Sanlam Limited (SLM) Earnings Call Transcript & Summary

Good afternoon, and welcome to Sanlam's 2023 Capital Markets Day. As you all know, this is a hybrid event, so a very big welcome to those of you joining us here today as well as those of you joining us online. We've taken a different approach this year, splitting the day and the event over the next 2 afternoons in order to give as many investors as possible across the world a chance to dial in and to follow our presentations. Last month, we presented the group's 2023 interim results, which showed that the group is in excellent shape and performing well on all of our key metrics. Over these two afternoons, we aim to give our investors some deeper insights into our business and the journey we're taking to build the most admired financial services group in Africa. You're going to hear over the next two days from the management team about how Sanlam has made significant strides in becoming an African champion through, firstly, implementing a number of transactions to strengthen our position and to create a fortress position in South Africa; and secondly, to establish an unassailable position on the African continent outside of South Africa through our joint venture with Allianz. The steps we've taken will ensure that the group is able to continue to deliver a sustainable long-term growth profile, underpinned by the growth and development of the African continent itself and also through market leadership in all the markets in which we operate. I must say we are absolutely delighted to have finally closed our transaction to create the new SanlamAllianz business in early September. This has been an extremely long, arduous and complex process. And I'd like to take this opportunity to thank the management throughout all of these businesses as well as our partners at Allianz, the corporate finance teams, for their patience and endurance in getting there. We need to remember that nothing worthwhile that one achieves is ever done without a really significant effort. The product of all this work is the creation of the strongest, most competitive and largest insurance group on the African continent outside of South Africa. We're delighted to have partnered Allianz, whose scale, human capital resources and culture make them fantastic and ideal partners for Sanlam. The management team from across Africa who've joined the JV from the Allianz side, I have to say, a really top quality team of people. And I've got every confidence that the new JV team will do a fantastic job for both sets of shareholders. We've historically seen very strong growth off a low base in Africa, and this partnership will allow us to benefit both from the African demographic and the growth in propensity to buy insurance products over time. Importantly, the 2 brands stand for trust and stability, something this industry badly needs across the continent in order for the industry to fulfill its long-term potential. I want to just warn that this is a first look into the SanlamAllianz portfolio, and we'll build on the disclosures and the insights for this exciting business as we progress and bed down the joint venture. It must be borne in mind that the joint venture was only formed in early September, and it's therefore early in the process for fully integrating all of the financial information. And I can confirm that we were not able on either side to look at each other's financial information right up until closing. Heinie Werth, the CEO of SanlamAllianz, will kick off the day with an overview of the SanlamAllianz business, and he will then be followed by presentations from the CEO of our captive reinsurance business, SAHAM Re, as well as deep dives into Morocco and Egypt and the businesses in those countries from the respective CEOs. I'm going to hand over now to Heinie to begin the presentations. And although you can ask some questions today, I think there's a huge amount of information to get through, and I would remind you that you will all have a chance in tomorrow's first session in the panel to ask some questions and perhaps you can reflect overnight on some of the information and insights that have been provided today. So thanks very much, and Heinie, I'm going to hand over to you.

Thank you, Paul. Thank you, Grant. And welcome, everybody. There's quite a few of my new team or colleagues here. I think you will meet most of them over the next day or so. Robert, I think you and Delphine are supposed to join me on the -- if you don't mind. So although I get -- we'll get to some of them. Robert will head up our Life Insurance and Asset Management business across the African continent, and Delphine, who is from the Allianz side, will head up General Insurance and the health business and reinsurance on the African continent. There are some more of our colleagues here who will be involved in panels tomorrow and at other discussions this afternoon, so I'm not going to introduce them now. Quite a few of them is here from Morocco. We've got Delphine here from C te d'Ivoire. So yes, we're becoming, I would say, a truly Pan-African player in terms of where we're all from. I'm from Cape Town. So SanlamAllianz, I would like to talk a little bit, as Paul says, officially, we only became a group and a company on the 4th of September, 5th of September, one of those dates. And yes, a lot of work was done beforehand, but there was very tight Chinese walls on what could be shared. Ironically, some of the people below me could see some of the information, but I couldn't see it. But in a very short period, we've tried to package something together, because obviously, when we did the deal, we knew what we were trying to achieve and how we want to achieve it. So I would like to leave here today, hopefully, with -- after my presentation, and Robert and Delphine will come in for one slide on the presentation, and I want to talk about the opportunities in Africa, or hopefully leave with you the thought that there is a real opportunity. I can tell you a lot of issues in Africa as well. But I think in the end, we'll have to look at a balance. There are lots of opportunities. I think the issues are normally known to people, but we really see Africa's opportunity. I will talk a little bit about SanlamAllianz, that we really believe is very, very well placed to capitalize on the opportunity. And I will share with you what we believe how we are going to capitalize on the opportunity and what are our objectives. And I'll come back to all of them during the course of the presentation. SanlamAllianz is really about, I'll just say, bringing together 2 great companies to form even a better company on the African continent. If we look at Africa and the potential it has -- as I said, I'm not going to focus on the negatives. We will have questions on the impact on the war, both wars at the moment on the go. There's questions about currencies always, currency risk, political risk, all of that. We understand it. But the real opportunity is really and admittedly from a lower base. But the Africa region, everybody quantifies it as having the best opportunity for GDP growth in the years to come. GDP is extremely important for our General Insurance businesses, GDP growth. GDP per capita is very important for our life insurance businesses. Africa has got a huge population, we know it, across 54 states, but it's a very young population. And if you read stuff and about the potential of the young population, coupled with the digitization that's happening, the mobile penetration, all of that, it's a different way, I want to say, of getting clients and opportunities in the years to come. So solid GDP growth expectations, a young big population across the continent and rapid digitization. On top of that, insurance penetration is extremely low. And please, we understand affordability is a key issue. It doesn't help -- we just talked about low penetration comparing it to Europe and so in Africa. It is then about but can people afford it and it's about getting to people in ways that they can afford it, because in the end everybody needs it in one or another form. And then the slide on the right -- I will come back to this as well -- this is for me quite a simple way to look at it. So if you look at the African continent, and this was in 2021, there's about EUR 66 billion premiums written on the continent. EUR 45 billion, 2/3 of that, is in South Africa. 1/3 is in the rest of the continent. In that rest of the continent, we are in the bulk. You will see the dark blue at the bottom. Luckily, Allianz and Sanlam was quite blue, so we could stick to blue. But yes, less than 1/3 -- you can say 1/3 is in the countries where we do business. And I really believe that is where the opportunity is. It's not about us getting a bigger chunk of the EUR 18 billion. It is about us and the competition helping to grow that cake. There's no reason -- if you add the GDPs of the other African countries together, there's really no reason why insurance in the rest of the continent should be so low on a relative basis to South Africa. [Presentation]

