(Bloomberg) — India’s post-pandemic economic rebound is fueling earnings growth in Sanlam Ltd., Africa’s biggest insurance company.
India has posted a strong recovery since Covid-19 receded. Its $3.4 trillion economy expanded 8.4% in the three months ended December. That compares with 0.1% growth in South Africa. The recovery has driven Cape Town-based Sanlam’s sales volumes, and helped the insurer deliver a better-than-expected claims experience in the market.
“India is a strong growth market for Sanlam and an increasingly important part of the group,” Sanlam Chief Executive Officer, Paul Hanratty told investors on Thursday. “Post-Covid, we are beginning to see strong growth across all lines of business.”
Sanlam posted a 49% increase in its headline earnings, lifting it to 14.5 billion rand ($774 million) for the year to December.
India’s contribution to the group’s net profit climbed to 17% by December from 10% in 2021, and the country now makes up 14% of the insurer’s group equity value, up from 9% in 2021. And the insurer is banking on even better performance going forward.
Read more: Africa’s Biggest Insurer Banks on India as Its Home Market Reels
“We have a business that aims to grow at a lower rate than the competitors so that we have a emphasis on very high quality of business and we run the balance sheet and the provisioning there very conservatively,” Hanratty said. “I think the ethos is that there’s prudence built into to how we operate and that gives you some degree of confidence moving forward,” he said.
Sanlam has been running its India business in partnership with the Shriram Capital Group in the South Asian nation since 2005. More than 70% of its earnings in the nation are from its credit business, while 16% is from general insurance business.
“If you take a long run view, particularly on the credit business, the growth of that book as well as ongoing changes to regulation will ultimately mean that that business will likely need capital at some point in the future,” Hanratty said.
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