Good afternoon, ladies and gentlemen, and welcome to the Sanlam 2025 Q1 Operational Update. All attendees will be in listen-only mode. There will be an opportunity to ask questions when prompted. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please note that this event is being recorded. I will now hand you over to Mr. Paul Hanratty. Please go ahead, sir.
Thank you very much, and thank you for hosting us again at Chorus Call. Good afternoon, ladies and gentlemen, and thank you very much for joining us on the call. I'm joined today by Group Finance Director Abigail Mukhuba, our Group Chief Risk Officer and Chief Actuary Mlondolozi Mahlangeni, and Anton Gildenhuys, the Chief Executive Officer of Sanlam Life and Savings. Earlier this afternoon, we released our operational update for the first quarter ended 31 March 2025. I'll give some brief comments on our strategic and operational progress, and then we'll move into Q&A. Execution of all the Group's strategic initiatives progressed well in quarter one of 2025. The Assupol integration is on track. We are delighted to have completed the Sanlam Allianz transaction to arrive at the final partnership structure in early April, and the Group has also invested ZAR 700 million in April into the Indian Asset Management and Wealth business.
In South Africa, the integration of Assupol is progressing well and remains on track with several key milestones already achieved. We've made very good headway in improving productivity across all tied channels, consolidating the branch network. The branch rollout is well advanced, and from quarter three, we should be able to service all Sanlam and Assupol clients in each of the previously Assupol branches. We're in the process of integrating the Assupol advisor force into Sanlam, and productivity improvements have already been seen as we transition to Sanlam's front-end system. Cancellations and replacements between the two businesses have been radically reduced, and significant progress has been made in integrating our back office, which will contribute to permanent cost efficiencies. Notably, a single executive committee is now in place and actively oversees the unified business.
Sanlam has completed its acquisition of 60% of the ordinary shares in MultiChoice insurance business from Sanlam Life for ZAR 925 million, effective on the 2nd of May. As I mentioned earlier, in the Pan African Business Allianz, has concluded the acquisition of 8.6% stake in Sanlam Allianz for cash consideration of ZAR 4.5 billion on the 7th of April 2025. As I said already, this acquisition will result in a final shareholding split for the joint venture, 51% for Sanlam and 49% for Allianz, as agreed initially upfront in the deal. In Asia, Sanlam has increased its subscription for additional shares in Shriram Wealth in India, raising our effective economic shareholding from 26% to 50%. Furthermore, the transaction to increase the Group's effective economic shareholding in Shriram Asset Management Company from 16.3% to 34.8% has received all the required approvals.
These transactions involve a combined capital outlay of ZAR 700 million, which we have funded from discretionary capital. We are still awaiting the regulatory approvals for the previously announced insurance transactions in India. Our proposed transaction was Ninety One , remains on track, and we hope to complete this transaction before the end of this calendar year, resulting in Ninety One becoming the group's active asset management partner. From an operational perspective, the Group's strong performance momentum from 2024 has continued into the first quarter of 2025. It's very important to note that the structural changes in the Group over the last 12 months require caution when comparing 2025 to 2024 results. We've therefore provided both actual and normalized comparisons so that the true underlying growth of the businesses that we've got today can be judged after eliminating the effect of structural changes as well as currency movements over the last 12 months.
The Group has achieved a 15% growth in net results from financial services and cash net results from financial services, with robust performance across all operational areas. Earnings growth in the life insurance line was modest, but growth in general insurance, the investment line, and credit and structuring lines were all excellent. Life insurance new business growth has been subdued in South Africa, although it must be noted that this is off an exceptionally high base set in the last few years and has also been affected by a switch back from life annuities, that's immediate life annuities, to more linked business in the affluent market. Growth in Sanlam's gross written premium has been strong in Q1, and growth in the new business flows and net client cash flow in the investment business is excellent. Growth has also been pleasing in our credit and structuring businesses.
The Group's solvency position remains strong and within our target range as of 31 March 2025. The Group's discretionary capital balance increased to ZAR 4.7 billion at 31 March, up from the ZAR 4.1 billion at 31 December 2024. Our pro forma discretionary capital on the 14th of May, in other words, yesterday, is ZAR 9.7 billion, following the completion of the final leg of the Sanlam Allianz transaction and other small transactions that I've mentioned a few minutes ago. Approximately ZAR 5 billion of this amount is ring-fenced for the Shriram Insurance transactions, which remain subject to regulatory approvals. Given the state of global economics and markets, the group has decided to maintain a significant discretionary capital buffer at this point in time. Clearly, this is something that we will keep reviewing as we go through the year.
