From Life Insurance to Financial Services: A Historical Analysis of Sanlam’s Client Base, 1918-2004 Simone Halleen Thesis presented in fulfilment of the requirement for the degree of Doctor of Philosophy (History) at the University of Stellenbosch. Supervisors: Prof. Grietjie Verhoef & Dr. Anton Ehlers December 2013 Stellenbosch University http://scholar.sun.ac.za ii Stellenbosch University http://scholar.sun.ac.za ABSTRACT Sanlam has long been stereotyped as an Afrikaans company. It has been positioned in Afrikaner nationalist historiography as one of a number of Afrikaner economic, cultural and political institutions that emerged alongside British ones in the early twentieth century as Afrikaners strove to assert their identity and independence. Much of the existing literature on the history of Sanlam has focused on the role that the company played in promoting this independence by mobilising savings for investment in Afrikaner businesses. This study challenges this conventional view of Sanlam. It argues that Sanlam was established as a South African company in a British industry of which the inclusion and empowerment of Afrikaners formed one aspect. It was a national institution that tried to represent South Africa at all levels. This study demonstrates Sanlam’s inclusiveness as a South African company by analysing its client profile from its establishment as a modest life insurance company in 1918 to its transformation into a diversified financial services group by 2004. It shows that Sanlam did not only target and attract Afrikaans-speaking clients, but included as wide a spectrum of clients as possible within the political and market constraints of the time. It did this by operating as a bilingual company, including working classes through industrial insurance and group schemes and by offering non-traditional life insurance products and ancillary financial services that met a range of needs. In this way Sanlam set itself apart from its competitors. Its clients included people from both sides of the demographic and social divide. Clients included English and Afrikaans-speakers, blacks and whites, young and old, male and female, and lower and upper class. Restrictions and exclusions were based on risk and not on race, sex or class. Sanlam broadened its prospects even further into the South African market during the second half of its history. This was in response to events such as the formation of the Republic in 1961, the growth of the South African economy, the deregulation of the financial sector in the 1980s and 1990s, and the collapse of Apartheid in the early 1990s. By 2004 Sanlam had completed its transformation into a diversified financial services group that provided a range of life insurance and financial services solutions for individuals, groups and businesses from various walks of life. The Group could now shift its focus not only onto further expansion into the South African and neighbouring African markets, but onto the rest of Africa and other emerging markets abroad. iii Stellenbosch University http://scholar.sun.ac.za OPSOMMING Sanlam is lank reeds bekend as ‘n Afrikaanse maatskappy, een van ‘n aantal ekonomiese, kulturele en politieke instellings wat gedurende die vroeë twintigste eeu ontwikkel het met die doel om die Afrikaner se identitieit en onhafhanklikheid te bevorder. Bestaande literatuur oor die geskiedenis van Sanlam fokus sterk op die rol van die maatskappy deur sy verkryging van belegggings vir Afrikanerbesighede. Hierdie studie betwis so ‘n konvensionele siening van Sanlam. Dit betoog dat Sanlam gestig is as ‘n Suid-Afrikaanse maatskappy in ‘n Britse industrie, waar die insluiting en bemagtiging van die Afrikaner slegs een aspek gevorm het. Sanlam was ‘n nasionale genootskap wat Suid-Afrika op alle vlakke probeer verteenwoordig het. Die studie toon Sanlam se insluiting as ‘n Suid-Afrikaanse maatskappy, deur ‘n ontleding van sy kliënteprofiel sedert sy stigting as ‘n beskeie lewensversekeringsmaatskappy in 1918 tot met sy transformasie in 2004 as ‘n gediversifieerde finansiële dienste groep. Dit wys dat Sanlam nie net Afrikaanssprekende kliënte bedien het nie, maar ‘n wye teikengroep binne die politieke en mark beperkinge van die spesifieke era. Albei amptelike landstale is gebruik, die werkersklas is deur industriële versekering en groepskemas betrek en nie-tradisionele lewensversekeringsprodukte en finansiële dienste is aangebied. Hierin het Sanlam homself van sy mededingers onderskei. Kliënte het mense van alle demografiese en sosiale verskille ingesluit. Daar was Engels- en Afrikaanstaliges, swart en wit, jonk en oud, manlik en vroulik, en polishouers van die laer en hoër klasse. Sanlam het gedurende die tweede helfte van sy geskiedenis verder in die Suid-Afrikaanse mark