Good afternoon, everyone, and a very warm welcome to Sanlam's 2026 Capital Markets Day. To our investors, analysts, colleagues, and partners here in the room and online, thank you so much for taking the time to be with us today. It is great to have you here. For those of you who have not had the pleasure of meeting me, my name is Tokelo Mulaudzi, and I Head up Investor Relations here at Sanlam. I will be your MC today and taking you through today's proceedings. Before we get into the program, just some housekeeping. For those of you in the room, the bathrooms are just outside the doors. You turn to your right and at the end of the corridor. In the unlikely event of an emergency, please follow the announcements and instructions from the venue team. They will guide you out.
The designated emergency exits are at the back of the auditorium. Now, a quick word on how we will manage questions today. We set aside two sessions for the Q&A, and we will take questions in those sessions. Those of you who are online, you will be able to post your questions online throughout the day, but we will cover them in the sessions as relevant. Those of you in the room, we will take your questions first. Finally, the presentation materials are available on Sanlam's Investor Relations website, so you can download them there. The recording of this event will be made available afterwards. Do give us some time because it does take time to format. With housekeeping now out the way, let us get into today's program.
Last year, many of you were here with us, or rather, were here with Sanlam, and we set out our ambition and financial targets to 2030. We did so under the theme, Leveraging Quality, Accelerating Growth. This theme still stands. Today, we want to take that conversation a step further. It is about moving from ambition to delivery, showing you not just where we want to go, but how we intend to get there. You will hear how we are building on our strong market positions, the progress we are making with our growth vectors, and importantly, how we expect to translate this into earnings, cash generation, and ultimately returns through to 2030. We have got a full program ahead of us, so let me briefly take you through it. I do not have my pointer.
We will start the day with our Group CEO, Paul Hanratty, and he will set the scene for us, taking us through the group's investment case and our reason to believe. Abigail Mukhuba, our Group Finance Director, will then take us through the financial pathway to 2030. From there, you will hear from the teams driving the five growth vectors, and Paul will then return to close out the day. With that, let us get started. To take us through how Sanlam is leveraging quality and accelerating growth, please join me in welcoming our Chief Executive Officer, Paul Hanratty.
Tokelo, thank you very much. Good afternoon, ladies and gentlemen, and a very warm welcome to everybody online as well. We continue our focus this year, as Tokelo said, with the theme of Leveraging Quality, Accelerating Growth. The main objective today is to provide you with a very clear explanation of how we are going to achieve the financial targets that we have set for each of our key performance indicators. Last year, we laid out six new key performance indicators with targets taking us up to 2030. Our Chief Financial Officer, Abigail Mukhuba, is going to explain exactly how we expect the business to progress on delivering against these KPIs. Members of our executive team will then give you updates on each of our growth vectors. There is obviously a clear link between the growth vectors that we have and the achievement of these KPIs.
We said last year at Capital Markets Day that we strongly believe that Sanlam is a quality growth company. What do we mean by that? Firstly, we believe that our earnings are of a very high quality. They are predictable, and they are pretty smooth, and they have been consistent over time. We also have very strong growth prospects driven by our positioning in key emerging markets, and now with the overlay of clear growth vectors that are there to enhance the growth in those markets. There are really three things that underpin the value creation that Sanlam has for shareholders. The first is a long-term compounding platform. So when Abigail shows a history of our financial performance, you will see that pretty much year in, year out, we have produced returns that build on each other. Secondly, we have a very capital-efficient platform, which is a really great thing in our industry.
It is not capital light, but it is not capital heavy either. Finally, because of our positioning in the markets in which we operate, we do believe that there is a very high degree of sustainability about the growth trajectory that we have. When we think of our business portfolio, we think of it as having four product lines and three distinct geographies. Our product lines are obviously life insurance, P&C, asset management, and credits and banking. The three distinct geographies that we always talk about are South Africa, the balance of the African continent, and India. In South Africa, we lead in insurance. We have a solutions approach to asset management, and we have now embarked on a new banking and credit business relationship with TymeBank.
Across the African continent, we are in the top three in most of the insurance markets, and we are a leading asset management player on the continent. In India, we lead in retail credit in the rural niche segment, which has actually got the biggest part of the Indian population and where economic growth has been strongest. So the growth characteristics of each of our markets, combined with very strong competitive positioning in each of those markets and under penetration of our products, excepting in South Africa, means that we have excellent long-term prospects for growth across our portfolio. Our growth prospects are enhanced in India through the use of an ecosystem, which makes sure that we have very high levels of cross-sell between the different businesses.
We have now decided to adopt this approach in South Africa as well, and we believe that in time, that will help to elevate the growth rates of our South African businesses. Over the last five years, as you know, we have really been deliberately restructuring our portfolio in order to create better platforms that can grow more strongly growing forward and usually at better scale and better operating margins. During this period, we have released about ZAR 18 billion of capital through either exits or balance sheet management, and we have deployed a new ZAR 28 billion in strengthening the platforms that we have in South Africa, the rest of the continent, and in India. Over that time, we have also returned over ZAR 50 billion through either dividends or share buybacks.
Following this period of restructuring, we now feel that we are at a point of inflection where our platforms are ready to grow at a faster rate going forward than they have been over the last five years. Our recently announced intention to acquire the balance of the equity in Santam is the final step in putting together the platforms that we need to really deliver excellent shareholder returns over the next five years. In our business, maintaining margins and managing efficiency results in profit growth over the long-t erm, with profit growth really in line with premium growth, credit book growth, and assets under management. If you look, there is an extremely high correlation between the size of the books of either premiums or assets and the profit growth.
Of course, a little bit of operating leverage thrown in helps, and that is something that we have been able to drive consistently over time. Although we have been busy over the last five years, as I said, restructuring our platforms, we have also been able to improve the rate of growth if one compares the last five years to the five years prior to COVID. As I said, we are now at a point of inflection where we think we can pick up the rate of growth of premiums, assets under management, and our credit books. Why do we believe we can pick it up? It is because our platforms are more competitive, they are scaled, and of course, they have now been powered up by growth vectors.
Higher premium growth, faster growth in asset management, assets under management, and bigger credit books mean an increase in earnings, and in time, of course, higher dividends and a higher return on equity. We can think of our portfolio in three buckets, three time horizons. In the first time horizon, we have our mature cash generative businesses, where our intention is to leverage these businesses going forward into the wider group, particularly the IP of those businesses. Sanlam Life and Savings business in South Africa, Santam, and the Sanlam Investments business are incredible businesses with great franchises in their market. In the second time horizon, we have got growth platforms that we think of as the South African ecosystem that we are now busy building.
The leading Pan-African insurance franchise in SanlamAllianz, and a tremendous Indian ecosystem, which is now being powered up through a big injection of capital last year into Shriram Finance. Our third time horizon is where we are trying in our operations to grow future revenue streams. These will only move the profit and loss dial in a number of years to come. In South Africa, we are beginning to build credit banking and rewards program. Santam is actually rolling out and growing a Lloyd's Syndicate in London, and we are busy building, growing, and developing a capital markets business in India to plug into the Shriram ecosystem. 2026 has obviously been a very difficult year for us financially, but we have achieved a great deal of strategic progress during the course of this year.
In South Africa, as we start to focus on building this ecosystem to enhance our growth, we have managed to operationalize 160 retail mass branches that are now ready to sell banking credits and insurance under one roof to customers. We have recently launched our joint credit operation with GoTyme, and we have finally received approval from our regulators to distribute transactional banking services through our relationship with GoTyme. In early 2026, we concluded transactions with Ninety One to exit direct ownership of active asset management, both in South Africa and in the U.K., and to partner Ninety One going forward. We now have a streamlined, focused solutions business which is growing quickly and is highly attractive from a market point of view. We have established an excellent relationship with Ninety One that will benefit both partners going forward. Early 2026 also saw incredibly significant developments in our Indian operations.
We increased our stakes at last in the two insurance businesses, so that we now have more than 50% of the economics of each of those businesses. At the same time, we were delighted that MUFG made a very significant capital injection into the Shriram Finance business. Aside from improving the credit rating and the riskiness of that business, reducing its cost of funds, that business is enabled to grow much more quickly going forward, and that in turn will boost the growth of the entire Indian ecosystem. We are delighted that Santam got out of the blocks with their launch of the Lloyd's business in January this year, and I am pleased to say that business is now fully operational and beginning to gain some traction in the London market. This year was also a big landmark for us.
We have been waiting for two years to complete our last integration in SanlamAllianz in Morocco, and I am pleased to say we are through that. This means that we can now focus going forward on what we should focus on, which is our customers and growing our business in market. The recent announcement that we wish to acquire the remaining outstanding equity in Santam is really, as I said, the last term of our long-term plan to simplify the structure in South Africa. Provided Santam shareholders vote in favor of the proposal, it will enable us to reduce the points of entry into the group, improve our capital allocation decisions going forward, and really take full advantage of developing the South African ecosystem. We believe this step is consistent with our strategy and it improves the prospects both for Sanlam and for Santam.
The full integration of Santam into our ecosystem, it does support our fortress strategy in South Africa. Aside from being accretive to earnings, creating scale for the group, and diversifying our earnings, it has the ability, over time, to unlock synergies within our ecosystem. We therefore see it as a very important plank in achieving our 2030 vision and helping us to achieve the targets that we have set towards 2030. I would like to talk very briefly about the five factors that really underpin the future growth of earnings and returns in our business. The first thing is, because we have excellent scale and really good competitive positions in each of our markets and each of the product lines in which we function, we are able to maintain margins going forward. That is really important.
The second thing, as I spoke about earlier, we think we now have stronger platforms overlaid by growth vectors, and that means we are able to grow organically the base of premiums assets and the credit books more quickly going forward. If you combine faster growth of the base with steady margins, you get an acceleration in profit growth. The really important point, and we get a lot of questions about what is the bridge to ROE. Really important point in our business is that as we grow our base of premiums, assets, and credit book, and we grow the earnings of those, the capital base does not grow as quickly. That is because we have a very capital efficient business. It is overall got probably what I would describe as medium intensity.
If you think of the one hand, your credit businesses are very capital intensive and therefore it is difficult to exceed a certain ROE. Our P&C businesses benefit from diversification. There is some accretion over time as you grow of your ROE. The life businesses are particularly good in this regard because under the Solvency II type regime, of course, you grow the capital much more slowly than you do the underlying books. You get a natural strong accretion of ROE. Then in our fast-growing asset management and wealth businesses, the E does not grow very much, so you get a very rapid expansion. Overall, we get a good, solid, consistent growth of ROE.
If you go back to where we were pre-COVID and where we are in 2025, you will see that there has been a very large increase, notwithstanding all the M&A we have done of ROE. Finally, we think we have got good long-term macros for our business, notwithstanding the current challenges of global geopolitics. It is really what we believe in is the economic growth prospects and the demographics of the markets we are in. We are in the long-term business, so in any given period, there can be turbulence, but the long-term trend is squarely in our favor. I am going to end by sharing really what our five very simple financial objectives are up to 2030. The first thing is, as we gradually expand our ROE and we hold our cost of capital roughly where it is, of course, with higher inflation, it can drift upwards, but that will also drift up ROE.
We want to expand the gap between ROE and cost of equity. That is objective number one. The second thing, as I have said, is to grow the base of premiums, assets under management, and credit book year in, year out. Then we want to maintain or increase operational leverage. We do not talk much about AI, but there is no question that aside from the approach that we followed for years, that too does, over the medium term, offer us some opportunities to improve operational leverage in the business. We will always focus on consistent organic investment. We will never starve any of our businesses from growing. That, as you will hear from Abigail, is always the first place we place capital. Finally, we see dividends as an important underpin to our business as we focus on long-term growth and long-term value creation.
We will continue to focus on growing dividends at a reasonable rate. With that, I am going to hand over to Abigail, and she will take you through the detail of how we intend to hit these different financial targets. Thanks very much.
Thank you, Paul. Good afternoon, everyone. You have heard where Sanlam is going. My role today is to show you how the numbers add up. I will start with our 2026 outlook, then I will look at our 10-year track record and what it tells us about the resilience and earnings power of the Sanlam Group. Then before turning to the specific business drivers that underpin our ambition through to 2030. We are not introducing new targets today, unfortunately. We are showing you the evidence, the economics, and the execution that is required to deliver on the targets that we communicated last year. If I start with 2026, despite the adverse weather, the macroeconomic environment, as well as the market pressure in the first half, we still delivered about 46% of our full year core earnings guidance CPI +3% .
Our confidence in the full year outlook, it still rests on four identifiable drivers. First, we want to convert the growth already achieved into earnings. Secondly, we intend recovering general insurance margins following the elevated claims experience in the first half. Thirdly, we would like to improve our cost efficiencies through disciplined expense management. Fourthly, we did communicate that we want to strengthen our cash generation and remittances across the group. All of these are tangible management priorities, with the first three directly supporting earnings delivery, and the fourth one strengthening cash generation and financial flexibility. We recognize that the weather and the market conditions remain outside our control, but our confidence is grounded on the underlying operations and the underlying performance of our business and actions that management is taking.
So that is why, for the full year of 2026, our CPI +3% guidance, as far as core earnings are concerned, remains unchanged. One half year is best judged against the decade behind it. If you look at our 10-year track record, it provides compelling evidence of the earnings power again of the Sanlam Group. First, our premium and assets growth are the engines of our earnings growth, the issues or the comments that Paul was referring to earlier. Since 2016, life new business volumes have grown by over 90%, general insurance premiums by around 86%, and assets under management have doubled to ZAR 1.7 trillion. Both the insurance businesses have grown ahead of nominal South African GDP, and this was supported by strong domestic franchises and our diversification into Africa and India.
Importantly for us, that growth has also translated into earnings. Earnings have almost doubled to ZAR 15 billion over the same period, and this demonstrates the relationship between growing premiums, expanding assets, and the benefit of scale. Second, for Sanlam, growth has accelerated post-COVID. Our annual earnings growth increased by approximately 7% before COVID, and now it's increased by approximately 12% between 2021 to 2025 post-COVID. This reflects more than a recovery. What we are seeing are the early benefits of our reshaping the Sanlam portfolio, strengthening our businesses, and scaling our platforms. There's also further operating leverage still to emerge. Then thirdly, our growth has translated into value creation and improving returns. If you look at adjusted ROGE for the group, it exceeded our hurdle in eight of the past 10 years, demonstrating consistent long-term value creation.
Adjusted ROE averaged approximately 15% before COVID and has reached a level of 18% in 2025. Notwithstanding the M&A activity and the associated expansion of our capital base. We've continued to reward shareholders throughout this period. The dividends have grown by approximately 7% annually throughout this period, including a recovery to pre-COVID levels by 2021. So what does all of this tell us? We have demonstrated the Sanlam ability to grow premiums and assets, convert that growth into earnings, create economic value, and improve returns through different economic cycles. Importantly, we have not yet captured the full benefits of the platforms that we continue to build. That is what's underpinning our confidence in delivering 2030 and the ambition that we have. It is not fundamentally a different business model.
It's just further earnings growth, operating leverage, capital efficiency from the business that we already own. So earnings matter, but ultimately it is the cash that funds growth and shareholder returns. For Sanlam, we have, again, a strong track record of converting earnings to cash. Over the past decade, our annual cash conversion ratio has averaged in the mid-70s of core earnings. That cash flows to the center, where it is allocated to opportunities that meet our return hurdles or return to shareholders. Before COVID, our conversion was consistently in the mid-70s. It rose temporarily after the pandemic, supported by reserve releases. The more recent moderation that we see reflects a deliberate investment phase, with cash retained to support growth in SanlamAllianz as well as our India business, rather than a structural deterioration in the group's cash generation capacity.