The geopolitical tensions, tariff wars, and the current economic and market uncertainties, including potential changes to the U.S. taxation system, have made providing any form of guidance for the balance of this year extremely challenging. We have analyzed a range of potential economic scenarios and remain confident that the group remains resilient and robust from a solvency and liquidity point of view under all conceivable scenarios. In conclusion, I'd like to say that our strong performance for the first three months of 2025 reinforces our confidence in the prospects for the group. The group is very well positioned to successfully navigate the ongoing challenges that we see in the current operating environment. I want to thank you all for participating in the call this afternoon and for those of you who invest in our stock for your continued support.
We are looking forward to talking to you in September around the half-year results, which was quite shocking to realize that actually in just over a month we'll have those internally at least. I am going to open up now to questions. Please just let us know who you are and what your question is, and we'll endeavor to answer them.
Thank you. Ladies and gentlemen, we will now be conducting the question and answer session. If you'd like to ask a question, please press Star then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press Star two to exit the question queue. Just a reminder, if you'd like to ask a question, you're welcome to press Star and then one. Our first question comes from Warwick Bam of Morgan Stanley. Please go ahead.
Good afternoon, Paul, Abigail Mukhuba, and Anton. Appreciate these updates, and thank you for all the details. Three from me. Your caution in relation to what could unfold given the tariff increases is certainly understandable. Can you just elaborate on whether you're seeing any change to the performance of your corporate credit portfolio or corporate bond spreads at this stage, given what unfolded, I guess, post this quarterly update? The second question, can you elaborate on the investment management new business volumes? They were up quite robustly at 21%. Are there any base effects? If I recall, the first quarter last year, the number was down 7%. Just trying to get a sense of what normalized growth is for investment management. Lastly, just how should we think about VNB for the remainder of the year?
Your comment is that it will decline significantly, but increase on a normalized basis. Is the 1Q growth rates something that we should—is it a fair reflection of what we should expect for 2025? Thanks.
Warwick, thanks a lot. The line was not great, and I think you asked us three questions, not two, but that is fine. If we start with your first question on the corporate credit, we have not seen any defaults. We have seen spreads widening, and I will ask Mlondolozi just to give you some color around that. I am always terrified of corporate credit because I think particularly when you have a situation like this tariff war, the effects are actually very, very hard to predict. I am sure you have been going through this for all your businesses and portfolios. Often in credit, the thing that you think is absolutely bulletproof gets knocked over by some dominoes that you did not see coming. We have not seen anything yet. Mlondolozi, do you want to just comment on that? Mlondolozi, are you out there or not?
Yes, I'm here. Can you hear me?
We couldn't hear you.
Oh, okay. Yeah. So I think thank you, Paul, and good afternoon, Warwick. As Paul has indicated, we have seen a widening of credit spreads, particularly in February and March, and then, of course, in early April. That has had an impact on our portfolio. In an overall portfolio sense, we have not seen a deterioration in the underlying credit quality of the book. That widening of a credit spread was, on an overall portfolio basis, not material. That was mainly in our listed credit instruments that we hold in an international component of the portfolio. Where we are sitting now, we have seen a stabilization in the credit spread after the initial widening and some slight compression that has started to take place. Overall, on an overall portfolio basis, there has not been material.
Okay. Great.
Thank you.
Sorry, Warwick, just remind me what your second question was about. I know your third question was about VNB.
The second one was just investment management. New business volumes up 21%.
Oh, the new business volumes.
If I look at the base period.
Yeah, yeah.
Yeah.
Look, and I think what you were after was, was there anything funny in the base and what is the normalized rate of growth? I've said it to you before. The thing that we're focused on is net line cash flow because sales, you could have huge sales and money walking out the door. What matters is what the net change is. I'm sure you look at this across the whole South African asset management industry, and you'll be aware that the total available pot at an industry level is not fantastic, right? I can say that our strategies are all working very, very well. Whether you talk about the passives business, whether you talk about our multi-management business, actually, that's where the biggest positives are coming in. We've had quite good flows as well for the first time. We've had positive flows from the Absa stable.