Yes. And I would just say that's really what we are all about, what SanlamAllianz is about. We decided to continue largely with the Sanlam purpose and vision. And in that process, the most simplistic way is we want people to live with confidence. Individuals, corporates, anybody, we want them to feel protected when it comes to the future. So I've started off by saying that all of this there's opportunity in Africa, I really believe we are well placed to capitalize on it. You've seen our purpose. We really want to help people to live with confidence, to cater for events that come about in the future. Paul had referred to the fact that Sanlam wants to be the most admired financial services group. We want to be the best. It's good to be admired, but we really want to be the best. And then very important -- and this slide, I just wanted to say, wherever I go across Africa, I use this slide. And it's a consistent message time after time to our staff that it's about the purpose, it's about our vision, it's about implementation of strategy, excellence in execution, but core in our business is the values. We recognize different cultures. We recognize different countries. But if you deal with SanlamAllianz, people should always feel they deal with people with integrity, people who care about their clients, about their staff, people who collaborate. We deal a lot in partnerships, and we need to continuously improve or innovate to stay ahead of the pack. So these values, we really vest everywhere where we go. Interestingly, these are also the Sanlam values, but there was about a 75% overlap with Allianz if you look through it. So there was a very strong mix of values between the 2 groups. SanlamAllianz, you will know, we're in 27 countries across Africa. We're in 7 of the 10 largest economies across Africa. The 3 where we are not is South Africa, Ethiopia and Algeria. We are in the 11th biggest, it is Ivory -- C te d'Ivoire. So you can say we're in all the big economies. And then we -- in the 27 countries where we're are a business, that EUR 18 billion that I showed you, we write about 16% of the premiums in those markets and most of the market is where we are, and that's part of our ambition to be the best. We have to be a top 3 player, but a top 3 profitable player. So we've got a very good footprint, I would say. We are really putting together the best of SanlamAllianz. I'd like to say this to all audiences where I get to, I always knew about Allianz, but I can say really when I go to countries now, and I've visited a few now after the deal, it's amazing how powerful the Allianz brand is. The moment people hear the name Allianz linked to us, it's really as if -- I would say our doors were always open, but the doors are now even better. But we are trying to put the best of SanlamAllianz together. We really want to capitalize on 2 strong brands. In the process, we've really got very, very strong technical skills and experience, and we've got access to strong technical experience and skills in Sanlam but also in Allianz. We also really have now access -- if you look at a company like Allianz Group, they spend lots of money on research, new products, new developments, new IT. As a group, we now have access to that to see what we can leverage off. We've got quite a unique footprint. Some of the countries we're going to combine companies, and it's interesting how complementary the distribution in those countries are. And then there will be opportunities for capital optimization, for cost optimization. So it's really trying to take -- to put 2 good groups together and really go forward with the best of both. This slide is also for me quite an important one. And people quite often ask us what differentiates us possibly from our competitors in Africa, because many companies will pull back, we continue to do more and more in Africa. And for us, it is really -- and I know everybody says it, but it is about client-centricity, helping them with their future risks. And then very important is we don't treat our countries as branches. We treat them as solid businesses with their own management, their own board. And our jobs are to work with those local management and boards and to help them to run a better business. Our focus is on execution, as I've said, our values that we want to install, that we've got passionate people. There's not one model that fits all the countries. There's really not. The dynamics of countries differ. The stages of development differ. So we are flexible. And partnerships, we really believe we can't do it on our own. SanlamAllianz is a partnership, but in the countries working with banks, working with local shareholders. And these core drivers of our philosophy is really, I want to say, differentiating us. But one that I do want to highlight that differentiate us is we entrust local management and boards. We don't try to dictate out of Cape Town or Morocco, "This is how it works." So our philosophy, I think, carries us in the joint venture. Some of my colleagues will show you some slides later today, and they will focus on -- we've got very experienced but still young people. I've got a very experienced team, slightly older. Robert, I don't -- Delphine, sorry, I don't put you in that box. But no, I think the end result is we've got a very experienced team. It's always difficult when you start a new venture. You have to bring cultures together and people together. But I really feel this is a good mix of Sanlam people, of Allianz people, and then also bringing a few new faces into it. For the time of the -- the time that comes for Robert and Delphine are here on this stage looking after Life -- our -- and 2 subclusters. Johannes Bayer is there at the back, our new CFO, also from Allianz. And then the other ExCo members are not here, but 3 of our business heads are also here. And these people -- our HR lady sits in Rwanda, Delphine sits in Ivory Coast, some of us sit in Cape Town. Lizelle sits in Casablanca. So we also follow a model where people don't have all to be in one spot. We are quite spread now across the continent. In addition to a strong management team -- this one I mostly use when we talk to clients, this is a bit like a break slide, but to a certain extent we say, with Sanlam and Allianz behind this, we can offer any life insurance, any insurance product, general insurance product, to any type of client, whether you're a retail client, whether you're institutional, and through any distribution channel. But then we qualify it and say you look at the country and what's most appropriate for that country. So we've got access to the knowledge base behind all of this, but it's then about what is really the best for that country. I've referred to this. When we look at the top 3 position in general insurance, in 16 out of the 25 countries where we are, we are in the top 3 players. The countries where we've got a bit of work left to get there and, as I said, must be profitable, is our Nigerian general insurance business, in Kenya and in Ghana. If we look at the life side, similar picture, 16 out of 22 countries the top 3 position. And the countries where we really feel we are not yet where we want to be is Ghana, Kenya, and then always a difficult one to crack is the life business in Morocco. Yahia here will talk a bit more about our Life business work there. It's very close to banks and cross shareholdings there. This is a slide where I'll start on the left. This just gives you a bit of a flavor, that EUR 18 billion, how it is split between general insurance and life insurance across the continent -- or outside South Africa, so basically close to 50-50. And our own split in terms of premiums in '22 was also close to a 50-50 split between life and general insurance. I've said we've got about a 16% market share, if I take all the countries together. On the life side, we are on 19% and on general insurance, 14%. And that's one of the opportunities. That's not yet good enough. But then as I've said, it's about taking that cake of EUR 18 billion and growing that on a relative size relative to South Africa. And I really think this is important for investors. Africa have got lots of opportunities but also, like many emerging markets, lots of issues from time to time. Our story is one about diversification. We offer any investor a reasonably well-diversified portfolio. I've referred to the 27 countries. Please, all the slides will be loaded or has already been loaded, so you're going to see a lot of detail, which you may or may not be able to read. If I sat at the back, I won't be able to read it. But I think this shows to you -- I've already talked about the split between General Insurance and Life Insurance, and it also shows you that we are quite well spread across the countries. Morocco is by far the biggest in our General Insurance portfolio in terms of premiums. But even beyond that, we've got a nice spread. And the whole idea is to get the spread over time even better on the Life side and on the General Insurance side. You can see the Life side is already much more diversified in terms of gross written premiums. If you look at distribution, again, general insurance and life, brokers play a very important role on the General Insurance side. Bancassurance play a very important role on the life side. It differs between countries. But if you put all of them together, it shows that you are not dependent on one distribution channel, and it also shows that we are making progress or we have achieved further progress to diversify our distribution. Same with products. Life Insurance, a lot of credit life, individual or funeral cover, savings annuities. On General Insurance, if you split it between the retail and commercial, retail predominantly motor, and the health business is very strong in that package. And then on the commercial side between property, engineering, all of that, quite a nice split. So this will give you -- and please, I understand countries will differ quite a bit, but my message -- and I don't say people have to accept this in the end -- we put countries together and try to offer a diversified offering. The moment we try to do it per country, as I've said, stages of development impacts that. So you don't have the same split. You don't have the same bancassurance. Egypt is very strong on bancassurance; other countries, it's less. But we're trying to pull it all together with this diversified profile between the countries, between products, between distribution lines. And then also in terms of currencies, we try to offer quite a diversified offering. Currencies, always the issue, I want to say, in developing markets, including South Africa. But at least in our part, with the Moroccan dirham and the West Africa franc being pegged currencies, I think Botswana is also quite nicely pegged and quite stable, so more than 50% of the portfolio, I want to say, is quite stable relative to the dollar and euro. But that's also, I would say, part of the game. So a very well diversified portfolio. If we look at our future strategy, so I've said Africa's opportunity, why do I believe we are well positioned, and then if we look, what are we going to focus on, again, we've got 4 pillars. Everything we do, we try to measure: is it good for the client, is it good for our shareholder, is it good for the community, is it good for our staff? And for all of these, and I'm not going to go through the details, we will have measurements. And for all of these, our senior management and top management remuneration are linked to it. So we don't just try to talk about do what is good for your clients, do what is good for your shareholders, for your staff. We really measure it, and we build our strategy around that. If we then look -- I always say I try to keep strategy very simple. I will get more detailed when we'll follow after this. Overarching, there's 3 components to the strategy where we -- first of all, and I'm going to start on the right-hand side, we have to make a decision. Should we be in that country? And if we're there, do we have the right business? So portfolio management, except we can't buy and sell the stock every day. But this is where we really decide what -- do we want to be in 27 countries? Do we want to be in more? What businesses do we want, and do we get the returns? The second part of the strategy is, where we do have businesses, run them properly. And again, I know this is very high level, but then there's a lot of detail behind it, and Robert and Delphine will [indiscernible] unpack a bit. The third part of the strategy is how do we support these businesses from the center, whether it's technical support, whether it is support with dealmaking, whether it is bringing partnerships to the table, all of that. So we want to be a value-adding shareholder. It's not about running a passive portfolio across Africa. On this note, I'm just going to ask Delphine to talk a bit about some of the key initiatives on the GI side; and Robert, just briefly on the Life side. Delphine?

Thank you, Heinie. And thanks, everybody, for being here. Maybe I'd like to start by saying, on the GI side, the foundation are quite strong. I was positively surprised as we were able to unpack the numbers on July 5, finally, at least from the Sanlam side, we had a view on the Allianz side. So we're starting with a very strong foundation to move forward. Now when you look at the portfolio split, you will note that on the retail side, 95% of the portfolio on retail is between motor and health. So these are key focus areas for us. First, on motor, it's a profitable line of business, but we'll also talk a lot about how do we improve the profitability of motor and how do we also increase our market share on motor across the countries. We have different initiatives that we're working on with the countries. But what's also important is how do we use then digitalization and how do we use AI. I know Africa is still quite far. But when we look at how do we manage claims, this is maybe an opportunity for us to make sure that we are improving profitability on motor. Health is a key one. We talk about financial inclusion. We talk about how we help people live with confidence. It's difficult to do that if we do not offer a health product. However, health is a difficult line of business across Africa. Our focus will be to get that line of business into a profitable space but also how do we impact the market. We are now one of the largest -- no, the largest insurance company across the world -- across Africa. I wish across the world soon. But health is an important focus for us in the next few years. Assistance has also been an area that was strong on the Sanlam side that we will use to expand across the rest of our countries. We have essentially focused on the countries where Sanlam was present, but now it's important that we focus into the other parts of the continent, especially in East Africa, where the Assistance business, at least from the joint venture, SanlamAllianz, is not there fully. Commercial is one area that is quite exciting for me in particular. And then you will hear from SAHAM Re later on today. We are bringing value to our customers by bringing a strong technical team in Africa and then providing them with the reinsurance captive that is still part of SanlamAllianz and then giving flexibility also to our clients across the 27 countries. There's very -- if I dare to be challenged on this, there's not another insurance company in Africa right now that is able to provide not only the technical expertise on the Corporate lines on the ground and the reinsurance capabilities in the same house. And while we're doing that, we're also making sure that the SME sector, which is growing quite substantially across Africa, we have a play there, because that will also help diversify the Corporate portfolio a bit more. SAHAM Re is our magic tool, I think, for the Corporate lines in particular. And you will hear more from Ilyes, so I won't take your thunder here. But there's a lot more that we can do when it comes to SAHAM Re to bring more value to SanlamAllianz moving forward. When it comes to control environment, this is quite important for us, we need to run a business that is profitable but also that our shareholders are happy with when it comes to governance and also that our regulators are happy with when it comes to governance. So this is an area that we will be focusing on. And the IT system is a big one. For us to be able to differentiate ourselves and then to also make sure that our costs are reasonable, we need to have an IT platform and provide solutions to our clients and brokers that are able to access us without having to go from one brand to the other. So overall, this is our strategy for GI. We are in healthy competition with life, so let's see what they say. No pressure, Robert.