We are now approaching a phase of inflection point, in a way, in that as the businesses mature, we expect the Pan-Africa cash conversion to move from low to medium. We previously saw a constraint that we saw in the JV and as far as the startup cash profile of the JV. SanlamAllianz began without central working capital. In the early years, subsidiary dividends and some loan facilities funded the central and integration costs of the JV rather than flowing to the shareholders. That phase is pretty much behind us now with the integration complete. We saw already SanlamAllianz has paid its inaugural dividend of around ZAR 500 million in June 2026.
As integration costs fall away and the holding company layers unwind, we expect more of the dividends to flow through to the shareholders and to the group for our purposes, increasing from at least 2027. Then we expect the cash remittances in India to move from low towards low to medium by 2030. Much of this improvement is structural. We expect the restructuring of the Shriram Capital business to simplify the holding structure of the India business so that we can hold the Shriram Finance entity shares directly rather than indirectly. We expect this is going to clear the debt also at Shriram Capital and reduce the withholding tax leakage that we currently see on dividends as they flow up to the group. Then we also expect proceeds from the Shriram brand.
With the majority positions now in the life and general insurance businesses in India, we also expect the cash generation will increasingly become insurance-led. Less debt and lower tax leakage mean more of India's earnings are going to reach the center as cash from at least 2028. Together with continued cash generation from our established businesses, this supports our ambition to restore group remittances towards the 75% level of core earnings by 2030. Importantly, higher remittances mean more cash available at the center to fund growth, but also shareholder distributions. We have demonstrated our ability to generate cash. We have deliberately reinvested to build the future, particularly the future earnings capacity. The next phase really for us is about converting that investment into higher remittances and sustainable dividend growth. Paul has outlined where Sanlam's growth will come from.
My focus is on how we translate that growth into earnings, cash, as well as shareholder returns. Our 2030 ambition rests on six identifiable business drivers. Scale will give us operating leverage. Growth will expand our earnings base. Stable margins will ensure that growth is profitable. We want to see cost discipline, which will allow more of that growth to flow through to earnings. Capital efficiencies will enable earnings to grow faster than the equity supporting the businesses, thereby lifting the returns on equity. Diversification across business lines as well as geography strengthens the resilience of those earnings for this group, and it reduces our dependence on any single market or source of profit. The drivers reinforce one another, and together they explain how we intend to deliver stronger earnings growth, higher returns on equity, and again, increasing cash generation. In 2025, we established the ambition.
Our focus now is on execution and demonstrating through measurable financial outcomes that these drivers are delivering. The distinction is simple. Our five strategic vectors define where we will grow. These six drivers explain how that growth is going to translate into shareholder value. This is where we connect the 2030 ambition to the underlying business economics. On the left of the slide are the operating assumptions underpinning our forecast, and on the right are the financial outcomes that are implied by those assumptions. Importantly, these are not heroic assumptions if you look at them. Over the past decade, life business and general insurance premiums, they grew approximately 7% annually, and investment assets under management at around 8%. Our forward volume assumptions are broadly in line, or they are slightly below that of the historical 10-year performance.
Investment returns are based on the long-term market expectations, while cash remittances are expected to return towards the historical average of 75%. Yet, we expect earnings growth to accelerate beyond historical levels for three important reasons. The first one, stronger earnings conversion. The scale of our established platforms, the growth across our strategic vectors, and stable margins and greater cost efficiencies that I talked about earlier should allow more of our underlying business growth to translate into earnings. Secondly, we want to improve our ROE while adjusted return on group equity value remains broadly stable. This reflects the capital efficiency inherent in our business mix. As our life and capital light businesses grow, earnings increase faster than the capital required to support them, progressively lifting our ROE.
At the same time, we expect to sustain attractive margins and return on group equity value above our hurdle rate, rather than relying on expanding economic return rates. Thirdly, we expect stronger dividend growth. As earnings growth accelerates and cash remittances improve, we expect the dividend growth to strengthen. Over the long- term, however, we do expect that dividend growth will be somehow smaller or somewhat slower than the earnings growth, particularly because of the India and the Pan Africa business, because as they become a larger part of our earnings mix, we still expect them to retain a bit more cash to fund their future growth. We have also been very explicit about the upside and the risks. Further operating leverage, stronger growth across our strategic vectors, and capital efficiencies provide the upside. While claims volatility, weaker markets, and possibly slower execution remains the risk.
For us, it is quite straightforward. Disciplined operating assumptions, accelerating earnings growth, improving the ROE, and sustainable dividend progression. That is our focus, and that is how the economics of our portfolio support the delivery of the 2030 ambition. Our confidence in the 2030 ambition also rests on strategic platforms already in place with identifiable opportunities to scale. If we go through the different regions, if you start with South Africa, where we are targeting at least CPI +6% from a core earnings growth perspective, life insurance penetration is approximately 10%, compared with just 3% on the GI side. This illustrates different growth opportunities for our business. Our opportunity is not simply to acquire more customers, but to capture more value from existing relationships. The financial benefit comes from combining that growth with better new business margins and operating leverage across our established infrastructure.
On the asset management side, it does provide us a different growth engine with diversified fee-based earnings on a relatively small capital base. Our earnings ambition in this business is also at least CPI +6% , supported by growing assets, positive net client flows, and diverse client solutions. This diversification should position us to capture flows across different client needs, investment strategies, as well as market conditions. Importantly, as assets and flows grow, earnings can scale without a proportionate increase in capital. This supports attractive returns and strong cash conversion. India offers a third structurally different growth opportunity for the Sanlam Group. With expected nominal GDP growth of between 8%-10%, life insurance and GI insurance penetration are quite low. The long-term opportunity is substantial. Through the Shriram ecosystem, we have already an established distribution reach and access to a large customer base.
Our earnings growth ambition in India is above CPI +1 0%, which is supported by increasing lives covered, expanding agency distribution, and scaling our capital market businesses. The financial opportunity is to convert that reach also into profitable growth while improving capital efficiencies, cash generation as the business in India matures. In summary, in South Africa, we grow by deepening customer relationships. In asset management, we grow by scaling fee income on a capital light platform. In India, we grow by capturing structural demand in an under-penetrated market. Different growth engines, but the same discipline. Profitable growth that translates into earnings, cash, and shareholder returns. Two further platforms extend our growth opportunities beyond our established markets, and each of them with a distinct contribution to our 2030 ambition. If we start with the Pan Africa business, where structural growth opportunity is quite significant.
We are already seeing double digit growth in the life new business in this market, as well as the value of new business, supported by expanding bancassurance distribution and integration synergies with further recurring benefits expected. Our ambition in the Pan Africa business is to more than double 2024's earnings by 2030, and that requires both sustained growth and a recovery in our general insurance profitability. We are taking decisive action on the general insurance business, strengthening the underwriting and financial controls, repricing underperforming portfolios, and particularly in the health environment, and directing capital towards markets that meet our return hurdles. More on the Pan- Africa business will follow when Heinie steps up on the platform. On the Santam side, it offers a different opportunity, taking proven specialist underwriting capabilities into the international market.
Through the Lloyd's Syndicate, we are extending our global reach with an ambition to maintain underwriting margins above 10%, at least on an underwriting year, and sustain historical returns on capital and increase international business to more than 30% of Santam's gross written premiums. As the syndicate scales over the coming years, we expect the current initial losses that we estimate for 2026 of about ZAR 500 million to give way to profitability. This will be supported by improving operating leverage and an increasing contribution to group earnings. Pan Africa gives us structural growth, as I said earlier, and an earnings recovery. Santam, on the other hand, gives us specialist underwriting scale and international reach. Together, they broaden our sources of growth while reinforcing the diversification and resilience of the group. That brings me to a question we hear very frequently. Will Sanlam do another deal?
Our 2030 ambition does not depend on further M&A. We have the platforms that we need. Paul has shown you our capital allocation track record. What matters now is how that discipline evolves on our strategic platforms as our strategic platforms mature. Beyond bringing Santam fully in-house, we have no material capital earmarked for acquisitions through to 2030. Further, any opportunity must meet our strategic and return criteria and compete for capital against the growth opportunities already within the group. Our priority now is to grow what we own and improve the returns and cash generation from those investments. In Life and Savings, we will fund profitable new business at returns comfortably above our cost of capital. At Santam, we will support profitable book growth, including the syndicate. In India, our focus is on insurance and wealth management.
At SanlamAllianz, we want to grow the book as the recovery progresses. As we said, asset management remains relatively capital light. The economics are important. Growth requires investment upfront, but as our in-force books mature, earnings emerge and the growth becomes increasingly self-funding. That reduces the need to retain cash within the businesses and increases their capacity to remit dividends to the group. Two developments reinforce this trajectory. In India, we do expect stronger cash generation from 2028 as the organizational restructuring that I talked about removes the debt and the withholding tax alongside the proceeds from the brand. At SanlamAllianz, we expect them to continue the dividends that they have now started in 2026 as the structure matures and more cash flows through to group. In all, our dividend outlook remains intact.
Growth of CPI +4% in 2026 and above CPI +4% in 2027, with the dividend cover maintained within our target range of 1x to 1.2x . Importantly, we will not retain capital simply to preserve optionality. Genuine excess capital will be returned through dividends first, and then through value accretive share buybacks where appropriate. Our capital allocation discipline remains clear. We invest where returns justify the capital, we maintain financial strength, and we return excess capital to shareholders. On return on equity. Maybe let me start by reaffirming, for purposes of 2026, our guidance of above 18%. That still holds. If we look into 2027, there is an important distinction between the accounting outcome and the underlying economics of our transactions.
The MUFG and the Ninety One transactions that we were involved in in 2026 have created significant value for Sanlam without requiring us to deploy additional capital. Because these transactions were executed at valuations well above their historical carrying values, IFRS accounting adds approximately ZAR 6 billion to our equity base. However, while this inflates the equity in terms of the IFRS accounting, the reality is that no capital was deployed. At least no cash capital was deployed in these transactions. The 2027 adjusted ROE we will report will not reflect the underlying investment reality. IFRS mechanically reduces our 2027 ROE by approximately 1%, even though the underlying economics of our business improved. On the same topic of ROE, if you look ahead, the Santam transaction, subject to approvals of course, is expected to provide further impetus to the achievement of our 2030 targets.
The additional earnings financed through leverage lead to ROE accretion, with the benefits expected to moderate as we subsequently deleverage. The higher exposure to Sanlam earnings also creates further diversification for the group's earnings and is expected to enhance revenue growth over time through the South Africa ecosystem. S&P, the ratings agents, have also affirmed that the group's rating will remain intact, the credit rating, and have taken the view that the diversification of earnings and the group's commitment to Santam strengthen both company positions. Earnings and ROE accretion are expected to contribute to the group's earnings and ROE targets and, by extension, dividend targets. I think the important message on this slide is that the transactions themselves strengthen our portfolio and position.
They strengthen our portfolio as well as our position to generate higher sustainable returns over time, even where the near-term accounting presentation does not fully reflect that value. If you look at the rebased 2027 position, we expect underlying economics of our businesses to drive a natural improvement in return on equity towards our target of above 20% by 2030. The key is simple for us. Our earnings can grow faster than the capital required to support them, and that comes down to the different capital characteristics of our businesses. In the credit and general insurance business, those are expected to be more, or they are capital intensive. As these books grow, capital requirements grow broadly in line, although the GI business benefits from diversification. From a ROE expansion perspective in these businesses, it tends to be gradual for these lines of businesses.
On the life insurance side, it's a bit different and particularly important to our return trajectory given its importance in the overall mix of business. Paul alluded to the Solvency II capital. In terms of the Solvency II type approach to life insurance, it means that the overall capital requirements grow modestly as the business expands. New business strain needs financing, but the regulatory capital requirements are largely self-financing, and this allows us to grow the life book without a proportionate increase in the regulatory capital. Since capital deployment grows more slowly than our underlying business earnings, the life product line has a natural ROE accretion over time. On the asset management side, we've mentioned a few times, it's capital light, and growing assets and fee income requires relatively little additional capital, allowing earnings growth to translate more directly into higher returns.
Taken together, our business mix has the potential to generate approximately one percentage point of annual ROE accretion, supported by profitable growth and disciplined capital allocation. As the recent corporate activity settles, that progression should become clearer. Our ROE ambition is underpinned by a simple economic advantage, the ability to grow our earnings faster than the capital required to support them. Ultimately, the test of shareholder value creation is also the return earned above our cost of equity. At the end of 2025, Sanlam delivered adjusted ROE of about 18% against a cost of equity of about 12%, which resulted in a positive spread of about six percentage points. By 2030, our ambition to exceed the 20% ROE means that we aim to widen that spread to more than 8 percentage points, assuming a broadly unchanged cost of equity.
And importantly, the improvement is supported by the economics of our business. As I've explained, our capital efficient life and asset management businesses allow earnings to grow faster than the equity required to support them. Together with a disciplined capital allocation, we expect this to support higher returns over time. Our ambition really is not simply to build a bigger Sanlam, but rather to build a more valuable Sanlam, one that consistently earns materially above its cost of equity on a growing earnings basis. Last year, we set our targets and our ambition. Today, we've demonstrated the financial foundation for delivering it. Our confidence is grounded in evidence, not optimism. Over the past decade, we've grown our businesses ahead of the underlying economy. We've expanded our earnings base and consistently generated returns above our cost of equity.
We now have five complementary growth engines, each with distinct opportunities to contribute to earnings, returns, and cash generation. And importantly, the economics of our portfolio work in our favor. Profitable growth, operating leverage, capital efficiency allow earnings to grow faster than the capital required to support them. Our proven cash generating capacity, together with disciplined capital allocation, supports continued investment in growth and sustainable dividend progression. We have the platforms, we have the financial capacity, and we have identifiable drivers of value creation. Our task as a management team is execution, converting these advantages into sustained earnings growth, ROE above 20%, increasing returns to shareholders through to 2030. Our 2030 through the cycle targets remain unchanged. I repeat it deliberately today, now that you've seen the evidence behind them.
We recognize that the markets will move, economic conditions will change, individual years will be stronger or weaker, but our ambition does not change with the cycle. Our targets remain unchanged, our commitment is clear, and we expect to be judged on that delivery. Thank you very much.
Thank you, Abigail, and Paul, for that presentation. If you don't mind, please join me on the seat. Abigail has repeated our 2030 targets remain unchanged. And you've had a closer look at our assumptions and the targets behind those assumptions, and how we're thinking about capital allocation and ROE. Now we'd just like to open the floor up for questions and answers. I'll begin by taking questions here in the room and then follow that up by questions online. I'd like to remind you again that we'd like to keep the questions, in this first part of the Q&A, to the group perspective and what Abigail and Paul have discussed. We'll do detailed questions on the growth vectors following that section of the presentations. I see Francois' hand is up here. If you can just get the mic to him.
Hi. Is it working? Yes. Yeah, just the impact of the MUFG transaction and also the Ninety One transactions to reduce your ROE expected for next year by percent, in your targets for above 20% ROE. Are you expecting any of those impacts to reverse? In other words, obviously, because of the IFRS accounting, your Ninety One transaction becomes relatively dilutive given the net asset value base of that transaction. Any consideration to selling that in that target? Number one. Number two, MUFG, obviously the capital they have received, you are expecting that to, from year two, three onwards, generate the sort of returns that had been in place in the past there. Is that incorporated in your forecast for returns of more than 20%? That is the first question. Second question is-
Francois?
Yeah.
Would you like for us to first take that first question and then we will-
Perfect. Thank you.
Yeah.
