* H1 normalised headline EPS 78.5 cents, vs 58.8 cents
* Expects full-year 2009, H1 2010 earnings to be higher
* India business to contribute to earnings in next 3-4 years
* Shares down 1.0 percent, lag firmer market (Adds CEO, analyst comment, detail)
By Serena Chaudhry
JOHANNESBURG, Sept 3 (Reuters) - South Africa's second-biggest insurer, Sanlam, said its full-year performance should be better than 2008, after stable local equity markets helped first-half earnings rise 34 percent.
"The market has been very favourable in the last two months, if you discount a lull there or two. So from that perspective, everything looks fine ... going forward, we expect to improve," chief executive Johan van Zyl said in an interview on Thursday.
Earnings were boosted by positive returns on local equity markets, which tracked higher global markets as investor sentiment improved, Sanlam said, adding full-year 2009 earnings and first-half profit in 2010 should be higher year-on-year.
Sanlam, one of the biggest asset managers in South Africa, said normalised headline earnings per share for the six months to end-June rose to 78.5 cents. New business rose 1 percent to 51 billion rand ($6.5 billion), helped by better sales in institutional and entry-level markets.
"(A) very solid set of results, beating consensus on all the key metrics," one Johannesburg-based insurance analyst said.
"Given how far other insurance companies have missed expectations, specifically Liberty, it's impressive."
Sanlam shares were down 1.5 percent to 20.30 rand by 0930 GMT, lagging a slightly firmer JSE blue-chip index.
RETAIL MARKET TO IMPROVE
Sanlam said new business at its personal finance and private investments units dropped as its middle-income retail target market remained under pressure, but van Zyl said he expected that to improve by the middle of next year.
South African insurers have been hit by a fall in consumer demand due to high interest rates, inflation and rising personal debt.
Metropolitan posted a drop in first-half profit on Wednesday and Liberty Holdings swung to a first-half loss after rising life policy lapses hit both firms.
Sanlam, which has an insurance joint venture with India's Shriram Group and wants to increase its stake to 49 percent, said it expected its Indian operations to make a "substantial contribution" to group earnings in the next 3-4 years.
"We still have the option, if the Indian government allows us, to increase our stake in both the short-term insurance operation and the life operations from the regulatory 26 maximum at present to the 49 that we expect," van Zyl said, adding he expected to get approval by the first half of next year. "As soon as that happens, we've set the money aside to do it." (Reporting by Serena Chaudhry; Editing by Dan Lalor) ($1 = 7.793 rand)