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The Week’s Weather up to Friday 31 March – Five-day outlook to Wednesday 05 April

The Week’s Weather up to Friday 31 March – Five-day outlook to Wednesday 05 April

Precipitation forecast from Friday 31 March to Saturday 08 April
Source: wxmaps.org, GrADS/COLA

When the season transitions from a summer to a winter stance, the daily interaction between opposing systems becomes visible.

For the duration of this week, the noticeably cooler nights had an impact as far north as Grootfontein. The unseasonally colder early mornings were as much a result of high pressure control from the south as it was from an easterly airflow, later in the week, advecting colder air all the way from the southern Mozambican Channel. This was the same high pressure cell whose core shifted from south-west of Cape Town to east of the South Africa east coast. In its migration around the continent, it displayed more winter than summer characteristics.

But the tropical systems that originate north of Namibia still displayed a typical summer pattern. The airflow from the Indian Ocean across the continent is still enhanced, the Inter-Tropical Convergence zone remains strong and well-demarcated, and it stretches from north-east of Madagascar all the way across the continent right up to the Angolan coastline. For the past three weeks, the western section of the Angolan highland have received far above normal rainfall. The result we see in the levels of the Kunene and Kavango rivers, both of which are very high.

The oscillation between southern and northern systems was empirically observable this week. During the night temperatures fell considerably, escpecially over the southern half and wind flow was consistently from the south south-west. As soon as the sun has risen, the temperature started rising rapidly while the wind flow backed around to north north-east.

This is a typical intra-seasonal pattern in the period following the equinox. When the source of energy is removed from the mix, the high pressure control from the south-west gains the upper hand. When the sun rises, the source of energy quickly flips the surface conditions around, lending strength to the tropical system which then moves across Namibia from the north-east up to the escarpment. The moment this system crosses the escarpment from east to west and the air descends to the coastal plain, we get Oosweer like last week and this week again. The Oosweer however, was strongest over the northern Namib and basically absent from the southern Namib. This is indicative of the battle between the two systems – tropical and temperate, or put differently, between low pressure and high pressure systems.

The battleground between these systems is Namibia. This week was a textbook example of how the convergence line can shift by as much as 600 km in a single day. So while there was a promising build-up of cloud at the beginning of the week, the high pressure control on the surface systematically crossed the entire Namibia, clearing all the cloud. The high was so much in control, it dispelled all rainfall, not only in Namibia, but in South Africa, Botswana, Zimbabwe and even western Zambia as well.

By Friday, the high pressure system had a reach as far north as Tanzania with relative humidity over the entire southern Africa below 30%.

What’s Coming

The whole country remains under the control of the high pressure system for the duration of the weekend. Some cloud may form north and east of the convergence line, but these will disappear in the late afternoons. The inferred cloud base is expected to remain elevated at around 15,000 feet, another indication of the high’s impact on the surface.

Two cold fronts pass the Cape in quick succession on Saturday and Sunday. Early mornings in Namibia will remain cool, with the cold first coming from the south and then towards Monday morning, from the east. The cold fronts at the Cape undermine the development of the core of the next South Atlantic high pressure cell which is expected to measure only 1018 mB. This indicates windy conditions, first over Karas and Hardap and then by Monday, over Omaheke and Otjozondjupa.

Rainfall expectations for the next five days are zero.

About The Author

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.