GLACIER INVESTMENT SUMMIT - Jurie Strydom, Sanlam Personal Finance CEO 06 February 2020 - Glacier by Sanlam
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GLACIER INVESTMENT SUMMIT
Jurie Strydom, Sanlam Personal Finance CEO
06 February 2020
Insurance | Financial Planning | Retirement | Investments | Wealth
1. Overview 2. Strategic focus for the Sanlam Group: 2020 and beyond 3. Operating environment 4. Outlook
1. Overview
A PROVEN STRATEGY THAT DELIVERS
Our strategic intent
Our purpose
Our purpose is to build a world of Our strategic intent is to create sustainable value for all stakeholders.
Wealthsmiths™, that supports people Our vision in
Our vision in Our vision in
in living their best possible lives South Africa Africa, India and Malaysia developed markets
through financial resilience and To lead in client-centric To be a leading Pan-African To play a niche role in
prosperity at the individual, wealth creation, financial services group with wealth- and investment
organisational and societal levels management and protection a meaningful presence in management in specific
India & Malaysia developed markets
Our values
Profitable top-line growth through a Extracting value through innovation
To:
culture of client-centricity and improved efficiencies
Act with integrity;
Our strategic pillars
Grow shareholder value through
Enhancing resilience and earnings Responsible capital allocation and
innovation and superior
growth through diversification management
performance
Lead with courage Transformation
Serve with pride; and Continuous transformation is central to Sanlam’s ability to adapt to a
Care because we respect one changing world and underpins all of the strategic pillars.
another
Executed through five clusters SPF SEM SIG SNT SC
OPERATIONAL STRUCTURE
Our decentralised structure provides us with a competitive advantage
Sanlam Group
Group office
100% 100% 100% 100% 62%
Sanlam Emerging
Sanlam Personal Sanlam Investment Sanlam
Markets Santam
Finance Group Corporate
(SPA & SSI)
SA Retail: life Emerging markets ex- SA & developed SA & EM corporate: General insurance,
insurance, investment SA: life insurance, markets: investment employee benefits, reinsurance & co-
& other financial general insurance, management, wealth health investor in SEM
services investments, credit & management, credit & general insurance
banking structuring businesses
SUSTAINABLE SHAREHOLDER VALUE CREATION
Target: SA 9yr risk free + 4% Target: 2% - 4% real growth
Dual focus on future growth and dividend flows
Consistent outperformance of RoGEV target Stable dividend growth
1600 350
10yr CAGR 15.6% 10yr CAGR 12.3%
1400 300
1200 250
1000
200
800
150
600
100
400
200 50
0 0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Target Actual Dividend Cash earnings
AN UNMATCHED PAN-AFRICAN FOOTPRINT
Diversification within Sanlam strengthens financial and operational capability
Luxembourg
United Kingdom
Ireland
France
USA Switzerland
Tunisia Saudi Arabia
Algeria Lebanon
Morocco
Mali
Niger Egypt
Senegal
Burkina Faso Ethiopia India
Guinea
Cote D’Ivoire Philippines
Ghana Kenya
Togo Uganda Malaysia
Benin Rwanda
Nigeria Burundi
Cameroon Tanzania
Gabon
Republic of the Congo Malawi
Angola Zambia
Future Expansion Zimbabwe Mauritius
Botswana Madagascar
Emerging Markets - Indirect presence Namibia
Mozambique
Emerging Markets - Direct presence South Africa Swaziland
Australia
Lesotho
Developed Markets
SPF (SA RETAIL) VNB MARKET SHARE
40.0%
Large 5 peer
group 35.0%
30.0%
SANLAM
25.0%
OLD MUTUAL
LIBERTY 20.0%
MMI 15.0%
DISCOVERY
10.0%
5.0%
0.0%
2013 2014 2015 2016 2017 2018 2019H1
SPF IN-FORCE POLICY NUMBERS
2021 2 390 380 1 712 237 651 369 Total: 4 753 986
2014 - 2021
2020 2 197 296 1 753 353 631 968 Total: 4 582 617
Entry Level Market
Middle Market 2019 2 027 336 1 795 804 615 241 Total: 4 438 381
Glacier 2018 1 879 681 1 841 966 601 347 Total: 4 322 994
2017 1 753 059 1 889 064 592 662 Total: 4 234 785
2016 1 624 655 1 952 973 585 745 Total: 4 163 373
2015 1 538 066 2 025 129 573 025 Total: 4 136 220
2014 1 451 537 2 100 458 543 384 Total: 4 095 379
0 1 000 000 2 000 000 3 000 000 4 000 000 5 000 000PROFITABILITY DRIVERS
Value of New Business per SPF Business
Glacier
473
BrightRock
526
604 120
Middle Market 81 226
301 323
187 250 338 20 251
Sanlam Personal Loans 280
513 457
144 405 424 460 408
Digital (MiWay Life & Indie) 410 36 352
127 301 9
85 263 249 288 287
Entry Level Market 67 94 249
54 280 208 211 296 696
14 57 198 260 150 521 618
103 98 382 371 365
186
169 258 74 67 62 129 138 174 263 244 357
74 88 -4PERSISTENCY IN CHALLENGING CONDITIONS
SA middle income market
Lapses, 5 4.8
surrenders & fully 4.5 4.2 4.2
paid-ups as % of 3.94.0 3.93.8 3.8 3.9
4 3.63.7 3.6
in-force per half 3.5
3.4 3.4
year 3.02.9 2.9 2.9 3.0
3 2.8 2.7 2.82.9 2.92.8 2.92.8 2.9 2.92.7 2.72.7
2.5
H1
2
H2
1.5
1
0.5
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018PERSISTENCY IN CHALLENGING CONDITIONS
SA lower income market
Sanlam Sky
17.5
16.8
(Excluding Capitec)
14.5
14.1
– NTU’s, lapses and
12.7
12.6
11.9
surrenders as % of
11.4
11.3
11.3
11.1
11.1
11.0
10.7
10.7
10.7
10.5
10.4
10.3
10.0
10.0
10.0
in-force
9.9
H1
H2
-
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192 Sanlam Group
strategic focus
2020 & beyondKEY PRIORITIES FOR THE GROUP
