Contents Sanlam Group Results Presentation Highlights & - PDF document

Sanlam Interim Results 2008 1 Contents Sanlam Group Results Presentation Highlights & Environment 2 Executing on Strategy 4 Financial & Actuarial Review 7 Salient Features 8 Group Equity Value 8 Analysis of Return on Group Equity Value 9 Business Flows 10 Operating Profit 12 Income Statement 13 Discretionary Capital 14 Summary of 2008 Interim Results 15 Review of Clusters 15 Retail Cluster (Sanlam Personal Finance, Sanlam Developing Markets & Sanlam UK) 16 Institutional Cluster (Sanlam Investments, Sanlam Employee Benefits & Sanlam Capital Markets) 18 Short-term Insurance (Santam) 21 Capital Optimisation 22 Summary & Outlook 23 Appendices Sanlam Group Basis of preparation and presentation 30 Group Equity Value Group Equity Value 32 Change in Group Equity Value 34 Return on Group Equity Value 35 Shareholders’ fund financial statements Shareholders’ fund at fair value 36 Shareholders’ fund income statement 40 Notes to the shareholders’ fund financial statements 44 Embedded value of covered business Embedded value of covered business 52 Change in embedded value of covered business 53 Value of new business 54 Notes to the embedded value of covered business 56 Sanlam Group Business Sanlam Personal Finance 60 Sanlam Employee Benefits 64 Sanlam Developing Markets 65 Sanlam Investments 67 Santam 69 Economic and Financial Markets Review 72 Contact Details & Sanlam Limited Board 76

Index 2 Sanlam Interim Results 2008 HIGHLIGHTS Agenda Highlights & Environment Executing on Strategy Financial & Actuarial Review Review of Clusters Summary & Outlook 1918 1922 1928 1932 1936 1938 1939 1943 1953 1954 Highlights & Environment 1958 1965 1967 1968 1993 1996 2001 2003 2008

Index Sanlam Interim Results 2008 3 HIGHLIGHTS Highlights Results reflect challenging economic conditions Earnings Core earnings per share of 89.7c (+4%) Business volumes Total new business volumes of R51bn (+2%) Value of new covered business of R290m (+12%) New covered business margin of 2.39% (versus 2.32% in 1H07) Group Equity Value Group Equity Value per share of R22.54 Return on Group Equity Value per share of 0% Challenging Operating Environment Turbulent & volatile financial market conditions 140 130 Divergence in Equity Markets 120 110 ALSI +5% over 1H08 100 90 (-11% since Jun-08) 80 Resources up 32%, but 70 60 Financials down 27%, 06/07 08/07 10/07 12/07 02/08 04/08 06/08 08/08 Industrials down 18% Alsi Resources Financials 350 11.0 Credit & Bond Markets 10.5 300 10.0 9.5 Credit spreads widening. 250 9.0 Reduction in funding lines / 200 8.5 appetite 8.0 150 7.5 10-year bond yield up 242bp 7.0 100 in 1H08 (RDR up 240bp) 06/07 08/07 10/07 12/07 02/08 04/08 06/08 08/08 ALBI down 6.7% Emerging Markets JP Morgan EMBI Spread (lhs) SA Govt 10-yr bond (rhs)

Index 4 Sanlam Interim Results 2008 Challenging Operating Environment (continued) Deteriorating consumer disposable income SUSTAINABLE STRATEGY Split of Average Monthly Household Income of SPF client 100% -45% Net Discretionary 90% +10% Other expenses +7% 80% Financial products Vehicle and other credit +4% 70% Mortgage +16% 60% Fuel 50% Food 40% Tax +38% 30% +16% 20% +7% 10% 0% Mar 2007 Mar 2008 Consumer under pressure – Inflation > 10% – Prime rate + 250bps since Jun 2007 – Fuel price up 38% in 12 months Note: Assumes average household income of R15 000 per month, monthly food cost of R1 500, 1 500km’s traveled per month, mortgage repayments form 30% of gross income, R50 000 of other debt, pension fund /medical scheme and other financial products form 12% of gross salary, & other expenses (incl. education, clothing, electricity, household expenditure) equates to R1 000 per month 1918 1922 1928 1932 1936 1938 1939 1943 1953 Sustainable Strategy 1954 Executing on strategy – 1958 Sustainable in current conditions 1965 1967 1968 1993 1996 2001 2003 2008