For many years, that was before we took it over, that was in outflow. We've been gradually stemming the tide there, and we're now in positive territory. That helps. Our private client business also growing very strongly. As a stable, we're one of the few asset managers that has strong net line cash flows. Actually, there's nothing new about that. This is just a good period for us. Our active business had some small outflows. I think we've had excellent investment performance. As that team goes across to 91, the assets under management are exactly as we predicted. We've had no big client movements. We've had really excellent performance. Our team goes across. I'm sure there are 91 people on this call. It's not a no offense meant.
It's just a fact that our performance is a lot stronger than theirs. That probably has helped a little bit as well. I think if you talk about normalized, it's hard to say. I think structurally, where we are and where we'll be post-exiting active asset management is that we're in the sweet spot between alternatives, passives, and multi-management. We would expect decent growth because I think we've got the right solutions, and we've got a great distribution and brand. The last question on new business, I'll ask Anton to go into this. Clearly, the actual VNB has reduced very strongly because the Capitec business gave us a lot of VNB. It did not necessarily give us a lot of profit, but it gave us a lot of VNB. We've replaced that to a large extent with.
Polish.
There, as I always said to you before the transaction, we're getting a lot more profits, but it's not as fast growing a business. It also has, I believe, some underperformance in its distribution. I alluded to some of that earlier where we're improving productivity. All other things being equal, if you take our core business like-for-like, and remember we also have a reduced exposure to Namibia now, which was also a strong contributor of VNB. If you take what we had before and make a like-for-like comparison, I would expect our VNB growth to be single-digit in the current year because of some of the changes in interest rates. Anton can go into that. You can think about high double-digit reduction in the actual number because of Capitec coming out.
If you want to go into a little bit of detail, Anton.
Yeah, thanks, Paul. You're right. I mean, the main reason for the actual VNB being lower is due to the exclusion of Capitec. We also saw some rotation out of life annuities into investment-linked annuities, which, of course, is a lower-margin product than life annuities. We do not expect that to change materially towards the end of the year. As Paul said, we've already started seeing welcome improvements in productivity in Assupol. As that productivity starts feeding through into incepted business and then also into our margin, we do expect the VNB to really start improving nicely on a normalized basis. Capitec is not in for the full year in the base in 2024. That will also reduce the gap a little bit towards the end of the year.
I don't expect the gap to widen, certainly, rather to narrow us a little bit.
Thanks for that answer.
If we did not answer you fully or what you were looking for, happy to try again.
Very comprehensive. Thank you, Paul.
Thank you. Our next question comes from Francois du Toit of Anchor Stockbr okers. Please go ahead.
Hi. As always, my first question is, can you hear me?
Yeah, Francois, go ahead. Nice to hear from you.
Thank you. Just quickly on the price that Allianz is paying for the additional 9% stake, can you confirm that that's around 120% of the 31 December group embedded value for the Pan-African businesses? My back of the envelope mathematics. Confirm if possible, please. Second question that you've given us a bit of information around, a bit cryptic information around, obviously, the value of new business. Do you mind maybe giving us the normalized number for FY2024 so we have a normalized base to work with, not just for the first quarter? Alternatively, maybe give us guidance in absolute terms for this year. Yeah, just so we can get that important number in my modeling right as well, please. Then just quickly on the ZAR 5 billion discretionary capital ring-fenced for SRAM.
If I remember correctly, last year, it's probably at least a year ago since you announced the transaction, the cost was going to be around ZAR 4 billion. If you can just discuss the pricing of that and how growth in EV earnings growth since it impacts what you will end up paying for that. Yeah, I think those are my three questions for now. If I may, you can give me some color on the sum sum results, especially in regards to the alternative risk transfer business where we've had extraordinary growth in the last two years. I just wanted to get a sense of where that continues to come from.
Yeah. Okay. I think there were four questions there. We sold 8.59% in the JV for ZAR 4.5 billion. The person who's best able to check whether your maths is right or not is Mlondolozi. I do not know, Mlondolozi, whether you're still on the call or not, but if you are, maybe you can just indicate whether you're able to answer that or not. The point about this is that there was always an agreement to sell the stake based on appraisal value, not on group equity value, just to be clear. For those of you who might be confused, where life businesses are concerned, our group equity value is an embedded value, so it does not put any value on the new business. Whereas when we did the transaction with Allianz, they had to pay for the value of the new business on the life side.
