Sanlam Limited

Sanlam did not give a single reported group revenue or EPS figure on the call. Abigail Mukhuba said operating profit excluding investment variances was minus 7% for the first quarter, and the full-year 2025 operating profit excluding investment variances was ZAR 13.853 billion. Management said 2026 earnings guidance remains South African CPI plus 3%, with through-the-cycle guidance of CPI plus 6%; they also said the full-year expected return on shareholder funds is around 8% to 9% after tax. On specific items, the Q1 Indian rupee hedge loss was ZAR 103 million, project expenses are expected to come in below ZAR 500 million for the year on the non-prefunded portion, and stranded costs in investment management are approximately ZAR 200 million to ZAR 300 million for the full year. Management said Q1 weather losses were large versus last year but within the normal range, and expects underwriting margins to be back within target range for the balance of the year, though not enough to recover the Q1 shortfall.

Paul Hanratty framed the quarter as one of continued strategic progress rather than a clean read on underlying earnings. He emphasized that the group is investing in organic growth, which creates short-term pressure but supports future growth, and pointed to progress on India, Lloyd’s, cloud migration, and the planned South African banking launch. His tone was confident but cautious: he repeatedly said Q1 is not representative of the year and stressed that weather, markets, and geopolitics could still affect outcomes.

Abigail Mukhuba focused on the items weighing on reported performance and the spending needed to support growth. She said project expenses are expected to be slightly elevated in 2026 versus 2025, but should come down from initial guidance and could be below ZAR 500 million for the non-prefunded portion. She also quantified the Q1 drag from the Indian rupee hedge at ZAR 103 million, said full-year investment-management stranded costs are about ZAR 200 million to ZAR 300 million, and reiterated that 2026 earnings guidance is CPI plus 3% excluding investment variances.

Analysts pressed on VNB margin pressure, India write-downs, investment-return assumptions, stranded costs, weather losses, persistency, and the effect of credit spread widening. Management said lower VNB margin was mainly mix-driven, not a collapse in product economics, and noted that India should turn positive on VNB later in the year. On the Indian life transactions, they said there will be a write-down equal to 50% of purchase price because the deals were done at about 2x GEV, but that this is small relative to the uplift from Shriram Finance and Ninety One. They also clarified that 50% of credit spread widening is treated as an investment variance and 50% as credit-quality deterioration, and said the Morocco merger regulatory process is nearing completion with final approvals targeted for June/early July and an EGM in July.