Sanlam has reported flat first half earnings as elevated weather-related insurance claims in South Africa and parts of Africa and the stronger rand, which reduced the translated value of earnings from businesses outside South Africa, weighed on performance.The group said on Thursday core earnings for the six months ended June rose 1% on a comparable basis to R7.38bn while headline earnings declined 16% to R8.27bn.The group uses core earnings as its measure of underlying sustainable cash earnings. Core earnings excludes certain items, including the effect of short-term investment market volatility on insurance contracts.Sanlam said the underlying growth of the group’s operating businesses was strong with new business volumes increasing by 22% to R224bn and net client cash flows rising 42% to R78bn, reflecting the strong customer focus and competitiveness of the group’s operating businesses.Operating profit declined by 2% on a comparable basis, reflecting lower positive investment variances and higher project expenditure than in the prior period. Excluding investment variances, the operating profit was 1% lower than the prior period.Adjusted headline earnings declined by 22%, mainly due to lower shareholder investment returns, reflecting weaker market conditions. “The impact of weaker equity markets and higher interest rates on bond valuations, particularly in Morocco and India respectively, following strong gains in the previous period, weighed on performance. Investment returns were further impacted by adverse unrealised mark-to-market movements on the group’s investment in Ninety One subsequent to the closing of this transaction in February,” it said.Life insurance new business grew by 14% on a present value of new business premium basis, with strong performance across South Africa, Pan-Africa and India.General insurance delivered growth of 7%, supported by positive contributions across most regions.The value of new business (VNB) written amounted to R1bn. VNB declined by 7% despite strong life sales growth, reflecting an ongoing shift in product mix in South Africa towards market-linked annuities and away from higher margin life annuities.The group said it has focused on cash generation and efficiency across all businesses, and as a result the short-term earnings volatility is not expected to negatively impact the group’s dividend capacity during 2026 despite the headwinds from weather-related claims and a strong rand. It noted consumers were under pressure in the first half due to the US-Iran conflict with its impacts on energy prices and interest rates.Sanlam said it enters the second half supported by sustained client activity, solid cash generation and positive underlying momentum in each of the underlying businesses. As guided at the 2025 annual results, full-year earnings growth in 2026 is expected to be below the group’s medium-term target, reflecting its deliberate investment in future growth platforms, the initial start-up accounting losses in Santam Syndicate 1918, weaker shareholder investment returns and weather-related claims.“Underlying business momentum and growth remains strong and the group expects to meet its full-year 2026 guidance, supported by continued execution, disciplined investment spend and an assumed normalisation of weather-related and large loss claims in the second half,” it said.This is expected to be partly offset by earnings headwinds in the South African health operations following the loss of a major client, and elevated health insurance claims in Malaysia.“Improved working capital and cash conversion are expected to support dividend capacity and offset the impact of weaker earnings, leaving the group’s dividend outlook unchanged and in line with medium-term target,” it said.