I do not think of it as a premium. They paid what they were supposed to pay. But Mlondolozi, can you—I do not have a calculator with me, and I might mess it up anyway. Are you able to answer, or do we want to take it offline?
Yeah, we can answer, Paul, but we'll just take it offline to look at Francois's speculation in terms of how we arrived at this point.
All right. Okay. Maybe, Francois, if you could just get hold of Emmanuel because Grant's on holiday, we'll get back to you. Emmanuel, can you just get back? We can answer that. Your second question was around better guidance on value of new business. You can see if you go and have a look that our actual was down 20% for the first quarter, and the normalized was up 4%. If you want guidance for the whole year, I think I gave it to Warwick earlier. I'd feel uncomfortable going any further than that. If my colleagues want to do that offline, 100% happy that we do that. Abigail, do you want to try and do it now, or would you rather do something offline on that?
No, Paul. I'm comfortable with the response that you gave to Warwick as the official response. Thank you.
Okay. Sorry, I can never remember. What were your third and fourth questions? They were around.
I think the ZAR 5 billion discretionary capital ring-fenced for SRAM.
Oh, yeah, yeah, yeah. You wanted to know what the pricing was on that. Basically, we've got a locked-in fixed price. There's no ticker. There's no change on it. That price was set. I can appreciate, on the one hand, the sellers are probably unhappy that there's no ratchet up. On the other hand, you can also imagine that valuations can move all over the place anyway. I think we agreed a very full price, and that's why there's no ongoing adjustment to it. Actually, funny enough, one of our board members had the same question this morning about why we aren't paying interest on it. We're just not. That's not our problem. There was another question you had, though, somewhere.
Yeah, just on sum sum and the strong.
Oh, sum sum. Yeah, sum sum. And the alternative risk business. I mean, look, basically, that's where someone else is running a cell and taking the risk. I think more and more what you do is you're seeing organizations setting up insurance cells. Obviously, I don't like that because we'd rather do the business ourselves properly. I think what you can do is say there's a growing industry out there of people who are prepared to put up their capital and want somebody to provide that facility. I guess they're in a relative sweet spot. I don't regard that as our core business. Our core business is taking risk, putting up capital behind it, underwriting and pricing it properly, not facilitating other people to do it. That's Guard risk. That's their whole business.
It is obviously a sweet spot of growth in the market. Yeah. Every year, they seem to produce good growth, which just tells you that there is demand for people to set up more and more cells. I guess that music will only end when somebody blows something up and loses money, and then they will realize it is better to leave it to someone else.
Excellent. I'll leave Michael to ask the experience variance questions.
Okay.
Thank you. Our next question comes from Larissa van Deventer of Barclays. Please go ahead.
Thank you very much. Good afternoon. Three questions from my side. The first one is on if we can just quickly go back to Assupol and how we should think about the margin going forward. Paul, you mentioned that it's a higher retention of profit, but with different dynamics driving it. If you can give a little bit more color on how she thinks about the margin, that would be helpful. The second question is on the discretionary capital. You mentioned that you want to maintain it at an elevated range given current uncertainty. Could you give us an indication of what that range would be currently? The third question is on Malaysia. If you can please comment on how the business is operating now that it is officially not core. Thank you.
Yeah. Okay. Larissa, nice to hear from you. I promised myself I was going to remember all three questions that you asked. I think your first question was on A ssupol and how you should think about the margins. Anton, I'll ask you—I will start off, but if you would not mind either correcting me or finishing with a proper answer. Larissa, what I said to people is, remember that when we were in the Capitec relationship, we were getting a percentage of the profits, right, a share of the profits. We had to, obviously, on the VNB side also, we counted a percentage, our fair share of that relating to our profit sharing. That was a business that started from scratch and grew very quickly.
By definition, in a relatively young, very fast-growing business, you had a lot of new business, VNB, but not much profit from the existing book. Assupol is exactly the opposite. Assupol is a company that was actually older than Sanlam itself, but with half the size of book in more than 100 years than Capitec wrote in, let's say, seven years. You had a lot of profits coming off the installed base, but relatively much less new business. When we said that the rationale for buying Assupol was to help us replace or fill in the gap, I always said, "We're not filling in the VNB gap as much as we'd like, but we're more than filling in the profit gap because there's no way of structuring the deal where we get the VNB but not the profits, right?" That's all that's happened.
