Sanlam Insurance share price drops by 4%
Sanlam's share price fell on Wednesday on investors' reaction to a poor financial report released by the company
Poor financial results published this week by one of the country's largest
insurance companies, Sanlam Insurance, led to a sharp drop in share
Investors reacted badly to the news that Sanlam's normalized headline
earnings per share had dropped a massive 86% in the first ten months of 2008. As
a result, share prices on the stock exchange dropped 4% on Wednesday.
Although the market was told by Sanlam's Chief Executive Officer, Johan van
Zyl that the insurance company remained strongly capitalized, the poor financial
report came too close to the news that another corporate giant, FirstRand
banking group, had also posted a poor trading report. A lack of confidence in
these corporations, despite van Zyl's reassurance that Sanlam had grown total
new business volumes by 7%, led to a drop in share prices.
Van Zyl said that the bad news was that there had been a marked slowdown in
new business growth and the company's performance fees had been hit by erratic
global markets. In addition, the Sanlam Capital Management division of Sanlam
Insurance recorded losses and what van Zyl termed "a substantial slowdown in
Market analysts, however, are not overly pessimistic about the results posted
by Sanlam Insurance. One analyst said that it was reassuring to note that there
no huge negative shocks in the report, while another said that Sanlam was a
"fine example of financial resilience."
Indeed, the report showed that Sanlam Personal Finance and Sanlam Developing
Markets performed strongly this year, despite the volatile conditions in the