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Weather 25 September 2015

What Happened
Local weather oscillates between winter and summer. The most notably feature on the week’s synoptic progression was the absence of a strong South Atlantic high pressure cell and the persistent southern Indian high south-east of Madagascar.

The week started with considerable cloudiness over the eastern half of southern Africa. This blanket of cloud covered a large part of South Africa, Zimbabwe, and eastern Botswana. By Tuesday, the same system has spread towards the west covering northern Botswana and western Zambia. From there it spilled over into Namibian airspace with scattered clouds over the interior, and some substantial cloudiness over the Kavango and Bwabwata.
By Wednesday the South Atlantic high was reduced to a small, weak core some 3000 km offshore from Oranjemund. The southern Indian high, however, remained strong and was displaced towards the north by a good 1000 km. Its 1024mB isobar was almost touching the south-eastern tip of Madagascar for most of the week.
It must be expected therefore, that the influence of the southern Indian high over the southern African subcontinent was enhanced while that of the South Atlantic high was diminished. But the atmosphere is a four-dimensional space meaning it develops laterally, vertically and continuously. This was amply illustrated by the colder nights in Namibia’s south-western quadrant, and the hazy, hot conditions over the northern and north-eastern half.
The impact of the South Atlantic high is strongest on the surface and over the southern Namib and Karas Region, i.e. those areas in close proximity to the high pressure cell. But with such a small, restricted and weak core, the impact was limited to nighttime.
The southern Indian high however, being much stronger and situated further north, had a much stronger impact. First was the cloudiness over eastern Africa, and later in the week, the cloudiness over Angola, Zambia and the northern half of Namibia. But while the South Atlantic high tends to hug the ground, the northern rim of the southern Indian high has a more pronounced impact in the middle and upper levels. As its rotates over land, it warms up losing its density leading to lower pressures.
Thus the interior was marked by low pressure conditions, with higher pressures over the south-western subcontinent. This also reflected in the cloud level with its base around 18,000 feet and its tops hardly exceeding 25,000 feet. Indeed a thin blanket to cover such a large area.
What’s Coming
The local weather over the next few days will be determined by the strength and relative position of the southern Indian high pressure cell. It is expected to remain stuck south-east of Madagascar with a relatively strong core reading of 1028mB. Its 1024 mB rim will remain in close proximity to the island itself.
The southern Indian high forms a very effective barrier against the approaching South Atlantic high but the massive volume of air has to go somewhere and the only way is up. This creates a large area over the southern Cape where vertical velocity will be enhanced meaning very windy, even stormy conditions during Saturday night and Sunday. The southern Cape may be far from Namibia but as the weather goes, it is only a stone-throw, and it has a major impact on local weather especially above 20,000 feet. The low pressure conditions over the southern Cape leads to a pronounced trough at around 25,000 feet running all the way from southern Angola, across Botswana and into the South African interior. This trough will lead to very hot conditions over northern Namibia, especially over Bwabwata, generally lower pressure over the interior, and considerable cloudiness over the north-eastern quadrant.
In the meantime, the South Atlantic high continues on its relentless migration towards the east despite the stagnant position of the southern Indian high. This leads to a northward push by the South Atlantic high and by Tuesday next week, it will feel like winter again in the Karas Region. Colder nights can be expected as far north as Otjiwarongo with very windy conditions over the escarpment.

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Sanlam 2018 Annual Results

7 March 2019

 

Sanlam’s 2018 annual results provides testimony to its resilience amid challenging operating conditions and negative investment markets

Sanlam today announced its operational results for the 12 months ended 31 December 2018. The Group made significant progress in strategic execution during 2018. This included the acquisition of the remaining 53% stake in SAHAM Finances, the largest transaction concluded in the Group’s 100-year history, and the approval by Sanlam shareholders of a package of Broad-based Black Economic Empowerment (B-BBEE) transactions that will position the Group well for accelerated growth in its South African home market.

Operational results for 2018 included 14% growth in the value of new life insurance business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances, testimony to Sanlam’s resilience in difficult times.

The Group relies on its federal operating model and diversified profile in dealing with the challenging operating environment, negative investment markets and volatile currencies. Management continues to focus on growing existing operations and extracting value from recent corporate transactions to drive enhanced future growth.

The negative investment market returns and higher interest rates in a number of markets where the Group operates had a negative impact on growth in operating earnings and some other key performance indicators. This was aggravated by weak economic growth in South Africa and Namibia and internal currency devaluations in Angola, Nigeria and Zimbabwe.

Substantial growth in Santam’s operating earnings (net result from financial services) and satisfactory growth by Sanlam Emerging Markets (SEM) and Sanlam Corporate offset softer contributions from Sanlam Personal Finance (SPF) and Sanlam Investment Group (SIG).

Key features of the 2018 annual results include:

Net result from financial services increased by 4% compared to the same period in 2017;

Net value of new covered business up 8% to R2 billion (up 14% on a consistent economic basis);

Net fund inflows of R42 billion compared to R37 billion in 2017;

Adjusted Return on Group Equity Value per share of 19.4% exceeded the target of 13.0%; and

Dividend per share of 312 cents, up 8%.