When you talk about the margin, you talk about what is the margin on the new business. The margin on the new business at Assupol is not as good as the margin on the new business at Sanlam for a variety of reasons. Smaller business, smaller scale. Their costs were, their overhead costs were a lot higher proportionately than Sanlam's. Secondly, they've got a very weak, poor direct marketing business that just burns cash and does not produce much new business. You actually end up with a negative value of new business out of that. What you see is the total margin. You would add up some things with positive margins and some things with negative. Direct marketing business that was not working. Then you have poor productivity of your sales force.
All your fixed costs in your sales force also negatively impact your margin. The margin at Assupol is a lot lower than the margin at Sanlam. The way I think about it is that within two years, we will want exactly the same margin on the Assupo l business that we get on the Sanlam business. It's that simple. Why should it not be? They're going to be going—all the advisors are becoming Sanlam advisors. Our management system, our front-end productivity management, our brand. They'll either produce the same or they'll be unemployed or finding a job somewhere else. It's really that simple. The margins will come up. Some of the cost reductions will also squeeze more profit out of the backbook. That's—I mean, Anton, this is your job, and you understand it better than I do.
I don't know if I've explained it badly, but that's like a layman's, an Uncle Remus explanation for it.
No, no, no. I think you touched on most of the issues, and I completely concur, Paul. I think we expect margin improvements, like you said. I'm a little bit more ambitious, even, in the sense that, of course, our existing retail management business will also benefit from the larger scale and the base. We should see some total margin improvement, actually. We already have a lot of early signs or, let's just say, green shoots of strategic recovery. Like we said, productivity improvements are healthy double digits already, so that's going to help. The only additional point is capital synergies as well. It is not only on the expense side, but Assupol was a monoline business. Through clever balance sheet management, we expect to eke out even more margin by balance sheet management action.
Thank you. Anton, just one clarifying question.
Yeah.
Sorry, actually, that—yeah, that was—
You go, Larissa. Please, you go.
You go.
Sorry, just one clarifying question. You say that the Assupo l margin is not as good as the Sanlam margin. Is that Sanlam overall or Sanlam's mass level foundation?
Sunlum mass.
Sunlum mass.
Yeah. I don't know overall, actually. That's a different—actually, I'm comparing like with like. It'll be much—it's much worse than the Sanlam one. It dilutes us a bit in the early days, but it'll recover. Larissa, sorry, what is your second question?
That was just about your target range for discretionary capital given elevated global risks.
Oh, okay. So let me tell you, I have no idea what our target range is. None at all, which probably sounds horrific to you. But I wake up every day, and this gentleman in Washington or Mar-a-Lago has come up with some new idea. So we literally do not know. We are maintaining a flexible and agile approach. I think it is so difficult to make big decisions right now. We kind of have to—the answer to your question is that we have to sort of wait and see what happens. For me, the big thing is this tax bill of his. We need to see what happens with that, whether the politicians and the markets can provide sufficient boundaries around that. I think we will remain, for the time being, cautious. Then your third question was on what again?
It was on how we should think about Malaysia, both growth and margin.
Oh, Malaysia. Oh, yeah, yeah, yeah, yeah. Look, I mean, it's no secret to anybody because Abigail classified it as held for sale or whatever. Clearly, we were trying. Clearly, we didn't succeed. It's now back. Actually, the business is doing not too badly. We've posted an older experienced person there to help. Let's be blunt. It's never really going to move the needle for us in any meaningful way. We also don't have the human resources to commit to it, to make anything of it. We just have to make the best of it until we can have another go at this thing down the line. I think the original buyer will eventually be able to buy it. I mean, he can buy it financially. He's just not allowed to from the regulator's side.
Yeah, that's where we are on that, treading water.
Thank you very much.
Thank you. Ladies and gentlemen, just a reminder, if you'd like to ask a question, you're welcome to press star and then one. Our next question comes from Baron Nkomo of J.P. Morgan. Please go ahead.