Francois, the 1% impact, over time, obviously it dilutes itself out as the business grows. I think the issue for us, why we wanted to flag it, is our formula or our basis of calculating ROE generally uses, if you use the mechanical calc, it uses opening equity. So it immediately boosts your opening equity for 2027. But as it averages out into the future, you expect that I would not call it reverse, but you expect it to get absorbed. In terms of the earnings, of course, we expect, and I think when the MUFG transaction was announced, we did say that the injection of the capital is expected to lead to faster or at least improved growth in that business. So one would expect that the earnings contribution would be higher or significant into the business into the future. Paul, I do not know if you want to add.
Well, maybe. Francois, basically what happens is completely falsely, the increase in E from the accounting, without putting ZAR 0.01 Of capital in, drops next year once off by 1%. Then we accrete naturally by 1%. So we will get to 20% before 2030 without any issue. Then if we do the Santam transaction, in any event, that is going to accrete ROE. So that is the MUFG thing. Already, the injection of capital from MUFG into Shriram Finance has already started elevating earnings growth there, because the cost of funds has come down because you have replaced relatively expensive funding with cheaper funding.
And you have immediately changed the credit rating, which means the cost of funding is reduced. So before you start expanding the book, they have already started to elevate earnings. So that will come through strongly, going forward.
Excellent. Thank you.
I did not understand the second question at all, sorry. So you will have to ask it again, or maybe you understood.
No, maybe just on, I guess because of the equity accounted earnings related to Ninety One, it is fairly dilutive and will continue to be relatively dilutive while you are holding onto that. You have not assumed any reduction in that stake, in that target for 2030.
But the dilution, if I am hearing you correctly, the dilution you are referring to is on the basis of the unrealized mark-to-market valuation of the Ninety One investment. In terms of the underlying core investment income and the performance of the Ninety One business that contributes to the Sanlam Group, that remains in line with the historical active asset management, at least if I look at this year. In terms of the unrealized one, we do talk about our targets are on the basis of you assuming a normal cycle. You are going to have up and downs in the share price, but those are all unrealized.
Right.
I think what is also important is the dividend element of the Ninety One investment, and that we are seeing that it continues to be strong and the cash contribution to the group will hold or be higher than what we previously saw in the active asset management business.
The dividend from Ninety One transaction is almost identical to the full 100% of the profits we were getting from the business we transferred to them. Any capital accretion that we get over time on that stock is all upside for us. It is anything but dilutive. Dilutive is the last word that would come to my mind. We have no intention of selling that stock. They are our partners. I think it is a great investment. We get great returns on it over time.
Okay. Thank you. Just on the I think you were mentioning in regards to Santam that you see it as sort of a medium capital conversion rate and expect that to continue. Historically, Santam used to pay us a special dividend every second year. Effectively, our payout ratio is quite close to 100%. How would you define medium, and would you still expect there to be quite a bit of internal spending and expanding on new projects in Santam into 2030? Maybe just quantify what you define as medium remittances out of Santam.
Yeah. So generally, when we talk about high remittances, we are talking 75% and above. Medium would be probably around, let's say, 40%- 75%. And the reason why we said medium, back to the conservativeness of our assumptions, is we are still looking into the maturity of the syndicate and its capital requirements. So we will first want to stabilize that capital requirements before we can assume that Santam goes back to high remittances.
But the P&C business is fundamentally very different to the life business, right? So the way the capital requirements are calculated relates to the size of the book you have. And yes, you do get a certain amount of benefit from diversifying into different lines of business there. But a bit like credit, if you double the size of a bank, you double the size of the capital requirements. That is not true in the life business, right? And that's the distinction. So theoretically, a P&C business is more capital intensive than a life business. And that's really the long term effect that Abigail was trying to articulate. The fact that you might have had some special dividends historically out of Santam really reflects that they've had some good underwriting years. And that gets released at some point when the solvency position builds up too high.
Thanks.
Thanks, Francois.
Just a last question. I think you've mentioned that your internal businesses have got priority in terms of allocating capital and there are hurdles. I guess your hurdles are very different depending on the regions of specific businesses. Maybe you'll go into that when you cover those specific businesses. Do you want to maybe just chat broadly on what defines those hurdles?
The king of defining them. Where is Mlondolozi ?
There he is.
He is hiding somewhere. Do you want to explain how we go country by country?
The hurdles.
class of business by class of business? This is a very I have to say, in Africa, it is also not that easy. We rely on a lot of data from research companies and so on to get it, but you can explain how you do it.
Yeah. Good afternoon, Francois. Yes, Paul, we can explain in a lot more detail in the one-on-one sessions. We have a session with you tomorrow. Broadly speaking, our hurdles are risk sensitive. That is the first question. It is based on the risk of the particular business or the particular geography or the particular country. You will see when the growth factors are being discussed, there is certain expectations in terms of earnings growth, but underlying that are hurdles that are based on the risk profile of those different growth vectors and the different businesses. Number one, it is risk sensitive. Number two, it is based on the risk profile and, in some cases, the regulatory capital requirements of all those different businesses. Number three, we do take into account the overall diversification. We are a diversified organization, so there is a benefit arising from that.
But in terms of the reward we look for the capital that gets consumed, it is based on economic principles, and it is risk sensitive. We ensure that we generate value when we allocate according to those hurdles. We then do the performance measurement afterwards. That is also taken into account. But I can give you a bit more detail at our meeting tomorrow.
Thanks for that. I did see Senamile's hand up and then Marius this side. But while the mic comes across, I am just going to read a question from the webcast. Please clarify what CPI you are referring to for your CPI +3% guidance. Is it average CPI for the year or closing? This is from Michael Christelis at UBS.
It's closing South Africa CPI.
Another one that is on the webcast is from Baron Nkomo of JP Morgan. He says, "On India and Pan Africa, cash conversion has been low right now. What are the specific factors that keep cash conversion at medium in 2030 instead of high? Which of those are structural versus within management's control?
I would say that the reason why it remains on medium is the issues, I think, what Paul has also already alluded to. We said that in India, as an example, we're focusing on the insurance businesses, which insurance businesses are really starting, especially both the life and the GI. They're still at very low penetration levels. These are markets that are high growth markets, and we intend to have quite significant growth or aggressive growth in those markets. We would prefer that they are self-funding in as far as possible, and that's why we said that the cash remittance will move from low to low medium, or low to low medium. From a Pan Africa perspective, we had previously communicated that the cycle from the in-country or the statutory entity level to the group or to the shareholders does take multiple times.
There are multiple levels that you have to go through. The team has looked at if there's anything structurally that we can do to restructure some of those entities in the different, remember, it's about 25 countries odd, and multi regulatory structures that you're having to deal with. There's not much opportunities in that regard. It was a case of going through a cycle, and a cycle generally takes about three to four years. Now that that cycle has commenced, that's why I talked about expectation, that we expect the cash generation and the remittances to grow. Obviously, to the extent that, again, we are focused on the GI business and making sure that we bring that business back to profitability on a sustainable basis.
It may also require some capital in the short- term, and we would expect it to fund that before it comes to the shareholders.
Maybe, Abigail, just Baron and I, hopefully, you can hear us. Coming back to India, there is an initial structural change which we have spoken about that has an important effect on the dividend and the cash that comes back to the group. The first one is the restructuring of the holding company, which is very important because there are two things. There is some debt at that holding company level that will be cleared through the restructuring, and that is obviously a drag on the cash that comes back. The second thing is that there are withholding taxes applicable, and once you restructure and hold the stakes directly, you release that. You get an immediate kicker in the short- term. That is a structural uplift.
But remember, in the long run, although the insurance businesses will be relatively more important for us in the future than they were in the past, India is still dominated from an earnings and a dividend point of view by the Shriram Finance business, which is a credit business, which is super capital hungry, and which will always have, in my opinion anyway, a relatively low dividend payout ratio. It may be that in the first couple of years now, because there is a lot of excess in that business, that it may deviate from that. But in the long run, that business must, by definition, be a fairly low dividend paying business. You will never see India while we hold the finance business. It will never ever be a high cash generative business for us.
It will always be a growth business, but the overall position will improve in the next year or two structurally once off, and then it will settle down to a new level.
There's a question here.
Thank you. Senamile from SBG Securities. I just have two questions. Is the capital intensity profile for the general insurance business expected to change given the international growth via Lloyd's? Obviously given the different capital requirements with South Africa and Lloyd's, and do the ROE targets account for that outlook? That's question one. Then question two is probably just to give a little bit of insights in terms of the targets for earnings or real earnings rather, is 6%, and for dividend growth is 4% through to 2030. Which business units do you expect will contribute disproportionately to that growth, and how should we think about South Africa versus the international operations by 2030?
Okay. Want to go first?
Okay. Well, I'm happy to do the first, but we do have Tava here who can be very helpful. Let's start with Lloyd's. The thing about Lloyd's is that it's a new venture for us. Although it is potentially a very profitable venture, it is something where we need to build up our skill set over the next few years. Our intention will be to grow that business in the first few years relatively slowly until we can prove that we've got the right underwriting skills in place. The other thing is that you don't just decide yourself what your growth plans are at Lloyd's. Lloyd's themselves need to sign off your business plan every year. They look at your skill base, your underwriting track record, your capital availability, and a whole series of factors to approve it.
You should expect in the first few years, a relatively modest rate of growth from there. It is something that you can power up over time. What I will say is that Lloyd's is an extremely capital efficient model. That is basically for the very reasons we explained earlier, is that you have got diversification benefits in general insurance. What you are doing is you are running off effectively the entire Lloyd's balance sheet is what is looked at in deriving capital requirements. They also allow you to fund a very high proportion of your capital through things like letters of credit. Maybe when Tava talks later, if you want some more detail, that might be the place to drive it out. Do you want to talk about the-
Then in terms of the targets, the CPI + 6%, generally what we have communicated was the split between the high growth regions, which was Pan Africa and India. That is where this CPI + 10% is. Then in South Africa, we say CPI + 6%. Obviously, between the underlying operations and businesses, there may be different weightings to get to that CPI + 6%. But we have not generally communicated to say in the SLS business, this is the split between the underlying operation. As long as the collective portfolio ends up at a minimum of CPI + 6%.
Thank you. Marius, do you want to go?
Thank you. Marius Strydom, ALG. I also have an ROE question. I do note that ROE is being elevated as a very important metric for your company, which I certainly think is appropriate. You have alluded to this, Paul, insofar as the Santam minority offer, that by definition will lift your ROE, from my understanding because, Santam's ROE target is well above that of Sanlam's. You have spoken about earnings accretion from the transaction. Can you give us an indication of how many basis points ROE uplift you like for like will get as a result of this transaction?
Abigail is shaking her head furiously at me.
She cannot give you.
She is glaring at me, Marius. Do you want me to be in the dog box or not? I guess you should do your own maths. It is not terribly difficult. Santam is listed last time I looked. Not for long, hopefully. You can look up your earnings numbers there, and then you can make your own assumption on the cost of funding, and you can do your own calc. I think that would be my advice to you. Otherwise, I will be in trouble.
The minority.
But you would agree that your 20%+ ROE target becomes easier?
Yes, I said so earlier.
Yeah. All right. Thank you.
Especially in the short- term when we're using the leverage.
Thank you. There is a question there in the middle from Warwick. While the mic gets there, I am just going to take one last one from the webcast. It is just a question from Michael Christelis of UBS, who is asking about our long-term gearing targets for the group and whether we can give a sense of what those are.
Long- term, we want to come back to, let us say, the last 10-year average that we have had in the long- term. But we have communicated that subject to the approval of the Santam transaction, we expect to reach gearing levels just below about 40% in the shorter- term.
Yeah. Warwick Bam from RMB Morgan Stanley, and thanks for the opportunity. You spoke about operating efficiencies. Some of your peers have targeted 10% cost reductions over about a three-year time horizon. How do you prefer to target and measure costs? And potentially, where should we expect to see the most impact from a cost reduction perspective over the next few years?
Yeah. Warwick, internally, obviously, we have got our own numbers that we target with management to say, "This is a cost target that we are looking at." And we have not really committed outside to say X percent or Rand million, cost target. But how we tend to measure it is ultimately in the margins and our profitability of the businesses to say to the extent that you are managing the costs as efficiently as possible, depending on the different, diverse businesses that we have. That is how we are measuring the success of our cost efficiencies in the group. You can ask any of the Exco members. There are plenty targets that we issue internally, but we do not commit to a cost target externally.
Yeah. Warwick, can I just add something? Firstly, I think we've been historically a pretty efficient business, so we don't have huge loads of fat to chop out. But when we look at costs, we look at it almost at a product line and company point of view. So when we look at the life business, we're looking at unit costs, and we know what our unit costs are compared to our competitors, and 10% ain't going to cut it. They're not going to be anywhere near us there. On the GI side, you can ask Tava later maybe when he's here, but there it's a very simple ratio. You're looking at what your expense ratio is, a percentage premium. He will tell you, we really do need to get that down over a number of years going forward.
I think that's really going to be critical to do that. Right now, we have the luxury of having a strong market position, but we do think long- term, that is an area that it has to come down. Then Carl, you can ask him as well. There we look at cost-to-income ratio. So depending on the line of business, we look at it, I suppose the way if you're a monoline asset manager or a monoline P&C player. We look at our benchmarks that way.
Thanks.
Ladies and gentlemen, that brings us to the end of the Q&A session. But I see there's one last question. We've got a minute to go, so I hope it's a quick one.
Yeah. Thank you for the presentation. I just have a quick question on shareholder capital returns. Can you give a bit more color in terms of what will determine the split between dividends and share buybacks going forward?
Our priority is always dividends, and we try to stick to our dividend policy as well as our dividend target as a minimum. Share buybacks, we generally always look at existing share price relative to GEV. The board has approved a certain amount relative to GEV, but also you've got to look at other possible investment opportunities. And we usually target where we're going to get the best returns as well as available capital to be able to effect that share buyback. I think if you look at the slides that Paul shared, you will see we've got a combination over the last five years of buybacks relative to dividends, but our priority is usually first to meet minimum dividends.
Also, maybe, Abigail, we should say that we haven't and don't intend to publish intentions to buy back shares.
It's not our company's policy. I personally don't think it's a very clever idea, but there are obviously some people who do think it's a good idea. But we're not going to do that.
Thanks for that, Paul, Abigail. And ladies and gentlemen, that brings us to the end of our Q&A session. We will break shortly for about 15 minutes, so if you could please be back within 15 minutes back to the room. And after the break, we'll continue with our growth vectors and give you more detail on the businesses and how the growth vectors will contribute to this business. Those of you online, take the pause break. And we acknowledge your questions. Some of these relate to the growth vectors and will be covered in the later Q&A. Thank you. Welcome back, everyone. I hope you had a chance to grab some refreshments and are ready for the next session of our Capital Markets Day. We've really spent the first time of today looking at the group's ambitions for 2030, the financial pathway to get us there.
Now we shift the focus to the businesses and what delivery looks like in practice. With that, I am going to hand over to Anton, who is going to speak to winning as one Sanlam in South Africa.
Thank you. Thank you to Tokelo. Good afternoon, everyone. It is great to see you all here. I am very excited to talk to you about the Sanlam ecosystem that we are building and that we are going to launch soon, and more about that later, here in South Africa. At the previous Capital Markets Day, Mongaane and I told you a bit about the ecosystem that we have started to build already together with GoTyme. Today, I am going to give you a good idea of what it is, all the progress that we have made, and what we are launching very soon into South Africa. If you look at the theme of the conference, it is about leveraging quality and accelerating growth.
