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Sanlam's earnings drop on consolidation programmeSANLAM's financial results for the year to December - which reflect a 31% drop in earnings - also give insight into some of the significant steps it has already taken in the demutualisation process, writes MARCIA KLEIN. The results reflect a consolidation ahead of its demutualisation and JSE listing, which it intends to complete by the end of this year. It reported a 31% drop in taxed earnings to R1.2-billion, due to changes in accounting policies, actuarial valuation assumptions and a higher tax charge. The changes bring Sanlam in line with international standards and affirm its improved focus on sustainable operating profit. Executive chairman Marinus Daling says without the changes, taxed earnings would have been 16% lower. Sanlam announced free reserves of R10.4-billion for financial 1997, 12.8% higher than the previous year. Premium income was 18% higher at R21.9-billion, while total assets under management grew almost 10% to R165-billion. Operating profit before tax, which rose 9.3% to R1-billion, was affected by a less-than-expected rise in individual recurring business. Policy and medical insurance benefits totalling R18.2-billion were paid out, mainly as living benefits to policyholders. This was 26.6% higher than 1996. Daling said that there were areas which required attention. Results reflect a high cost of information technology, which will result in higher productivity in the future. The Asian crisis saw the investment return on total policyholders' funds at 9.9% or R11.9-billion, compared with 10.8% or R12.3-billion. This year Sanlam will focus on higher service levels, more competitive products and a marketing focus "to re-establish Sanlam as a premier brand in the financial services industry and thereby improve (the group's) profitability".
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