Hi. Good afternoon. Just two quick questions. The first is on discretionary capital. I mean, I fully appreciate the comments on being cautious with the capital given the geopolitical risks. I was wondering if you can elaborate on some of your strategic priorities for deploying this capital were it not for the geopolitical risks. Secondly, on the outlook and guidance, earlier in the year, you obviously gave some guidance on the earnings for FY2025. Just wanted to double-check if you're happy to keep that guidance. I think it was growth of about 6%-16% on a normalized basis, if I'm not mistaken. Just want to check if you're still happy to keep that guidance or you're retracting it. That's it.
Yeah. Thanks very much, Baron. Look, I mean, we never talk a great deal about our strategic priorities. I think it's fair to say that insofar as South Africa is concerned, our big focus strategically is on the execution of a range of things, not least of which the integration of Assupol, but later in this year, the rollout of our partnership with Tyme Bank. We've got a lot to do. We've also got to get the Ninety One transaction over the wall or across the line. Just remember that the piece of our business that's going across to Ninety One is probably about 30% of the earnings of the investment business. We have to restructure what we're left with. I'm sure you can appreciate that because what is going to Ninety One are the investment professionals and the money.
Just like you guys all have, you've got bosses and risk and compliance and ESG and everything. We've got basically just a ton of work to do inside. Within the South African borders, we just do not have any strategic priorities other than getting done what we're already busy with, frankly. Plus, you've seen it's tough out there, right? Anton and his guys have to work really hard just to make sure that the existing businesses are growing. In Africa, we've still got a lot of ongoing integration going on. The Moroccan thing is we're deep in process there to figure out with the regulator how we've got permission, but there are some conditions to that. There's a lot to do on that front. Again, hard really to conceive much. You've seen that we've put some money now into India.
You've also seen that we've got pending approvals on the insurance transactions. You will have seen that I'm very bad with dates, but that's a long time. We love India. We absolutely love India. On the insurance side, clearly, there's nothing we could even contemplate. Yeah, I hope that gives you a sense of our priorities. It's just getting done what we're busy with. We think there's a full plate. It's not like we have lots of people waiting around to find things to do. Full year guidance, I mean, clearly, we've given you a range. Common sense would tell you that the midpoint was what we thought was a prudent sort of target to shoot at. If you've read carefully what we've said in our statement, it's actually very hard to provide any guidance.
I think if we provided any update, we can only be made fools of because either something is going to be unleashed that none of us saw coming and that is not good, or this gentleman is going to turn out to be a bigger genius than we are giving him credit for, and things are going to boom. It is just very, very difficult to provide further guidance. I can say, as a business, we are obviously targeting to still, our intention is still to achieve what we planned, but there is a lot more uncertainty. Actually, globally, very few companies are providing any guidance because I suspect they are all having the same problem we are having. I am not talking just about insurance. I am talking about all industries are having the same problem. It is extremely difficult to know how to give guidance when you do not know what tomorrow holds.
Yeah. Okay. Thanks, Paul.
Our next question comes from Marius Strydom of ALG. Please go ahead.
Hi, Paul. I have two.
I'm sorry.
Yeah.
I have two questions, but I'm going to ask one, you answer it, and then I'll ask the other one to help you out.
Thank you. You're a man who appreciates my problem.
I think it's age. Similar ages, no?
No, it's not. It's a man thing. This is why we can tell our wives, I don't remember you telling me that or asking me that.
Okay. Let's start off. Look, the life insurance and health growth of 7%, to me, is a bit disappointing. I mean, I was looking for a bit more than that. My question is, to what extent did the rising bond yields or the higher bond yields at March impact the South African life and savings component of that? Then, obviously, bond yields have risen even further since the 31st of March. If, in fact, the bond yields had an impact at March, it's going to have more of an impact in June unless we see a reversal.
Yeah. Let me help you here. So Mlondolozi and Anton will know much better how much, if any, bond yields impacted the outcome. My initial thought would be they did not have any impact and so on. You were disappointed in 7%. The only thing I will say to you is one swallow does not make a summer. One quarter's earnings in life insurance is no period to judge by. Anton makes up the bulk of what goes into the 7%. I am confident that by the end of the year, he will have not disappointed you, if I could put it that way. Your job, of course, is to fiddle in the detail, but it is very dangerous in a life company to think of quarterly earnings. There is a lot of little bits and bobs going on in that number.
I think Anton and Mlondolozi, you're probably now going to tell me that the bond yields had everything to do with it, in which case I'm going to kill you because you haven't told me that when I've asked you what the problem is.
