South Africa's largest life insurer, Sanlam [JSE: SLM], posted a 6% full year decline in profit due to negative foreign currency translation differences and weak equity market performance during 2016.
Normalised headline earnings for the year ended December 2016 - the measure of profit in South Africa - was down to R8.4bn from R8.9bn in the previous year.
Sanlam CEO Ian Kirk said the group can sustain itself despite challenging conditions. "We expect the challenging operating environment and economic climate to persist in 2017," he said in a statement.
"However, with the support and commitment from our staff, management and partners, we believe we have the opportunity to sustain our performance going forward."
Sanlam's share price was down 1.72% at the end of trade on Wednesday, after rallying 10.4% higher in the past month. With a market cap of R148.29bn, the share price was at R68.45 a share.
Sanlam said in its financial report that the "changes in Finance ministers in December 2015 sparked a sharp weakening in the rand and a significant rise in long-term interest rates at the end of 2015".
It was referring to the disastrous replacement of Nhlanhla Nene with Des van Rooyen followed days later by his replacement with Pravin Gordhan as Finance Minister.
Sanlam said that the positive developments of cooperation between government, labour and business since then and South Africa's ability to retain its investment grade foreign credit rating, supported a rally in the rand exchange rate.
The rand hit a low of R17.79 to the dollar at one stage in 2016, but slowly recovered to end the year in the mid-R13/$ level.
"The rand strengthened by 12% and 26% against the US dollar and British pound respectively, with the pound weakening on a relative basis in the aftermath of Brexit. The rand also strengthened against the emerging market currencies where the group operates."
It said that Sanlam Investment's new business growth of 8% represents a satisfactory performance "given the difficult operating environment during 2016. Retail and institutional clients in South Africa took a cautious stance given political and investment market instability."
Sanlam said global markets were also impacted by various domestic and international events during 2016.
"These included fears of lower than expected global economic growth driven by a slowdown in China and the soft commodity cycle, rising geopolitical risks and the impact of potentially opposing monetary policy stances by central banks in the US, UK, Europe and Japan.
"The fragile outlook for global economic growth was dealt a further blow at the end of the second quarter by the UK electorate's surprise vote in favour of Britain leaving the European Union, signifying rising pressure in a number of countries for more protectionist policies. Protectionism also featured strongly in the US presidential elections.
"These conditions increased the pressure on the economic growth, currencies and investment market performance of the emerging market countries where the group operates with commodity-based economies such as Zambia, Nigeria and Angola particularly hard hit. The British pound was similarly under pressure."