Alexander Forbes CEO Dawie de Villiers explains how the virus has impacted the group

Alexander Forbes, a leading financial services provider in Africa, recently reported a 6 per cent improvement in headline earnings per share from continuing operations. The company saw a rise in assets under administration and assets under management by 3 per cent year-on-year, attributed to higher market returns and an increase in new business flows. CNBC Africa caught up with Alexander Forbes CEO, Dawie de Villiers, to discuss the impact of the COVID-19 pandemic on the group's operations and their future growth strategies. De Villiers shed light on various aspects of the business and the industry as a whole in the current challenging environment. Despite facing challenges, the company has remained resilient and focused on navigating through the uncertainties caused by the pandemic. One of the significant points discussed was the decrease in cash flow by almost a third, which was primarily due to a large dividend payment and regulatory capital requirements. De Villiers clarified that while there was a decline in free cash, the cash generation remained high and in line with profits from the previous year, indicating a stable financial performance overall despite the pandemic impact. The CEO highlighted the issue of outflows in the asset management sector, with members withdrawing funds due to job losses or pay cuts. He mentioned that approximately 15,000 members were retrained in the past six months, affecting administration fees and fund contributions. Despite the challenges faced, De Villiers expressed optimism about the future, especially noting that retrenchments from larger companies have been relatively low compared to smaller firms. The company has also observed a trend of members shifting assets to safer investments amid market uncertainties. Regarding the possibility of a second lockdown due to COVID-19, De Villiers emphasized the importance of balancing health concerns with economic activities. While acknowledging the need to protect individuals' safety, he raised concerns about the long-term negative impact of a prolonged lockdown on the economy, investment, and employment. De Villiers hoped for targeted measures to control the virus spread without resorting to a complete lockdown to allow businesses to continue operating. On the regulatory front, De Villiers discussed engagement with the government, particularly regarding Regulation 28 and infrastructure investments. He emphasized the importance of targeted infrastructure investment for economic growth and stability, highlighting the potential benefits for pension funds and asset managers. De Villiers expressed support for projects that are well-run, governed, and structured to attract private sector investment. He advocated for collaboration between the public and private sectors to drive infrastructure development for long-term benefits. Transitioning to business developments, De Villiers mentioned the ongoing process of selling the company's short-term insurance business in Namibia. Despite the challenging macroeconomic conditions in the country, the sale is part of the company's strategic focus on divesting from capital-intensive businesses. De Villiers also discussed the company's acquisition strategy to drive growth in constrained economic conditions. He highlighted the focus on bolt-on transactions to scale the business and access niche markets, emphasizing the importance of cultural fit and integration in acquisitions. Overall, De Villiers remained optimistic about the company's future growth prospects through strategic acquisitions and navigating the challenges posed by the current environment.