Normally, Delphine gets the last word in, so this is a special day for me, it's a first. So on the Life side, you would have seen that the main distribution channel in Life is now bancassurance. And the Allianz business comes with a very strong bancassurance focus. The Egypt business is a big bancassurance business. We have in Ivory Coast quite a great -- a good presence in bancassurance as well as then in some of the rest of the Francophone West Africa countries. We do think we can add some value, especially in the Francophone businesses, in terms of we have developed some interfaces with banks that really try to lock in the bank in terms of making it difficult for them to leave. The issue always with banks is that they see the margins that you make, especially on the credit life side. Firstly, they push you to lower those margins or to give them more of those margins, and then at some stage some of them decides to get their own insurance licenses. And you get those kind of phases that the industry goes through. In Kenya, you have Equity Bank now that got their own license. Some other banks are saying, well, it doesn't make sense. Absa is selling some of their licenses. So you always have that kind of cycle in bancassurance. So it's great to have bancassurance. The brands of the banks carry you a lot, but you also need to develop your other channels. Sanlam has traditionally been a strong retail business. We have a strong agency force, especially in a market like Nigeria. But also in Botswana and Namibia, those are very strong retail markets. So we will continue building out those retail offerings and then slowly try to introduce some of that. We've already tried some of that in Morocco. We'll try it in Egypt and a few of the other markets. In West Africa, we've been quite successful in a few of the smaller markets to introduce very nice agency forces, and those will come through in the next few years to help us. And then on the -- you would have seen our split is very much bancassurance, agency and then brokers. And what's absent there is the international broker. So on the general insurance side, you see the split between international brokers and local brokers. On the life side, there's very few of the international brokers that sells life business. They prefer to do the big-ticket items, and they leave a lot of the group business for the local brokers to do. Even your multinationals that operate across the continent, they will do their risk management of the big assets. They will run that centrally. But then they often leave the group risk to be placed in country by their subsidiaries there. So then, our focus is very much to work with the local brokers to build those relationships, but then also to start -- and this is quite a big focus for me -- is to start doing group business direct to the clients because, in my mind, there's no reason we can't offer that directly to clients, especially because your international brokers are not in there, so it doesn't offer a conflict to Delphine's business. The really interesting part of the life business is what we call additional growth, or some people call it innovation and growth. I think a few companies have chief innovation and growth officers. And that, together with the MTN, is really looking at new ways to distribute products. In my own mind, we often talk about Africa and we say we should educate people about insurance and about risk management. I think people are educated about insurance. Poor people find ways of trying to protect themselves against risks. They do it in family, in -- the family contribute or the community contribute. So there are ways that they mitigate risk. Our challenge is to find ways to add value to that, to offer that same kind of protection that they offer themselves but in a better way, either by doing it cheaper for them or offering them a benefit that they cannot do on their own because their risk pool is not big enough. And I really believe that these initiatives will take us into those markets. And as Heinie said, it's not about only meeting the competitors in the markets, but it's about growing the markets. And these are, for me, the main drivers of that growth. The rest of the focus areas are your normal ones. So it's around product innovation, it's around operational efficiency. And then the final thing that we believe really differentiates ourselves from our competitors is our culture. We've been building a strong, what we call, the high-performance culture in our organization. We see that in Egypt as well. They have the similar kind of culture as us and also in some of the other Allianz businesses. From my side, from our core team, I mean Heinie also mentioned this, our challenge is how to add value to the businesses. So you'll see some of our CEOs later on the program. Some of these are -- or most of these are really solid businesses, especially the big ones are really solid businesses. They've got strong teams. Our challenge is -- I always tell my support team, our challenge is for them to feel that they've got a competitive advantage against the CEO of a company that operates locally. So Yahia's main competitors are local companies in Morocco. He must be able to do better business in Morocco because he's part of the group. Otherwise, we add no value to him. And that's really the bottom line for me on the life side. I hope it carries your nod, Delphine. Thanks.