There is few areas where that is more true than in South Africa, in Sanlam Life and Savings, where we really have a quality franchise, and the whole purpose of the ecosystem build is to really accelerate growth. Before I go into the detail, let us just look a little bit at why it is that we are doing what we are doing. We do start from a position of strength. Abigail pointed out quite clearly how we grew in South Africa faster than GDP and then also faster than our peers. So we saw market share gains, whether it is in general insurance or in life insurance, underwritten risk, where we have got leading market share in group risk. Our platform business is the largest assets under management in South Africa. So that is absolutely great, and that has fueled a lot of growth in Sanlam Life and Savings as well.
The key question that you guys have, and we have got the answer, is: where will the growth come from? That is where the focus on ecosystem comes in, where first of all, we want to broaden the franchise to actually get more sources of growth, more profit contributors, but then very importantly, improving our relevance. If you look at Sanlam at the moment, we had a lot of growth, but our relevance, especially if you look at the younger mobile-first urban customers, is not really there. If you start working, your first financial needs are certainly not income protection. It is transactional products, credit, those kind of things.
For us to build and respond to convergence in South Africa, where you see banks coming into insurance and insurance, our peers also expanding into banking, more importantly, to get those relationships with those younger customers as well, we need to broaden our reach through the ecosystem. Let's first give you an idea of what it looks like. A couple of things I'd like to highlight from that quick video overview. First of all, there are four key pillars in the Sanlam app: transact, credit, rewards, and the Sanlam portfolio. All of these components are built, they are complete, and they are integrated. Currently in Sanlam, we are beta testing the Sanlam app.
We've got about 500 staff members, myself included, that uses this app to pay, to do EFTs, to do transfers, and to see the integration between the Sanlam portfolio and the rest of the app. You can see there in the middle the anchors. One Sanlam in South Africa. Transactional banking we do with GoTyme. I'll tell you much more about that just now. Retail credit. This is a joint operation that we've got with GoTyme that is live, up and running, and it's already profitable. The group-wide rewards program. In Sanlam, we've got various initiatives around loyalty and rewards. All of these initiatives kind of lived in their own pillars, whether it's cashback in MiWay or Echo Bonus in Sanlam Life and Savings or Reality, that's a rewards program or a loyalty program that kind of ran on the side.
Through Boost Rewards, which you would have seen in that quick clip, we're pulling all of that together and enhancing that and boosting that with a lot of lifestyle rewards as well. The Sanlam portfolio, whether it's Life and Savings, general insurance through Sanlam, and then of course with this transaction, and I'll do the asterisk, pending approvals. Of course, that brings Santam even closer to Sanlam and makes it much easier to integrate the general insurance component of Santam's portfolio into the One Sanlam app. Then, of course, investments and wealth, Sanlam Private Wealth, Sanlam Collective Investments, and so on. We do follow a MVP approach, and I'll tell you a bit more about that just now. It means that when we launch, we launch with a minimum viable product, and then we constantly evolve and improve the solution over time.
That's also the architecture and the technology approach we do together with GoTyme. When we launch, you'll have fast, secure onboarding, immediate everyday utility. That'll be your value-added services like buying electricity, vouchers, and so on. You will be instantly rewarded through Boost for financial behavior, and it is already integrated across the entire Sanlam portfolio. Why is it that we believe this is the right approach to do this together with GoTyme? There's a couple of very important and key reasons for this. The first one being that in GoTyme, we really have a unique and competitive partner. GoTyme brings us two things, economies of scale and economies of scope. On economies of scale, GoTyme has 40 million customers already on their platform.
Their operating model is to have one operating model and one technology stack across the world, where they have a presence of about 20 million clients in the Philippines, another 20 million clients already in South Africa. That gives us unsurpassed pricing power through scale benefits in South Africa jointly with them. But then they also bring us economies of scope. Economies of scope do touch on banking services, but it certainly touches a lot on the technology skills to build the kind of application that we have built with them, where there is a real focus on customer journeys, customer experience. Being a digital bank, that is the only proposition you have. It is your only engagement model with clients. So that is where all your energy goes, all your focus goes to build a really kickass customer experience. That translates into unsurpassed value for money.
You would have seen our bank account together with GoTyme will have zero fees. Zero monthly fees, zero fees for EFTs, zero fees for debit orders. It is really an account that gives you incredible value for money. But it does not come at the expense of the customer experience. The digital journeys are so intuitive, it is so frictionless, and a lot of innovative features that I am not going to tell you about all of it today. But there are a lot of great features embedded in the app that is unique in South Africa. Now, if you look at the kind of journeys that we have seen in other digital propositions and ecosystems, whether it is Revolut or Nubank, they did well, and they followed a similar recipe in terms of expanding the portfolio, solving a lot of the client needs in one place on one platform.
But increasingly, if you look at research, the one thing they really want is to also have a digital human relationship connection with customers. When they get to those weighted decisions, retirement, that big life insurance policy to cover everything, they do want to talk to people. That is what Sanlam really brings to this joint operation, is where we actually bring more than 9,000 advisors throughout South Africa that have relationships with clients, where they can actually then connect through the digital ecosystem with our clients. We supplement that by distributing this ecosystem under the very trusted Sanlam brand. Importantly, it is our intention to also leverage the native Sanlam payments. Let me explain. If you look at this proposition, it is a free bank account. Because of its free nature, we can start integrating the bank account into our payments ecosystem to our clients.
When we pay out a wealth bonus amount to clients, we can put that wealth bonus into the client's SanlamGoTyme account. Then the client can put it wherever the client wants to. We do not cause the client to incur any additional fees or any transaction charges or anything like that, but it puts the money in the control of the client. That is incredibly valuable from a fraud perspective, where often clients, especially in certain market segments, want us to pay the money into different accounts. I do not know if they do not want their wives to find out or whatever the case may be. But they want the money to be placed in different accounts. That, of course, results in a lot of fraud and so on. But we know that when the client is on our Sanlam app, this is our client.
They've been biometrically verified. We know who they are. Then we can pay it in there and put them into control to move it wherever they want to. It's important to understand that this ecosystem journey that we're on goes wider than adding transaction bank accounts and credit solutions to the Sanlam portfolio. It's actually modernizing how the entire South African business operates. It's almost as if we've now, in this ecosystem, we had a certain way of doing business and a culture in Sanlam, but we added this drop of ink in here in terms of the modern way of building digital customer experiences, digital ecosystems that's permeating throughout the organization. First of all, the success in the digital environment comes from a relentless focus on customer experience, where you track continuously using data, where customers get stuck, where they are frustrated.
Because of our technology approach, we constantly evolve and update the app together with GoTyme and TymeX to have releases and drops in the ecosystem up to every two weeks. If you look at the Sanlam app five years from now, it will look very different from today. It's not going to be a planned transition in boardrooms and where people that think they are clever says, "This is what we should do." We will be data-driven by our customers where they actually direct us through their usage of the app. This is a tech company DNA that I'm speaking about there. That's a DNA that we start seeing everywhere in Sanlam. I think I've mentioned at the previous CMD that we're building the Sanlam app on the Tyme stack.
It's not as if we've got the Sanlam app and there's the GoTyme account and we've got APIs between the two to try and make it seem as one experience. That's not the case. We rebuild the entire Sanlam app together with GoTyme on a single technology platform. Through this intervention, we will also really refresh and enhance our brand relevance. I spoke a lot about relevance because that is so important to us to be a relevant company. Now for our customers, when they think financial services, we want them to very firstly think of Sanlam. Sanlam will be able to solve this for me. By adding and expanding our portfolio this way, we really get to do that. Then last on the left-hand side, data-driven. We really love data in Sanlam.
This thing will supply us with so much data in terms of usage, frustrations, and joys. Where customers are really delighted, so we can amplify that and leverage that for cross-selling purposes. All of this will be underpinned by human relationships and advice. What has changed since the previous Capital Markets Day? Just a bit of a step back. The Assupol integration is complete. We have now added significant scale to our retail mass operation and significant reach in the retail mass market. We've already started seeing early cost efficiencies emerging. The SanlamGoTyme credit joint operation is live. We've transitioned the platform. It was on the FirstRand stack until around June this year, May to June. We've transitioned everything. Everything is running off the GoTyme stack now. It's a joint operation, 50/50 with them. Like I said a bit earlier, it is already profitable.
Of course, what happens because it's a joint operation between GoTyme and Sanlam, their existing unsecured credit activities are also absorbed into this joint venture. That is their only credit JV, and it's also, of course, our only credit JV as well. Then on the banking approval, the distribution of the transactional banking account approval has been received from the Prudential Authority, which enables us to target a commercial launch early next year. Then finally, we are going to soft launch the app actually a little bit more than two weeks from now. Maybe I should tell you what we mean by a soft launch. A soft launch is more than a beta. We are already in beta phase. The app is live, it's working, and you can actually interact with the real world in there. It's not like in a sandbox environment.
You do interact in real payments. When we soft launch, we release the app onto the App Store. You will all be able to download it. Put the mark in it. First week of November, you'll be able to see and download the app and start experiencing it and play around with it. The only difference is we don't go big in terms of top-line commercial marketing. The focus on the soft launch is really on our own staff and our own intermediaries first, because we really want our people to experience it, become brand ambassadors of this awesome thing that we've built. Then, of course, you stress test it as well. You make sure that you can handle the volumes, and then you start opening it up from early next year into the wider market. This is just in terms of a timeline.
We're still in the build and test phase in 2026. We've got the credit joint operation live, we've got the approvals, and then early November, we do the soft launch. During this phase, you look at the bottom there, the kind of focus areas for management is to track whether we deliver in line with the plan and whether we keep to our budgets. When we get to the launch, the commercial launch next year, the focus is then absolutely on scaling. Really ramping up the accounts opened, seeing whether we get app activity rates, focusing on getting some transactional volumes through, and drive customer volumes, and to really focus on getting new-to-Sanlam customers as well. You can see the focus then is on scaling it.
Then from 2028 onwards, that's when we really start focusing on deepening those relationships, where the core focus area of management starts shifting towards deposits, core earnings, and then, of course, the credit book growth as well. The kind of things that investors should track. We're targeting 2 million-4 million banking customers by 2030, and we're almost doubling the credit book, the unsecured credit book, by 2030 as well. I do want to put an asterisk in there. This is only focusing on unsecured credit book. Given the nature of the ecosystem, it lends us to a lot of other types of credit solutions for our clients, which are integrated into the Sanlam portfolio. You will see additional growth from that as well. In terms of the kind of investments that's involved here.
This is another benefit over and above the fact that partnering with a leading digital provider like GoTyme gives us a lot of benefits in terms of cost advantage and the value proposition advantage. It also gives us a much, much more cost-effective way to expanding our portfolio. On the transactional banking side, we have invested about ZAR 180 million to date. We expect to invest up to 2030 about ZAR 150 million-ZAR 200 million per year. Then we expect to break even on the banking services side by 2030. It is important to note the reason why we still have a continued investment in banking is because we keep on improving the value proposition. So when we launch to market in, what, early next year, it will have all the transactional banking capabilities. It will be a debit card, but credit card, for example, is still under development. It will only launch during 2027.
Then there are further banking solutions as we expand and deepen the solution set that comes over the next couple of months and years. On the credit side, we have spent about ZAR 100 million on the IT migration from the FirstRand stack to the GoTyme stack. That is complete, like I said, and the business is already profitable. On the reward side, we have invested about ZAR 360 million to date to bring all of our rewards programs together under a single umbrella, built a totally new platform, and develop a new proposition. That is almost complete. That is why there is about ZAR 100 million-ZAR 200 million in total of investments still to come. This is, of course, funded by all the participating reward partners.
Where we had rewards programs, whether it is Santam or AfroCentric or Sanlam Life and Savings or whatever the case may be, all of these are consolidating their spend under a single umbrella. In conclusion, like Abigail said, you invest capital now for growth in the future. This near-term investment that we do is basically building the platform and the technology that is underpinning this ecosystem, then a lot of investment in integration into the balance of the Sanlam portfolio. This will be our single digital entry point with all of our customers. We expect to invest and improve on this and continue to evolve this application through to 2030. It is primarily funded from the cash generative SLS core. Where we expect growth to come from. It is first of all data-driven cross-sell and multi-product penetration.
Where it has been a perpetual weak point of Sanlam that we did not have that deep penetration in terms of multi-product holdings in Sanlam up to now. With this ecosystem, together with our intermediaries, together with the Sanlam integration, we believe there is a massive opportunity for us to broaden the multi-product penetration driven through data. The ecosystem that we are launching will be super charged through relationship driven advice. This actually goes both ways. First of all, you strengthen the ecosystem by having that human relationship where it is needed. Of course, we will build that technology to connect virtually customers to advisors, then they can make that a physical connection if they want to as well. But it goes the other way as well.
We expect to get a lot of new customers, new to Sanlam customers, through our improved relevance, which enables us to give more prospects to our advisors, really bringing down the unit cost that Paul referred to. A big problem for our advisor community is to prospect, to get new clients in. By doing this kind of activity, you broaden your customer base for relationship driven advice. Because this will be our digital engagement platform, we can bring down the cost to serve for customers by increasingly allowing them to self-serve across the portfolio. First of all, you bring the cost to serve down, but also eliminate duplication, which causes not only frustration for the client, but additional friction for us.
By bringing together all of our rewards and loyalty programs under one single umbrella, we expect to see a little bit more enhancement in retention, which is already fabulous in Sanlam's case. I spoke about the new to group customer acquisition. Thank you very much.
Before we welcome Carl on stage, just I think to round things up. Anton took us through how we want to modernize the SA ecosystem and the Santam business. He even used words like kickass customer experience. We really are going towards that modernization. With that, I'd like to hand over to Carl to speak to-
Thank you very much. I'm going to take that kickass customer experience to the next level in my presentation. Thank you very much. It's a pleasure to be here. What I want to do in my few slides, in a couple of minutes, and I give you an update, is just to, first of all, reemphasize the decision, the bold decision that we made a couple of years ago that we want to focus on our core businesses where we think the asset management industry is going to grow the fastest. Then do our partnership with Ninety One, where they look after our single active asset management capabilities, I think was a very good decision for us.
I am also going to give you an update on what we said, what we are going to do in Capital Markets Day 2025 and the progress over the last 12 months. Hopefully, a good proxy that this business has got very good sustainable earnings in a very capital light business and I think with very good growth prospects. So, what changed since Capital Markets Day 2025? The first is that we completed our Ninety One transaction. So we transferred more than ZAR 400 billion of assets to Ninety One. We have appointed them as our primary active asset manager. Most of the assets have been completed the transfer, and I think that business is now well established, and we are very happy with them as our partner.
Second is that they allowed us to focus on our core business and our core strengths where we think we have a right to win. That is our solutions business, our multi-manager, indexation, private markets, and wealth management. We could put all our effort and all our energy into those businesses to make sure that we have sustainable, scalable businesses with very good client cash flows, which I will show a little bit later. The third thing is this gives us a very, very strong earnings base with very, very good positive net client cash flows. It is a very good proxy of whether clients believe in your product and your proposition or continue to invest with you. So today, after that Ninety One transaction, after transferring ZAR 400 billion of assets, we still have a ZAR 1.3 trillion asset management business.
This year, we have generated, in the first six months of this year, more than ZAR 37 billion of net client cash flows in those businesses. Then very important, this also allowed us to actually build a very simplified operating model. A simple operating model where we allow those businesses to focus on their core, what they do best. We allowed them to build their strategies. We stripped out a lot of stranded cost from the Ninety One transaction. These businesses now can run faster, they can make quicker decisions, faster to the market. I think that has been a very, very successful strategy for us. So this slide for me is our business, basically in a simplified way on one page. So we are now a solutions led emerging market asset manager, and our solutions are being supported by what we call best-in-class capabilities.
