Good afternoon, and welcome to Sanlam's 2023 Capital Markets Day. As you all know, this is a hybrid event, so 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 two 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 show 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 Sanlam, 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, are 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 of 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 two 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. 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. Perhaps you can reflect overnight on some of the information and insights that are being provided today. So thanks very much. Heinie, I'm gonna 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 is supposed to join me on the... If you don't mind. So 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 the general insurance and health business and reinsurance on the African continent. There's some more of our colleagues here, who will be involved in panels tomorrow and in other discussions this afternoon, so I'm not going to introduce them now. The quite a few of them is here from Morocco. We've got Delphine here from Côte d'Ivoire.
Yeah, we're becoming, I want to 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 5th, 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 you today, hopefully, with after my presentation, and Robert and Delphine will come in for one slide on the presentation. 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, one have to look at it balanced. There are lots of opportunities. I think the issues are normally known to people, but we really see Africa as an opportunity. I will talk a little bit about SanlamAllianz, that we really believe is very, very well placed to capitalize on the opportunity.
I will share with you what we believe, how we are going to capitalize on the opportunity, and what's our objectives, and I'll come back to all of them during the course of the presentation. SanlamAllianz is really about, I want to say, bringing together two great companies to form even a better company on the African continent. If we look at Africa and the potential it has, as I say, 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's across 54 states, but it's a very young population. And if you read stuff and about the potential with 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 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 don't help you just talk about low penetration, comparing it to Europe and so in Africa, it is then about, but can people afford it?
It's about getting to people in ways that they can afford it, because in the end, everybody needs it in one or other form. 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 on the African continent, and this was in 2021, there's about EUR 66 billion premiums written on the continent. EUR 45 billion, two-thirds of that is in South Africa. One-third 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 yeah, less than one-third, you can say one-third 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 $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 .ow on a relative basis to South Africa.
At the core of who we are at SanlamAllianz is a mission to empower generations to be financially confident, secure, and prosperous. With combined experience of more than 200 years, we understand the impact of enabling and inspiring millions of people across Africa to live with life-changing confidence, financial confidence. This empowers people to protect the ones they love and the things they own. Whether they have a lot, a little, or somewhere in between, they can always grow to reach new potential. Everything we do is guided by this mission, so all our clients can live knowing that today will be a good day and tomorrow will be even better.
Yes, and I want to say that's really what we are 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 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 has referred to the fact that Sanlam want 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.
Then, very important, and this slide, just for interest's sake, 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.
There was a very strong mix of values between the two groups. SanlamAllianz, you will know, we're in 27 countries across Africa. We're in seven of the 10 largest economies across Africa. The three where we are not is South Africa, Ethiopia and Algeria. We are in the 11th biggest, is, Ivory Coast, so you can say we're in all the big economies. And then we, in the 27 countries where we are business, that ZAR 18 billion that I showed you, we write about 16% of the premiums in those markets. And most of the markets where we are, and that's part of our ambition to be the best, you have to be a top three player, but a top three profitable player. So we've got a very good footprint, I would say. We are really putting together the best of SanlamAllianz.
I 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 won't 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 two 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, 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. You know, some of the countries we are 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 there's really to put two, two 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 differentiate us, possibly from our competitors in Africa, because many companies will pull back. We continue to do more and more in Africa.
For us, it is really, I know everybody says it, but it is about client centricity, helping them with their future risks. 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 is, 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.
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 work. So our philosophy, I think, carry 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 put 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 of bringing a few new faces into it, for the time of the, the time that comes. So Robert and Delphine is here on the stage, looking after life, our, two subclusters. Johannes Bayer is there at the back, our new CFO, also from Allianz. And then the other exco members are not here, but three 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 sit 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 brag slide, but to a certain extent, we say with Sanlam and Allianz behind us, 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 three position in general insurance, we, in 16 out of the 25 countries where we are, we are in the top three player.
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 life side, similar picture, 16 out of 22 countries, the top three 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 will talk a bit more about how life business work there. It's very close to banks and cross-shareholdings there. This is a slide where I started on the left. This just give you a bit of a flavor that ZAR 18 billion, how it is split between general insurance and life insurance across the continent or outside South Africa. So basically, close to a 50/50.
Our own split in terms of premiums in 2022 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%. 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 ZAR 18 billion and growing that on a relative size, relative to South Africa. So... 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 well, 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 plays 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, commercial, retail, predominantly motor and 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...
Please, I understand then countries will differ quite a bit, but my message, and I don't say people have to accept it, is in the end, we put countries together and try to offer a diversified offering. The moment you try to do 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 across between countries, between products, between distribution lines, and then also in terms of currencies. We try to offer quite a diversified offering.
Currencies, always an issue, I want to say, in developing markets, including South Africa, but at least in our part with the Moroccan dirham and the West African 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 want to say, part of the game. So very well-diversified portfolio. If we look at our future strategy, so I've said Africa is 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 four 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? For all of these, and I'm not going to go through the detail, we will have measurements. 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'll get a more detailed one will follow after this. Overarching, there's three components to this strategy. Where we are. First of all, and I'm gonna start on the right-hand side, we have to make a decision: Should we be in a 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 to? 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 now, now 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 deal making, 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. 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 5th, 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. These are key focus areas for us.
First, on motor, it's a profitable line of business, but we also talked 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, we 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 had essentially focused on the countries where Sanlam was present, but now, it's important that we focus it into the other parts of the continent, especially in East Africa, where the assistance business, at least from the joint venture, Sanlam Allianz, is not there fully.
Commercial is one area that is quite exciting for me in particular, and then you'll 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.
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, 'cause 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, there's a lot more that we can do when it comes to Saham Re to bring more value to the SanlamAllianz going 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. 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 branch 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 businesses comes with a very strong bancassurance focus. The Egypt business is a big bancassurance-
... business. We have in Ivory Coast a good presence in bank insurance, 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 tries 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 industries 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 bank insurance. So it's great to have bank insurance. It's 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, 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, try it in, in Egypt and a few, 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 bank insurance, agency, and then brokers. And what's absent there is the international brokers. 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 there, 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.
'Cause in my mind, there's no reason we can't, 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, 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 beating 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.
Then the final thing that we believe really differentiates ourselves from our competitors is our culture. We've, 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. 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 a 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 don't deliver," or, "You - Why was it so low? Why was it so high?" But this, this is really just showing you a little bit the makeup, and we use December 2022 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, what is locked up in the asset management, credit and MTN. And then, I do expect, there's a rate there, ZAR 6 billion rand of group cost, 6.3, before somebody correct me. So this shows that at the end of 2022, our GEV was about ZAR 36 billion-37 billion rand, 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 opportunity. We don't want to do 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 Sanlam 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-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 a Sanlam number 'cause 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, quite evenly spread between life and general insurance. The net and premium of about ZAR 17 billion, life insurance, new business volumes, ZAR 12 billion. And then, important going forward, yes, and we expect about a 12%-15% type of growth on that. Then people may say, "But that's quite low." The reality is we sit 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.