Thank you, Robert, Delphine. I won't elaborate. Normally, I comment on how long they talk and stuff like that, but I won't do it today. Delphine always say I'm wrong, so okay, I don't want to give her that opportunity. This is where we start to stick our necks out a bit. And this is where I know many people will be happy, other people will not be happy. And then afterwards, a year from now, they remind us, "But you promised this, you didn't deliver," or "Why was it so low? Why was it so high?" But this is really just showing you a little bit the makeup. And we used December '22 group equity value, the Sanlam way of basically measuring it. It shows you that the bulk of our value is still in the GI business, the reinsurance business, the life business. It shows value that is locked up in the asset management credit and the MTN. And then I do expect -- there's a [ red ] there, ZAR 6 billion of group cost -- ZAR 6.3 billion, before somebody corrects me. So this shows that at the end of '22, our JV was about ZAR 36 billion, ZAR 37 billion, and that's after ZAR 6 billion was deducted for group costs. So I see that as opportunity, something we have to work on and reduce. Yes, we want to add value, but you have to add a hell of a lot of value to justify that number. So that is our opportunity. We don't want to be doing silly things. But we have to grow the businesses and we have to get that cost more in line. As you well know, Namibia is not currently part of the transaction other than Santam Namibia. But we are quite confident that by middle of next year or so, Namibia will be in the pool, and that will add another ZAR 4 billion -- close to ZAR 4 billion to the portfolio. I want to say the ZAR 36 billion, ZAR 37 billion was after we allowed for the dilution or the devaluation of the Egyptian pound in this year. Also for the Nigeria devaluation, it was quite a big devaluation here in June, and then also for the Angola Kwanza. So you won't find it in the Sanlam number because we've adjusted it accordingly. This is -- we were asked to give some expectations in terms of what we believe we can do on the financial side. So again, for every item, we try to give you indication what is the base value using 2022. We've added the premiums together, a bit more than ZAR 50 billion, but evenly spread between Life and General Insurance. The net earned premium of about ZAR 17 billion. Life Insurance new business volumes is ZAR 12 billion. And then important going forward, yes, and we expect about a 12% to 15% type of growth on that. Then people might say, "But that's quite low." The reality is, as we said, with certain big businesses like Namibia, Botswana, Egypt, if you already have a big base, even if you outperform on the smaller countries, the reality is, on a weighted basis, it brings you back again. On the net insurance ratio, following IFRS 17, it's quite difficult to always split exactly between underwriting margin and float. And as many of you will know, Sanlam started to create an asset mismatch reserve on the float. So previously, if you combine the ratio that we set on Sanlam side, it would have been 11% to 18%. We reduced it down to 10% to 15%. And the main reason for that combined ratio is after IFRS 17 you hold less technical reserves. So that had an impact on your margin. And then secondly, following Sanlam's introduction of asset mismatch reserves, we effectively will now release a cash return on the float and we will take the volatility into the asset mismatch reserve. So previously, we would have had a long-term assumption on equity markets, all of that. We still have it. But what will come through in our results is now a lower float combined with a cash return, rather than, let's say, a balanced portfolio. We can go into more detail on that later, or I see that Gert, everybody is here, so there's lots of people who can explain it better than me. On the Life Insurance, we will always continue to aim for a 5% underwriting margin. And we think we can grow the value of new business there with 15% to 20% per annum. This is all constant currencies, please. We will have ups and downs certain years. Operating profit, we believe we can also grow 15% to 20% over the next few years. Attributable earnings, I've just put it there. We can't give you a '22 number because we now put the businesses together. There will be a new, what do you call it, amortization coming through, and that will impact the base too much. So we first have to do closing accounts and then we can look at that one. Dividend payout ratio, people may feel at 65% to 75%, I've heard the comments it's too low, I've also heard a comment it's too high. The people who will say it's too high, but it's, yes, you need to reinvest, you need to grow. People who will say too low, you say, but look, if you make the profits, why don't you distribute it. Overall, this is a guesstimate for the next few years. The whole philosophy behind the dividend is we don't want to retain excess cash. If there's a big deal, we will go back to our shareholders and ask for money, the same like we did in the old Sanlam way of doing. But we do want to cater for organic growth. And through that, there is less payment. And we first -- we also now, to a certain extent, on our own, we first have to [ build ] up our own working capital over the next year or 3. We don't have one shareholder now and we just write a check like we did in the past. And overall, we still want to achieve what Sanlam always communicated, the return on group equity value of 6% to 8%. So hopefully, this will give you some indication. The detail is obviously -- the devil is in the detail, same on the strategy and rollout of strategy that Robert and Delphine talked about, same here. And I want to say this is really work that we have done on a high level as part of the merger to say what do we think a merged company can do over the next few years. So we will improve it as we go along. I've talked enough about the dividend. Please, given economic issues in certain countries, we will struggle from time to time to get dividends out. We really struggle at the moment to get dividends out of Nigeria, notwithstanding their devaluation. Egypt will have difficulty in paying out dividends. Nigeria, I've talked about Nigeria. Even in a country like Malawi, we struggle. So there will also be that type of volatility, depending on the in-country scenario, what we will pay out. In the end, in an ideal world, I would like to pay out everything and we should ask our shareholders for capital when we want to invest in a Nigeria, Kenya or Ghana. Also with this, we get a lot of questions on synergies. Paul quite often refers to the fact that the deal with SanlamAllianz is not about cost synergies. Yes, there will be cost synergies. I've visited a few countries now, and I can tell you, regulators are very tight on what's going to happen to staff. So job protection is key in the countries. Yes, we have quantified certain countries. We have the ops in Cape Town, Ivory Coast. Morocco, we've looked at. There will be savings, if you add those together, and some of the countries that we've looked at already will come to about ZAR 150 million after tax. That's about 6%, 7% of the profits I've showed you earlier. But then Morocco, we first have to go through the hold-separate process with the regulator. So we haven't quantified or looked at any synergies in Morocco at this stage. So this is just the indication. I would like to believe there's more upside on these numbers. But then the reality is if you do -- we've got 11 overlapping territories. The reality is when you go through processes like this, there will be HR, restructuring cost. There will be a lot of IT integration, a lot of rebranding. You can spend any amount on rebranding. We are quite tight on Gaffar and the team. But the reality is, I think the -- until the end of '25, we will -- most of the savings will go into integration costs. So we believe from '26 onwards, we will start to see a kicker. And as we integrate countries, I do think there may be a bit of upside on these numbers. Also very high on what we look at is that we are responsible citizens from an ESG perspective. Sanlam have got high standards, Allianz even have higher standards when it comes to the environment. And we will really -- we're always strong in governance. We have a strong focus on the society. And we need to find a balance on the environment between really developing local economies but also doing it responsibly for the future in terms of the business we support and also in terms of the investments we place in the countries. Governance is always high on Sanlam's table, a very busy slide. All this really says is every country have got their own board, their own subcommittees. We've got good representation between us and Allianz on those boards. As I've said earlier, we really believe in empowering the local entities. We didn't have a Board between SanlamAllianz. Paul have referred to all the directors are; he's on Board and then the same with Oliver B te, the Group CEO of Allianz side and a few others. And we've got various subcommittees. We've got your typical audit and HR committee. But we have a committee which oversees General Insurance business in the countries, which oversees our Life Insurance business, which overseas ESG, and which oversees our investments. Because investments are quite big, not only third-party investment, our own balance sheet. And that rolls up then to the different shareholders through their [ forums ]. So nothing new. We continue with what we basically had. So in the short term, going forward, as I've said, the most important thing at this stage is to stabilize the business. We already integrated our ops in Morocco, C te d'Ivoire and also in Johannesburg and Cape Town. So we do believe that's settling down now. There was a few people impacts, but not really too much. When we go to the countries, we get lots of questions, a lot of uncertainty, because now the next phase is what happens in countries, especially where there's overlapping territories. So we spend a lot of time on people matters at this stage. The big focus is, we don't want to blame the integration or the deal, is both -- all our businesses on Sanlam and Allianz side also delivering on current commitments to shareholders. And then we engage with the Moroccan regulator on the hold-separate. So they identified basically areas where we are too strong from a competition perspective side, a few distribution areas, a few product areas. We already went through an exercise to see what we need to do to address it. And soon we will go back to the regulator and say, "Look, if we do this and this, will this satisfy your concerns?" And then we will move to next phase there as well. So in the short term, it's I would say business as usual and managing uncertainty in the longer term -- medium to longer term. It's really implementing these in-country [ mergers ]. We will start to put in applications for many of the overlapping territories here in November -- between November and March next year. And hopefully, we can go a long way on this by the end of next year. It's really then making sure that our clients, everybody, is comfortable with the new joint group and to deliver on these promises that we've made here and to really, hopefully, one day when we look back, to say we've really delivered what we thought this JV could deliver. So to conclude -- I'm not going to spend time on this -- we believe we have got a good toolbox to make a success on the African continent. There will be lots of issues. I can promise you, I will never write a book, but some days when I sit back, I don't think there's any event we haven't come across yet over the years. You can think about something, you can ask possibly, we have come across it. So there will always be issues, but I think that's a good thing as well between all our countries. There will be some experience even if something happened in another country. So thank you very much. Grant, I think I took a bit longer, but I can blame Delphine and Robert, but I won't. But thank you.

Thanks very much, Heinie. Thanks, Delphine and Robert. We are over time, but I think we will just look for one question from the audience. [Operator Instructions]

Michael Christelis, UBS. Just going back to the slide you showed on the country exposure by premiums. Would it look very different from a profitability perspective, or can we assume that your profit per premium kind of split is reasonably similar?

No, profits will [ reduce ], especially, I want to say, on the Life Insurance side, because a lot of the volumes in Morocco is really low, low margin. So on the Life side especially, your premiums are not the indication of your profits. So they will be -- for the rest, you have to then split the profits of [ Sanlam ] really back to the countries, then there will be a better alignment. But because we use this pooling tool, it will not necessarily be like that. Delphine?

Yes. Especially on the general insurance side, we have a good amount of profitability in SAHAM Re. And also, I would say it's very similar, when you look at the premium to profitability for the countries, it's not really far on the GI side.

I think, Michael, hopefully over time we can disclose a bit more. I just -- honestly, I feel it was a bit early days. Allianz, for example, do not follow the same accounting practice exactly as Sanlam. So we are busy cleaning up the books but aligning -- that we apply IFRS in the same way when we look at float returns versus shareholder returns, that we do it the same. It was a little bit early. There's one slide we can put up next year, or when Grant and Paul do roadshows after a few months, which will give you a much better indication of the value that GEV is split between countries and so.

Thanks very much. I think we'll have to leave it there. There is a time slot tomorrow as well to address more questions to the management team. So with that, I'll thank Heinie, Delphine and Robert for the presentation. We'll move to Ilyes for SAHAM Re. Thank you.