We provide solutions for retail clients, institutional clients, and private wealth clients. Then we use our best-in-class capabilities as we build those solutions. Our own capabilities as well as capabilities from our partners. We go to the market through solution businesses through basically three entities. The first thing is our multi-manager business. There we have a discretionary fund manager called Glacier Invest, where we focus on our IFA and BlueStar advisors, independent advisors, and BlueStar advisors mainly on the Glacier platform. Then we go to the market, another discretionary fund manager called Graviton. There, our focus is pretty much on independent financial advisors on other platforms like Ninety One, Allan Gray, Momentum, and the other platforms.
We also go to the market for ultra high net worth clients via Private Wealth, where we built our private wealth solutions. We combine best of our products in those solutions for our clients. Our last solutions business is mainly institutional focused, a structured solutions where we built a focus on asset liability matching, derivative structuring, and very important portable alpha to build solutions for those clients. That is supported by best-in-class building blocks. Our active manager and our partner, there is Ninety One, indexation, Satrix, private markets where we have strategies that is owned by Sanlam Investments. Our sub-advised Amplify Multi-Manager strategy, where we go to small boutique asset managers. We ask them to build very specific capabilities for us. We use those capabilities in our solutions in the multi-manager, and that business is growing very, very fast.
That is underlined in South Africa by our South African platform, Sanlam Collective Investments. As we start managing assets for our clients and transferring those assets offshore, we do that on our Sanlam platform in the United Kingdom. I think this is a very, very good proxy that we can provide our clients with different products, good investment returns, and we use the best of our own capabilities and our partners' capabilities to build that platform. I want to just stand still for a second, just on our private markets capability. This is where we are going to expect significant growth going forward because your margins are high in private markets, but this is also a very difficult market to build.
This is where our partnership with Sanlam and our ownership with Sanlam gives us that seed capital and that ability to scale this business. You need to have a very scaled private market business because most of your allocators offshore, your sovereign funds, your large pension funds, DFIs are looking for a scaled opportunity. They want to invest $100 million or $200 million per strategy. They are not looking for a South African only or an African only capability. They are looking for a broader emerging market capability. Just to share some progress that we have made over the last 6-12 months. We have a business called Climate Fund Managers. We own 50% of that business. FMO, the Dutch Development Bank, owns the other 50%. That business is based in The Hague. It has raised two very successful funds over the last four to five years.
Climate Fund Investor One. This is a renewable energy in Asia and Africa. That closed at $1 billion and fully implemented and invested. Fund Two is also $1 billion, which is water to waste, mainly in Africa, emerging markets. Very, very proud to say that we have closed Climate Fund Three, which basically participates in the energy transition in South Africa. Its first commitment is closed at roughly about $500 million. That is a green hydrogen fund in South Africa for South Africa and for Namibia. The PIC, the IDC, the DBSA are all partners and all funders in that business. Because Climate Fund Managers are so successful and well known for these blended finance equity capabilities, we start getting big allocators.
The GAIA Fund, which basically MUFG, FinDev Canada, that basically came to Climate Fund and said, "Please, can you also provide credit capabilities with adaptation strategies and use your expertise to do that?" On the right-hand side is our own capabilities, private equity, that we have built in progress over the last few years. In our mid-market fund, we raised a fund a couple of years ago, ZAR 3 billion. Very successful private equity strategy. Very good returns for the clients. We are busy closing Fund Two, and we are probably going to close between ZAR 4 billion and ZAR 5 billion on Fund Two. We also launched our secondaries fund. We lifted out a team in South Africa and the U.K. That fund was roughly $200 million-$250 million. Series One has already been invested. That secondaries that gives you Africa and East Asia emerging market exposure.
We also closed AlphaCode, which is a venture capital strategy with a team that we also lifted out, that is venture capital between South Africa and Africa. If you just think about a difficult market, but in South Africa, to have the ability to raise nearly ZAR 15 billio- ZAR 17 billion, ZAR 18 billion of private equity commitments in this environment also shows again the capability and the scale that we have in our business. This is going to grow significantly for us going forward. Very good earnings that you can expect from this business. David will talk a little bit later about India, but just to also give you an update. Roughly two years ago, we invested in our Indian capital markets business. That is basically stockbroking, wealth management, and asset management.
We have made good progress over the last 6- 12 months. We have made some management changes. We are investing in the distribution capability of the wealth management business. We are getting very involved in the product manufacturing of the asset management business. Very importantly, make sure that the Sanlam Capital India, Shriram Capital Markets business leverage off the Shriram brand, the client base that they have, integrate some of these propositions. You can expect significant growth from this business. David will talk a little bit more going forward. What is important is just then to come back to our, so what have we created? We have created the four businesses that we have in our stable are businesses that operate at scale. Those four businesses are either number one or two in their industry, in their discipline in South Africa.
Multi-manager, second largest. Satrix, by far the largest indexation provider. Alternatives, one of the largest private market businesses in Africa and growing. Obviously the same for Sanlam Private Wealth. They generate high double-digit returns for us. Very big asset base, more than ZAR 1.3 trillion that allows you to get your cost to income ratios down, you generate net client cash flows and built a very good sustainable capital light business. Very importantly, is actually the last line, which is net client cash flows. These four businesses, over the last five to six years, generated more than ZAR 200 billion of net new client cash flows. That is quite significant because without adding more capital, your asset base grows, you get more net client cash flows in there, and it actually gives you very good sustainable earnings going forward.
And maybe then just to highlight what we've achieved so far over the first six years. Just to put a little bit into context. Our net client cash flow is roughly about 0.7% of our asset base. We are now well above 3.6%. I think any asset manager that is above 1%, 1.5% is actually doing quite well. Very importantly, for the first six months of this year. If you take the ASISA stats as a proxy of retail flows. For the first six months of this year, Satrix was the number one asset manager in the country, attracting ZAR 13 billion of flows. Amplify was number two, attracting ZAR 9 billion of flows. The rest of our multi-manager capabilities was number six, attracting ZAR 5 billion of flows. And Satrix, just for their flows, was roughly about 25% of the total flows in the industry.
If you add those three together, we probably attracted more than 50%, 52% of the total retail flows in this industry in South Africa. Obviously what is very nice about retail flows, it is sticky, it comes at higher margins, which allows us to achieve the profitability and the cost to income ratios that we want. Then just my last slide, just to wrap up. Stranded costs that we had to exit out of our business after the Ninety One transaction. Just to remind everyone again, we sold and transferred a portion of our business to Ninety One. We sold the assets and a few of the portfolio managers went across. We did not sell them. The portfolio managers went across. Which obviously means that the stranded costs sat with us.
We identified that we have to get roughly the same ratio of stranded costs out of our business, and we have made significant progress. So far from the end of last year and the 12 months of this year, basically ZAR 560 million of stranded cost has been exited out of our business. The remaining portion, we are in the process of that. All of that will happen in the first few months of 2027. The last asset that we transferred to Ninety One happens in a week or two's time, or three's time. That will allow us to accelerate more of our stranded costs. But we believe that cost will be out of the system by the middle of next year. I think in this couple of minutes, hopefully this gave you a very good sense of our business.
We think that we are focused on the right areas of asset management. I think we have the wind to right there. I think the clients believe in our strategy, and we think this is a fantastic platform for significant growth over the next five to six years. Thank you.
Good afternoon, everybody. It's good to see you all here again. A lot of familiar faces and some new ones as well. It's hard to believe it's already been a year since last year, but as you can hear from my colleagues, it's been quite a busy year. It's my pleasure now to tell you what we've also been up to on the India side. At last year's Capital Markets Day, I think I left you with three key takeaways. The first is that India has very strong structural underpins, which will mean faster growth in India than in any of our other regions for years, if not decades to come. The second was that that opportunity is a marathon and not a sprint.
The road will not be linear, and so that means one has to look at the portfolio as a whole and take a long-term view. The third takeaway was that the ecosystem model is proven in India, which only adds to our confidence in executing on a similar strategy in South Africa, which Anton has outlined for you. On that first point, we have experienced near-term turbulence in 2026, specifically on the currency. I think we all know the Indian rupee depreciated around 17% against our Rand reported earnings. The second is that there are ongoing regulatory changes, which impact life insurance in particular, in the medium- term. The third is that the Middle East conflict, and its impact on oil and fertilizer imports has flowed through, particularly into a market like India, in terms of inflation and the rupee.
All that said, the long-term thesis hasn't changed at all and remains fundamentally strong. We have, obviously, a large population with a youthful, expanding middle class. The continued GDP outperformance compared to other markets, as I think Abigail touched on. Insurance penetration obviously remains low, and savings and investment demand increasing fast, as Carl has touched on. Importantly, the overall direction of government policy is very supportive, remains very supportive of our particular businesses, which are squarely premised on financial inclusion and enabled by digitization. For these reasons, India remains a very scarce structural growth opportunity. It's one of the few markets globally where, if you think about it, Sanlam can deploy capital at scale across multiple profit pools. In fact, every single business line that we do. And expect that to keep compounding for decades. What do we have today?
We've got a genuine multi-engine platform with distribution reach and growth well ahead of the rest of the market in India. As I explained last year, our ecosystem was developed through a series of disciplined bets. Credit was the entry point, then a natural evolution into insurance, and more recently expanded into wealth management as our customer needs have expanded. Today, we've got serious scale in that ecosystem. There are 29 million customer relationships. That's on a total aggregated basis. But still, you get the point. Over 4,000 branches and more than 200,000 agents. This scale of physical reach in rural and semi-urban India remains very difficult to replicate. If you look at our individual businesses, the more mature ones, they're all leaders in their chosen segments, as I think Paul touched on as well. Shriram Finance, obviously one of the leading non-bank financial companies in India.
Fifty years of trust and reach in a market that others find very hard to serve. Shriram General, a motor-led insurer with market leading position in third party motor underwriting. The largest agency force in India and the third largest private branch network. Importantly, that business is outgrowing the market by a factor of three times. Shriram Life, a mass market insurer with a very strong position in the rural market, the third largest private insurer in the rural space by number of policies. It has very low ticket sizes, about a quarter of the industry. That is at the same time, both our secret sauce and also our Achilles heel, at least for the time being. It is obviously a very hard place to make money until you have got serious scale.
But at the end of the day, if you think about it, that government policy about insurance for all by 2047, and the fact that 60% of the population lives in the rural space, the only way you can achieve that is by succeeding in this space. So we have serious conviction about where the pack is going to be in India, and we will see it through. This company, Shriram Life, is also importantly, consistently outgrowing the market quite well. So we are steadily gaining that scale that we need. So what have we achieved since we spoke last year? It has been a year of material structural change. Last year, I was saying to you, I know it is only been two years, but it is coming. We are increasing our stake. I am very pleased this year to be able to say we have done that.
We have increased our ownership of the insurance businesses to above 68% in Life and above 51% in the General Insurance business. We have agreed to a global bank, MUFG, further capitalizing the credit business, which has strengthened that business significantly and significantly accelerated growth and profitable growth there, which also feeds through into the whole ecosystem. As Carl indicated, we have obviously expanded our ecosystem into asset management and wealth management following our customer needs. We have shared joint control in those businesses with Shriram. We are, with the help of Sanlam Investments, hands on driving disciplined growth in those businesses. So we are very pleased with what we have achieved since last year, and I think it is all systems go. If I now look at what the changes over the past year have actually meant for us. We have moved into higher ownership of the higher return businesses, really.
That is really the strategy at the end of the day. If you look at this chart from left to right, you can see that moving from the left, we have businesses that are decreasing in capital intensity, increasing in ROE, and therefore cash generation potential, and also coupled with increases in Sanlam’s strategic influence in the businesses. So on the left, obviously, credit remains for now the anchor of the ecosystem. It is by far the largest contributor to profit still today. It remains, for the most part, the entry point that brings customers into the ecosystem. But it is capital intensive by nature, and therefore will remain inherently the lowest ROE business. General Insurance. Our General Insurance business, a high quality and fast-growing business. It is obviously lower capital intensity than credit.
It is, as I said, outgrowing the market, and our increased ownership in that business means that we increase the share in the profitability of that business, which we are currently very pleased with. On the Life Insurance side, this will, from 2027, be accounted for and run as a subsidiary. It has obviously been the largest step up in our ownership. It is longer duration earnings, obviously, and it is also the business where we have the most hands-on influence now, along with capital markets, which provides the fee-based capital light earnings going forward. Importantly, it is also an important strategic multiplier for our insurance businesses. It is all about beyond the sort of short- term. It is not a short- term profit earner for us.
Why it is important is it is about shifting the whole Shriram brand more upmarket, and there is also a very strong cross-sell potential between this business and the insurers going forward. That is strategically why it is important. All of that means that if you look at Sanlam Group, and the core earnings coming out of India, they will increasingly be driven by insurance and fee income rather than credit alone. Commensurate with that, the ROE will steadily improve on a blended basis, as will cash generation in future years. That will be part of improving the path to dividends and cash remittance for the whole Sanlam Group, as Abigail spoke to. The India portfolio, as we know, has already created significant value for the Sanlam Group, and this has accelerated in recent years. You can see it through three lenses.
If you look at it in absolute Rand terms, GEV has increased to ZAR 33 billion currently, so that is around four times in the last 10 years. The relative share of group has more than doubled as a percentage to 19% in the first half, and we expect that level to broadly sustain as a proportion of group through 2030. The returns have been delivered consistently and comfortably above our hurdle rates, and we fully expect that to continue as well at a portfolio level. Where is the growth going to come from from now? The short answer is we expect continued strong growth in all of our businesses, but they are at very different stages of maturity, and it is important to keep that in perspective. Shriram Finance, obviously the most mature engine. The MUFG capital injection significantly changes the growth outlook for that business.
The capital is supporting faster growth than we are used to seeing in the past. I would say by several percentage points per annum. Largely by opening the door to new customer segments, specifically going into lending against new vehicles. It has also, as Paul mentioned, already materially lowered funding costs and boosted margins. Those combined factors we expect to largely offset the short-term dilutive effect of that capital having come in. General Insurance, although we have been there for 20 years, it very much remains in the scaling phase still. We had very strong volume growth in the first half, well above the market and our own target range. It is a very profitable business with very strong cost control and very healthy cash generation. We are very pleased to have increased our stake in that. Life Insurance very much also remains still in the scale phase.
Overall reported growth in the first half, as I am sure you all well know, was held back largely by group business. But very pleasingly on the retail side, the business does continue to grow strongly. That was up 24% in the first half. That bodes well for the future. That near term margin and VNB pressure that you saw in Q1 will remain for a while from the regulatory change and from continued investment into the distribution channels, which again, we think is important for future growth on a long term view. Capital markets that Carl spoke to, clearly at the earliest stage, the smallest business today. But as I have said, strategically important and we are excited about it.
The focus there for the time being remains on incubating and growing those operations and capturing those new client segments, which is also important to help us retain clients throughout their customer life cycle. How do we measure our own progress and therefore, what do we think that you, as investors, should watch? I would say there is four key markers that we think about that will evidence our strategy as I have just explained it. The first is continued growth in the insurance volumes and profitability as well as in credit. The second is driving increased scale in the capital markets business, which as we have said, is an important growth engine for the future. The third is the impact of the increased control and Sanlam participation and influence in all of the non-credit businesses. Noting, as I said, that Shriram Life will be consolidated from 2027.
There is a lot going on in that space across all the business lines. Just a lot more. I think the timing is right now for the whole group to be a lot more involved directly with the India businesses. For example, Anton and some of the senior guys speak quite regularly to Shriram Life. You have heard directly from Carl about how involved Sanlam Investments is. Tava and some of his senior guys speak directly to Shriram General. It is really quite exciting to see the sort of new opportunities that are being uncovered and the sort of enthusiasm both ways for what more we can do in India with more participation by Sanlam Group. Lastly, the business mix evolution that a few of us have spoken about. You should watch that marker for that improving ROE, which will support those group targets.
