance would be less pleasing.

Sanlam said that global economic conditions were subdued and they would reflect in markets and economies where Sanlam ran some its business.

"Global economic growth is expected to remain sluggish for the rest of this year," said Sanlam in its statement. "The acceleration in earnings growth achieved during the latter part of 2010, in many instances on the back of stronger equity markets and strong underwriting results will not necessarily be repeated in 2011."

Analysts say that Sanlam is warning the market to be more guarded in general.? Shareholders were also warned that market movements could impact group earnings significantly.

Increased Business All Around

Despite these gloomy predictions, overall results for Sanlam's first quarter of 2011 were pleasing.

• New life insurance business grew by 12%.
• Net business inflows grew to R8.6 billion - up 27%.
• Net result from financial services grew 15%.
• Sanlam's international businesses were negatively impacted by the strong rand.
• Sanlam is well capitalised with discretionary capital of around R4 billion as of December 2010.

"The group's 2010 annual report indicated that we did not expect the South African economy to stage a large scale recovery in 2011, but rather to experience slow, yet steady progress," said the group.

It pointed out that this has been the theme for the first four months of 2011.

As a result of the financial statement released on Wednesday, share prices dropped on the Johannesburg Stock Exchange and lost 1.05% (29c) to R27.34.