Sanlam Life and Savings paid gross death claims of more than R14 billion in the first 10 months of 2021 – 88% higher than in the same period in 2020 – mainly because of the impact of the third wave of Covid-19, the group said in a trading update on Wednesday.
It paid R3.42bn in claims net of reinsurance and annuity and disability offsets over and above its long-term expected level in the Sanlam Life and Savings business, and R536 million within Sanlam Emerging Markets.
The Sanlam Life and Savings cluster released discretionary reserves of R2.85bn to mitigate the impact of excess claims.
Sanlam Emerging Markets holds more limited discretionary reserves and will only consider releases at year-end based on full-year experience.
Sanlam said it has taken “significant actions” to mitigate the future impact of Covid-19 on its business. These include the “extensive” repricing of group risk business, the development of new underwriting standards and amended product design in the retail business, and a full review of actuarial valuation assumptions in the light of the pandemic.
“The latter will permit the group to restore pandemic buffers over the next number of years from higher margins. Sanlam continues to actively manage the consequences of the Covid-19 pandemic and the emergence of the fourth wave in South Africa. The group expects to retain modest discretionary reserves to mitigate any mortality losses after 2021.”
Sanlam chief executive Paul Hanratty said the group produced “outstanding” operational results despite the challenging year.
New business volumes were 17% higher than in 2020 and 46% higher than in 2019.
The value of new covered business was up by 55% on 2020 and was 23% higher than in 2019.
The new covered business margin of 2.65% was higher than in 2020 and only slightly lower than that in 2019.
Net fund inflows of R61.4bn were 21% higher than in 2020 and 41% higher than in 2019.
The net result from financial services increased by 24% on 2020 was 4% higher than in 2019 excluding one-off items.
Sanlam said the 2020 and 2021 financial years contained significant “quarterly movements”, which meant the current level of growth was not expected to be maintained for the full year.
However, Sanlam was “delighted that current-year profits are in line with 2019 results, since the group was targeting to restore profitability to 2019 levels as quickly as possible”.
