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Promised ‘synergies’ between Sanlam and Saham delayed

Promised ‘synergies’ between Sanlam and Saham delayed

The insurance group’s priorities for 2020 had to be reviewed. © Naoufal Sbaoui – Mike Hutchings / REUTERS The pan-African insurance leader has managed to maintain its revenues despite the ongoing health crisis, but its margin is collapsing and the integration of Moroccan Saham’s African assets is dragging on.

In the end, this is not a surprise. 2020 and the consequences of the ongoing health crisis on the insurance sector have somewhat slowed down the pan-African ambitions of the South African financial services group Sanlam.

Admittedly, the latter managed to maintain or even slightly improve its revenues last year (R87.2bn, or nearly €5bn, compared to R84.25bn in 2019), but the benefits of its Moroccan mega-acquisition, which took effect on 1 October 2018, are still slow to bear fruit.

“The valuations of all the group’s operations were affected by the Covid-19 operating environment, contributing to a negative return on equity,” says the group.

Sanlam’s return on equity was negative (-2.8%) in 2020, compared to a positive return the previous year (6.4%), according to the latest published figures. This is a key indicator for assessing the group’s ability to continue to grow – particularly from an integration perspective, with a necessary capacity for innovation and other associated investments. An economic slowdown in sub-Saharan Africa

As anticipated at the time of the publication of its interim results last September, “Sanlam is going through the most difficult period that the group has faced in many decades,” said Paul Hanratty, the group’s CEO, at the time.

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The South African insurer is now giving no further indication as to when the integration of the former Saham Finances into its operations – originally scheduled for 2020 – will be completed.“The realisation of the synergies will take longer than initially expected due to the slowdown in economic growth in Saham’s area of influence following Covid-19. We remain confident that the synergies can be achieved, but we have decided to view them as learning opportunities for the future,” said the group in its financial statement, which was made public in mid-March.According to market observers, Sanlam suffered in 2020 from the “scissors effect” on its revenues, which […]

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