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Weekly weather overview and short-term outlook to Wednesday 16 January 2018

Weekly weather overview and short-term outlook to Wednesday 16 January 2018

Visual: Midday synoptic map for southern Africa and the southern seas as on Friday 11 January

Source: South African Weather Service,

Recent Developments

Southern Africa’s weather is prone to a large influence of the two major high pressure cells either side of the continent. In the west is the South Atlantic high pressure cell and in the east, the Southern Indian high pressure cell. These two are links in a chain of high pressure cells in the so-called high pressure belt, i.e. the area of high pressure control between the tropics and the Antarctic that circles the southern hemisphere roughly between 20°S and 40°S.

Shortly after Christmas, Namibia’s northern half has been dominated by an influx of tropical air from Angola and Zambia. This could be seen in the low cloud base around 10,000 feet, the dark grey colour of the clouds and the fluffy texture of tropical clouds.

A middle layer of clouds was also visible, leading to some impressive localised cloud formations of the more familiar cumulonimbus (CB) type. These produced widespread thunder showers but they were highly isolated and scattered over a vast territory. Some areas got good rain while others relatively nearby only saw drops.

Windhoek, for example, have several stations reporting a season-to-date total of close to 100 mm with many other areas now only between 50 and 60 mm. The variance between the figures shows the erratic nature of the holiday rainfall.

Further north, rainfall totals are higher, but south of Rehoboth, close to nil except for the Karasburg district along the South African border. These conditions were present until around last week Friday, 04 January.

As of this week, a remarkable change has become visible. Not only were the skies almost completely devoid of clouds, the only regions where some precipitation occurred were Otjozondjupa along the Botswana border, Kavango East, Bwabwata and the Caprivi section of Zambezi. Even here nothing spectacular happened and falls above 20 mm were the exception.

The reason can be seen on this week’s visual. Friday’s synoptic map shows a weather stance that is in essence a winter pattern. This is corroborated by the continued light showers in certain areas of the Western Cape.

The core of the South Atlantic high pressure cell, despite not being very strong, is displaced to the north by a good one thousand kilometres, and the southern Indian high, although somewhat stronger, is also too close to Madagascar. Furthermore, the lateral distance between the two cores is relatively short meaning a rainfall window will occur less frequently than would be the case in a normal year.

In the Regional Consensus Forecast published by the Weather Working Group of SADC in Lusaka in October last year, a so-called “false start” was mentioned as a possibility. Going by the current weather stance, that is certainly a possibility. For as long as the South Atlantic high remains displaced to the north, Namibia will not get good rain.

Further afield, it is noteworthy that the equatorial Pacific Ocean is definitely in the first phase of a weak El Nino which does not bode well for us. Also, the Southern Oscillation Index of the Australian Weather Bureau, which got to an index value of almost +10 late in December, has quickly receded over the past week, now with a value of only +5.6. Again, as long as this index stays under +7, chances for good local rain are very slim.

The impact of the South Atlantic high was felt every night this week. Compared to last week when nighttime temperatures did not go below 20°C, this week was considerably cooler, going down to around 12°C Tuesday and Wednesday night. This is the South Atlantic high at work, showing us just how important its relative strength and locality are.

On the Radar

For the duration of the weekend, the South Atlantic high continues to reign supreme. The skies over most of the country will be clear and cooler nighttime temperatures will be experienced up to Grootfontein.

A large area of lower pressure (during daytime) is situated over the western half of Botswana just touching the Namibian border and covering Kavango East, Bwabwata and Zambezi. This indicates very hot afternoon temperatures.

Due to the large pressure differential between the Atlantic ocean and the Botswana interior, the Namibian interior will be prone to windy conditions. The closer to the escarpment, the more windy it will be.

By Monday, the high pressure cell has migrated to the east opening a small window for an influx of moisture from Angola. The effect will be limited to the areas north of Etosha. Some alto-level cloud will begin to form over the country’s northern half but are not expected to lead to any rain.

Tuesday and Wednesday should see improved conditions for the northern half, but the westward development of the trough is uncertain. It may however develop further west and south than currently expected.


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