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Overview for the week and 5-day outlook to Wednesday 07 November 2018

Overview for the week and 5-day outlook to Wednesday 07 November 2018

Visual: Surface synoptic map of southern Africa on Thursday 01 November.

Source: South African Weather Service,

What Happened

Thursday’s midday synoptic map provides a good snapshot of this week’s weather development. The map shows elements of both winter and summer patterns although the overall stance leans more to a winter pattern with the obvious exception Namibia’s north-eastern corner.

Generally a cooler week for the interior south of Etosha which resulted from the South Atlantic high pressure cell’s impact over the south-western two-thirds of Namibia. This produced some surprisingly cool nights across the southern half with the minima going as low as 10°C in the higher areas of the interior.

A high pressure cell by definition constitutes a sinking air mass but it can have a local effect in two opposing ways. The first is when there is high pressure control on the surface, (the direct result of the proximity of the South Atlantic high) while the second happens when there is high pressure control in the upper air, or so-called ridging. This is what we had two weeks ago with the sweltering late afternoons.

This week’s high pressure control was surface bound and it was driven by the South Atlantic high migrating around Cape Agulhas but with its effect extending well into South African, Namibian and Botswana territory. This lead to the cool nights. It is essentially still a remnant of the winter pattern when the location of the 1024 mB isobar generally indicates the high’s core. As can be seen from the map, it still straddles the parallel that runs through Saldanha Bay from which it can be deduced that out to sea, winter conditions are still in control.

Opposing this impact from the south-west, is the so-called anti-cyclonic circulation which is a standard summer feature of southern Africa. With daylight reaching 13 hours this week, the amount of energy received during daytime is approximately 16% more than the energy lost during the night. Consequently, central and southern Africa is heating up fast as it moves deeper into the summer season with a commensurate effect on overall temperatures in general and daytime temperatures in particular.

This airflow from the north-east advects warmer, moister tropical air from Angola and Zambia into Namibian airspace where at some point, it encounters the cold, dense air from the south-west. Depending on the relative strength of the two systems, it can lead to cloudiness which typically occurs east of the convergence line. This did not happen this week for a third reason, i.e. the strength and direction of the jet stream in the stratosphere

This week, the South Atlantic jet stream was particularly strong and active, also blowing from a south-westerly direction like the high on the ground, but clearing the upper air of moisture as it pushes the convergence line to the east. Blowing strongest between 35,000 and 45,000 feet, the jet stream is most powerful at the height where cumilo-nimbus cloud formation usually takes place. The jet stream can be seen as a huge blower that simply clears the upper air of everything it meets in its path.

Thus the clear skies were in part due to the activity of the jet stream.

What’s Coming

In the wake of the departing high, a fairly intense low pressure system develops over the ocean south of the southern Cape. Lower pressures are present over Namibia forming the signature mid-level trough reaching all the way from Angola, across the eastern half of Namibia, through Botswana and into South Africa, linking up with the low pressure system in the south.

This will bring a broad band of cloud into Namibian airspace east of a line running more or less from Ruacana through the interior to Mata Mata. The outlook expects widespread light rain across Ohangwena, Kavango West, Kavango East, eastern Otjozondjupa and Omaheke along the Botswana border, but only on Saturday and Sunday.

This system intensifies on Sunday and may lead to isolated but strong downpours in some areas. The geographic distribution remains more or less the same as on Saturday but there is an outside chance that the system may actually develop a few hundred kilometres further to the west due to the absence of a high pressure cell.

The jet stream remains very active meaning that by Monday the trough has shifted north-eastward with only a slight chance for rain over Kavango East, Bwabwata and the Caprivi on Monday and Tuesday. By Wednesday the system has moved away from Namibia to Zimbabwe and eastern Botswana.

No rain is indicated for the interior.

The next approaching high makes landfall by Monday afternoon bringing very windy conditions to the southern Namib on Tuesday. Because of the high’s rapid shift from west to east, Tuesday morning will again see cooler temperatures in the south-western quadrant.

Overall, Monday, Tuesday and Wednesday should be clear with very limited cloud formation and zero expectation for rain expect for the northern-most part of Kavango West along the Angolan border.


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