JOHANNESBURG, June 7 (Reuters) - South Africa’s largest insurer Sanlam Ltd reported a rise in profit in the four months to the end of April, but warned that persistent risk aversion, a stronger rand and a weak economy will hurt its half-year performance.
Insurers in Africa’s most advanced economy have expanded elsewhere on the continent to offset slowing growth at home, but prospects have been dealt a blow by a collapse in commodity prices.
Sanlam’s normalised headline earnings – a commonly used profit measure that strips out certain one-off items – increased by 9 percent for the four-months ended April, the company said, without giving further details.
Political instability, low economic growth and credit ratings downgrades have dented business and consumer confidence in South Africa.
“We expect that the economic and operating environment will remain challenging for the remainder of 2017 with a resulting impact on the Group’s key operational performance indicators,” Sanlam said in a statement.
The insurer’s new business volumes were down 4 percent to 71 billion rand ($5.52 billion)largely due to lower lump-sum inflows at Glacier, Sanlam Investments Retail and Sanlam Private Wealth.
At 1313 GMT the share price was up 0.81 percent at 66.25 rand.
Sanlam has operations in 11 African countries, India and Malaysia. ($1 = 12.8550 rand) (Reporting by Olwethu Boso, editing by Louise Heavens)