Sanlam shares surge as insurer returns to pre-Covid profits

South Africa’s Sanlam said on Thursday its operating profit was back at around 2019 levels, it had recovered to pre-pandemic performance on other metrics and annual profits rose 27%, pushing its shares 6.5% higher in early trade.

The country’s top insurer, which has South Africa’s largest life insurance business, reported the rebound despite ongoing high levels of excess mortality claims related to Covid-19, which hit R4.2 billion ($279 million) during last year.

Chief executive Paul Hanratty said the insurer used high levels of reserves to offset these, allowing it to capitalise on boosts from factors including higher consumer savings and higher returns in equity markets.

“All financial services companies were wondering how long it would take them to get back to pre-Covid levels and we’ve managed to get there in 2021, which is … probably about a year ahead of when we really thought we’d get there,” he said.

New business volumes hit a record level, up 43% on 2019, and strong profitability and margins drove a 13% rise in Sanlam’s measure of operating profit, up 4% on 2019 when one-off gains experienced that year are excluded.

Its headline earnings per share – the main profit measure in South Africa – rose 27% to 433 cents in the year to December 31. That was towards the upper end of its forecast range and compared with 340.3 cents a year earlier when restated to account for a hyperinflation accounting error.

It declared a dividend of 334 cents per share.