| Fri 30 Jun 2006, 11:40 | | Fitch Affirms South Africa's Sanlam Life at 'AA(za |
|
Fitch Affirms South Africa's Sanlam Life at 'AA(zaf)', Revises Outlook to
Positive
Fitch Ratings-London-28 June 2006: Fitch Ratings has today affirmed Sanlam Life Insurance Limited's
("Sanlam Life") ratings at National Insurer Financial Strength 'AA(zaf)' and National Long-term
'AA-(minus)(zaf)'. At the same time, Fitch has affirmed Sanlam Limited's ("Sanlam"), the parent of Sanlam
Life and the ultimate holding company of the Sanlam group, National Long-term rating at 'A+(zaf)'. The
Rating Outlook for all entities is revised to Positive from Stable.
Fitch will continue to monitor Sanlam in 2006 and could upgrade the insurers' ratings if it meets the
following rating triggers: Sanlam maintains a very strong capital position, reports competitive new business
margins, manages to achieve growth of life APE at or above market rate and reports further net inflows of
the investment business. The current ratings reflect Sanlam's strong brand and business position in South
Africa. Sanlam benefits from good diversification by type of business.
"However the group faces the ongoing challenge to protect and strengthen its strong business position,
having lost ground in the very competitive South African life insurance market," said Franz Lathuillerie,
Associate Director in Fitch's Insurance Group in London. "Fitch expects Sanlam's new business margins to
be at a level closer to other competitors, although this is in the context of the industry's likely declining trend
in margins."
Fitch views the capital position of Sanlam Life as very strong. Despite the capital restructuring in 2005,
which resulted in a distribution of ZAR4 billion, and the acquisition of African Life, the capital adequacy
requirement ("CAR") reached 3.9x at YE05, thanks to strong earnings. The quality of capital has also
improved as the sale of Sanlam's holdings in Absa reduced concentration risk in the shareholder portfolio.
Operating performance over 2005 was strong as the group reported a good growth in profitability. This was
largely on the back of excellent performances from non-life insurer Santam, the investment division and
from strong returns on the shareholder net assets. Life insurance sales were up 14% in H205 and halted their
decline and there was an up-tick in new business margins. Fitch notes that performance in H105 had been
muted with life sales down 3%.
Sanlam was established in 1918 and demutualised in 1998, listing as Sanlam Limited. It is a major financial
services group in South Africa, which includes the country's second largest life insurer, the second largest
fund manager and 53% of Santam, the leading non-life insurer in the country.
Contact: Franz Lathuillerie, London, Tel/email: +44 20 7862 4149/franz.lathuillerie@fitchratings.com;
Harish Gohil, +44 20 7417 4367/harish.gohil@fitchratings.com.
Media Relations: Jon Laycock, London, Tel: +44 20 7417 4327.
Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with
relatively low international sovereign ratings and where there is demand for such ratings. The best risk
within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are
designed for use mainly by local investors in local markets and are signified by the addition of an identifier
for the country concerned, such as 'AAA(zaf)' for National ratings in South Africa. Specific letter grades are
not therefore internationally comparable.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site,
www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times.
Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant
policies and procedures are also available from the 'Code of Conduct' section of this site.