So SAHAM Re, as you all know, is the captive reinsurer for SanlamAllianz. So basically, the model is that SAHAM Re runs all the reinsurance that is ceded by the different entities back to the captive, and then the captive retrocedes basically the higher exposure risks to the reinsurance market. But the main message today is really to present to you SAHAM Re overall. Why is it a successful and profitable captive business model for the group? It does bring benefits to SanlamAllianz with a centralized approach, and this is really the management of the reinsurance and the underwriting on the most, what we call, specialist business. And this is exactly where the margins are coming from. We are targeting basically an underwriting margin of no less than 25%. That has been basically the minimum for us to run the profitable business and make sure that we are attaining our objectives on the technical side. And also, the last bit, with the new joint venture, we are benefiting from Allianz's A rating, which means that we'll have more access to more -- larger clients, more profitable business and also gain a competitive advantage in Africa where there's not a lot of reinsurers that are A rated besides a few. So just to give you a snapshot of what SAHAM Re does, who are its partners, what's really the value proposition in more details and also what are its business channels where the business is coming from, obviously through the entities, but how the business is reaching the entities themselves and also give you a basic run on the scope on a geographical side. So as a captive business, we are basically working exclusively with SanlamAllianz entities. So we're not writing to date commercial reinsurance, which means that we are not competing, obviously. We've given capacity to our competitors. So our key activities are basically underwriting and servicing. Underwriting is really unique to this business model, because as a reinsurer, usually the risk is pre-written by an insurance company. Then it lands on a reinsurance desk. Then the reinsurance underwriter will look at it and then decide whether the pricing is good or it makes sense or if they have appetite or not. The difference here is that the underwriting is centralized, which means that past a certain threshold, that's what we call the specialist business, so the more complex risks and the risks that are bringing the most margins, are written by the central team with the assistance also of the local team, because obviously the local team has knowledge, has intelligence and know exactly how the risks are performing from a local context point of view. So if you look at Africa, it's just really about intelligence. It's knowing your risk and really relying on the local underwriters to give you a good idea of how a risk is performing, how is it maintained, et cetera. So it's really different from what underwriting is done in Europe. In London, you have risk surveys, you have access to a lot of information coming from a particular risk. But in Africa, it's not always the case. So you have to have that knowledge locally, and you have to base your decision on that intelligence. So it's really a close collaboration with the different entities but making sure also that we are bringing the required expertise, I would say, in the underwriting and pricing process. And so when we do that, then we decide, as a captive company, how much we will retain. So based on our own capacity, on us also sourcing additional capacity, we can do arbitrage and making sure that we are retaining the desired volatility within our portfolio and retroceding back the highest volatility to the reinsurance market. Also, one of our key aspects is how do we optimize our reinsurance structure and how we optimize reinsurance banks to make sure that we are still competitive and buying reinsurance at a cheap cost, and also making sure also that we are [ writing ] the reinsurance cycle in a stable way. If you look at what happened in the previous renewal, so renewal for January 2023, the reinsurance market went through a very hard cycle, which means that on a price-adjusted basis reinsurance costs went up by at least 20%. And that's for clients who did not experience any losses, who have not produced any losses for their reinsurers. So really, our model is set up so that we can minimize these peaks and making sure that we are providing capacity to our SanlamAllianz insurance entities and that they are not suffering from any, I'd say, punishment from the reinsurance market, whether is it because of cat events or man-made events. So these are disrupting events for the reinsurance market. And capacity usually is given to companies that either are very selective or at the right price at least. So that's one of the important elements in our business reinsurance model. So revenue sources is mainly treaty, and second to that is premium. We work basically everywhere in Africa where our licenses are present. But we do also intervene in some countries where SanlamAllianz is not present, but we are following our larger Pan-African clients. Our clients -- we have large clients that operate pretty much everywhere in Africa, and we need to service them. So one of our servicing approaches, even if we are not present in a particular country, we rely on partners to access those risks. So there's been a lot of talk earlier about the value proposition, really what makes sense to the client. And this is really our approach, and it's been successful: it's really putting value before price. So when we're dealing on the specialist business, it's really looking at the client, what they need, what they require, and also to risk management approach. Because we have our own risk engineers, so they do go visit our clients, making sure that the risks is well attained. So we have also a very good view of the risk management process, and it's been an approach that we've been building for the past 2 to 3 years. Obviously we are not there yet, as we are retaining a lot of the risks, but we're making sure that we will have at least a full view of our clients at least once every 3 years. So that's basically what we've set up our risk engineering desk to making sure that they visit our clients and do an assessment of the risk that we are writing through the captive. But at the same time, it's being flexible and adapt to the changing needs of our clients. So we'll make sure that our processes are efficient, they can be changed relatively quickly, so we're lowering the cycle time process for basically changing our way of doing things if it makes sense and also really bring that management aspect of awareness to our clients. And we've been successful in the wins with some of our biggest clients. So at the end of the day, it's really value before prices, how the value is perceived by the client and also does it make sense for us from a profitability point of view, and usually it does. So I think that's also one thing that changes what actually give us really, I'll say, competitive advantages is our clients are seeing us as really partners. They're not simply insurers giving them insurance coverage. So that's been quite successful to date. So if I go over some of our strength, obviously it's about talent, it's about the people who are writing the risks, it's about the people who are doing risk management. I think we have one of the most talented team in the continent. And we're talking about culture. It's -- we're people from different horizons, different nationalities. And really, it's about how they believe in the model and they feel part of the success of this company and they have been building with us this organization. Just as a reminder, SAHAM Re was incorporated in 2012, but started actually writing business in 2014. So it's about 9 years into the captive model. And it's been growing each year after the group acquired different other entities, other groups. So SAHAM has been very successfully integrated, basically the business that has -- was purchased by the group at different stages of during these past 9 years. We have very sophisticated reinsurance protection. I think it's one of the few that exists in Africa. So it's really an aggregation of basically the premium and the losses that go through the captive. And the advantage is that we set our retention, obviously within the group's risk appetite, to a certain level. So what effectively we're telling the reinsurers is that if you lose money, we've already lost money, which means that they put a lot of trust and then a lot of capacity in SAHAM Re. And it gives them also this unique and broader access to Africa without even writing business or being present in Africa. We do that for them. So it's really a delegation of underwriting authority from the reinsurance market, and it's been successful so far. We're also counting on the new JV with Allianz to access increased capacity, additional capacity if we need some. And again, with a broader portfolio, a more diversified portfolio, so we're also benefiting from more stability in our reinsurance purchase cycle, which means that also our reinsurers are looking at us as a very positive diversification tool for them to basically complement their global portfolio. In terms of opportunities, through the -- making sure that we are still growing within the captive model, but also looking at the other opportunities that present themselves outside the captive model. So we are not restricting ourselves simply to write in the SanlamAllianz cluster, but if it makes sense, without competing against our own licenses, we can look at opportunities. Obviously, grow further within SanlamAllianz. So with the new integration and new entities that are coming from the Allianz side. So we'll be busy basically integrating the portfolio. It's going to be a significant growth for SAHAM Re. Also trying to create new demand for clients through the captive services, whether it's on the risk management aspect or new reinsurance coverage, new products as well. And we're also counting on the new JV to bring in some of Allianz's expertise in that field. So that's basically the opportunity that we are looking at in the coming months. So reinsurance strategy is really simple, it's really about retaining the benefit of diversification. So we are a captive reinsurer, but still a captive reinsurer that writes in more than 25 territories, that has a solid base, a very diversified pool of premium, which means that we can replicate the reinsurance strategy of any commercial reinsurer. We are also basically supporting the growth of our Sanlam entities, especially on the property side, making sure that our underwriting guidelines project basically our risk appetite through the internal reinsurance capacity that is basically provided either through treaties or through fac underwriting. We are also providing the group with a single view of what would be the maximum exposure at any given time for the group. So it's really a central retention aligned with risk appetite. And I've talked about it earlier, when I was talking about how our retrocession reinsurance buying is aggregated. So we know that we have a single retention, and it's basically the maximum that the captive and the group would lose in any given time. And also managing the whole exposure accumulation as we are writing business, obviously, in different territories. But we can be exposed to accumulation. A simple example is having basically on the marine side, on the cargo side, basically, different policies issued to different Sanlam entities that are involved in one kind of transport that goes out from a port in Europe, goes to another country, but you found out that you have 3 entities that have also written policies, marine policies. So -- that gives us also a single level -- a single level view of what would be our maximum cat exposure at any given time. So if we look at basically at the traditional model or how things were made or done previously, you would have the SanlamAllianz pool of premium. Then each entity would buy reinsurance through the reinsurance market, and then the reinsurers themselves would buy protection for their highest exposures. What we are doing now is actually we are keeping that middle block, where value is, where margins are, and not ceding those margins to the reinsurance market. We're only buying retrocession behind the captive to protect against the highest exposures and the highest volatility. So for us, it's really building and keep building our capital position, making sure also that diversification effect remains there, and aim for superior underwriting margin. I think that's -- these are the 3 main components of our business strategy at the end of the day. It's about the dividend. And to do that, we need to have a solid capital base, so we can retain more business. As we are retaining more business, we have also basically retaining more earnings. But obviously earnings are a factor of underwriting margin and earned premium growth. So the solid base, or solid capital base, is very important in that respect. We need to obviously maintain our minimum of 25% underwriting margin and keep growing basically as fast as we can -- as we are integrating basically the ex-Allianz entities, but also looking for additional opportunities in territories where we are not present. So about the team, again, very diverse. But most of the team has more than 15 years of reinsurance experience, especially on the underwriting and operations side. These talented people are from different horizons, have also worked internationally in the biggest reinsurers. So I think we're very, very lucky and very happy that they are working for SAHAM Re and also believe in SAHAM Re and the trajectory that SAHAM Re has taken. So they are part of this growth. I think that's also what drives the motivation and what drives basically the thinking outside the box, is everyone feels that really they are part of this adventure. Some of the strategic KPIs, especially the 3 main ones. So we've been basically experiencing a very, very impressive performance trend. And our objective, obviously, is to keep that earnings growth going, keep the solvency ratio at the highest level possible, obviously within risk appetite and within the threshold that the Board have set, but also on the return on equity, it means that also that performance operationally is there and it's there to stay, as we are aiming for bigger growth not changing really the way we write business. I think we've found the right solution, the right -- the right recipe, if I can say so, but at the same time, making sure also that we are distributing the dividends as the group requires. So this gives you simply a view of how much premium we have been writing since 2019. So we're close to EUR 110 million mark. And I think it's -- the growth will still be happening in 2023 and then 2024. One of the most important KPIs is the retention rate. And as I mentioned earlier, the retention rate is really important because that's how we capture the margin, and we want to make sure that we are capturing as much as possible without overexposing the company, obviously, but it's still very telling as to where we started and where we have ended up so far. So if memory is certainly well, and we started with about 10% retention ratio and now we're at 55%. So it shows exactly how we are building the capital foundation and how we are also making sure that the business is well written and well managed. This gives you basically the sources of revenue for SAHAM Re. So as you can see, Morocco, Cote d'Ivoire and Angola are evenly distributed, about 15% each. And then you have the CIMA region also contributing quite importantly, in -- for SAHAM Re and then other would include basically Eastern and Southern Africa. In terms of line of business, Property & Fire is really the line of business that constitutes basically most of the premium. So we are looking obviously to rebalance that, to write -- with more engineering and also making sure that on the liability side there is growth, but making sure also that we are not overexposed, especially as some markets have become very litigious. And so we need to make sure that we are not overexposed in that particular line of business, and we're choosing basically the markets where we are deploying this capacity on the casualty side. So our main focus area now, especially towards the end of the year and 2024, is obviously we need to secure our existing portfolio. So now there's the joint venture, but I want to make sure that neither entities that are brought in are experiencing any hiccups or any loss of portfolio. So we want to make sure that we consolidate 2023 and making sure also that we are renewing our existing portfolio plus the additional opportunities. As we are also growing, it means that we need more resources, especially human talent. So we are still busy recruiting for SAHAM Re the best talent that we can find in Africa. We're also preparing now the renewal pack for the Allianz's entities, so that they will be renewed with SAHAM Re, most of them at least, in 2024 and also making sure that we are delivering on the various projects that we've embarked on prior to the JV. So our medium-term strategy is to be able to, obviously, sustain that growth and those profits, but make also sure that we keep at the forefront of the service and risk approach that we have developed so far with our Pan-African clients. We would like also to eliminate as much as possible all the fronting arrangements that we have in some of the territories so we are now privy to using Allianz's A rating. So I think that's a very positive side for the overall cluster, plus the added opportunities that it will bring with new clients that are more sophisticated today. So a lot of our new clients are asking us, well, how do you reinsure, who are your reinsurers? What is your financial rating? So -- and as they become very more intrusive in the reinsurance buying process, thanks to brokers, basically, we are now benefiting from that A-rated paper that gives us access or at least eliminates any concerns that some of the bigger clients have when they are buying insurance and looking at reinsurance at the same time. We also would like to reduce our reliance on third-party reinsurers. I think we've come a long way, but we still have room for improvement. So we are making sure also that we are bringing stability on the reinsurance side and that capacity is easily provided to our SanlamAllianz entities. I'd like to highlight that I think SAHAM Re is the only captive that has a political violence treaty for the whole of Africa. So I think these are the competitive advantages that come in when we are putting basically SAHAM Re's strength on the reinsurance market. And our purchasing power is growing, so I think it's a good area for us to be able to ask what other clients may not get. So that's on that side. So obviously, the captive reinsurance business for us is there to say, so we need to consolidate that. Just by reinsurance, we're looking at growing based on the new opportunities that present themselves, and also look at Allianz to help us build niche markets and also provide third-party services if needs be, but that's basically at a later stage. So how will we -- how we puzzle it together is basically underwriting. It's really having basically the skill sets and the expertise not only at the central level but also with SanlamAllianz insurance companies. They have also their own talent. So I think we -- the level of collaboration and at least the level of assistance going both ways has been impressive. I think we need to make sure that we remain at that stage. So the servicing has really been the party to go to for Pan-African international business. As more Pan-African clients are getting notice that Sanlam and Allianz have joined forces, I think there's more capacity for them to approach us and buy insurance from us. Group Protection, I think we have to be jealous of what we have achieved so far on the retrocession side. And as markets -- reinsurance markets -- are growing a bit uneasy, and also through the hard cycle, because the hard cycle is not over, it's not just 1 year, usually it lasts between 3 to 5 years, we want to make sure that we are optimizing our cost base on the reinsurance side and not basically getting the full effect of the hardening. And then as we are also operating in many different countries, I think risk and compliance is very key. So we're beefing up also our reinsurance and compliance capabilities. The group is also helping us a lot on that front. But as an independent company, we need to make sure that we are on top of any ESG, or any legal matter or compliance issue in any territories where we write business. And that's it for me.