As many of you will know, Sanlam started to create an asset mismatch reserve on the float. So previously, if you combined the ratio that we set on Sanlam side, it would have been 11%-18%. We reduced it now to 10%-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 the third everybody's 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%-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%-20% over the next few years. Attributable earnings, I've just put it there. We can't give you a 2022 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 65%-75%. I've heard now comments it's too low. I've also heard comments it's too high. The people who says it's too high, but it's, yes, you need to reinvest, you need to grow. People who say it's so 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. 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 three. We don't have one shareholder now, and we just write a check, like we did in the past. So, and overall, we still want to achieve what Sanlam always communicated, the return on group equity value of 6%-8%. So hopefully, this will give you, 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, you 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, oh, I've talked about Nigeria. Even 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 Nigeria, Kenya, or Ghana. Also, with this, we get a lot of questions on synergies. Paul quite often referred to the fact that the deal with SanlamAllianz is not about cost synergies. Yes, there will be cost synergies. I 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 hubs 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 whole separate process with the regulator, so we haven't quantified or looked at any synergies in Morocco at this stage. So this is just an 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 Gafar and the team, but the reality is, I think the until the end of 2025, we will, most of the savings will go into integration cost. So we believe from 2026 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 were always strong on 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, always high on Sanlam's table. Very busy slide. All that 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 then have a board between SanlamAllianz, Paul have referred to who all the directors are. He's on the board, and then the same with Oliver Bäte from 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 oversees ESG, and which oversees our investments, because investments are quite big. Not only third-party investment, our own on-balance sheet. And that roll 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 hubs in Morocco, Côte d'Ivoire, and also here 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 happen 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 whole, 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 the 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 then 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. Can we get a-
Pass microphone.
Because make sure he sits right in front. We'll just get a microphone. Please introduce yourself and go ahead with the question.
Thanks very much, Jimmy. Thanks very much, everyone. 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, is reasonably similar?
No, profits will, 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 there will be... For the rest, you have to go and split the profits of Saham Re 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. 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 feel it was a bit early days. We, Allianz, for example, do not follow the same accounting practice exactly as Sanlam. So we are busy cleaning up, I wouldn't say 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 I hope 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 on.
Excellent. Thank you.
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 Heine, Delphine, and Robert for the presentation.
We have three minutes left.
We'll move straight to Ilyes from Saham Re. . Thanks very much.
Thank you.
Thank you.
Thank you. Saham Re, as you all know, is the captive reinsurer for SanlamAllianz. 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 retrocede the higher exposure risks to the reinsurance market. The main messages today is really to present to you Saham Re overall. Why it is a successful and profitable captive business model for the group. It does bring benefits to SanlamAllianz with the centralized approach, and this is really the management of the reinsurance and the underwriting on the more, what we call, a specialist business, and this is where exactly the margins are coming from. We are targeting basically the underwriting margin of not 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 part, 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 is not a lot of reinsurers that are A-rated besides a few.
So let's 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 from 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're not giving capacity to our competitors. So our key activity is 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 some 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 in from a local context point of view.
So if you look at Africa, it's 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 aspect is how do we optimize our reinsurance structure and how we optimize reinsurance buy-in to make sure that we are still competitive and buying reinsurance at a cheap cost. And also making sure also that we are right in 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 facultative 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 with, on the specialist business, it's really looking at the client, what, what they need, what they require, and also to a risk management approach, because we have our own risk engineers, so they do go visit our clients, making sure that the risk is well retained. 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 2-3 years. Obviously, we are not there yet, as we are retaining a lot of the risks, but we are making sure that we'll 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, 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 been 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 awareness to our clients. And we've been successful in doing so with some of our biggest clients. So at the end of the day, it's really value before price.
It's 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 maybe, I'd say, competitive advantages, is our clients are seeing us as really partners. They're not simply insurers giving them insurance cover. 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 have 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've 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 nine 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 successful in integrating, basically, the business that was purchased by the group at different stages during this, these past nine years. We have a 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 also counting on the new JV with Allianz to access increased capacity, additional capacity, if we need so. And again, with a broader portfolio, a more diversified portfolio, so we 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, it's really 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 our opportunities.
Obviously, grow further within SanlamAllianz. So with the new integration and new entities that are coming in 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 are also counting on the new JV to bring in some of Allianz's expertise in that field. So that's basically the opportunities that we are looking at in the coming months. So reinsurance strategy is really simple. It's really about retaining the benefit of the 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're also basically supporting the growth of our Saham 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 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 group risk appetite, and I've talked about it earlier when I was talking about how our retrocession or reinsurance buying is aggregated. 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. 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 know, you have three entities that have also written policies, marine policies. So that gives us also a single level of 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 to the reinsurance market, and then the reinsurers themselves would buy protection for their highest exposures. Well, 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 are 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 three main components of our business strategy at the end of the day. It's about 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're 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.
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 is taking, so they are part of this growth. I think that's also what drives the motivation and what drives basically the thinking outside the boxes. Everyone feels that really they are part of this adventure. Some of the strategic KPIs, especially the three main ones. 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 has set, but also on the return on equity.
It means that also 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 find the right solution, 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've been writing since 2019. So we're close to the ZAR 110 million mark, and I think it's the growth will still be happening in 2023 and in 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 my memory serves me well, we started with about 10% retention ratio, and now we are 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, Côte d'Ivoire, and Angola is, are evenly distributed, so about 15% each. And then you have the CIMA region also contributing quite importantly in, in, for Saham Re. And then other would include basically East and, and Southern Africa. In terms of line of business, property and fire is, is really the, the line of business that constitutes basically most of the premium. So we are looking obviously to rebalance that, to, with more engineering and also making sure that, on the liability side, there's 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, in that particular line of business.
We are choosing basically the markets where we are deploying this this capacity on the casualty side. So our main focus area now, especially towards the end of the year and in 2024, is obviously we need to secure our existing portfolio. So this is. Now, there's the joint venture, but 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 entities, so that they will be renewing 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. That makes also sure that we keep at the forefront of the service and risk approach that we've 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, well, how do you reinsure? Who are your reinsurers? What is your financial rating?" So, 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 stay, so we need to consolidate that.
Third-party 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 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 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 is really being the party to go to for Pan-African international business.
