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- Sanlam says it is confident about its ethical practices and doesn't expect a Competition Commission probe to highlight any problematic processes.
- The insurer is also confident its business is resilient, even as customers struggle with rising interest rates and elevated inflation.
- But it is concerned about potential reputational damage after regulators indicated that they suspect potential cartel behaviour among SA's biggest life insurers.
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South Africa's largest life insurer Sanlam doesn't expect an industry probe from competition authorities into alleged collusive behaviour to reveal any dodgy practices in its business, but it is concerned about reputational damage.
The Competition Commission announced in late August, after some dawn raids, that it was investigating pricing practices at eight life insurance companies, including Sanlam, but no charges have been laid yet.
Releasing its interim results to end-June on Thursday, Sanlam said while it hadn't been given the necessary details to form a view on the matter, it strictly adheres to ethical practices and legislative requirements, as well as putting a high value on the trust of its customers.
"We believe all pricing practices within Sanlam Life are in the best interests of customers and have robust processes in place to ensure this," it said.
The probe comes as SA insurers grapple with issues including rising inflation, the lingering effects of Covid-19 and deteriorating infrastructure, which can bump up vehicle repair costs. However, Sanlam said on Thursday it expects its medium-term growth to be supported as consumers review their policies in the midst of higher general prices.
Sanlam's headline earnings slipped 8% to R3.84 billion in its year to end-June, with its general insurance business - covering items such as cars and household assets - hit by a "perfect storm of events" that prompted operating earnings to more than halve to R592 million.
This business was under strain from adverse weather, including the KwaZulu-Natal floods, rising claims from Eskom load shedding effects, steeply rising claims costs brought about by a combination of the inflationary surge and heightened crime, and its investment return on insurance funds affected by volatility in global and local bond and equity markets.
The group's life insurance business fared better, growing operating earnings 23% to R2.73 billion as the threat of Covid-19 receded, although new business volumes fell 7% to R33.23 billion.
"Consumer pressure from elevated inflation, market uncertainty and a high comparative base is likely to result in muted levels of new business growth over the remainder of the year, largely impacting investment business," Sanlam said in its results.
"However, the resilience of the South African and broader pan-African economies, especially those that benefit from higher commodity prices, coupled with our diverse product offering, market segment presence and strong distribution capabilities, should continue to provide support to the absolute level of sales volumes."
