Sanlam, the largest insurance company in Africa, is refocusing on its home market and plugging holes from its largest-yet acquisition to squeeze higher returns out of its businesses, reported Bloomberg.
It has been two years since the Cape Town-based financial services firm bought Morocco’s Saham Finance for $1.1bn, extending its reach to 33 countries across Africa. But a crisis in Lebanon, underwriting practices that didn’t meet Sanlam’s criteria and an over-reliance on investment returns has seen the purchase fall short of investors’ expectations.
Mr Paul Hanratty, who took over as CEO of Sanlam in July, said, “We’re going to focus on South Africa and on fixing the leakages in the African continent, outside of South Africa, because the growth is there.”
The acquisition of Casablanca-based Saham was part of a plan to diversify away from South Africa, which accounts for most of its Sanlam's earnings, as the economy struggles with a recession, high unemployment and corruption. Sanlam is repackaging its product suite and digitising channels to sell more of its offerings from funeral cover to investments to existing customers, the CEO said.
The 102-year-old Sanlam had to write down its operations in Lebanon, which accounted for 10% of Saham’s purchase price. It also faced claims from the bomb blast in Beirut in August, and took a hit when the drop in oil prices hit Angola’s economy.
“When I talk about filling the holes in the bucket, I talk about putting in place really strong operational disciplines that get you back to a decent return on capital and a less volatile pattern of earnings,” Mr Hanratty said.