As more Pan-African clients are getting noticed 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. As markets, reinsurance markets are going a bit uneasy and also through the hard cycle, because the hard cycle is not over. It's not just one year. Usually, it lasts between 3-5 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.
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 and company, that 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. That's it for me. If not?
Thanks very much, Ilyes. The presentation, we'll again go to questions in the room first, and then any that may come through on the webcast. We've got a question on that side.
Afternoon. Thanks for the presentation. Warwick Bam from RMB Morgan Stanley. I'm trying to sneak in two, 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 two layers to that. Just give us a sense of what Saham Re currently underwrites relative to the opportunity in the SanlamAllianz portfolio. Thanks.
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. Then we looked at the engineering being second, about 8%, 8%, 7% for casualty. And as well as, she's 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 context, where some countries are becoming more litigious. So, we just need to make sure that we are 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% co-contributor to overall premium. But fire and property 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's 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 risks. 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.
Thanks.
Yep.
We have another question.
Hi, it's Cornette van Zyl from Sanlam Investments. Maybe just to clarify: so within the old SEM, stable, my understanding was that most of the entities was already using Saham Re as their reinsurance partner.
Correct.
Could you maybe clarify that? Okay. 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 SEM 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 in 2024, using Saham Re as their treaty reinsurer and also as their facultative reinsurer when they need facultative business.
Any more questions from the room? Seems like there's any... There's just one that's come through from the webcast. And the question is, 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 were 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 or quantification of what the maximum exposure you have to single event?
I'm allowed to say that?
Yes.
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. It is just around about 3:00 P.M. now. We will commence with the next presentation at around 3:15 P.M. Thanks. Thanks very much.
Imagine you lived your whole life in a single day. By breakfast, you'd be 18 and just finishing school. At mid-morning, you're 30 and hustling hard. By lunch, you're 40. Maybe you have kids, kissed at once.
You speakers?
By 3:00 P.M., it's the big 50. The kids have moved out, and you say, "Freedom!" Your parents say...
We're moving in.
I hope you planned for that. Before you know it, it's 8:00, and hopefully, thanks to some smart investments, you can afford to put your feet up.
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 two of the biggest businesses in SanlamAllianz, that being Sanlam Maroc and then also Allianz Egypt. So with that, I'd like to invite Yahia Chraïbi, 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, 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 macro economic environment in Morocco. Last year has been very tough in Morocco. So we experienced a significant, 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, 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 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 inflation 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 seven combined insurance companies, both life and GI. It's a quite concentrated market in Morocco. The other insurers that you can see in this slide are specialized insurers. These ones are specialized in transportation, like taxis. This one are life insurers, credit insurance, reinsurers, too, and five assistance companies. These are all quite small businesses. So the main competition for Sanlam Maroc is there. We are seven 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 $5.4 billion, which represent a 3.9% penetration rate in Morocco. So this is one of the highest penetration rate in Africa, but this is far from Europe.
So we are just in the middle as our position, geographical position is. The market loss ratio is a little bit, it's around 66%, the combined ratio 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 $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 concentrated 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 five years. It has mainly been driven by life business. As you can see, last year, it was 10.7% growth, and over the last five 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, a 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, you know, 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 represent 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 that said, very quickly, to come back to our history. Sanlam Maroc has been founded more than 70 years ago as CNIA, 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 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, or in terms of reinsurance, or even more capacity than SCR, which is the national reinsurer in Morocco. It means then, that when we compete with local insurer on a deal where we need to be reinsured, we can bring more capacity than the national reinsurer 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.
I mean, even 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, very extended across the country. And it's also based on a very strong exclusive agent network, which reduce our dependence from large brokers, and we'll discuss this later on. So the business-oriented organization, this is not just word. 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, four 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, that when they have a client in front of them, they engage with them, they give a promise to the client, and then they have to deliver it. Sometimes, I mean, some organization, 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 two 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 forties. So sorry for Heinie and the team. But I can tell you, they really, really need this energy to tackle, I mean, to transform the company and also to tackle that very strong competition in Morocco. So I'm very lucky to have them, and 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'll have the presentation after this—I mean, you'll 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 a, 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, 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, you know, the life business in Morocco, we see this in figure, is quite small, and we partner with a small bank, which is Crédit du Maroc. So we had to introduce new innovations and new innovative products in Morocco. One of them was called Wessal Al Amane. It's in Arabic. I'm sorry, it doesn't mean anything for you. But it's a payback risk life risk product, which 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 thought, 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 sold through this network. Health and corporate risk are more balanced, so 60% of these two line of businesses are sold through brokers, and 40% to 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 through our agencies or brokers. So if we dive into our distribution network, which is... So this is a picture of our exclusive network. We have more than 500 points of sale, 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 points of sale. So this is a huge advantage.
We have built this over the years because we didn't have a strong partnership with the 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 many 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 show 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 of Morocco is obviously dominated by banks, so Wafa, RMA, and Attijari, as related in terms of shareholding to the three 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 a 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 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 premiums, 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, the life side represents 16% of our business. But this here, there is a very important figure for me, and I think it's very, 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 a third, 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. At that, 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 $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 the life one, for the reason I mentioned. So that, that's quite clear and 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% for, specifically for motor business. And we have been able to keep this market share and this position over the years.
So now, the mass market motor business is more and more competitive on the prices. 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%-30%. In Morocco, no insurance company has increased its premium on the motor business during that period. That's crazy. But we maintained 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 the stat, that's an example for motor. On the health side, we also grow at the same pace as 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 it's combined ratio is very close to 100%, but it helps us to sell other risk, just as fleets or corporate risks.
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 two main elements.
The first one, I just mentioned, two big brokers and reinsurance, and the other one is that we are targeting more and more SMEs. For one reason, is that SMEs is a non-addressed market in Morocco. I mean, 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 trade 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, where 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 non-profitable risks, or we try to, at least. The other main reason is that we operate at a very lower cost than the competition. 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 you, Heinie, there, and you can come and help, but really, that has been—I mean, we, 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. 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. 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, if not to kill 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 three successive increases in the interest rates, from 1.5% to 3% in Morocco. That increases had the consequences, the consequence was a 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 in bonds. That's what that's what we have been doing starting from April 2023, with these yields estimated around 4%. On the equity side, the market was very I mean 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 the- 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 the 10% growth at end of September 2023. And now we are in 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 two 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 in 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 position, 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 at 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, to 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, 33%-40%, where we should be at 35%, 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, not say months, but 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. So 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 no choice than to have the best-in-class quality of service. They come together. Again, in a 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 the 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 strategy, 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 that 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 a demonstrated record, a track record in terms of innovation, and that also helps us to maintain that position on 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 two 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 Quint 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.
