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If you can breed mink in a cage, then you can breed lions

We often find the prevailing view of Africa hilarious. Except for the very small percentage of non-Africans who have actually visited the continent, the vast majority of foreigners either does not know where Africa is, or they do not know we also live in cities, enjoy all modern amenities, send our children to university, and provide both thought leadership and pioneering research in many fields.
Still, the romantic, colonial image of Africa as the dark continent persists and will probably continue to do so until we contribute our rightful share to the world economy. It is similar to many consumers worldwide only realising in the last couple of years that China manufactures more than just fancy teacups, bamboo sticks and cheap plastic junk.
We find the pervasive African image funny, but when it hurts us, then the entertainment value suddenly drops. Take for instance the very contentious issue of breeding lions for hunting.
A report sent to me earlier this week hailed a recent American decision to ban the import of lion products as a major conservation achievement. This is utter nonsense and it is only viewed in that light by the same deluded people who think they are doing us a favour by blocking the trade in lion products.
This report makes a big deal of the fact that 85% of all canned lions are hunted by Americans and that they will now be prevented to import their dear trophies into the USA. What a shame.
As is typical, the do-gooders are not familiar with either fact or reality.
Lions bred in captivity for the specific purpose to become a huntable trophy, serve a very important economic and conservation role.
Wild lions need large territories to exist. This is brought home very clearly on the world-renowned lion expert, Dr Flip Stander’s website where one can get an inkling of the size of the area he has dedicated his life to protect. Another comparison can be found in the fact that Etosha, large and almost virgin as it is, supports a wild lion population of only around 300 animals.
The fact is, wild lions populations everywhere in Africa and India are vulnerable and it is a sad incident when one of Dr Stander’s lions is shot due to predator human conflict. It is equally sad when rare lion subspecies in the Sahel face extinction because it is so easy to poach in these unregulated regions. But banning the trade in trophies will not solve anything.
The real solution lies in breeding lions in captivity, make them available to overseas hunters, charge for the trophy and the service, and assist the hunter to get his or her trophy back home for display. This activity has been slandered by the popular media and is widely know as canned lion hunting. It is portrayed as inhumane, primitive, and contributing to the demise of the wild population. Nothing can be farther from the truth.
Breeding lions in captivity for the hunting trade must be encouraged. The very successful South African lion trade has proven this over and over again. A market exists for serious hunters to shoot their trophies in South Africa, particularly in the North West Province where most legal hunts are conducted despite the fact that the biggest number of breeders are located in the Orange Free State. This has to do with regulations and compliance.
If the soft-hearted find the idea of shooting a lion repulsive, it is their right to voice their disapproval, but this is a question of ethics and not of economy.
Captive lions is a part of the hunting industry, in turn a part of tourism. Call it adventure tourism if you want. Every lion bred in captivity that becomes a trophy animal has generated an income along the way, and it has earned the host country some hard foreign currency. It is part and parcel of the same mechanism that drives tourism.
Consider this – every canned lion has saved the life of at least one wild lion. The important issue is not to confuse the benefits of conservation for eco-tourism with the direct benefit of generating income while at the same time helping to protect the wild population. It would have been lovely to remain stuck in the romantic notion of Africa but that is simply not reality. As communities grow and develop, they come into conflict with wild animal populations. That is why we have statutory protected areas. But if an enterprising group of lion breeders manages to supply in the demand for huntable animals, and helps protect the wild population, then do not let emotions kill a lucrative industry. After all, we are not cultivating poppy fields.

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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