Index Sanlam Interim Results 2008 5 Sustainable Strategy Increasing diversification underpins resilience SUSTAINABLE STRATEGY Split of Group net operating profit 10% 13% 5% 2% 11% 1H03 1H08 49% R736m R1 385m 20% 9% 65% 6% 4% 6% SPF SDM SUK SEB SIM SCM SNT Increased diversification of Group portfolio, plus more diversified revenue streams within each cluster Life insurance creates stability Note: Comparative numbers are not restated for group restructuring (ex-Direct Financial Services + ‘Corporate & other’) Delivering on Strategy Strategic progress (maximising shareholder value): Capital efficiencies (share buybacks of R1.6bn, R3.0bn discretionary capital) Growth & diversification (R1.1bn applied to grow & diversify Group) Cost efficiencies (successful integration of Sanlam Life/Santam call centres) Created a sound platform and strategic base from which to grow: SDM (new bus flows: Aflife SA +65%, RoA +42% & India +89%) Established Shriram General Insurance JV Retail Affluent Market (New bus flows: Glacier flows +39%; SPI +8%) Sanlam UK (consolidation of UK activities, acquisition of Principal & Buckles) Innovation continues: MiWay (good progress at the direct financial services provider) Liquid (rated best savings account by Sunday Times & Business Times - 2008) SPE (launch of Agri-Vie Fund)

Index 6 Sanlam Interim Results 2008 Retail Strategy Defensive qualities of life businesses shining through SUSTAINABLE STRATEGY Profitability: SPF - No. of lapses & surrenders as % of in-force – Retail Cluster’s profits up 15% 4.5 H1 H2 (before new business strain) 4.0 Net life cash flows: 3.5 – Retail net life cash inflows of 3.0 R1.6bn in 1H08 2.5 VNB & new business margin: 2.0 2003 2004 2005 2006 2007 2008 – Retail VNB up 18% to R276m Aflife SA - No. of lapses & surrenders as % of in-force – Average retail margins of 8 H1 H2 2.45% for 1H08 (37bps higher 7 pre-economic basis change) 6 Persistency: 5 – Longer term improvement, but 4 slight deterioration yoy at SPF 3 2006 2007 2008 Institutional Strategy Solid performance, notwithstanding turbulent market conditions Profitability: – Sanlam Investment Management’s profits more volatile (up 8% before gross performance fees) – Sanlam Employee Benefits profit up 73% New business volumes: – Segregated fund flows +25% – Sanlam Private Investments +8% (despite large inflows in 2007) – However, Sanlam Collective Investments -24% and Multi-Manager -43% (trends were not unexpected, given the relatively strong inflows in 2007) Net business flows: – Net investment inflows of R3.1bn (strong improvement in segregated fund flows) – Sanlam Employee Benefits +53% to -R0.5bn

Index Sanlam Interim Results 2008 7 1918 1922 1928 1932 1936 1938 1939 1943 1953 FINANCIAL REVIEW 1954 Sanlam Group 1958 Financial & Actuarial Review 1965 1967 1968 1993 1996 2001 2003 2008 Changes in Presentation / Key Assumptions Sanlam UK presented as separate business unit – Merchant Investors (ex SPF) – Sanlam Multi-Manager International (ex Institutional Cluster) – Punter Southall Group, Intrinsic, Nucleus (ex IFS) – Principal, Buckles (new acquisitions) Remaining IFS businesses in Corporate 240 bp increase in economic assumptions: Sanlam Life / Aflife – Risk discount rate – Investment returns – Inflation

D Index 8 Sanlam Interim Results 2008 Salient Features June June 2008 2007 Group Equity Value* cps 2 254 2 350 (4%) ROGEV per share* % 0.0 18.8 CAR cover (Sanlam Life)* times 2.8 3.5 Net operating profit R mil 1 334 1 488 (10%) FINANCIAL Core earnings R mil 1 913 1 983 (4%) REVIEW cps 89.7 86.2 4% Normalised headline earnings R mil 1 254 3 126 (60%) cps 58.8 135.9 (57%) New business volumes R mil 50 985 49 820 2% Net fund flows R mil 5 470 1 250 SIM funds under management R bn 438 430 Value of new covered business R mil 290 260 12% New covered business margin % 2.39 2.32 * Comparative figures are as at 31 December 2007 Group Equity Value Rand Million June 2008 December 2007 Group operations 41 496 89% 42 651 83% Personal Finance 21 099 21 281 Developing Markets 2 302 2 188 Sanlam UK 2 479 1 668 Institutional Cluster 11 438 12 371 Short-term insurance 5 235 6 375 Diversification (1 057) (1 232) Covered business 28 618 69% 28 432 67% Other operations 12 878 31% 14 219 33% Other 2 043 5% 2 542 5% 43 539 94% 45 193 88% Discretionary capital 3 000 6% 6 100 12% Total 46 539 100% 51 293 100% GEV (cps) 2 254 2 350