SA and beyond
Continue to accelerate
market share gains in Execute on the partnership
Execute on our advantage opportunities
high opportunity areas in SA
Capitec, MTN, ARC
Entry level 3rd party
Delivering on the Saham Harnessing technology
market asset
acquisition through digital
(funeral) management
transformation
Employee Deliver on the Pan-African
Health Competing through people
benefits opportunity via SEM &
Santam
Transformation and societal impact – being the very best of what Africa has to offerCAPITEC COLLABORATION
Sales performance to date
Policy sales since launch in May 2018 (in '000)
140
• Sales exceeded
120 116 113 2019 target by
102 40%
97 96
100
88 88
79 77
• 1 075 000 policies
80 74 74 75
69 sold in 2019
60
60 56 59
47 45 • Active book
40 31
960 000 policies
20 12 • Collections, NTU
and claims on or
- better than target
Jan-19
Nov-18
Jun-18
Oct-18
Jun-19
Oct-19
Jul-18
Aug-18
Dec-18
Mar-19
Apr-19
Jul-19
Aug-19
Nov-19
Dec-19
May-18
Sep-18
Feb-19
May-19
Sep-19INNOVATION & GROWTH
Matrix Risk Cover repositioned
Investment Hub
Sanlam IndieDIGITAL: PORTFOLIO OF INITIATIVES
SCAN, TEST AND LEARN
NEW BUSINESS
Robotics
TRANSFORMATION OF Find an intermediary
Sanlam Now Risk
CORE BUSINESS Cover
Sales & marketing Operations Technology Savings Goal Manager
Glacier Investment Hub
Business intelligenceTHE SANLAM FOUNDATION
3. OPERATING ENVIRONMENT
SOUTH AFRICA’S REALITY
3 possible scenarios for 2030
A nation torn by deepening A nation with an expanding
A nation torn between
immobility and restless social divides, daily protests economy, social cohesion
energy and cynical self-interest and a renewed spirit of
constitutionalism
GDP growth averages 1.5% with GDP growth averages 2.2% to GDP growth averages 4.5% to
periods of recession 2030 2030 with growth becoming more
Unemployment never falls below Slow but persistent depreciation in solid and predictable from 2020
25% the rand and increasing onwards
The interest rate increases towards government debt risk Unemployment in 2030 stands at
the end of the 2020s Unemployment is reduced to 22% 16%
Income inequalities skyrocket A growing separation of South The 1st six years of education
Destructive battles within major Africans by class and income level improves, and university education
political parties with oppositions Under-investment in agriculture becomes more affordable
forming coalitions between 2024- sees declines in food production Public sector becomes more
2029 and security capable and which increases trust
Key institutions are only partially Market-led interventions in in key institutions
liberated and are quickly recaptured education, health and SOE’s Faster urban and rural land
by the newly emerging elite produces mixed results redistribution
Individual freedoms are becoming Agricultural production and food
curtailed security is boostedOPERATING ENVIRONMENT
Going forward, political will, political alignment and implementation capability will determine the SA economic
landscape
Pedestrian economic Eskom bail-out undoes SOE risks remain
Market risk and volatility
growth, with GDP fiscal consolidation, with (SAA, Denel, PRASA,
higher
expected at 0,8% a debt trap now possible etc.)
Unemployment rates
Risk of SARB
Current fiscal trajectory increasing including high
nationalisation remains, NHI risk to economy
not possible levels of unemployed
but mandate intact
youth
Revenue shortfall of Moody’s downgrade now
Possible VAT hike on the
R52bn projected for the more likely than ever
cards
current fiscal year beforeTHE REALITY
• Moody’s last decision to downgrade the outlook from stable to negative
• Reflects the "material risk" that the government will not stop deterioration of its
finances
• Concerned high unemployment and inequality precludes the necessary policy action
• Notes that “the 2020 budget in particular will be a key indicator of whether or not the
government is committed to [fiscal consolidation]”
• Moody’s sending a strong signal that Government should stop talking about structural
reform and should start implementing policy that will attract investment
• Continued inaction will likely ensure a downgrade ±March 2020
• This will lead to outflows and an increase in the cost of borrowing
• Very negative for investor confidence and growth outlookCRITICAL ACTIONS NEEDED
What is needed at the SONA / February Budget Speech
• Implement a blueprint to revive the economy focusing on strategic
sectors and interventions.
• Key aspects and clear milestones to be covered in the plan to
include:
• Security of energy supply
• Fiscal consolidation by cutting government expenditure and energy supply
• Reform SOE’s
• Government to refrain from announcing any new big policy initiatives that could
further erode investor confidence4. Outlook
LOOKING FORWARD We believe SA is on the right path, we will not fail, but it may take time to right the ship A slow recovery in SA will require Sanlam to up its game continuously We have conviction that Sanlam has the required strategy and execution capability to do this We need to benchmark ourselves against the best in the world As Sanlam we need to lead by looking through the noise and restoring confidence
questions
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