Our opinion on the current state of CLI

Clientele Life (CLI) operates as a small insurance company specializing in the sale of short- and long-term policies and underwriting insurance products. The company distributes its products through agents, brokers, and tele-sales channels.

In its financial results for the year ending 30th June 2023, Clientele Life reported a 15% increase in headline earnings per share (HEPS) and achieved a return on average shareholders' interest of 43%. Additionally, the company attained a return on embedded value of 12%. Clientele Life highlighted the challenging trading environment marked by factors such as low economic growth, persistent load-shedding, and difficulties in premium collections.

On 3rd November 2023, Clientele Life announced the acquisition of 1Life Insurance for R1.914 billion, to be funded by issuing 117,815,756 ordinary shares in Clientele. Despite anticipating a decline in HEPS ranging between 37% and 57% in the trading statement for the six months ending 31st December 2023, the company emphasized its sound solvency and liquidity position, with continued strong positive cash flows.

Trading at a price-to-earnings (P:E) ratio of 7.8, the company's shares appear attractively priced. Moreover, Clientele Life's shares witness sufficient trading activity to accommodate most private investors. From our perspective, the current valuation offers reasonable value, with potential for direct benefits as the South African economy shows signs of improvement. Investors should consider these factors when evaluating investment opportunities in Clientele Life.