Thanks. Mike Christelis again, UBS. Can you talk a little bit about the profitability dynamics in motor? My understanding from the last visit I had in Morocco is that the third-party liability business is by far the majority of what you write, and that's all regulated pricing. Can you confirm that?
Yes, I confirm.
Okay, so it's all regulated. And then on the own damage side, if I remember correctly, the market was heavily loss-making. Can you talk a bit about the sort of profitability over the last three or four years in own damage in the market, and in Sanlam-
Yeah.
Sanlam specifically?
Yeah, sure. So, you're right to say that, third-party liability is the main part of the market, and it's regulated. Even though it's not officially regulated, we cannot play on the prices. The specificity for Sanlam Maroc is that the highest part of our portfolio is third-party liability, if we compare to our competitors. That's why we have the most profitable business in motor. So just to give you an example, 90% of our portfolio is third-party liability. And you are right again, on the comprehensive side, this is not a profitable business, but sometimes you have to write it. So what we do, we choose our clients on that. We don't sell comprehensive cover to anybody. Just to give you an example, we stopped for...
At a period, we stopped writing new cars, I mean, comprehensive covers for new cars. These are very strong choices that we made on the market. So we lost some of these positions, but this is really aligned with our strategy to say we want to grow profitably. So if we want to grow profitably, that also explains why TP, or third-party liability, is so high in our portfolio compared to the other covers. That's also... So in Sanlam Maroc, that's why I say that quality of service and offering the best customer experience is very important in our market. That's how we keep our clients, and specifically on the motor business. Just to give you an example, we were the first company in Morocco to build a unique platform with both insurance and assistance.
Why we did this, and how it works, is that when you have a car accident, for example, you can call that platform, and you have a single point of contact. The person that answers the phone can help you for the towing truck, for example, and then on the whole process of repair and reimbursement or repairing your car. We were the first one to do this, and that helps a lot to keep our clients.
Just, again, in the visit to the digital factory, there was a lot of talk around creating an app experience that allow you to sell directly to the customers, but the regulator at the time didn't allow that. Do you? Is direct selling now allowed, or is that still?
So, that's a good question. Now, now it's allowed. So we were the—it's one of the slides, but back to 2011, if I remember well, we were the first company to launch a commercial site. But at this time, the regulatory frame was not allowing us to sell online. But now it's doable, starting from last year. So now the frame has changed. The regulatory, the regulator is pushing so as we can sell online. But reality is that the sales levels are very, very low, if not, I mean, close to nothing... zero. But now we are allowed to do it.
Right. Thank you.
We have one question.
That one.
Thanks, Warwick Bam from RMB Morgan Stanley. Can you just come back to, I guess, the opportunities with the Allianz merger, and I guess what the regulator is looking for, just from a... I think it was, you know, earlier mentioned that there were some concerns from the regulator, or at least can you just reiterate what those are and what the strategy is there? Thanks.
Okay. So, as far as Sanlam Maroc is concerned, at this stage, this is not an opportunity for the main reason is that the regulator approved the JV, so that merger between Sanlam and Allianz. So we have a new shareholder, which is Sanlam Allianz. But the regulator didn't approve a local merger between the two entities. So it means that for the coming months, at least, we will have to compete as you wish to do and as we are two separate companies. So nothing really changes for Sanlam Maroc. Allianz Maroc is still on the market, and it's still a competitor in the market. So for us, it's not a risk or a threat or an opportunity as well.
So then the question would be for the shareholders to decide what they would do with these two companies if we are not allowed, because we can come back to the regulator and ask again for a merger. So that's an option, but we have a lot of options. But again, I don't want to talk too much about this option because these are my shareholder options.
Is there anything you wanna add to that? But if there are no questions that have come from the webcast. If there's none more in the room, I'll just thank you, Yahia, for the presentation. Thanks very much.
Thank you very much. Thanks.
And then with that, we'll welcome Ayman, the CEO of Allianz Egypt, to do the presentation. Thank you.
So, good afternoon. Today I'm going to try in this short presentation to present about Egypt, the economy, the insurance players in the market, and the operations of Allianz entity in the market. I know it's the last presentation, and all... You're all tired, which is a good thing for me, but I'll try to make it as interesting as possible. To commence, before I start, the Allianz entity in Egypt has now been rebranded to Sanlam. So in the presentation, I'm going to refer to it as Allianz Egypt. So this is the entity which is owned by the Sanlam Allianz JV.
And also, you'll see many of the figures in the local market ending in the fiscal year, and fiscal year in Egypt ends at 30th of June. Just as a disclaimer, so that you can follow up the figures when we present them. So, the presentation will start with a brief about the economic outlook and the economy in general in Egypt. I would like to start with an overview about the GDP growth in Egypt over the last 10 years. The GDP growth has been above the world's average GDP growth consistently. However, you can see it has been also cyclical. So you can see sometimes it drops and goes up, sometimes it drops and goes up.
So whenever there is a drop, there is an economic situation in Egypt. So this started in 2014, and this was after the Arab Spring revolution that you are all aware of. This has consumed lots of the country's resources. There were major disturbance in terms of economic, political, social disturbance, which I think in my point of view, this was the toughest period in Egypt. However, it has recovered, but not fully. We had in 2016, another big hit, when the government decided to do 100% devaluation of the currency.
That reason, because it still was the repercussions of the revolution, and during this period, the government did not work on economic development, and rather, they have consumed the effects reserves of the country. So, the government in 2016 started investing, after the devaluation, investing in the economy. Mainly the investment was directed towards the infrastructure projects. So, the GDP growth starting 2017, 2018, were mainly due to the government expenditures. The aim of the government at that point was to build the infrastructure of Egypt, which had deteriorated a lot during the previous years, and then start after seven or eight years, when they finished the investment and development of the infrastructure, to start attracting foreign investors.
When they started to finalize, unfortunately, this did not happen. We were faced with COVID-19 pandemic, and then with the war between Russia and Ukraine. And also, the issues that we had is that the global inflation also did not make the Egyptian market an attractive for investors. Noting that the majority of the investors at that point were hot money investors, so not real investors in the economy. And when they found better opportunities outside Egypt, they started to withdraw their investment from Egypt starting 2022, especially after the COVID and starting of the Russian war, where we have seen an increase in interest rate globally.
This has made additional pressures on the economy, that's why maybe you have read about the downgrade of the Egyptian sovereign funds by Moody's last month, and there is still review by S&P and Fitch during the coming few days and few weeks. So we'll see how it goes, but this was mainly driven by the facts that I have mentioned. Egypt, to sustain its development, has went through extensive external debt lending, borrowing, sorry. And that's why the external debt now reach almost 40% of the Egyptian GDP, which is $404 billion, almost. On the inflation side, you can see that the inflation started to peak. So maybe Yahia, in his presentation, was talking about 10%-13%.