In terms of the targets we committed to last year, this is how we are tracking. On the life insurance side, I spoke about a top-line growth target of 20%-25%. Shriram Life is behind target at the moment for the reasons I mentioned earlier. In addition, some of you will know there is actually, just very recently, a proposed new regulation on commission, which the industry is engaging on. We definitely support the long-term direction of that regulation. We are fine with it in the general insurance space. We think that it could affect the outlook, particularly on the life side, in the next couple of years. It is not clear yet because there is a lot of engagement between the industry and the regulator, and the impact will vary by type of business. It is too early to tell what the eventual framework and timing of that will be.
I would say we will be clearer on that in early 2027. For now, we see no reason to revise our targets on Shriram Life. On Shriram General, I spoke about growth target of 15%-20%. We significantly outperformed that in the first half. As Paul mentioned in his section, when you have got scale, it is a lot easier to generate sustainable margins. With that in mind, we have introduced a new metric in the General Insurance business. We will be reporting on net insurance ratio going forward. The target we are putting out there is 16%-21%. We are currently tracking at around 16%, so we are in range. That is a metric that we will be speaking to you about going forward. We remain very confident of our 2030 targets in the General Insurance business. Then in terms of core earnings growth, our target is CPI +10%.
Although we are behind that in the first half for the reasons that we have given, at a portfolio level, we remain very confident of hitting that target through 2030. In line with the point that Abigail made also, there is a rebase in ROE given the capital injection into Shriram Finance and also the capital that was invested into the insurers. That will show up from 2027, as Abigail said. We do foresee a very strong recovery of what is a larger base going forward. We fully expect our earnings to continue to compound in India faster than the capital requirement. We expect ROE in our Indian operation to steadily increase between now and 2030, thereby strongly supporting that group target that Abigail spoke to.
In summary, in India, the last two decades since our initial investment in India have been about building the platform, and we have completed that really fundamentally in the last 12 months. The value creation in this next phase is going to come from four things. The stronger credit platform turbocharged by the MUFG capital injection and, as I said, feeding through into the whole ecosystem. Secondly, that increased ownership into the higher return insurance and capital markets business. Thirdly, the deliberately changing business mix with earnings quality and cash generation, increasingly insurance driven in India. With all of that, a very clear path to further value creation. In conclusion then, in India, the foundation is set. It is primed for ongoing growth in all areas over the medium-t erm. It is a dynamic environment. There will be swings and roundabouts in individual businesses.
We have the right team in place, we have the right partners in place, and we are very confident about continuing to steadily grow value at an overall portfolio level for many, many years to come. Thank you.
Thank you, David. I think just before I introduce Tava and bring Tava onto stage, we've now heard from our investments business. We've heard about the SA ecosystem, and now India, and this really is bringing us just over halfway through our strategic vectors. With that, I'd like to bring Tava on stage to speak more about Lloyd's as a growth vector.
Thank you very much, Tokelo, and good afternoon, everyone, and thank you very much for joining us. We're not quite yet in the graveyard shift, so hopefully, I can hold your attention. Over the next 15 minutes or so, I want to do three things. Firstly, I want to remind you briefly of the strength and the consistency of our core General Insurance business franchise. The reason for that is that really is the base on which everything else is built on. Then I'd like to spend some time on the newer part of our growth strategy, the Syndicate 1918, our specialist capability at Lloyd's, and then give you a numbers-led account of what has changed since we last met at the CMD in 2025.
Finally, set out why we believe this is the right platform at this point in the cycle to carry out Santam's international ambition forward to 2030. I'm really happy to report that Syndicate 1918 has been live for nine months since 1st of January, underwriting business and performing as expected in line with our plan. Let me start by saying that Santam remains South Africa's leading and most diversified property and casualty insurer, and we have remained in this position for over a decade. GWP growth is running at 10%+, ahead of our target. Our net underwriting margin is sitting at 8.1% within our target range of 5%-10%. It's important to say that is within a soft market and what is a localized weather-prone environment here in South Africa.
The return on capital is at 27%, above our target of more than 24%, and the interim dividend growth is at 10.2%, in line with our policy of growing dividends, roughly in line with our net earned premium. We hold a 22% market share here in South Africa, and that's a position that we've sustained for more than 10 years. We currently serve 3.6 million+ policyholders across our markets, and we insure 80 of the top JSE companies here in South Africa. We have 108 years of client services history. The strength of our business really does lie in the diversification of the model across product lines, geographies, and also the channels.
Now, we provide a diverse range of GI products and services, including motor, property, agri in both crop and assets, engineering, accident insurance, as well as what we will talk a lot about today, the specialist lines of business. Geographically, our footprint spans South Africa, our core home market, the rest of Africa, north of the Limpopo, and key international markets across the world. We offer primary insurance, commercial, corporate insurance, alternative risk transfer, and reinsurance. We deliver these products through several business units that we believe complement each other and their offerings, and that allows us to meet our client expectations more holistically. Our purpose as a business is really to safeguard what is important to our clients in a way that enables wealth creation and protection for our stakeholders. Our strategy to 2030 is built on three growth vectors.
As Paul mentioned earlier on, Sanlam's offer to acquire the minorities, we believe, reaffirms the confidence in our strategy. Lloyd's is part of a coherent whole and not a separate story on its own. The first vector of our strategy is really about strengthening the leadership position in South Africa by shifting our business to a multichannel model, maintaining our dominance within the broker channel, scaling the direct business, and also our tied agency. The second vector for us and where we will spend most of today's discussion really sits in the international expansion and diversification. Leveraging SanlamAllianz, as you will hear later on from Heinie, scaling our reinsurance business, and accelerating our specialist capability via Lloyd's. The third vector is about scaling ecosystems and exploring new markets. Key here are the partnerships that we have in place, the likes of MTN and MultiChoice.
The ecosystem platform play and cross-selling across the Sanlam Group, as you have heard a little bit earlier on from Anton. We are particularly excited about the developments in that particular space and what it potentially brings for the Sanlam Group. Now, all three vectors are held to the same long-term disciplines. A net underwriting margin of 5%-10%, a return on capital greater than 24%, a capital coverage ratio of 145%-165% GWP growth of CPI plus GDP + 1%-2%. We expect our international expansion or the contribution from the GWP to be greater than 30% by 2030. We are targeting for ourselves a direct contribution from the likes of MiWay, to be greater than 30% by 2030. Syndicate 1918 is really being built to firstly contribute and then to meet these same targets.
Now, before I talk about our own syndicate, let me answer a question which is still on your minds. I think the question really is why Lloyd's at all? I think some have asked, who is Lloyd's? Let me start firstly by saying that Lloyd's is a global powerhouse with significant scale and a proven value creation track record. Lloyd's generated GBP 76 billion in GWP in 2025. To give you some context, that is more than seven times the size of the South African P&C market and about three times the size of the African general insurance market. Lloyd's also offers broad access with licenses to operate across 80 insurance and 200 reinsurance territories. It really is one of a handful of credible platforms, where specialist risks gets priced and is really placed at scale. The second point is really around diversification.
The market's risk portfolio splits across specialty, property, marine, aviation, energy with a genuinely balanced mix coupled with underwriting innovation, flexibility, and has demonstrated cross-cycle resilience. Third is that it is a sizable market with superior rating, and that is quite important for us, particularly given our sovereign rating here in South Africa. The global commercial and reinsurance market has grown from about 800 billion in 2010 to just close to 1.5 trillion in 2024. The London market has held a consistent 7.4%-8.7% share of the global commercial and reinsurance market over the period. We have seen the shares ticking up between 8.2% and 8.7% in the last most two readings. Lloyd's, for us, carries the superior rating, A+ excellent for AM Best, a AA-, very strong for both S&P and Fitch, and with a very positive outlook pretty much across the board.
This is the platform, the base on which the syndicate largely builds on. It is a platform that is large, it is well-diversified, highly rated, growing, and I think most importantly, given where we are at the cycle, a very disciplined platform. Looking at what we said at the last CMD is that we had international ambitions to extend the specialist capabilities via Lloyd's. Today, we can report that the execution is on plan with a clear pipeline visibility as at the 30th of June 2026. Four things have changed. One is that we have scale from day one. Part of an existing specialist book was transferred into the syndicate to give us scale, and that is what we believe gives us the right to win rather than starting from zero. Two, we believe that we have a very strong team in place.
We have appointed a new strong CEO into the syndicate, supported by really senior seasoned underwriters and strong executives that really work to complement the team that we also have here in South Africa. Three is that the underwriting has commenced from the 1st of January. We have gone live, and we are starting to write open. We start writing open market business from the 1st of April. We are also very proud to report that we have GBP 375 million of approved underwriting capacity for 2026, and we target about GBP 150 million of incremental new business for this year. Fourth is that the premium momentum is building but with discipline. We have concluded new incremental business and are seeing an initial but expected loss within the syndicate.
I think it is important for me to say that the loss reflects the revenue recognition profile of the new business and is strictly not an underwriting concern for us, and I will unpack this in the next slide. By the 30th of June this year, we had concluded ZAR 1.3 billion worth of incremental business measured as estimated premium income. Against that, we planned an operating loss for the year of between ZAR 450 million- ZAR 550 million in 2026. We do expect to break even on a monthly basis in mid-2027 and to start to contribute positively from 2028 onwards. This loss is entirely timing driven, linked to the pace of our premium ramp-up, not to underwriting quality, and certainly not a deep cost J curve.
Of the ZAR 1.3 billion of the business that we have concluded, ZAR 461 million of that GWP is recognized in the first half of 2026, and the balance will be recognized over the second half of 2026 and then into 2027, simply because IFRS delays revenue recognition relative to when the risks are actually written. I think it's been a huge learning curve for us as a business going into Lloyd's and I think for yourselves as well, explaining the mechanics of how the Lloyd's machinery also works. What is important for us is that on an underwriting year basis, the book is already positive, and I think that's the key core metric that we really do track.
The way Lloyd's works is that we have a three-year distribution requirement at Lloyd's, and that means while profits are delayed in cash, this is not a delay of value. What you're seeing here is that this is a planned transition from dilution to value accretion, and certainly not an open-ended drag on earnings. The scale of the investment we're making is directly linked to how fast we choose to grow the book, and that is certainly a lever that we control. Capital deployment for us is staged into the international growth. We deployed some ZAR 2 billion at the end of 2025 to support the current 2026 plan, and we expect this to increase as we grow into 2027.
We are currently at the upper end of our range, and over time, we expect to remain within the coverage target range of 145%-165%, which means that we do have sufficient capital available to support the syndicate's growth. To optimize the capital management further, we do use a combination of Santam funding and also letters of credit within the syndicate, and Paul did allude to this, and I think that's a very efficient way for us to be funding the growth within the syndicate. In short, we are funding the growth in a really disciplined, staged way from a position of capital strength and certainly not from a capital stress position. As noted earlier, funding for the syndicate is not expected to impact our normal dividend declarations. We have launched this syndicate within the reality of the current environment.
Looking at the cycle, we do see that global corporate property rates continue to soften from their 2024 highs, and we expect further softening into the January 2027 renewals. Global property cat reinsurance rates specifically have fallen more than 20% since 2024. South Africa's traditional intermediated market has also softened in the first half of 2026. Altogether, these are not unknown, but are real headwinds for the P&C sector at this point in time. Our response really has been to stay selective and disciplined rather than to chase volume growth. At Lloyd's, we've taken a facilities and consortia-led approach to protect the quality over volume, and we deliberately withdrew Avatar capacity from the U.S. corporate mid-market sector, where we didn't really like the risk-adjusted rates on offer at this point in the cycle.
At the same time, where we are seeing good risks, we are leading in. We have GBP 67 million of additional capacity approved for Syndicate 1918. As I have said earlier, GBP 59 million of estimated premium income has been concluded to the 30th of June 2026. We do have a very strong second half of 2026 pipeline that we also expect to continue to earn into 2027 and into 2028. Importantly, the market has maintained underwriting discipline through the soft phase with a continued focus on profitable growth. The Lloyd's market's first half for 2026 combined ratio came in at 90.8%. That has been better than the 92.5% that we recorded in the first half of 2025. The London market is entering its next phase of growth from a position of strength, certainly not weakness.
When rates do eventually harden, we believe that this will be a tailwind for the syndicate that we have built on discipline rather than growth at any cost. We believe that this is a transformational step in Santam's journey because it is for us, strategically sound, built on strong capability within our core business, and accelerating our international ambition in specialist lines where we already have competence and that we understand. It is also operationally efficient. We have what we believe is a very lean, well-governed model with top-tier underwriting talent already in place. It is primed for growth, scalable from day one and with a clear path to profitability by 2030. We have set, for us, three specific markers of success from 2027 to 2030. Most of this will not be new in terms of how we think about the metrics for the broader business.
First is an underwriting margin of greater than 10% by 2030, tracking towards Lloyd's own mid-cycle expectations. Secondly, a return on capital on a ZAR basis of 24% by 2030, reflecting our existing Santam hurdle rate. This is underpinned by an SA support base and a head office structure that gives us a real cost efficiency advantage versus our peers. Our ability to share resources between our London office and our South African base is a real advantage that we believe gives us sustainability into the future. Then third, we expect the international GWP contribution of greater than 30% by 2030, reflecting the rising contribution of the international business to the group GWP. Bringing it all together, Santam's core franchise continues to deliver consistently against its targets.
Our strategy is anchored in three clear progressive growth vectors. Within that, the Syndicate 1918 has moved from ambition to execution from the last CMD. We are doing this in a very disciplined way. Underwriting is live, incremental capacity has been approved, and we have a very clear and transparent path through the planned 2026 loss to the mid-2027 break even. We have deployed capital on a staged basis. This is certainly within our normal capital coverage range ratio, and we do have three measures of success that we are accountable to you by 2030. With that, thank you very much for your time this afternoon.
Tava talked about not having the graveyard shift, so that means this is it. Good afternoon to you all. It is good to be here. Today I want to talk about the Pan-African opportunity, and it is actually quite a simple story. Heinie and the team spent the last three years building a platform. As Abigail quite clearly said, now we need to start earning on this platform. So this afternoon, I want to cover the presentation about telling you about the opportunity again, which I believe is a really good opportunity. We will talk about what we have delivered in the period up to now. There has been some shortcomings and shortfalls, which I want to recognize, but then also what we are doing to fill the gaps in terms of taking this business forward. Maybe starting with the opportunity.
Paul referred to the fact that, we are the largest Pan-African business on the continent. We have got really good positions in the markets we operate. On the general insurance side, we had top three position in 15 out of 21 markets, with Namibia and our business in Egypt being the big markets. On general insurance, we top 17 out of 23 countries. We have got more than in the top three. There we have got Ivory Coast and Morocco again as the big markets we play in. We have got on average a 16% market share, so we have got proper presence in these markets. That really helps also with scale, as we talked about earlier. Our shareholders both highly committed. I have been in the role now for the last two months, and I have really experienced just from the Allianz side, the real support, the technical scale they bring.
If you have got a problem in the business, your ability to pick up the phone and talk to somebody somewhere in the world, in the Allianz world, that is already dealt with that problem and solved it. I think it is incredibly valuable for SanlamAllianz. Sanlam brings sort of the deep local expertise, almost the African way of managing businesses, which I think is very valuable. We have got a presence in 25 countries. Where in the African market, GDP growth 4%-5%, so really sort of a continent that is growing but with less than 1% insurance penetration. From that perspective, a really good opportunity for us as a business to grow in. Moving on to what has changed since the previous CMD. Paul said it. We have done the integrations now.