Thanks very much, Ilyes, for the presentation, we'll then go to questions in the room first and then any that may come through on the webcast. We've got a question on...

Warwick Bam from RMB Morgan Stanley. I'm trying of sneaking in 2, if I can, Grant. Just the first one, can you give us a sense of the split of gross written premium by line of business for SAHAM Re. And the second one, you spoke about the reducing the reliance on third-party reinsurance. I guess there's 2 layers to that. Just give us a sense of what SAHAM Re currently underwrites relative to the opportunity in the SanlamAllianz portfolio?

Sure. I think I had a slide basically on the breakdown of premium relative to the line of business, and fire engineering was actually the main contributor in terms of premium volume. And we looked at the engineering being second, about 8%, 7% for casualty, and as well it was mentioned that on the casualty side we are not looking into growing as fast as we are growing on the property side because of some legal local contexts where some countries are becoming more litigious. So we just need to make sure that we are on top of any exposure that we are writing for the casualty. And then we looked at also as motor being also about 5% contributor to overall premium. But fire and properties is really the key driver. And then the second question on the reducing our reliance on third party is really structuring our program and really playing on the retention level. So as we are retaining more means that we are also buying less. So buying less reinsurance is basically going through the phase where our pool of premium is diversified enough that we are comfortable in increasing our retention level. And there is a second message that is also given to the reinsurance market is that we are comfortable with our portfolio, and then we are buying less and we are attaching higher. So that gives us also that flexibility to price our own internal treaties and price our own risks without going to the external market, trying to ask for validation or for a pricing for particular risk. So what we are saying is we are mature enough now that we can do our own pricing and retain basically the bulk of the business.

It's [indiscernible] from Sanlam Investments. Maybe just to clarify, so within the old SIM stable, my understanding was that most of the entities was already using SAHAM Re as their reinsurance partner. Could you maybe clarify that?

Correct.

Okay. Then in terms of the entities that are coming in from Allianz. What are they currently using? Or does all of those entities just fall into the JV and that entire margin in terms of reinsurance now just falls straight into the JV?

So you're correct. The old SIM scope is reinsured by SAHAM Re. Now -- at the legal permissible level in terms of participation. And now that the new Allianz entities will come in starting 2024, using SAHAM Re as their treaty reinsurer, and also as their facultative reinsurer when they need facultative [ business ].

Are there any more questions from -- there's just one that's coming through from the webcast. And the question is your -- do you have any recent exposures to events like the Moroccan Earthquake in Morocco.

Yes, we do have exposure, but obviously we haven't had any claims coming in so far. So what we are expecting is that the level of damage that will be declared will not be significant. As we know, most of the damages happened in rural areas or areas where there's no insurance interest. So it's mainly villages, et cetera. So -- and we know to date that our maximum exposure -- what our maximum exposure will be, so...

In fact, that was one of the next questions that's come through is if you could just give some sense of quantification of what the maximum exposure you have to single event.

I'm allowed to say that? Okay. So our max exposure is EUR 3 million.

I'll just come back to the room if there are any other questions. There's no more questions that have come through on the webcast, so I think we'll leave it there. Thanks very much, Ilyes. We will take a 15-minute break now. So it is just around about 3:00 now, we will commence with the next presentation at around quarter past 3:00. Thanks very much. [Break]

Afternoon, and welcome back. Thanks again for joining us at Sanlam's Capital Markets Days. We will now commence with the second part of the afternoon, where we'll hear from -- 2 of the biggest businesses in SanlamAllianz, that being Sanlam Morocco and then also Allianz Egypt. So with that, I'd like to invite Yahia Chraibi, the CEO of Sanlam Maroc.