No, not at all, Paul. We're well-matched, so there's no mismatch losses coming through. Of course, the bond yields have an impact on EVs and certainly over time on new business in the sense that higher bond yields drive higher annuity rates, and then we see higher annuity volumes. The bond yields certainly haven't risen enough to discourage intermediaries and clients to move back from [ELOS] into annuities. I mean, the recent good market growth certainly would have kept their faith in investment bank life annuities. Then, like Paul said, there's various bits and bobs, but remember, not only in the first quarter of this year, also first quarter of last year. If there was a positive bob last year, it'll influence your growth year on year, quarter on quarter.
It is, I agree with Paul, it's not really a long-term indication if you look at quarterly growth on the previous quarter. Mlondolozi, I don't know if you want to add anything.
No, I have nothing further to add, Anton. I think it's all covered. Thank you.
All right. The second question, Paul, look, it's in relation to Capitec's new push into the underwriting space. It looks like the new coalface is limited underwriting products, lower sums assured, and they seem to be selling a lot of product. My question is, do you think this is the next area for potential growth, and what is Sanlam's strategy around limited underwriting products?
Yeah. Look, I do not think there is any problem with limited underwriting products. Actually, funeral insurance, which is sold in fairly high amounts, are limited or zero underwriting products. I think for us, actually, it is a slightly different journey. I mean, Anton, it is probably better if you speak to this, but I think that we need to broaden the non-bank products that customers in that segment are getting sold because just buying funeral insurance is, and we have been saying this for a long time, people need a full suite of products, including more traditional products. I think whether you underwrite or not, I mean, the only thing underwriting does is it affects the price, right? The more you underwrite someone, the lower the premium will be. There is actually a trade-off because it is expensive to underwrite.
I mean, I don't know what it costs now to give a bloke like you or me, Marius, a medical, but I can tell you it's a big number, right? Then the question is, if you can get enough of us and write enough of us, you might be better off by not underwriting because you'll be saving and you'll have a little, you'll have the odd bad apple in the barrel, but you can deal with that, right? I don't know, Anton, if you want to add any color.
Yeah. I can add a couple of things. I mean, first of all, we do have a limited underwriting solution, and we actually sell a fair amount of it. It's a kind of solution, of course, not in bank branches, although we see opportunity for that in the Assupol, Retail Mass bank branches going forward. But it's a very popular solution in worksites where we've got advisors in a worksite. I mean, that's not an environment where people are that keen on underwriting. I mean, I've seen the Capitec releases. Their average premium seemed quite low to me, so it seems as if they're playing in a little bit of a lower market than we are playing with our limited underwriting product.
The other trade-off that you also see is when you provide advice and a client goes through underwriting, the persistency of the solution is vastly better than the limited underwriting product. It is a little bit like easy come, easy go. Of course, limited underwriting is easy come, so we see worse persistency in those solutions as well. It certainly is a product that has its place, and we do see quite significant growth here as well.
Thank you very much.
Ladies and gentlemen, just a final reminder. If you'd like to ask a question, you're welcome to press star and then one to place yourself in the question queue. We have a follow-up question from Francois du Toit of Anchor Stockb rokers. Please go ahead.
Thanks. I'll ask the experience variance question, please. We've had elevated group life variances over the last few years, but there's a high base in the life businesses as a result of that. Can you compare the experience there in the last quarter with last year? Also, if you can give us a sense of persistency experience compared with last year as well.
Yeah. I think once on a quarterly basis, I think to go into experience variances, I can say that if you take all of the experience variances together, we've got a positive experience in Q1. I think that's probably about what we should leave the answer to that at.
Thank you.
Ladies and gentlemen, it appears we have reached the end of our question and answer session. I will now hand back for closing remarks.
Thank you very much. Once again, we really appreciate you guys hosting the call for us very professionally. Thank you. Thank you very much to my colleagues for helping out tonight. Thank you to all of you who joined the call. We really appreciate it, and we wish you all the best. I also do hope that for your sakes as well, unless you're a hedge fund player, that the markets settle down and the environment becomes a little bit easier. If you're one of the hedgies out there, I hope the chaos continues. Good evening and have a good evening.
Thank you. Ladies and gentlemen, that concludes today's event. Thank you for joining us, and you may now disconnect your lines.
Thanks. Cheers, guys.
Thanks, Paul. Thanks, Anton. Cheers.