Now we are at 37% in Egypt, the inflation. The urban inflation, the core inflation is at 40%. We expect this to continue for a couple of months until things stabilize. During the coming next 3 months, there is a commitment by the government to start working with the IMF on implementation of what they have promised, mainly on selling some of the government assets to foreign investors. And they have been preparing many companies to be sold during this upcoming period, and we'll see how this will progress. And also, they are currently negotiating higher IMF loan, $5 billion instead of $3 billion.
So I think during the coming three, four months, we'll see how things will progress on the economic front. If we move on to the Egyptian insurance market landscape, in Egypt, a single insurer cannot underwrite life and non-life. So we have separate companies for life and separate companies for non-life. Allianz also in Egypt has two companies, one life and one non-life. There are 23 general insurance companies and 16 life insurance companies. They're all the four... We'll see in the next slide how each market is being focused by major competitors, maybe three or four competitors, especially on the life side and on the GI side, it's more diversified.
And also here, this is the market growth in the GWP, in gross written premiums, top line. You can see that the CAGR rate over the last 10 years has been 18.1%, mainly driven by the life, 20% CAGR and 16.2 for the GI. However, this picture we expect in 2023, as I mentioned, we don't have the figures of the market for 2023. That's why this is fiscal year 2022. We expect the component of the general insurance to increase in terms of growth because of the automatic appreciation in the assets price in general, because of the very high inflation that we have seen. So, as you see, there has been consistent growth despite the hits in the economy that has...
I've explained in the previous slide. And this is mainly driven by the low, very low penetration rate of insurance. So the penetration rate of insurance in Egypt is less than 1% of GDP. This just to give you an indication. I think in South Africa, it's more than 12%, 12% or 13%. So it's very low penetration, and this is driven by low awareness, insurance awareness and the economic situation as well, of the individuals in Egypt who are focusing more on daily or monthly expenses rather than spending on their insurance. Starting in 2017, there have been lots of development in the market.
For example, we'll see later in the slides that Allianz Egypt has made major transformation, lots of action we have done during this period, which has you will see that has driven the market growth, because we have been growing outstanding the market growth. And also we have seen entrance by some multinational players like AXA, who entered the market by 2016, and we have seen their impact starting 2018. This is a consolidated view of both the life and GI markets. This is the market ranking. You can see that Allianz comes second. This is the consolidated Allianz entities, Life and GI. This comes after the state-owned companies, Misr Insurance.
Misr Insurance is a company which is owned by the government, and they have two arms as well, one life and one GI, and have been incorporated more. The Life has been incorporated since 1900, and the GI has been incorporated since 1934. So they have been operating in the market for quite a long time, and they have the majority of the government project insured by them. Then comes Allianz, and then come other players like AXA and MetLife. And you see, we have a good margin between our competitors who are starting to grow, and especially on MetLife, we have seen them having big growth during the last couple of years because they have a big portfolio of medical which is supporting their growth. This slide shows each market separately.
So in the life market, we are number two. By far, maybe MetLife and AXA, they are closer to us, but still we have a good margin of market share between ourselves and themselves. On the GI side, you can see it's mainly dominated by the Misr arm, Misr Insurance arm, almost having 38% of the market, and the majority of the markets are playing in the range of 8%-5% of the market. So they were very close competition between the second and the fifth place. So the next slide, I'm going to speak a bit about the competitive advantages that Allianz Egypt is having, which has supported its growth during the last years, and also its positioning into the Egyptian markets.
The first one, again, so as Yahia maybe has mentioned, we have a wide range of experience of the management team, young, as he has mentioned. So, we'll not focus on that too much. But the average age is around 45 years, between 40 and 45 years, and the majority of them have experiences in insurance more than 15-20 years. So we're happy with this team as well. Very experienced team and very... And there have been, their commitment to the company has been outstanding. So many of them have been in the company, not in the insurance, in Allianz Egypt for more than 20 years. At least 3 of them has been more than 20 years in the company. The second aspect that we have taken it serious, since 2016, was to work on the customer satisfaction.
Previously with Allianz, we had an exercise that we had to do annually, by... which was appointed by Allianz or driven by Allianz Group, to appoint a third-party market research, to do a research about the customer satisfaction for Allianz Egypt, three of its competitors and the market average. They do it independently, outside us, completely, and they take the average scores of the market and compare it to our customer satisfaction. Since almost 2017, so 2019, we have been a market leader in the customer satisfaction through the NPS score. And we have worked, actually, so this is the latest report that we had since Q4 2022, and we have worked on all of these aspects, which is services, product, brand, and price.
So we have put a complete task force when we have been doing the transformation back in 2017, because we did not have this picture back in 2017, and we worked at all of these levels. So service, we have created a full contact center for the customer. Mobile app has been also to answer the customer queries. On the product, we have made many developments in our products. Still not digital products, because we had some restriction from the regulator. They started to open up, but we have developed different products which cater different segments, like pre-signed, for example, for mass. And we'll see some products example in the coming slide, like pre-signed, for example, products for the mass segment.
And also, we have invested big deal in the brand, because in Egypt, one of the issues that, as I've mentioned, the insurance awareness, and definitely this is linked to the brand awareness of the insurance companies. So we've made huge investments also in the brand. And finally, the price. Some products are price sensitive and some products are not price sensitive, but the what we have tried to do is to enhance our service. So whenever we are higher than the market, especially in products like the motor, for example, insurance, we are higher in terms of cost or the premiums compared to the market, but we are very known about our services and our links to the workshops, which facilitates the claims payments, a big deal. So we have the life...
We do the exercise on the life and GI separately. NPS, it's the, it's the GI. So you can see from last year, the market average was a score of 23. Our score was 71, and on the life, the market average was 20, and our score is 60. So we are not only proud of being always leader, but because of the gap also between us and the market. So this section, we are going to deep dive more about the products that we are selling. So on the life retail side, this product shows the life, life retail side. We are mainly concentrated on selling the unit link retirement and education products. So this is, this is our main specialty, actually. So it's a saving product where we are embedding a portion for life insurance. Why?
Because life insurance is still a pure term life insurance is still not very popular in Egypt, so it's not a product that is being wanted or asked by the customers, but they prefer, in such a high interest rate environment, to buy saving products. That's why the biggest chunk of our product is saving. And we have an advantage compared to the market, is we manage the policyholder funds internally in the company. So this has enabled us to provide the customers with a wide variety of unit linked products. So we are offering more than 7 unit linked funds with different risk appetites. So pure equity, pure fixed income, and the mix between them, US dollar, EGP.
