Sanlam's shares dipped after the company projected a 10% to 20% drop in headline earnings per share (HEPS) for the first half of 2026. This contradicts earlier guidance from May which anticipated strengthened earnings momentum. The expected HEPS range is 372c to 418c, compared to 465c in the prior period. The primary drivers for this decline were lower shareholder investment returns and persistent elevated weather-related and large claims in both South Africa and Pan Africa.
While attributable earnings per share (EPS) are expected to rise by 24% to 34%, reaching 607c to 656c, this uplift is entirely attributed to one-off gains. These gains stem from the disposal of Sanlam Investments' active asset manager and a gain from the dilution of Sanlam's shareholding in Shriram Finance Limited following a capital injection. Stripping out these non-recurring items reveals the underlying operational weakness.
The lower investment returns were broad-based, impacted by negative fair value movements in the listed equity exposure to Ninety One, weaker market conditions in Morocco, and India. Additionally, the elevated weather claims, including floods in northern South Africa and wildfires in the Western Cape, as well as floods in Morocco and a cyclone in Madagascar, continued to affect general insurance earnings, particularly for SanlamAllianz. Sanlam's first-quarter operational update had shown an 8% comparable operating profit increase, supported by life insurance and asset management, but this was partly offset by these same weather-related claims and weaker equity markets.
