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Wealth, Investment Management and Insurance

WIMI is the integrated non-banking financial services provider to Barclays Africa and other partners across the continent, including life insurance, non-life insurance, investment management, retirement services and fiduciary. We also provide advice-led investment, credit and banking solutions to high-net-worth clients, retail solutions to individual bank clients and institutional propositions to corporate and business clients. Our well-established partnership model with the bank is based on close collaboration and integration, delivering broad-based financial solutions for our customers and clients.

This is a summary extract from our segment performance reporting. For the full segmental analysis, see our 2015 financial results booklet.

Highlights

  • Return on equity improved to 24.9% (2014: 23.2%).
  • Assets under management increased by R15bn to R274bn.
  • South African Life Insurance business net premiums increased 9%.
  • South African Short-term Insurance margins improved to target levels, resulting in a 23% growth in headline earnings.
  • Fiduciary Services South Africa headline earnings grew 21%.
  • We acquired a majority stake in First Assurance, a Kenyan short‑term insurance entity.

Challenges

  • Investment income on shareholder funds declined 28%, adversely impacted by market performance.
  • Embedded value of new business for Life Insurance declined 4%.
  • Potential for higher lapse rates in insurance policies and pressure on savings and risk protection products due to current macroeconomic conditions.

Operating environment

A convergence of adverse developments, including low GDP, rising interest rates, pressure on government finances and a weakening rand and business confidence, weighed on the outlook for the South African economy. This culminated in rating agencies downgrading South Africa’s sovereign credit rating to one notch above junk status. These developments resulted in significant volatility and a decline in market value of bonds and equities. Sub-Saharan Africa is affected by headwinds such as low commodity prices and outflow of capital from emerging markets, however, the outlook for economic growth for the Rest of Africa is expected to remain positive.

The first phase implementation of proposals contained in the Financial Services Board’s Retail Distribution Review initiative fundamentally alters the way in which insurance and investments are sold. We remain committed to providing customers with affordable, fair and sustainable advice.

Business performance

We launched our first Customer Lifestage Moment sales campaigns and strengthened alignment with RBB initiatives to better serve target segments. Margins and returns were improved through the outsourcing of personal lines administration to a third party. Cost and sales efficiencies were achieved through the outsourcing and centralisation of administrative functions in both our Short-term Insurance and Distribution businesses. This further improved our control environment and improved client solutions. We also concluded the disposal of our Agricultural Crop business.

Our focus on omni-channel distribution capabilities continued with the launch of Houseview to formalise the advisory process. This included a new adviser remuneration model to drive customer-centric sales and improve our digital technology platform capabilities through the recent acquisition of a majority stake in a direct life insurer. We also gained momentum by building out our telephony and direct channel capabilities.

In building out our bancassurance competencies on the African continent, we established a greenfield Life Insurance business and acquired a majority stake in a short-term insurance business in Kenya. We are also implementing broader channel coverage across the continent, in our existing businesses, which includes branch kiosks to enable face-to-face service, telephone and digital platforms.

We enhanced our Wealth and Investment Management capabilities by:

  • transferring the high-volume unstructured credit banking to RBB;
  • integrating our Stockbrokers and Private Clients businesses;
  • implementing a franchising model, concluding key investment manager hires and launching a revised remuneration model in our Active Asset Management business to build skills and scale up assets under management; and
  • progressing the application of United Nations Principles for Responsible Investment and the Code for Responsible Investing in South Africa (CRISA) into relevant business lines.

Looking ahead

Our main focus remains on growing assets under management and premium income with a specific priority on accelerating growth through customer focus and digital enablement. The key execution priorities are:

  • growing cross-selling through continued and improved collaboration between WIMI and RBB;
  • driving growth in selected markets on the African continent through entry into remaining target markets, expanding our product and channel propositions in existing markets and targeted development of external partners for scale; and
  • enabling growth through continued investment in digital platforms, automation, data insights-led sales capabilities and a diverse and high-performing team.