Thank you, Grant, and thank you all for attending this presentation. I'm glad to have this opportunity to present you with the Moroccan business of Sanlam, Sanlam Maroc. So let's start with the agenda. It will be very straightforward. We'll start with a short presentation of the Moroccan insurance market as an introduction. And then we'll go into more details about Sanlam Maroc, its history, market position figures and asset allocation. So I will start with the macroeconomic environment in Morocco. Last year has been very tough in Morocco. So we experienced a significant slowdown in the economic growth in 2022 due to various factors like drought. You know that in Morocco the agricultural sector is still important and it has a big weight in our GDP also, due to inflation for example. So back in 2023, we expect and the Central Bank expect a better growth, 2.4% in 2023. Before we consider that growth in 2024, the expectations are around 3.3%. In this context, we also have -- we still have the inflation in Morocco. Historically, inflation has always been very low in Morocco, so this is quite new to us. We had an efficient rate about 8% last year, 6% this year, and we expect, again, 3.8% next year. So all of this to say that the environment is still uncertain if we consider the inflation and also the geopolitical issues that we face currently worldwide. So in terms of insurance market in Morocco, as you can see, our main market is there. It's composed by 7 combined insurance companies, both life and GI. It's a quite concentrated market in Morocco. And the other insurers that you can see in this slide are specialized insurers. These ones are specialized in transportation, like taxis. These ones are life insurers, credit insurance, reinsurers, too, and 5 assistance companies. These are all quite small businesses. So the main competition for Sanlam Maroc is there. We are 7 players operating in Morocco. Again, this is a quite concentrated market. So in terms of main indicators, as you can read here, the gross written premium, the insurance market in Morocco is around USD 5.4 billion, which represents a 3.9% penetration rate in Morocco. So this is one of the highest penetrate in Africa, but it is far from Europe. So we are just in the middle, as our position -- our geographical position is. The market loss ratio is a little bit -- is around 66%, the combined ratio of 94%. The next figure is important. Our financial assets. So the insurance companies are the first investors in the Moroccan economy and our total assets are around USD 22 billion. Our solvency margin as a market is higher than 350%, which is quite high and explained by the fact that we are a constructed market, a very regulated market. So it's a very stable market due to this regulator. And it's a good sign of stability for the insurance market in Morocco. So if we focus a little bit on the level of premiums, the main messages here is -- so you can see the growth, 6.9% per year for the last 5 years. It has mainly been driven by life business. As you can see, last year it was a 10.7% growth, and on the last 5 years 8.4%, while the GI business is also growing but not at the same pace. So the life business in Morocco is representing 47% of the total premiums, while the GI is 53%. One other element which is important for you to know is that, if we consider the life premiums, you can see that the main part is represented by savings, which is 87%, while the risk is only a little bit less than 13%. So this is a specific market, life market. I think that Heinie mentioned that earlier. These savings are brought by insurance companies that are linked to banks. So this is mainly bank insurance, and these are not profitable premiums. So we are not willing to compete in that segment because -- I mean we can do it, but it's just showing muscles, and this is not our strategy. I will be talking about our proper strategy later on. But the idea is to focus more on the risk side when we are talking about life insurance. On the GI side, motor represents half of the GI business, while Corporate business and health are quite balanced. I mean, Corporate is a little bit higher than health business in Morocco. As you can see, the growth rate for the last 5 years has been 5%. So we are more competing in that market in Morocco than in this one. So let's go to Sanlam Maroc and to more details about Sanlam Maroc. So let's add very quickly, to come back to our history, Sanlam Maroc has been founded more than 70 years ago as [indiscernible] back in 1949. We have a long history, a lot of changes, positive changes. And all these changes has contributed to build a very, very strong, innovative and resilient company. Maybe I will focus on one point here because we will be talking about it later in the presentation, is the launch of the digital factory. This has been a market innovation, not only for the insurance, but I mean all sectors combined. We have been the first -- one of the first companies in Morocco to launch a digital factory. We today have 80 people working in this entity, which is there to build or buy the best solution to implement in the insurance market in Morocco. So Sanlam Maroc has very strong competitive advantages. I will mention them here, and then I will go into more details in the next slides. But this is really thanks to all these elements that we have, our strong position in Morocco. So obviously, we have a very experienced management team. I will talk about it into details. We have a business-oriented organization. We have a strong image. We used to have a strong image with Saham when we were Saham, but we now have an even stronger image and brand with Sanlam. We have a strong technical support from the group. Ilyes talked about reinsurance, and we will be talking about it, but just to give you an example, in terms of capacity, Sanlam Maroc, thanks to SAHAM Re, has the same capacity in terms of reinsurance or even more capacity than SCR, which is the national reinsurer in Morocco. It means that when we compete with a local insurer on a deal where we need to be reinsured, we can bring more capacity than the national arranger in Morocco, which is a big competitive advantage. I talked about our -- I haven't mentioned it that way, but we have a strong innovative DNA. Innovation is part of our DNA, and we can demonstrate it through several initiatives, and I will be showing some of them. And last very strong competitive advantage is our distribution network. It's a very strong distribution network, very diversified where we extend it across the country. And it's also based on the very strong exclusive agent network, which reduces our dependence from large brokers, and we'll discuss this later on. So the business-oriented organization. This is not just words. We were the first company in Morocco to implement this organization. I will focus on the main benefits of it. So as you can see, we are organized through business units, 4 business units: motor business, health, corporate risk and life and bank insurance. The main benefit of this is that the people that are managing these business units, they are both responsible for their premiums and their margins and their claims management. It means that when they have a client in front of them, they engages that they give a promise to the clients and then they have to deliver it. So some organizations, you have the sales people and then you have the claims management people, so -- and there is a misconnection or disconnection between them. So you have the salesmen that sell a very beautiful story, and then once you have a claim, there's nobody to handle it. So this is the main advantage of it. And of course, we have support functions, digital factory, finance, HR, marketing and legal. So talking about the team. This is my team on 2 slides. What I could say about it is this is both a young team, between 40 and 45, but very experienced. They have around 20 years of experience and mainly in the insurance sector. So what I used to say about this team is that they are well experienced and enough experience, but they still have the energy of their 40s. So sorry for Heinie and the team. But I can tell you, they really need this energy to -- I mean to transform the company and also to tackle that very strong competition in Morocco. So I'm very lucky to have them. They make my life very, very easier than it should be. And I know that the market is very jealous from that team. So happy to have them. So I talked about our innovation DNA. I won't be into all these details. I'm sure you have the presentation after this -- I mean you have the slide after the presentation. Maybe just to focus on one of them. So the first one that you see here is Check Auto Express. This is something we launched in Morocco like 10 years ago. It's the first rapid compensation center in Morocco. It means that when you have a car accident, for example, and you can still drive your car, you can come to one of these 7 centers in Morocco. And we have experts in this center. They assess your damages and they can offer you a reimbursement within 1.5 hours. So that was totally new in Morocco. We have been copied by all the other companies. And I think we also -- not I think, I'm sure we also helped some of the group subsidiaries to implement that initiative in other countries like Ivory Coast, Angola and Mali. So this is a very important one, and that just illustrates our capacity to innovate and introduce new services in Morocco. Another one which is not in that slide, but I'm just referring to something that Robert said in his presentation, he said that the group should be supporting new initiatives for the subsidiaries, I mean to bring some value. And one of them, I'm sorry Robert is not there, but it's very important. We launched last year -- I mean, the life business in Morocco, we'll see this in figure, is quite small. And we partner with a small bank, which is Credit du Maroc. So we had to introduce new innovations and new innovative products in Morocco. One of them was called [Foreign language] in Arabic, I'm sorry it doesn't mean anything for you, but it's a payback risk -- life risk product. It means that you can pay your premiums for 15 years. I mean, of course, if you die within these 15 years, you'd get a capital. But if you don't die within these 15 years, you will get your premiums back after 15 years. That was totally new in Morocco. I'm sure you have it, I mean, you obviously have it here in South Africa. But in Morocco, that was completely new, very well -- I mean, we had a warm welcome from the market, and that was thanks to the group. So thanks again. But that's just an example to illustrate our innovation capacity, but also the support that the group can bring to us. So I talked also about our distribution channel, our strategy as a very strong competitive advantage. Here what you can see is how we sell or where we sell our premiums. So motor is mainly focused on our exclusive network. 