Sanlam earnings expected to rise by 42%

Posted On Wednesday, 03 March 2004 02:00 Published by
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Sanlam, Africa's biggest life insurer by premiums, would probably report on Friday that earnings rose 42 percent

March 3, 2004

By Bloomberg

Cape Town - Sanlam, Africa's biggest life insurer by premiums, would probably report on Friday that earnings rose 42 percent, as it cut costs and improved its investment performance, analysts said this week.

Earnings a share before one-time items and goodwill amortisation would probably rise to R1.23 a share from 86.7c, according to the median forecast of seven analysts surveyed by Thomson Financial.

In September, Sanlam chief executive Johan van Zyl pledged to cut costs by as much as 20 percent and improve investment performance.

In January, Cape Town-based Sanlam said in a trading update that 2003 profit had shown a "material overall" increase.

"We would like to see whether they are delivering on cost savings," said Neville Chester, a fund manager at Coronation Asset Management. "We are expecting new business to be down - it's the magnitude of the decrease that's important."

Sanlam plans to release its annual earnings on March 5.

"I don't expect fireworks - it's too early to see the long-term benefits [of the cost cutting]," said Ian Troost, an insurance analyst at Metropolitan Asset Managers. 


"In the second half they had to retrench people. There should be short-term costs that were incurred," Troost said.

Sanlam made a R943 million net profit in the first half of last year, its first profitable period in 18 months.

Those results were buoyed by increased earnings at Absa, in which it holds 23 percent.

Sanlam's earnings should be boosted by its asset management unit, which won R8 billion in new business in 2003 after it appointed a new staff and chief executive and improved its investment performance.

Sanlam's shares rose 33 percent in the past 12 months as the FTSE/JSE Africa all share index gained 30 percent.

London-based rival Old Mutual's share price gained 14 percent, while Liberty Group, South Africa's second-biggest life insurer by premiums, advanced 2 percent.

Sanlam closed 11c higher at R9.43. Liberty improved 55c to R55.35 and Old Mutual was down 1c to R11.88.
 


Publisher: Business Report
Source: Business Report

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