So we are offering different varieties of unit-linked products, which is making the product very appealing to our customers. And we are mainly selling it to the affluent. As I mentioned, for the mass, we have developed, since I think 2021, the prescribed retirement product. We are selling it as well through the banks. And this product is a fixed payment for five years, and then you have coverage till the age of 60, and a specific same saving amounts, which is generated through our different interest rate scenarios. We are currently also working on launching digital term life, which is a term life solution. We are going to test it in the market very soon by Q1 2024, and another one for high net worth individuals, which is a modular proposition.
We're trying to change the way we're selling our product. Instead of selling a product, retirement product only, we're trying to sell it through covers. So we sell life insurance. Maybe the individual can choose, with it a motor insurance, maybe can choose a roadside assistance, only, not a full motor insurance. Maybe can invest in one of the funds. So getting different covers from the existing products. And applying this through a platform that we have developed already. This product is under implementation now, for the back end with our IT, and hopefully, we'll go to the regulator for approval towards Q1 2024 and launch it in Q2 2024. We think this is going to be an evolution in the market.
On the life corporate side, we are also here mainly selling or we have a competitive advantage in the group retirement product, and this is for the same reason we have our funds. We can manage with different investment guidelines for our customers. We have segregated, non-segregated customer funds, so we can agree with the customers on different or flexible investment strategies. For the group life and group credit, we definitely are there, but however, those are very price-sensitive products. So we are there, but we don't compete based on price too much. We price it based on a profitable margins, and that's why our main edge is in group retirement. This is the competitors and what the competitors are offering.
So the competitors are. We and the competitors are already offering the majority of the products that I mentioned, so savings unit-linked, savings with profit, term life and medical. However, I just need to put a caveat because the savings with profit, we have stopped selling the savings with profit since a couple of years ago for the retail customer. We're still selling the savings with profit for the corporate customers. The reason for that is this product is a product participation fund, where the capital is guaranteed to the customer, and which means it consumes capital, actually. So it has an impact on our solvency. So we took a decision not to provide any capital guarantee product for retail customers.
On the corporate side, there is still huge demand on the capital guarantee product, so we're still on, but in a very limited scale. Medical here, it says no for Allianz, but however, because here is an overview of the life company. So medical, we are underwriting it through the GI company. So that's why we're not offering it here. However, the sales are offering it to the customers, but in the back end, it's separated between the life and GI customers. The GI company, sorry. On the GI side, we have a more diversified product mix. So this, again, these are fiscal year figures, 2022, so that we can compare it to the market. And we were—until 2022, the biggest chunk of our port...
Portfolio was mainly concentrated in the motor, and we are very extremely profitable in the motor line of business. Here, the combined ratio is 99% because there are some treatment. This is local accounting figures, where we are required to put some reserves, called retrograde, whenever we have favorable results, we have to accumulate additional reserves, so which deteriorates the results, actually. But if you look at IFRS 4 and IFRS 17 results, the combined ratio for motor is around eighty, around 90%, 89%-90%. So we're extremely profitable in this line of business. However, during the last year and a half, we have seen shortage in the car supply in Egypt because of the controls and restrictions on the imports in general. So that's why we don't have new cars.
So our portfolio did not grow during the last year as it grew before. So we concentrated our growth into the medical line of business. As you see, the medical line of business last year, it was 94 combined ratio compared to the market average of 105%. Again, so it's an extremely profitable line of business that we underwrite. We are very careful about how we price. We, we coordinate with our third-party administrator for the pricing every month in order to ensure that we are properly pricing for renewals and new new schemes. So, and even till now, after we have grew around 40% this year in the medical line business, we're still at combined ratio of 97%-98%. Property and engineering, we here have more opportunities to grow on those two lines.
We had a good chunk of our portfolio on those two lines, but I guess with the new JV between Sanlam and Allianz, we'll have more flexible underwriting guidelines that will enable us to capture more opportunities on those two lines. For the rest of lines, this is mainly travel insurance. We have consolidated it with the rest because currently it's a pool by the government. Whenever you renew the passport, you get automatically the insurance, so we are not selling it individually anymore. Before they implemented this pool, we were market leaders, so we are getting the biggest chunk of this pool compared to the other market players.
And this has caused a huge increase in this line of business during the last two years since they implemented this pool. If we move now to the distribution channels, this is the distribution channels for the GI company, and we believe it's a very healthy diversification. We have a very healthy diversification. The major distribution channel that we have is our direct corporate team, direct account, our account executives. They almost generate 36% of our GWP. And then comes the broker. We are happy because the majority of the market players who are competing with us or very close to us, they are mainly dominant by, through, by the brokers.
And the brokers have a great say in these operations, and they, they have a great say in the pricing, and push on the pricing. So we don't have this situation. We mainly rely on our direct profits, and we have good relations with the brokers, but they are not... They don't have strong leverage on our pricing. And then the agency sales force, who are mainly concentrated on selling retail motor and the rest of lines of business, they're a bit small. So we are diversified among mainly the three distribution channel for the GI. For the Life, we have also diversified, or have many channels that we are sending through. However, there is more concentration on the bank insurance side.
So, historically, bank insurance used to generate around 85% of the total production of the Life company. And we have took 4 years ago, almost, a decision, is that we need to grow other channels to reduce the reliance on the bank insurance. Currently, now, the bank insurance is around 73% of the total production of the Life company. What have we done, is that we have grew our tied agents network, and we'll see this later. And we also focus on our corporate business. So, that's why the group retirement was a key player in increasing this corporate segment sales during the last 4 years.
Now we are having the portfolio has grew five times in three years for the corporate life, and which has reduced the concentration of the bank insurance, and we are aware that we need to work more. However, bank insurance still comprises or still is the biggest distribution channel in Egypt, and the customers are there in the bank, financially illiterate. They're waiting for their turn for the customer service of the bank, so they are prepared to listen to the insurance product. We are a market leader in this bank insurance distribution channel.
We have been working on this model for more than 20 years, and we are happy with the progress, and we believe there is lots of potential still in this channel. However, we are working hardly on other distribution channels in order not to rely only on one channel. This is a landscape of all the banks, and just for you to see. So, in Egypt, we have around 34-35 banks. We have currently 7 agreements with different banks. One of them is the mega b ank, which is Banque Misr, which is a government-owned bank, which is generating almost 65% of our bank insurance business.
