The Power of Your Life: the Sanlam Century of Insurance Empowerment

OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi The Power of Your Life OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi The Power of Your Life The Sanlam Century of Insurance Empowerment, 1918–2018 Grietjie Verhoef 1 OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi 3 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Sanlam Limited 2018 The moral rights of the author have been asserted First Edition published in 2018 Impression: 1 Some rights reserved. 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Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2018942484 ISBN 978–0–19–881775–8 Printed and bound in Great Britain by Clays Ltd, Elcograf S.p.A. Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi Dedicated to Verity Roussouw OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi ■ PREFACE AND ACKNOWLEDGEMENTS To do business in global markets emerging from humble parochial beginnings in the scope of a hundred years testifies to a determination to succeed. The rise of global companies has had a profound impact on domestic politics, the economy, and society, but multinational enterprise has also shaped the global environment. In the globalized world of business and society, new entrants can only succeed by strategic market selection and operational competitive advantage. Studying internationalization offers a range of possibilities to new entrants, but context changes so dynamically, that it has become almost impossible to predict the exact course of business expansion. When the opportunity arose to study the century of development of an anchor Afrikaner financial services enterprise, Sanlam, it was apparent that it would be a study in business sustainability, the adaptability of ethnic culture to the globalized world of business, and the changes those trends implanted in peripheral polities, economies, and societies. When taking on the history of a century of Sanlam, the aim was to explore business adaptability in the context of globalization. The history of Afrikaners in South Africa is complex. The history of Sanlam allows insight into the complexities of political, economic, and social empowerment of not only Afrikaners, but also those South Africans who exercised a distinct choice to put South Africa first. The centenary history of Sanlam is a history of South African home-grown entrepreneurship, business vision, and the inextricable socio-political development of the country from anti-imperialism, through competing nationalisms through to a society responding to the forces of globalization and international business. Sanlam responded in the domestic South African market to global trends in market deregulation and subsequently emerged as a global enterprise. This is an important achievement. Sanlam made this transition from humble but confident beginnings in the Cape into global markets capitalizing on its firm-specific advantages. Empowering the marginalized and creating a century of sustainable wealth in Africa— this is the African success story of Sanlam, the only emerging market multinational company to adapt an inward-looking nationalistic business model to become a global player. Sanlam relied on its institutional learning of a century ago to conduct global business from Africa. A history of embeddedness in an economic and political environment of racial segregation and white power, was transformed into the firm-specific competitive advantage of understanding the business of mobilizing marginalized people in emerging markets to take ownership of their own destiny. This history is good news from Africa. It explains how a financial enterprise rooted in a developing market, within an ethnically and culturally circumscribed community, OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi viii PREFACE AND ACKNOWLEDGEMENTS utilized social capital and mobilized its community for empowerment. It offers insights into successful transformation strategies for companies in African and other emerging markets. The historical institutional perspective is important, since other global financial service enterprises such as Barclays failed to capitalize on its DCO (Dominion, Colonial and Overseas) legacy in devising a new African strategy. The perspective from humble African beginnings presents an important dimension to future financial service provi- sion in Africa and other emerging markets. This is the history of the South African National Life Assurance Company (Suid- Afrikaanse Nasionale Lewens Assuransie Maatskappy—Sanlam), established in 1918 amidst the international turbulence of World War I, the growing marginalization of poor Afrikaners in South Africa, and emerging nationalisms in the British Common- wealth. Afrikaner entrepreneurs consciously chose insurance to mobilize the people’s savings towards their own economic empowerment. First the South African National Trust and Insurance Company (Suid-Afrikaanse Nasionale Trust en Assuransie Maats- kappy—Santam) was established in March 1918. Soon the short-term trust and insurance business separated from the long-term life business. Sanlam was established in June 1918 and made inroads into an industry controlled by English- and foreign-owned life offices. Sanlam leaders supported the call for the supremacy of South Africa’s interests above loyalty to the British Crown. Sanlam leaders aligned themselves to the politics of white supremacy since the formation of the National Party in 1914. This history provides a unique perspective in Business History. It illustrates the business of using nationalism to mitigate risk in deeply divided societies progressing through socio-economic transformation. Sanlam used strategies to enter the life market in South Africa through actively canvassing the non-insured segment of the white population and ultimately grow an inclusive business able to outgrow the ethnic enclave. This is an exceptionally complex, but inspiring business history, unprecedented in the history of insurance and financial services development in developing markets. The unique Business History case is this transformation from an enclave to a global business focus. The complex political and economic environment of the first decade of the twentieth century presented limited strategic alternatives to an insurer aspiring to enter the market. These environmental complexities only intensified in the course of the century. The importance of excellence in top management for the performance of the company, as well as for the national economy, was consistently emphasized by Alfred Chandler in his study of industrial corporations in the United States. This is equally true for the role of management in the insurance company, Sanlam, since 1918. Marginalized Afrikaners were mobilized to trust Sanlam in growing their personal destiny as inevitably interlocked with the future of a sovereign South Africa in the British Commonwealth. Economic empowerment was the ultimate aim. Management was the agent providing the intellect and impetus for organizational innovation and performance improvement at the enterprise level. Sanlam mobilized savings, created an Afrikaner-controlled OUP CORRECTED PROOF – FINAL, 26/9/2018, SPi PREFACE AND ACKNOWLEDGEMENTS ix corporate business network alongside the existing English- and Jewish-controlled South African corporate world. Afrikaner business employed social capital to construct a significant position in the South African economy by the 1970s. Distinct Afrikaner- controlled business groups (Sanlam, Federale Volksbeleggings, and Federale Mynbou Beperk, later Gencor as one group, and Rembrandt as another group) emerged and established a distinct presence among the big English business groups centred around the mining industry. Sanlam outperformed competing long-term insurers to take up the position as the second largest life office in South Africa within forty years—through the development of competitive products, superior agent training, innovative computer technologies, and building broad trust amongst all South Africans. Fundamental environmental transformation in Africa and South Africa again altered the strategic options to Sanlam. Sanlam reconsidered

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