All 11 countries where we had more than overlapping countries, we had more than one license. The last one, Morocco, we got the final approval in July. We are doing the rebranding end of the month, and the operational integration should be done by early next year. SanlamAllianz Re, you will be aware of the problems we face there. We have implemented or introduced a new management team. They have been in place now for almost a year. We were able to implement a new system that went operational in August, and we have, through these processes, strengthened the controls in the system. I think that reset has been done. The Life business has really continued with very, very good performance. We hit all the key KPIs for the first half of 2026. As Abigail also said, and which is important, we managed to declare and pay our first dividend.
It takes time to get the cash flows through the platform, but it demonstrates we have now moved across into cash generation also from a shareholder perspective. Maybe just to take a step back to the integrations. Was it worth it to do the work relating to integration? As I said, it took three years for us to get all the approvals, and I must say credit to the team. In the African regulatory environment, where everything takes a bit longer, I think to have closed it out in three years is impressive. We have spent just less than ZAR 1 billion to do the integrations. But the run rate of cost savings that is now in our base, almost just over ZAR 900 million. Effectively, a good investment to make sure we get the synergies in place and do the actual integrations.
The team has got the ability to focus on how to grow this platform, both in terms of the products we have got, what the clients need, as well as what distribution platforms we use, and of course, that we do it in an efficient way. Before we go to the growth story, I want to maybe just first take a step back and look at our current performance. If you look at it on the life side, we have performed on track. We have really demonstrated that this platform can work. Earnings, 25 earnings increased by almost 35%, with that continuing into 2026. Really driven off very good VNB growth and volume growth through the bancassurance arrangements we have got and the agency forces. That works really well. The general insurance business, as you would be very much aware, has been performing below target.
The business was impacted. The profitability was significantly impacted by natural catastrophe events in the first half of this year, as well as other large claim events that occurred. In addition to that, the Santam reset took also financial cost to make sure we get that right. That all being said, the impact of the underperformance of general insurance has sort of overall subdued the performance of SAS as a business. But if I look at it, the Life business demonstrated that this platform can actually really provide good profitability. As you know, my own background is from a general insurance, and if I look at what is currently in the General Insurance business happening, I am sure it is something that we can fix. We need to fix it in order to achieve our ambitions for 2030. The question is, what are we going to do?
There is a number of things that we have started doing immediately. I think firstly, looking very much at strengthening the underwriting and financial controls. There are some real tangible things we are putting in place to make sure that where there has been gaps before, that we address that. We are looking at our current operating model. As you know, we run a Life business and a General Insurance business. Then there is a support structure to support the performance of both those line of businesses. We are looking at how we are doing it and how can we do it more efficiently. That review is currently in progress. We have repriced unprofitable business, and I specifically refer here to our health portfolios, which has been significantly underperforming. Health remains an absolute important product for the African market.
But we need to make sure and find a way to write health in a profitable way. For that reason, we had to look at certain of our portfolios and actually decided to significantly reprice them in order to make sure that we improve the performance of the profitability of those books. The next point, and Tava referred to it, the importance or the opportunity to work with the Santam specialist team around attacking the corporate market in Africa. I think in my years when I was with Santam, we often talked about the larger African opportunity. I think there's the ability, we've got the skills on the Santam and the SanlamAllianz side to really put together a team that can very well attack this market and grow significantly in terms of what's available there.
Lastly, but probably for me, one of the most important points is the importance of teams. I've visited a few countries now in the last two months, and what really stood out to me is the local management teams. The way they think about the businesses. They're part of SanlamAllianz, but they want to make sure they manage it well in country. So the important thing would be for us from a center to be able to provide really good support and guidance for them to optimize what they do locally. Because it's a business that run in country. Looking a bit further forward and again, activities that we've really started doing. We want to expand our partnerships with banks and also other distribution platforms. I think that provides a good opportunity to grow, not only in the broker space.
Cross-sell between life and non-life, I think is a really opportunity. Anton also referred to it. It's something we should do better within SanlamAllianz. Our reinsurance programs needs to be optimized. There, we need to make sure we get the right protection for the really significant things happening. But also, on the other side, make sure we retain the business we want to retain in the group. Because if you write a good risk, you want to retain the right amount of that risk. Lastly, as I said, we're looking at simplifying our operating model to make sure that we get real cost efficiencies coming through. Slightly longer, but very important. If we want to be a meaningful African insurance play, the retail General Insurance business need to grow.
For that, we need to make sure we offer products and through distribution channels that really reach the uninsured market, the massive uninsured market on the continent. So that work we want to kick off. With that, the real importance of data, to use that both in terms of simplifying some of our businesses, but also in terms of standardization of our products. So how would you measure us in terms of doing all of these things that I've just talked about? Within the group, within SanlamAllianz, we've got a commitment, which we already gave in the prior years to say we want to double our 2024 earnings by 2030.
I believe if I look at the opportunity, having the 25 countries on the continent, the platform that we have built and the areas that we need to fix, which I believe is fixable, I am very confident that we can deliver on these numbers and these sort of targets by 2030. Thank you.
Thank you, Heinie. If you do not mind, please stay on stage. I think that has been a broad overview of the business, about our 2030 strategy and ambitions, how we plan to get there, and how the growth vectors will be supportive of that. With that, we are going to move into our Q&A session, and I would like to invite Anton and David onto stage. Carl and Tava will be in the audience and will take any questions that need to be answered. Once again, I will repeat that we will start with questions in the room and then move on to what we have received from webcast audiences. I remind the webcast audience again, please use the Q&A function that you have available. Then just for the audience in the room, if you do not mind, just speak a little bit up.
I think in the last session, we did struggle on stage to hear some of the questions. Thank you. I think, Warwick, you have got the mic.
Can you hear me clearly?
Yeah, we can.
I have two. One for Carl, one for David. I will just start with Carl. What opportunities do you see in the asset management gathering space from Anton's single platform strategy?
I think there is a big opportunity. The more you gather clients into that single app and you offer an investment opportunity for them, Satrix or any of the other products, the more you would actually have broadened your client base and broadened your reach into that capability. You are not going to add any more cost to that. You are just going to add to the assets and the existing platform that is there.
Do you think the target market in the single platform strategy might just be complementary to your existing customers, or is there a very strong overlap?
Yeah. If I understand the question correctly, from a target market perspective, we see on the Satrix side, you definitely see that is a big entry into the lower segment of the market, and we see significant growth there, specifically on the direct platform, not through LISPs. I think that will give us a significant opportunity to build that savings capability and investment capability at that lower entry level of the market.
Thanks. David, you spoke about the low ticket size and the need for significant scale in Shriram Life to make money. Just give us a sense of how many customers you think you need to make an appropriate return on the investment you have made already in Shriram Life?
Warwick, that team has dealt with three significant The management team in India, I mean, has dealt with three significant regulatory changes in the last 18 months, very nimbly and very successfully. Actually, I think you know this, but VNB was obviously pretty negative in Q1. It is already, with the channel optimization and product optimization shifts that have been made, already back in positive territory. Really, I think we can say that the kind of headwinds to date have been successfully dealt with. What I flagged a moment ago is something that has come out literally in the last few days. The impact is not known yet. Just in full transparency, I am saying there is another one coming.
It remains to be seen what the final framework and the timing is going to be, and then we can quantify, and then that team can, and I am very confident will deal with it accordingly. We already have pretty good scale in that business, and it is growing significantly faster than the market. Tian can correct me, but I think it is maybe almost twice as fast as the rest of the market in policies. Actually, the business has been quite profitable in the past, as you will know. I guess it is a long way of saying the goalposts shift. We have already had scale for the context we have been in. Right now, as I sit here, we are comfortable with the scale, but the goalposts are shifting.
There will come a point at this rate of growth, there will come a point where we have such scale that the question becomes moot. But at the moment, we are still subject to turbulence. Having said that, the direction of these regulations we think is good for the long term and for the industry as a whole. My message really is about weathering some turbulence. I do not know for how long still, but at this rate of growth, every year that goes by, we put ourselves in better shape for whatever comes. It just is that kind of environment.
Thank you. While the mic moves along, David, there is another question here that relates to regulation in India. It is from Vikram Gandhi of HSBC. He asks about whether you could touch on the potential impact of the latest regulations and, or proposals by the regulator on the in-force book on new business. He also then mentions that business press articles have suggested that MUFG is contemplating a majority control of Shriram Finance and whether you think that will crystallize.
Okay. So on the first one, as I said, on the commission regulations, there is a proposal out. The long-term direction of it, particularly in the general insurance space, is clear and we think good for the industry, and we are not concerned about that on the general side. On the life insurance side, it is much more complex and nuanced, and the whole industry is quite concerned at this point about, let us just say, engaging significantly on the eventual shape of that framework and the timing. It has very different impacts depending on the nature of your business. So for example, the current draft proposal is more likely to be very disruptive for corporate brokers and aggregators. Neither of which, by the way, Shriram Life is particularly reliant on.
So there is a lot more engagement there, both in terms of the final framework that will be and the timing and glide path of it. Only once that is clearer will we be able to comment on what it means for our particular business. I think we will be in a position to do that.
But it's mostly new business, given that it's commission.
Yeah.
Yeah. So the in-force book is fine.
Yeah. Thanks for that, yeah, that build. On the second question, look, we obviously can't comment and won't comment on press speculation. I think it's not the first time we've seen that particular bit of speculation. Maybe what I would say is that MUFG so far is showing up as a very good additional partner in the mix. The impact is clearly visible in that business already. Having said that, as a shareholder, like all the shareholders, the business has a lot of capital at the moment. There's a lot that has to be done in terms of operating capacity and skills and so on to deploy that kind of quantum of capital responsibly. So that remains our focus, and I'm sure many other investors for the time being. That's all I would say on that.
Thank you, David. Thapelo.
Thapelo from Investec. Thank you for the chance to ask a question. My question is to Heinie. I just wanted to ask around the insurability of the rest of Africa population. Obviously, the incomes there are significantly lower than for South Africa and the rest of the world. What is the true addressable market there? Is it right for us to look at penetration in the crudest form? Or is the opportunity significantly lower than just looking at the number of people who are insured relative to the population?
Thank you for the question. I think if we look at the market there, it is currently very low, the penetration. I think there are reasons for that. Mainly the retail market is, there is not a lot of people that really go out and buy insurance. I also think often insurance companies think they present a product which works in the developed world through a broker where people earn commission, which is very, very different from how you would need to think about getting product out in the emerging world. From that perspective, I think if you just look at the SME market, for example, in Africa, the number of informal traders that is there and the specific needs they have got. I think it is important that we find a mechanism to approach the uninsured market.
That is a longer- term view, but I think we can definitely get there. The other point that I think is important about how to grow the market is with the regulators. My interaction with regulators in the short period I have been involved with this business now is that there is a real understanding that you need to enhance insurance on the continent because it brings that risk protection gap to people. I think over time, we should, as a big Pan-African group, we should constantly keep pushing that for those opportunities to say, where can regulators help us to make sure that insurance products become more acceptable and accessible for the market. The reason I think there is a real opportunity, but we need to think about how we attack it differently.
Is it right to say, with your current products that you have in those markets, there is probably a little bit more of innovation that is needed for you to tap into that uninsured population.
Yeah.
Is that the right way to think about it?
Correct. If we talk about the retail market, I think the corporate market, we are doing well. The commercial market, we are doing well. But in terms of in retail, where people can afford to buy a vehicle, we can get them to buy insurance for the vehicle. I think that works. There is a different market there that is uninsured currently that we need to target.
Okay. That is very clear. Just last two questions. You mentioned the cross-sell between life and general insurance. Just a bit of color around that. Which specific markets are you talking about and how do you plan to do this?
Yeah. If you look at it, you would normally find that our Life business is bigger than the general insurance business in many countries, in the retail market. You would often have many more retail life clients than general insurance clients. The ability to say to a client that has bought a life product from us, to say, "Well, why don't you also buy a general insurance product, a motor policy or a simple property policy?" I think in most of our medium to large markets, that is an opportunity that we must work much harder on. We operate under a single brand, so a SanlamAllianz customer would We already have got the brand out there. For me, it is not only one market we think about. I think that is across our markets. We want to work on that.
And just one last question. You mentioned you want to expand partnerships with banks and other channels. Just a question on the risk of disintermediation, just given what we have seen, banks are going the route of getting their own licenses. I do not need to mention examples in South Africa as well. Yeah, just that strategy, how do you think about that risk?
If you look at it, we currently distribute on the life side, by far the majority of our products through bancassurance arrangements. We have arrangements in place with more than 100 banks. It is not that we only have one or two relationships. I think there are still many, many banks on the continent. We actually found that there are probably more opportunities that we have not targeted yet around bancassurance arrangements. I think for us, that remains a very, very important channel to focus on. Then I think there are wider, there are other opportunities we need to also look at where other distribution channels, where you have not got the bank as the distribution partner, but other partners. Retailers, there are other options we should look at.
For me, it is about finding ways where we can much more directly, and this is in the retail side, in a direct way, contact a client rather than to work through a broker or agent.
And you do not think one day they will go directly to a client? Is that a risk?
I think that if you provide really good client service and your brand is seen as the brand that when it goes bad, we are there to support you. I think then you keep a really good relationship with clients. It almost does not matter through what channel you go.
Thank you. Thapelo, if you do not mind moving the mic in that direction. I think I saw Francois's hand up. In the meantime, I have just got a question here from Adrienne Damant of Avior to you, Anton. He asks, "Is the bank under Sanlam brand or SanlamGoTyme joint brand?
The bank is regulated by GoTyme, and the services are provided by GoTyme, and it is distributed by Sanlam. So we have got a distribution agreement. You would have seen in that card that flipped up that it is a joint branding. So it is Sanlam, but wherever the transaction banking appears, the GoTyme brand will appear with equal prominence.
Just before I hand over to Francois, I am going to ask another question from Michael Christelis, also to you. Can you provide clarity if there is any profit share with GoTyme for any life insurance products sold through the app in South Africa?
Yes, we will share profits with them. I am not going to go into the details. It depends on whether the customer has been originated by Sanlam or by GoTyme. We are their sole life insurance partner for GoTyme, for their stack as well, as inside the Sanlam stack.
I will try to keep it much briefer. Just around, yeah, just quickly on. My question is for Tava really. Thank you for the color on the targets for Lloyd's Syndicate. I think you mentioned 30% of Santam wide premiums to come from the Syndicate by 2030. If I am not mistaken, that means ZAR 15 billion of premium income. If you were to reach that target, how much capital would you need at that point? Would you still expect that level, 10% underwriting profit on such volumes as well? A bit of color on how you intend to get that high level of premium growth until that point. Would there be any sort of cannibalization of existing premiums, or where would this come from? Thank you.
Okay. Maybe just to clarify where the 30% comes from. The 30% is what we expect the international business in totality to contribute as a percentage of GWP. If you look at what constitutes our international business currently, it is made up of the Syndicate as we have spoken about. It is composed of the specialist business that we do into rest of Africa, working with Heinie. Then it also consists of the Santam reinsurance business that we also underwrite pretty much across the world. It is not just the contribution from the Syndicate. I think maybe just to emphasize the point that we historically had that target sitting at 19%, and we have now adjusted that upward to 30%, taking into account the contribution of the Syndicate.
We expect that growth and contribution to that 30% holistically of international business to be a lot more than we expected previously. It is not just the Syndicate in terms of the 30%.
Not ZAR 15 billion, ZAR 5 billion. For the syndicate, maybe how much capital would it need if it's ZAR 5 billion in the syndicate?