And we have 2 agreements in the pipeline, still, in the final negotiation phase, so hopefully, we even grow our also, network of banks within the bank insurance agreement. Our next competitor is AXA, which has 4 bank insurance agreements, so, they're a bit far away. MetLife now is trying to penetrate this channel. However, they don't have much experience in this. They are mainly focused on the medical line of business. However, we have seen them trying to pay sign-on bonuses in order to penetrate some of the banks and get their bank insurance agreement. These are the rest of the banks, but those are smaller banks. If we go back to how the retail life is distributed among channels, among different channels.
So this is, again, retail Life, not the total Life. So as I mentioned, 93% of the production of the retail Life is coming from the bank insurance. And now the agency sales or tied agents have grew to to be 7%, through 452 tied agents that we have across Egypt. On the bank insurance side, we have 712 agents working on this channel, and they are present in almost 715 branches from the bank insurance agreement that we have. On the corporate side, the majority of the business is coming from our Direct agents or the employee benefit team, who are employees also of Allianz.
So 83%, they are mainly working on referrals from the tied agency network and from the bank insurance as well. So bank insurance, whenever they meet small enterprises or corporate representatives, they refer business to the to our agents. And also the tied agents, they work on referral basis to our agents. So this now is 80% of our production, and then we have the corporate brokers that we rely on for almost 17% of of the production of the corporate life business. This, I guess, is the last slide in the distribution, and this is Egypt. So almost 40%-50% of the population is concentrated in Cairo, Alexandria, and the Delta area. That's why we are having wide range of offices for the tied agent in this area, it's concentrated.
We have across Egypt, 15 offices plus two main branches, so the majority of the offices are concentrated in this area because of the population density. And then we started also to expand across Egypt to go south into Luxor and Aswan to Luxor, Aswan, till the far south. So we are trying through our tied agent network to expand materially. That's why our 452 agents, they are not only in Cairo or Alexandria, they are spread across Egypt. And the good thing as well is through the bank branches that we operate with, we have access to 719 branches, not 750.
719 branches of the banks that we work with, and we have 712 agents sitting in those 719 branches, and those branches are also spread across Egypt. The figure here also only shows our tied agents network, not the branches, but this also complements our existence in across Egypt. Egypt is 1 million square meters, so it's huge, but the majority is concentrated here. Last section that I have is to show you some of the key figures for Allianz Egypt. This is a summary. So again, this is just to get a snapshot. So we are number two in terms of market ranking.
As of the fiscal year ending 2022, June 2022, 2022, we had EGP 8.5 billion of premiums, 77% coming from Life and 23% coming from GI. Our operating profit have been growing, and we'll see why in the next slide, have been growing at a CAGR rate of 28% for the last twenty, 10 years, sorry. Combined ratio was 90.4 as of June 2022, and still, we are maintaining similar combined ratio for this year. Return on equity has been in the range of more than 25% over the last few years, 30% and 40%. We'll see a detailed graph for this.
And our CAGR for the gross written premium has been 31% over the last five years, and this is higher than the market average. And again, we are loyalty leaders for the last five years on the Life and GI side in terms of NPS. This graph shows the historical performance. So, on the GI side, the blue one is our Allianz Non-Life, and the gray is the market. So you can see that the growth in the GWP has been higher than the growth in the market almost across the last 10 years. On the Life side, we had some issues up until 2015.
This is where I mentioned we have done some restructuring in terms of operations, IT systems, people development, which has led to extremely higher growth compared to the market average in the following years. And with the exception of 2021, where we had lower than the market average, and this was driven by one product, which was launched by our competitor, Misr Life, which is a single premium product, which causes temporary growth because it's not a recurring premium payment, it's a one payment product. So they had an evolution in one year, but then they started to normalize again during the following years. On the combined ratio and expense ratio for the Non-Life, this is another success story that we are very proud of.
Once we started our transformation, you can see that the combined ratio is, is coming from 99% in 2016, and now we are at the range of 94%. This has been a consistent improvement in the combined ratio across the years. And also, we had a very high expense ratio. Expense ratio almost was 53% in 2016. Now it's at 28%, our expense ratio, and even this year, it's lower. It's reached, more, less than 26%. So we are very happy about our progress as well, in terms of the, expense and combined ratio, and this is also definitely, match with, healthy loss ratios that we are having.
The return on equity, as I mentioned, has been consistently almost above 25%, with the exception of 2016, because we had an accounting treatment that hit, hit us. Other than this, it consistently above 25%, and 30%, and sometimes 40%, return on equity. With this, I'm just going to summarize what are the key focus areas that we are currently working on. I'm done with the presentation, but we already believe there is a big opportunity for further growth in the Egyptian market. The things that I wanted to explain that we had turbulences in the economy, and this has been always the case for Egypt. We did not...
I don't, I don't remember that we had three or four years of stability. Probably, we get bored too quickly, so we always see this cyclical changes in the economy. However, the insurance industry, as you have seen, has been consistently growing because of the low penetration, lots of opportunities. We have the population, 60% of the population under the age of 35, so there are lots of opportunities to grow there despite the disturbance in the economy. So, with the current disturbance, we are still working with the internal management in order to stabilize and not to be impacted by the higher interest rates in the market and the high inflation and the correct pricing in order not to impact our profitability.
So those are priorities we are used to, so we and we are happy with our progress so far. Also, as I mentioned, bank insurance, we're trying to strengthen our relationship with our partners because we still believe there's huge opportunity in this channel, but also to diversify and to continue to grow our corporate and tied agency network. Last but not least, definitely with the JV, because the concentration that we had previously was through our internal knowledge of the management team and also the support of Allianz. However, I think we do believe that Sanlam will bring on different kind of expertise that will help us grow faster. For example, Robert has mentioned the MTN.
There are lots of innovative solutions that they have implemented across Africa, like the MTN partnership with the mobile operator and how they have done it through and grew this segment. We have—we don't have access to such innovative solutions, so I think with such innovative solutions that have been implemented elsewhere to a similar demographics like the Egyptian demographics, because we are different than Europe in terms of demographics. We have younger population, growing, compared to Europe, which is mainly older population. So the risks and the demographics are more matching to what Sanlam has been successful in doing during the last years.
Also, as I mentioned, the underwriting guidelines on the GI side is going to be an opportunity to grow mainly the property and engineering lines of business. So, with this, I end my presentation, and I'm ready for any questions.
Thanks very much for that, Ayman. For the Q&A, I'll start with the webcast. We have some questions. There's 2 questions that both relate to the combined ratio. The first one asks about the sustainability of it. Property 54% and engineering 40%. How are these so much better than the market, and, and how sustainable are those, those numbers?
So the, we are very selective in the property line of business. As you have seen, we are not, the property and engineering, they are not the majority of our lines of business or the chunk of our business. So that's why we are very selective in the risks that we are underwriting. And this, what I mentioned, is part of the, underwriting guidelines of Allianz that we are implementing in Egypt as well. So we are very selective in our risks. That's why, maybe our competitors are much more focused, like Misr Insurance, GIG, Arab Orient. All of this are mainly focused on the, on those lines of business, through the brokerage, distribution channel, and they have less, favorable combined ratio on those lines of business.
