Sanlam's emerging markets plan on track

This is in line with the group's strategy which defines emerging markets as one of the key areas to be exploited for potential growth in the business.

Sanlam's chief executive Dr Johan van Zyl said: "In 2011 the company's international business contributed around 15% of operating profit (pre-minorities). Our view is that this contribution can be doubled over the next five years as these markets are seen as key growth engines. Considerable work continues to be done to identify core markets for expansion."

Earlier this month Sanlam said that the SEM division delivered gross operating profits of R850m‚ up 30% from R656m in 2011. SEM is expected to deliver a compounded annual growth rate of 17% between 2011 and 2015.

SEM's chief executive Heinie Werth says the company is pleased with the progress made by the business cluster responsible for Sanlam's expansion in emerging markets outside South Africa.

Currently‚ SEM is doing business in 10 countries in Africa‚ excluding South Africa and Namibia‚ as well as India and Malaysia.

In 2012 SEM concluded transactions to the value of roughly R3bn. In the first quarter of 2013 a further transaction worth about R1bn with Shriram Transport Finance Company was concluded.

SEM is making profits

For the 2012 financial year‚ SEM managed to increase gross operating profit from its Indian operation (Shriram) by 750% from R4m to R34m. With the Shriram transactions completed in 2012‚ a contribution of about R400m in profit is expected in 2013.

Gross operating profit for Namibia increased 10% to R225m and 20% for Botswana to R499m. For the rest of Africa‚ the businesses managed to increase gross operating profit by 134% to R117m.

Among the highlights was the Nigeria operation which has managed to break even within two years of its launch‚ testimony to SEM's low-cost expansion model in Africa.

Says Werth: "We are making steady progress towards our objectives and we are satisfied that the cluster is well positioned to increase its contribution to the group over the next five years as the markets we operate in are seen as key growth areas."

In addition‚ Werth says, strong local partnerships play an important role in the company's performance: "We rely on strong local partners and management to drive business growth within each country and this has been mutually beneficial in India and in our operations in Africa."

Sanlam has been in partnership with the Indian Shriram in respect of life insurance (Shriram Life) since 2005 and short-term insurance (Shriram General) since 2008.

SEM continues to focus on growing the group's stake in existing operations. In 2012‚ SEM concluded some major transactions and the group redeployed a total of R3‚ 3bn of its discretionary capital during the year. The bulk of this was invested in SEM initiatives.

Some highlights of 2012 include:

• A further R2bn investment in Shriram Capital Limited;
• The acquisition of a 49% stake in the Malaysian short-term insurer Pacific & Orient Insurance Co. Berhad;

• Approval from the relevant Kenyan authorities and the South African Reserve Bank to increase its shareholding in Pan Africa Insurance Holdings from 50% to 60% in the open market.

Looking ahead‚ Werth says SEM will continue to explore further opportunities in Africa‚ India and South East Asia‚ in line with the strategy to create value for shareholders.