90% of our motor premiums are [ set ] through this network. Health and corporate risk are more balanced. So 60% of these 2 lines of businesses are sold through brokers and 40% through our direct agencies. And life is mainly sold through banks. So if I want to simplify here, for life, 60% is mainly savings sold through banks, while 25% and the rest is more risk and sold to our agencies or brokers. So if we dive in in our distribution network, which -- so this is a picture of our exclusive network. We have more than 500 point of sales which are exclusive to Sanlam Maroc. That's a huge number. We are present in more than 200 cities in Morocco. And this is by far the largest network in Morocco. If you take the second network in Morocco, it's around 250 point of sales. So this is a huge advantage. We have built this over the years because we didn't have a strong partnership with a bank. So we had to compete with the others building this network. This is important in terms of strategy and profitability as well. This network sells mainly motor business. And the motor business is the most profitable in our portfolio. And we are everywhere in Morocco for one good reason: if you want to sell motor business, you need to be very close to your customers first. And secondly, we are everywhere, because if you take the main cities like Casablanca, Rabat or Marrakech, these are not the most profitable cities. I mean the claims level, the loss ratios are very high in the cities because competition is very high on prices, while in the other cities where we are almost alone, we can sell at good price, and we have a high profitability and high margins in other cities. So this is a very strong competitive advantage for Morocco, for Sanlam Maroc in Morocco. So what about our market position? I don't really like this slide because it just shows partly our market position, but this is the combined market, both life and GI. As you can see, we are between the fourth and fifth position when we talk about the combined business. But we are leading by far the motor business with around 20% market share and the health business with around 24% market share. We only rank seventh in the life market. But as I think Heinie said it earlier, the life market on Morocco is obviously dominated by banks, so Wafa, [ Arema ] and [indiscernible], as related in terms of shareholding to the 3 main banks in Morocco. So that's the main reason why they are leading this market. If we go into the GI market, we are the leader of that market for years, for more than 10 years now, with more than 17% market share. The main challenge was not only to become the leader of the GI market in Morocco. It was also to stay and to maintain that position over the years, which we have been able to do. So if you can -- if you see also the gap between Sanlam Maroc and its competitors, it's a stable gap over the years. So we are very proud of that story that we wrote in Morocco and especially on the GI business. So in terms of figures, the non-life business, so as you may have guessed, is representing 84% of our premium. So we are mainly a GI company. On this GI business, motor is more than half of our premiums, while health and corporate risk are 25% each. On the Life side, we -- the Life side represents 16% of our business, but this -- here, there is a very important figure for me and I think it's really very important. As I told you, we are not competing in the same life market as our competitors as we don't have the same size of network in terms of bank agencies. But what you can see here is that our risk business represent 32%, so almost 1/3 of our Life portfolio. And as you may know, the risk business is the one who is the most profitable. I mean savings doesn't -- that don't bring any kind of profitability for the company. So we are -- I mean, this is one of our main focus here is to develop the life risk premiums in Morocco through all the channels that we have. We are building new channels. We are trying to use also our direct agencies. And we also use obviously the bank for that and the brokers. So I haven't mentioned the turnover of Sanlam Maroc. So we have a total premium of around USD 600 million in 2022, which gives us an idea of the size of the company. So we have been growing faster on the non-life business than on life one for the reason I mentioned. So that's quite clear -- obvious. The main challenge for -- so the motor is growing at the same pace than the market, and that's always a big challenge. As I told you, we have a 20% market share on the motor business in Morocco, while the second player is around 14% specifically for motor business. And we have been able to keep this market share and disposition over the years. So now the mass market motor business is more and more competitive on the prices. Just to -- just to give you an idea, when the inflation started in Morocco, we reached levels of inflation of 8%, we never saw that before in Morocco. I know that you are more used to that in South Africa. In that period in South Africa, I know that the insurers, they increased their premiums around between 10% to 30%. In Morocco, no insurance company has increased its premium on the motor business during that period. That's crazy. But we maintain that position by targeting new segments in the motor business. What we did is that we struggled on the mass market side but we were able to target fleets, for example, that were underweighted in our portfolio. So just to give you -- that's an example for Motor. On the health side, we also go at the same pace in the market. Here, we are not willing to grow on the health side. So the health strategy is specific. This is not -- this is maybe the less profitable segment on the Moroccan market, but this is a hook product for corporate risk. We cannot sell corporate risk if we don't sell health. So the objective here is to maintain this line of business profitable, even if its combined ratio is very close to 100%, but it helps us to sell other risks just as fleets or corporate risk. If I share with you some elements of our current strategy, maybe the main room for growth that we have in Morocco is the corporate risk. When you have already 20% or 24% of market share, this is difficult to improve that market share. This is linked also to our history, to that exclusive network that we have. But if you see starting from 2021, we started to target more corporate risk. And also thanks to our reinsurance capacities, we were able to offer new capacities to the market. And we have been able to grow very quickly on the corporate risk, 14% in 2021 and almost 12% in 2022. So we -- this growth is linked to 2 main elements. The first one I just mentioned through big brokers and reinsurance. And the other one is that we are targeting more and more SMEs, for one reason is that SMEs is an unaddressed market in Morocco. I mean they -- the big brokers, they don't talk to SMEs, they are too small for them. And the direct agents, the tied agents, they are not used to talk to them. So what we are doing right now is that we are training our agents to sell insurance to SMEs and to sell to them corporate risk. This is a big advantage for us because this segment is also profitable. These SMEs are not addressed. So they are less volatile, and they are less focused on price. The last advantage is that it also helps diversifying the revenues of our tied agents, which is always good. So in terms of profitability, I mean, I will focus on the strategy, but globally the strategy is very, very easy. I will come back to it. But in Morocco our strategy is to grow profitably and also by delivering the best-in-class customer experience and quality of service. The figures are aligned with this strategy. So if you compare here the Sanlam Maroc combined ratio over the years to the market combined ratio in Morocco, we are always lower than the market. So in 2022, 2021, we're around 90% and even the years before, while the market is more around 95%. So there is a big difference here. First reason for that, of course, is that we don't underwrite nonprofitable risks, or we try to at least. And the other main reason is that we operate at a very lower cost than the competition. So if you see the 23% operating ratio, it's very low compared to the market. It means that we have a very good cost control. I'm looking to your highness there, and he can comment ahead, but really that has been mean, we always acted as if we were a poor company in the market. That's not that we are poor, that just we need people to know that every dollar counts, and it's important to operate at a very, very low operating ratio. So the last challenge, and not the smallest one, is our asset allocation. So what happened is that we [ inherited ] a specific portfolio in the market with the equities maybe overweighted in our portfolio. Positive side of this is that we could have very high financial results some years. The bad side of it is that it brings some kind of volatility, as you all know. And we don't like volatility when you are an insurance company. So the objective here in our strategy is to lower this volatility from [indiscernible] it. So what we have been doing the last year is implementing a new strategy, trying to rebalance the portfolio, having less equity and more bonds to really simplify it. And also on the real estate side, having more recurring incomes every year. Just to give you an example, we had a lot of lands that we had to sell because we are not real estate players. We don't want to build any kind of project. We just need to rent, for example, properties and not to build them. The main variable here in this strategy is time. Because you can decide on your strategy, but you cannot implement it however you want because the current context doesn't always help. Just to give you an example, last year on the bond market, as I already said in my introduction, we knew 3 successive increases in the interest rates, from 1.5% to 3% in Morocco. That increases -- the consequences -- the consequence was the decrease in the valuation of the bond funds. We couldn't invest in more bond funds until the interest rates were stabilized. Now it's done. Now that these interest rates are stable in Morocco, we can invest in bonds. That's what we have been doing starting from April 2023, with yields estimated around 4%. On the equity side, the market was very -- I mean, it was down in Morocco, with a sharp fall in the first quarter of 2023 in the capital market, the MASI in Morocco, but we had -- so we couldn't sell our position in that context. We had to wait the rebound that came in the second quarter in Morocco with a 10% growth at end of September 2023. And now we are in a position to sell some of our equities. Of course, all the equities that we'll be selling will be reinvested in bonds. So all this strategy and implementation, the objective is to be aligned with the group target allocation. So we have 2 portfolios, life and non-life. So from the life side, we are already aligned with the target. So as you can see here, the bonds already represent 80% of the portfolio at June 2023, which is fine, which is what we want. This is on the general insurance side that we have more challenges. If you see the equity share in June 2023, you can have the feeling that it increased between December and June. It's not that we bought new positions. It's just the rebound of the market. So the value increased. You can see what I was saying on the real estate side. We started from 31% in December 2021, now we are 27%. What we did during this period is selling as much land as we could. As you know, land, they don't bring any recurring incomes or revenues. We don't need them anymore, and they are a cost for us because we need to -- I mean do some gardening and so on. So we sold some properties and we are very close to the target in terms of real estate. In terms of equity, we are still a little bit far from the target at 40%, where we should be at 25%, but selling this position will help us also to reach the target on the bond side. I'm very confident that we'll achieve it in the coming, let's say, months not years, but we will make it. So I don't know if this slide is still useful, because I already said a lot of things about our strategy, but it's always good to summarize it very in small words or not -- the main strategy is to say that we want a sustainable and profitable growth in Morocco on all our segments. To do this, we have not chosen them to have the best-in-class quality service. They come together. Again, in market and driven by price, the only way to sell your product maybe with a little bit higher price is to have the best service, the best products and best quality. We definitely have a challenge on the life business development. We don't want to grow the premiums at any cost or any price in Morocco. We will have some opportunity that we will assess on the bank insurance side, for example, the market in Morocco is moving. But we don't want to go just to go -- I mean savings, that they don't bring again any kind of profitability. So that's not the objective. Here the objective is more to diversify our distribution channels to sell more risk, and we already do it well. So we need to continue that way. And obviously, we just talked about the asset allocation. We need to optimize our financial results here to reduce the volatility and increase the recurring profits every year. So as a conclusion, maybe here are some key messages I would like you to keep in mind after this presentation. So Sanlam Maroc is the unbeaten leading non-life insurer in Morocco. We have a strong performance on all the key metrics. We have a very strong distribution strategy and strong distribution channels all around the country, which is really important for us, and that helps in terms of figures as well. We have demonstrated record -- a track record in terms of innovation, and that also helps us to maintain that position in the market. We have a specific focus on improving our market position in life. And as I presented, we have strong competitive advantages, one of them is the technical support from the group. And now that we have 2 groups as partners, Sanlam and Allianz, we really think that we will strengthen this competitive advantage even more. Thank you very much for listening, and I think that Grant will jump in if you have any questions. Thank you.

Thanks very much, Yahia, for that. We'll start with questions in the room. Get the mic.