Okay. So maybe the way, Francois, to think about the capital is we are deploying Santam. We are funding this from Santam, and then we complement that with letters of credit. We are able, for up to about 50% of the capital we deploy, to use letters of credit at a very efficient cost from some of the banks that we're using within the London market. I think it's also important to say that the way to think about Lloyd's is it is a very efficient capital platform. It does allow for the use of third-party capital. We've been very clear that we're not using third-party capital at this point because we believe we have sufficient resources within Santam.
Then, I think an important link to make here, and I think the question was asked maybe earlier on, is that we have delayed the payment of special dividends, while we are keeping ordinary dividends consistent during this ramp-up and build-up phase. That's how we are effectively funding the syndicate. Not quite the detail that you're asking for. But I think capital is not a constraint. I think the major focus for us here into a soft market is ensuring that we are writing profitable business in a disciplined manner.
Excellent. Thank you. One quick question just on It's not a question, just a request. Thank you for that color, Carl, on the net flows. If you can maybe continue giving us that end results in future as well. It would be very helpful. Maybe some profitability behind the various divisions that have been as strong as it has in terms of net flows.
It is a question around the profitability of the flow.
Well, obviously, I think, first of all, majority of those flows, as I said, are retail flows. So they do attract significantly higher margin than institutional flows. And obviously, those are what you call net new client cash. So that is after all your outflows. And I think, obviously, the flows that goes into Satrix, this is not as profitable as single active asset management flows. But those retail flows are still very comparable, I think, similar to kind of like a multi-manager flow. So your Sanlam Multi-Manager flows is you do have a lower margin, but are you still roughly above 20 or 30 basis points. And the retail Satrix flows are roughly the same. Then obviously in your private markets, the profitability and the margins there depends on your carriers and your different type of products. And you will see that come through over the next probably four to five years.
I think your 2030 numbers would probably reflect some of those very profitable private market type of business.
Thank you.
Thank you. Jared's hand was up, and then we can move the mic to you after.
Sure. Thank you. It's Jared from All Weather. Anton, just first question for you. Thanks for the disclosure on the annual costs associated with the GoTyme launch. The costs seem very modest per year. Is that just a function of it's your share of costs and the incremental rollout? Give us some detail on how you're managing to keep those costs as low as they are.
Yes. Of course, it is our share of the cost, so that helps quite a bit. The scale benefit that GoTyme brings into the arrangement. The model is that GoTyme's built a technology stack that is used as is in the Philippines by themselves and South Africa, and then also by Santam. Then we spend some extra money that's outside of those banking costs to integrate the banking stack into the ecosystem. That's a separate cost. In terms of the launch cost, that is included in those numbers as well.
Okay. Perfect.
Of course, just one point is we do intend because we want the brand to be supported by this diversification. We can reallocate some of the marketing spend that would have traditionally been in just life insurance to support the launch of the bank. There is also emphasis shift in, let us call it our general marketing spend to support the launch cost as well.
Perfect. Thank you. Then just one for Heinie on the general insurance in Africa. You mentioned some of the actions you are taking on the underwriting side. Subject to the Santam deal closing, does anything change in terms of how you would implement the change to that strategy on the underwriting front? Does something change with the partnership on the specialist lines as well? If you could just give us a color on how that potentially impacts your strategy.
Jared, I think, for me, when we look at the opportunities, almost irrespective of whether the Santam deal will close or not. I think there is a real opportunity to benefit from Santam's sort of expertise on the specialist side. That is something we can do if you can find a way to say the two teams work closer together and, in that sense, create more business. The current arrangement already in place between Santam and SanlamAllianz on the corporate business is to sort of have a 50/50% share of business we bring in. For me, if the answer is there, you get a bigger business. It works whether the deal happens or not. On the other underwriting matters, I think the point I made about shareholder support.
I think there is really good support from Tava, the team, in terms of accessing the right people in Santam to make sure that we understand what they do when we think about underwriting on our side. For me, that is the whole model of the SanlamAllianz business, to say we have got two shareholders that both have really successful in their markets, and how do we as a business benefit from that. That we can do almost irrespective of the Santam deal. For me, that opportunity is there always.
What I might add to Heinie's comment is on the reinsurance side, if you think of the large reinsurance programs that we run in Santam and that Heinie and the team run in SanlamAllianz, I think, again, there would be scale and opportunity for us to look at how we efficiently bring those programs together and run them more efficient. I think you've seen on the Santam side what we've done with reinsurance, taking out seven, eight basis points on the gross earned premiums. I think there is scale, I think, for us to work much closer with Heinie's team to bring that more tightly together.
Yeah.
Thank you. There was a question here in the middle from Harry.
Hi, it's Harry from Bank of America. Just a question on the Sanlam Life and Savings premium growth that you're targeting. How much does the ecosystem add into your, I guess, 2030 targets? Then, I guess, in terms of margins, how should we think about that in the profit growth targets? Do you expect new business margins to improve?
Sorry, just the first part of your question, the premium growth in life and savings.
Yeah. How additive is the ecosystem to that?
It is, of course, incrementally, quite a bit. I am not going to disclose exactly how much of a growth we expect from the ecosystem and how much we expect from our new distribution channels. But in terms of margin, our margin is incredibly dependent on mix. If you look at our per product margins, these have been pretty stable, but the margin compression has been like you guys saw life annuities to guaranteed annuities, but also within the risk products, we saw switches from higher margin risk solutions into lower margin risk solutions. So we are seeing that turning around at the moment, so that is the good news. Not necessarily the mix, but the margins themselves. Then, of course, as the ecosystem scales up, we believe that to be supportive to margin improvement because of lower cost of acquisition as well as improved unit economics.
Thank you.
Thank you. H ere.
Thank you. Anton, well done on the ecosystem. It is certainly, I think, a very important direction for all insurance companies in South Africa and financial service companies to move towards. It is a bit early to ask this question, but how scalable is it? Or how transportable is it? Heinie, is that not maybe a potential solution for your retail outreach within Africa? We saw cellular telephony leapfrogged fixed line in Africa.
Of course, I certainly thought about that as well. There are certain clear advantages. The GoTyme stack is already multi-tenanted. They are already in different jurisdictions. But for us to export it, you will need to respond to the specific market needs. You cannot just take what works in South Africa and dump it in Kenya, for example, and think it will work. There is also the question of regulatory access. You will need to have banking licenses and so on. But who knows, four, five years down the line, that can work.
I am also a firm believer that you need to prove your leadership in your home market, and then you can export that as well in terms of if the ecosystem needs to be exported in its current on the way that we are going to develop it, in terms of integration of general insurance and investments and life insurance and so on. If we can really make it work in South Africa, that gives us the license to win in other markets, subject to adaptations and so on as well.
Marius, I fully agree with Anton. I think that it almost goes back to the point I made that it would be something and that we can look at Sanlam getting right. Is there a way we can sort of also make it work in the rest of Africa? I think the other point, of course, is where GoTyme would be on a matter like this. But it is definitely something that we could look at. But I also think it is important for now in the SanlamAllianz world, we need to make sure we almost do the basics right, and then we sort of have other focuses.
Are you focusing on mobile phone type of solutions in the retail space? Is that one of the areas where-
Absolutely. We've already got arrangement in place with MTN. That space definitely. Up to now, we haven't found that, and it's not only SanlamAllianz, the real way to really use that as an effective distribution channel, but very much so. Anything where you can use digital way of reaching a client is top of mind for us.
Thank you for that, Marius.
Senamile from SBG Securities. My question is to Tava on a general insurance perspective. Of course, there's the impact of the normalization of the catastrophe claims environment, and I suppose it's a bit unfair to compare it against a prior, relatively benign claims environment. But once you put that also with the softening market, just what's your view just in terms of the margin, the net underwriting margin? Are you expecting a further squeeze on the margin, compared to what we have seen already?
I think, maybe just to reference 2025, which was a benign cat environment for us in South Africa. I think we saw the margins there significantly above the top end of the range.
We then came into 2026, and we've had significant weather activity here in South Africa, which is interesting because that's quite localized. I think if you compare it to the international environment, you're talking about benign weather, whether it's hurricanes. You've seen international performance or underwriting margins at a much, much higher level. One has to take into account that the direction of travel is more weather events into the future. We've seen what's coming through with El Niño. What we are happy about in the context of the Santam environment is that we've been talking to you and the market for quite some time about all the underwriting actions we've been taking, understanding the risk, pricing it much, much better.
We then come into a year such as 2026, where the business is then tested in that environment, and then still delivers an underwriting margin of 8.1%. If you look at the numbers we've given you at the half year, we've taken ZAR 1.5 billion worth of large fires and weather. That's effectively about 6, 7 percentage points on that margin. I think just for some context. I think what it says is the business is certainly more resilient and certainly in a better space to weather, excuse the pun, further adverse conditions into the rest of the year.
Thanks. Thank you. I'm going to move on to the online questions before we run out of time. Another one for you, Tava. It's from Vikram Gandhi, and he asks how you would counter the argument that the Lloyd's entry may not have been the right move or possibly not the best timing, given where the P&C pricing cycle is across the world. What are the business lines that the syndicate is targeting, which you might have covered, and what your appetite is for casualty business and specialty lines like aviation, energy, marine, or private.
Thanks, Tokelo. It's a mouthful. All right. Maybe let's start with the timing. I think if you plot a chart of syndicate entries over the last, let's say, 20 years, what you will find is that syndicate entries have come through into soft markets and into hard markets, right? I think typically, you found that there's a lot of interest and activity, particularly in a hard market where returns are great, lots of private equity activity coming through there. But I think it is fair to say that entrants have come through pretty much into a soft or even into a hardening market.
I think it's also important to say from a Santam perspective, we are at a point of maturity in terms of our underwriting, in terms of where the specialist business is, and then in terms of our capital management that allows us to enter Lloyd's at this point in time. Could we have done this 20, 30 years ago? I think that would have been questionable. But I think given the maturity of the business, the maturity of the capabilities that we have within our specialist business, I think this is a natural step for us to expand into the international space. I think the quality of that business in South Africa is strong.
We have significant market share within the South African environment, and so it makes industrial sense for us to then grow into the international space on a trusted platform of the strength of our South African business. But I think the timing of the soft market, we expect that is cyclical. I think as I've said earlier on, it can only be a tailwind as the cycle starts to turn. I didn't get the second part of the question.
This-
In the U.S. Okay. All right. Yeah. I think maybe just to, again, give some context that the factors that we're finding in the international space, whether it's soft market conditions, what we're seeing in the U.S. on casualty, those are not new factors for a seasoned specialist business that we have run here in South Africa. The same disciplines that we've applied in South Africa are extending to how we think about writing the business in the international space. Again, we've been very measured in a soft market about being very selective about the risks we are writing, and we've been very clear that we are not chasing volume.
Case in point is that we have withdrawn our capacity from Avatar as a very strong signal about the discipline that we are enforcing in how we choose and think about writing business in the international space. As far as the classes of businesses are concerned, we are sticking primarily to classes of business that we understand. Very strong on property, particularly international wide property. We are writing limited amounts of other classes such as marine and aviation. I think it is very important that we are staying very clear, for example, U.S. casualty, where we know the nuclear verdicts that we have seen in the U.S. can create problems for that class of business.
I think the overarching message is that of all the business that we see, we are turning away, probably in the open market space, close to 80% of that business, simply because we are maintaining a very disciplined approach in terms of how we think of underwriting business in that space.
A final question from online, just before we start to wrap up. It is from Michael Christelis of UBS, and he asks, it is for you, David. Can you confirm if health is an opportunity that you would look to expand in India, given the focus there by many of your local and global peers?
Yeah, thanks for the question, Michael. It is a good one. You are right that health is seen as an attractive space in India. I guess, at the moment, no. We are very happy with the opportunity we have before us. There is still a lot, as we have spoken about, to do there. We have just deployed a fairly material bit of capital into India, so we would like to see that really put to work before we look at something more. As I keep saying, it is a long-term game there. It is an attractive segment, so it is one we watch. Not now, but maybe on a five-year view, we will certainly keep it in mind. That is what I would say to that.
And then, another last sneaky one, because we still have a little bit of time, from Matthew Pouncett of Laurium Capital. He asks, this is a question for Abigail. "On slide 17, your cash remittance relative to core earnings is expected to increase back to that 75% level, but your dividend guidance of more than 4% real lags core earnings, which is expected to grow by CPI + 6%, suggesting a decline in dividends relative to core earnings. Where is the excess cash to be deployed?
Hi, Matthew. If I'm understanding your question correctly, it pretty much comes down to, if you look at our high earnings growth regions or markets, it's primarily the India and the Pan-Africa business, which is also the area where you want to reinvest in growth. That's why I think we made the comment to say that in future, one expects that the dividend growth will be slower than the earnings growth because you're reinvesting in your high earnings growth markets. So that's probably the reason why you're seeing that lag. But I think also to flag, from a dividend payment perspective, while we are targeting our CPI + 4% as a minimum, which is higher, we're also not intending to pay dividends at any cost.
I think Paul's slide did show as well that one of our priority areas is to reinvest in growth within the business, at least businesses that will return levels that are higher than our cost of equity. But the main reason for the lag is because your mix of the regions that generate the highest growth in earnings are also the regions that require more reinvestment into growth.
I think, Matthew, it's Paul here. I understand your question. There is, sort of in the short- term, a break of the relationship. What Abigail has said for a dividend target is a long-term target of CPI + 4% versus operating profit of CPI + 6%. That's entirely consistent with the mix of business that we expect to change over time to be more heavily weighted to both Africa and India, which, because of their being not as mature and more capital intensive, you will get dividends growing slightly more slowly in the long-t erm. But you are correct that between now and the end of 2028, if you held that relationship perfectly, there will be some excess cash. We've been very clear that we're not making any decisions about that. Lots can happen in the next two years. Markets can go up and down.
We can have hurricanes, pestilence, and floods. If we do have some excess capital, it will be a wonderful problem for Abigail to deal with.
Thank you. That brings us to the end of the day and the end of the Q&A. Once again, thank you, Carl, Tava, Heinie, David, and Anton. Just to bring the day together and to leave us with some key takeaways, I would like to now hand over to Paul.
Well, thank you all very much, whether you are online or in the room. It has been a fantastic session. Tokelo, thank you very much to you and the whole team as well. I think this is your first time, and so well done. It has been great questions today. Really engaging. I would really just like to thank our own board members and our chairman, who sat through the whole day as well. For those of you that we see tomorrow, we really look forward to seeing you. I think today you had an opportunity to see how we are very committed to the targets that we set last year. I hope that we have laid out a reasonably clear explanation of how things work over the long- term.
We are, as I always say to people, in a business that is affected by so many different factors, whether it is markets, currencies, bond yields, fires, floods, pestilence, crime, you name it. It does impact us. So we can have fairly volatile results in any given period of time. But I think we have shown you that over a very long period of time, we have delivered consistently. I personally think that we are going to have a great few years ahead of us, and that in many ways, all the ingredients that we need to actually drive profits, returns, dividends are all in place. I hope that you got a sense from only a part of the management team that you saw today that we are excited about our business. We love our business. We love Santam.
We think our customers love us as well, and that we really are very bullish about what we can achieve over the next few years. Navigating uncertainty, that is what our business is about. We are essentially there to provide risk management for our clients and to provide good retirement for them one day and to deal with any of the mishaps that come along between here and a happy, long retirement for our customers. So, it is the business we are in. We accept volatility, but we think we are going to keep producing for our shareholders year in, year out. It is really a pleasure to have all of you, whether you are online or physically here, as shareholders. We never ever take capital for granted. We know that you are exposing it to risk when you buy shares in our company.
We have enjoyed the engagement, and we wish you all the very best. Thanks very much.