So we believe if we started to grow, and we have the opportunities with the new guidelines between Sanlam and Allianz, I think we will grow, but we have very good margin in order to grow and still be profitable.
Just following on from that, the motor clause. So there was just a question, if you could just explain that motor clause, your comments around the combined ratio for motor, and how that relates to the rest of the market.
So for the motor, the comments that I have made during the presentation is that we have seen combined ratio of 99%. However, on IFRS basis, we are at almost 90%. The reason that we have 99% is an accounting treatment. In the local accounting GAAP, we have a reserve called retrograde. Whenever you specify with the regulator at the beginning of the year that your target loss ratio, for example, is 60% and you achieved 50%, actual loss ratio, then you have to accumulate a reserve in order to increase the loss ratio to the 60% that you have budgeted at the beginning of the year. So this additional budget, it's only a precautionary reserve that is required by the regulator.
That's why it worsens the combined ratio. But actual technical combined ratio is much more favorable and in the range of 90%. Compared to the market, we are much profitable than the market in the motor line of business. We have been working in this line of business maybe for more than 20 years. We have very strong ties with workshops. We have extremely excellent service to the customers, so they can fix their cars very quickly. We have services that the customer even cannot... don't need to pay and reimburse. So we have agreement with third parties that they can pay directly on the behalf of the customers their deductibles, for example. So we have developed lots of initiatives in this line of business.
But the most important thing is the credibility and reliability of whenever there is an accident, we fix the accident, because the reputation of insurance in general in Egypt is not as perfect as in other industries, because some companies try to avoid or say it's deductible, it's not covered, or try to negotiate the amounts. So we have established this, and this is very obvious in our NPS scores.
Thanks. Before I take any more questions from the webcast, are there any questions in the room?
Thanks. Michael Christelis again. I noticed you didn't give us a profit number, so if I ask for it, I suspect you're not going to give it to me. But your ROEs are intriguing because they're quite high, and you've got very strong top-line growth. So first of all, how well capitalized are you at the moment, and do you need further capital injections to continue that level of growth?
Just to give you an indication, maybe to answer this question indirectly, our solvency ratio is more than 200, 250% on most companies. So we are very well capitalized. Even our capital is very small, but we have reserves accumulated from previous years due to the profit returned earnings, which is very well capitalizing the company. So even if with sensitivities, because of the increase in interest rates that we do and shocks that we do, we're still in a safe, very safe margin in terms of capitalization.
What sort of target capitalization ratio would you have then? Because presumably your ROE can expand considerably if you bring down the capital.
So the regulatory requirement is 100%.
Yeah.
However, with Allianz, and now with, with Sanlam and Allianz, we target internally not less than 145%. This is to accommodate any shocks that might have-
Yeah.
Can hit our reserves because of the increase in interest rates and unrealized losses.
Thank you.
We have another question in the room.
It's Cornette from Sanlam Investments again. Thank you. This was very useful. I didn't realize on the life side that you had that much savings and retirement business. And not really knowing the Egyptian market, can you maybe just explain to us, you know, the entire retirement market there? Are there big stand-alone pension funds? Is it mostly in, you know, that you have to privately, you know, look after your or budget for your retirement, or the big government pension funds? Just sort of trying to understand, what the opportunity is and how that actually works. And then secondly, who manages the assets for that? Is that done by Allianz globally, or do you use local Egyptian asset managers? And how much of that money is actually allowed to go offshore? Not understanding the assets and rules around that in Egypt.
Thanks.
Okay. Thank you. So, for the local pension funds, we have a local pensions scheme by the government, but it's very low. So whenever you reach the retirement age, you can get as low as $500 per month. So it's not even something that the Egyptians are looking for, and it's not satisfying any of the existing inflationary environment. So people are not relying on the government scheme at all. There's deduction from our salaries and goes to the government, but the amount that we get after retirement is very low. So that's why the opportunity lies on the private sector....
Whether individually for us by selling to the retail or through the corporates, selling to the employers directly, where they deduct additional amount from the employee and put it in a fund with us. So the opportunity here is definitely there, because no one is looking at the government pension funds. For how we are managing it, so we are managing it locally 100%. So we manage around ZAR 17 billion of assets under management for the policyholders. And we have developed our in-house team since 2014. Because before that, we used an external asset manager, but since 2014, we have this managed completely.
We have the benefit out of it, because we can provide different solutions to different-- Whenever we come to corporate customers, we can tailor solutions. For retail, we have set funds, unit-linked funds that they can choose from. Whenever there is development, we launch new fund, like money market fund we have launched a couple of years ago when we saw the opportunities. Before that, when we had stability in the stock market, we launched an index which is matching the stock market index. So we have the flexibilities to offer new solutions. How much can be managed outside Egypt? 0. So by law, all the funds has to be managed in Egypt, so we cannot put the money outside Egypt.
Worth mentioning, just to complete my answer, is that the investment guidelines that we use are 100%—were 100% monitored until last month by Allianz Group. So there is a center of competence called Allianz Investment Management, and they monitor with us on a monthly basis, and they do committees with us six-monthly basis to review the duration of the portfolio and the actions that we are needing in order to ensure the asset liability matching that we are embedding in our actions. So it was completely monitored, and now we are in discussion with the Sanlam team, in order to continue the same discipline and governance that we used to have before.
No further questions in the room. Just one, from the webcast, also around earnings, not, not the number, but just if you can give any guidance on the split of earnings between life and general insurance?
So, the split of earnings between life and general insurance, it will be in the range of 80 to 80/20, 75/25, in this ranges. 85-
In favor of life.
In favor of life, yes. Life is, for us, also a very profitable line of business. We have good margins and good profitability margins on the savings products, because we earn on the mortality. We manage the funds, so we earn also on the fund management. We have fund management fees, so we have lots of elements of profitability embedded in the product.
Thanks. I'll just check if there's any last questions from the room. We'll be just about out of time for this session, so I think we'll leave it there. Thanks very much, Herman, for that.
Thank you.
That brings us to the end of this afternoon's proceedings. Thanks very much to everyone joining us in the auditorium and to all the webcast participants. Thanks again for the engagement as well. We will kick off tomorrow, same time, at 1:30 P.M. We will have further discussions with Heinie and the, and the Allianz management team, and we'll also have some other presentations on from a group level, IFRS 17, and some of our transactions, discussions around that. So thanks again very much, and we'll pick it up tomorrow.