uitgebrei. Dit was in antwoord op gebeure soos die stigting van die Republiek in 1961, die groei van die ekonomie, die deregulering van die finansiële sektor in die 1980s en 1990s, en die beëindiging van apartheid gedurende die vroeë 1990s. Teen 2004 was Sanlam volkome getransformeer tot ‘n gediversifiseerde finansiële dienste groep met ‘n reeks lewensversekering- en finansiële produkte beskikbaar aan individue, groepe en besighede uit alle dele van die bevolking. Die Groep kon nou uitbrei, nie net in Suid-Afrika en sy buurlande nie, maar na die res van Afrika en ander opkomende markte oorsee. iv Stellenbosch University http://scholar.sun.ac.za ACKNOWLEDGEMENTS It has been a privilege to study the history of Sanlam – one of South Africa’s oldest and best- known companies. I commend Sanlam’s management for ‘thinking ahead’ and bravely ‘taking the risk’ of making its archives, its history and its reputation available for academic consumption. I hope that the experience has been as rewarding and insightful for you as it has been for me. Thank you also for the funding which along with merit bursaries from the University of Stellenbosch made this research possible. During the time that I conducted my research at Sanlam’s Head Office in Bellville, Cape Town I was welcomed into the Sanlam family with great warmth, enthusiasm and friendship. It was a memorable time that I miss and will always cherish. In particular I would like to thank Sanlam’s archivist Verity Rossouw. I don’t think there is anyone who is more passionate about Sanlam’s history than you. Thank you for your interest, input and assistance. Another Sanlammer that I am indebted to is the archives assistant Jalynn Fortuin. I have not only gained a PhD, but a lifelong friend in you. I have been blessed to have two world class business historians representing two very different universities, UJ and Stellenbosch, steering this study. This added invaluable perspective and variety to the study. Grietjie and Dr Ehlers the road has not always been smooth, but I have finally given you something to read. To say that I am grateful for your patience and understanding is not enough. I did not deserve it. To my friends and colleagues at the universities of Johannesburg and Stellenbosch, you know who you are – the ones who kept asking me how far I was with my thesis. I can finally say that I am done. Thank you for your support and love and at times tough love. To my student assistant Matthew Hoy thank you for proof-reading, prayers, pouring me energy drinks and pushing me over the final hurdle. Vedi, Vini, Vici! To the Scheepers/Dohmen clan thank you for being my fill-in family and for reading and reflecting on Sanlam’s history with me. A special thank you to Marietjie Scheepers who translated the abstract into Afrikaans. To my real family Mom, Sis, Kayla, Jaydon and v Stellenbosch University http://scholar.sun.ac.za Squirrel thank you for giving me the freedom to pursue this project. I sadly lost my father Paul Halleen during the writing of this thesis. Dad it is with love and longing that I dedicate this to you. And lastly I would like to thank Sanlam’s founders Charlie Fichardt, Fred Dormehl, Willie Hofmeyr, Charlie Louw, Pieter Malan, Antoon Benning and Alfred MacDowall– a group of inspired patriots and visionaries without whom none of this would have been possible. vi Stellenbosch University http://scholar.sun.ac.za TABLE OF CONTENTS Abstract iii Opsomming iv Acknowledgements v Table of contents vii List of abbreviations and acronyms xi List of figures xii List of tables xiii CHAPTER 1: UNDERWRITING SANLAM’S HISTORY 1 1.1 Introduction 1 1.2 Overview of Sanlam’s history, 1918-2004 1 1.2.1 Nationalism and empowerment 1 1.2.1.1 Early empowerment 1 1.2.1.2 The era of finance houses 3 1.2.1.3 Expansion into mining 7 1.2.1.4 Black economic empowerment 8 1.2.2 Transformation from life insurer to financial services group 10 1.2.2.1 Products and corporate structure 10 1.2.2.2 Ownership structure 14 1.3 Current Group structure and functions 16 1.4 Literature review 17 1.4.1 International historiography 17 1.4.1.1 Historical development and globalisation 17 1.4.1.2 State of life insurance history around the world 20 1.4.1.3 Topics and themes 25 1.4.2 South African historiography 31 1.4.3 Sanlam historiography 33 1.5 Research process 35 1.5.1 Rationale 35 1.5.2 Research problem and questions 35 1.5.3 Objectives 36 1.5.4 Research design, method and ethical concerns 36 1.6 Conclusion 38 vii Stellenbosch University http://scholar.sun.ac.za CHAPTER 2: THE HISTORY AND DEVELOPMENT OF THE LIFE INSURANCE INDUSTRY IN SOUTH AFRICA, C.1800-1918 40 2.1 Introduction 40 2.2 The history and development of life insurance: A global perspective 40 2.3 The first foreign life insurance companies in