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with our performance in a challenging operating environment. We will continue to focus on managing operations prudently and diligently executing on our strategy to deliver sustainable value to all our stakeholders. The integration of SAHAM Finances is progressing well. In addition, Sanlam shareholders approved the package of B-BBEE transactions, including an equity raising, at the extraordinary general meeting held on 12 December 2018. Our plan to implement these transactions this year remains on track.”

Sanlam Personal Finance (SPF) net result from financial services declined by 5%, largely due to the impact of new growth initiatives and dampened market conditions. Excluding the new initiatives, SPF’s contribution was 1% down on 2017 due to the major impact that the weak equity market performance in South Africa had on fund-based fee income.

SPF’s new business sales increased by 4%, an overall satisfactory result under challenging conditions. Sanlam Sky’s new business increased by an exceptional 71%. Strong growth of 13% in the traditional individual life channel was augmented by the Capitec Bank credit life new business recognised in the first half of 2018, and strong demand for the new Capitec Bank funeral product. The Recurring premium and Strategic Business Development business units also achieved strong growth of 20%, supported by the acquisition of BrightRock in 2017. Glacier new business grew marginally by 1%. Primary sales onto the Linked Investment Service Provider (LISP) platform improved by 5%, an acceptable result given the pressure on investor confidence in the mass affluent market. This was however, offset by lower sales of wrap funds and traditional life products.

The strong growth in new business volumes at Sanlam Sky had a major positive effect on SPF’s VNB growth, which increased by 7% (14% on a comparable basis).

Sanlam Emerging Markets (SEM) grew its net result from financial services by 14%. Excluding the impact of corporate activity, earnings were marginally up on 2017 (up 8% excluding the increased new business strain).

New business volumes at SEM increased by 20%. Namibia performed well, increasing new business volumes by 22% despite weak economic conditions. Both life and investment new business grew strongly. Botswana underperformed with the main detractor from new business growth being the investment line of business, which declined by 24%. This line of business is historically more volatile in nature.

The new business growth in the Rest of Africa portfolio was 68% largely due to corporate activity relating to SAHAM Finances, with the East Africa portfolio underperforming.

The Indian insurance businesses continued to perform well, achieving double-digit growth in both life and general insurance in local currency. The Malaysian businesses are finding some traction after a period of underperformance, increasing their overall new business contribution by 3%. New business production is not yet meeting expectations, but the mix of business improved at both businesses.

SEM’s VNB declined by 3% (up 6% on a consistent economic basis and excluding corporate activity). The relatively low growth on a comparable basis is largely attributable to the new business underperformance in East Africa.

Sanlam Investment Group’s (SIG) overall net result from financial services declined by 6%, attributable to lower performance fees at the third party asset manager in South Africa, administration costs incurred for system upgrades in the wealth management business and lower earnings from equity-backed financing transactions at Sanlam Specialised Finance. The other businesses did well to grow earnings, despite the pressure on funds under management due to lower investment markets.

New business volumes declined by 13% mainly due to market volatility and low investor confidence in South Africa. Institutional new inflows remained weak for the full year, while retail inflows also slowed down significantly after a more positive start to the year. The international businesses, UK, attracted strong new inflows (up 57%).

Sanlam Corporate’s net result from financial services increased by 4%, with the muted growth caused by a continuation of high group risk claims experience. Mortality and disability claims experience weakened further in the second half of the year, which is likely to require more rerating of premiums in 2019. The administration units turned profitable in 2018, a major achievement. The healthcare businesses reported satisfactory double-digit growth in earnings, while the Absa Consultants and Actuaries business made a pleasing contribution of R39 million.

New business volumes in life insurance more than doubled, reflecting an exceptional performance. Single premiums grew by 109%, while recurring premiums increased by a particularly satisfactory 56%.

The good growth in recurring and single premium business, combined with modelling improvements, supported a 64% (71% on a comparable economic basis) increase in the cluster’s VNB contribution.

Following a year of major catastrophe events in 2017, Santam experienced a relatively benign claims environment in 2018. Combined with acceptable growth in net earned premiums, it contributed to a 37% increase in gross result from financial services (41% after tax and non-controlling interest). The conventional insurance book achieved an underwriting margin of 9% in 2018 (6% in 2017).

As at 31 December 2018, discretionary capital amounted to a negative R3.7 billion before allowance for the planned B-BBEE share issuance. A number of capital management actions during 2018 affected the balance of available discretionary capital, including the US$1 billion (R13 billion) SAHAM Finances transaction. Cash proceeds from the B-BBEE share issuance will restore the discretionary capital portfolio to between R1 billion and R1.5 billion depending on the final issue price within the R74 to R86 price range approved by shareholders.

Looking forward, the Group said economic growth in South Africa would likely remain weak in the short to medium term future, and would continue to impact efforts to accelerate organic growth. The outlook for economic growth in other regions where the Group operates is more promising. Recent acquisitions such as the SAHAM transaction should also support operational performance going forward.

“We remain focused on executing our strategy. We are confident that we have the calibre of management and staff to prudently navigate the anticipated challenges going forward,” Mr Kirk concluded.

Details of the results for the 12 months ended 31 December 2018 are available at www.sanlam.com.