Our opinion on the current state of CLI

Clientele Life (CLI) operates as a small insurance company, offering both short- and long-term policies and underwriting insurance products. Their distribution channels include agents, brokers, and tele-sales.

A significant development for the company was its acquisition of 1Life Insurance for R1.914 billion, to be paid through the issuance of 117,815,756 ordinary shares in Clientele. This acquisition likely aimed to expand Clientele's market reach and product offerings.

However, in its financial results for the six months ending December 31, 2023, Clientele reported a decline in headline earnings per share (HEPS) by 35%. The company attributed this decrease to lower insurance revenue, which was down 5% compared to the previous period. This decline was mainly due to a lower release of the Contractual Service Margin (CSM) and Risk Adjustment (RA), driven by higher-than-expected withdrawal experience.

Despite the decline in earnings, the company's price-to-earnings (P/E) ratio stands at 6.6, which appears cheap relative to its earnings. This may present an opportunity for investors seeking undervalued stocks. Moreover, the share is traded heavily enough to accommodate most private investors.

Overall, Clientele Life may offer reasonable value at its current P/E ratio, especially considering its potential to benefit from improvements in the South African economy. However, investors should carefully consider the impact of the acquisition of 1Life Insurance and monitor the company's financial performance and market position.