Contents Sanlam at a Glance Key features, Group structure and - - PDF document

Contents

Sanlam at a Glance

Key features, Group structure and Investment case 1 Analysis of Return on Group Equity Value 9 Analysis of Shareholders 13 Economic Review 17

Results Presentation

Highlights 2 Financial Review 13 Priorities for remainder of 2011 22 Outlook 25

Group Financial Review

Overview 2 Group Equity Value 28 Shareholders’ Fund Financial Statements 34 Embedded Value of Covered Business 50

Cluster Reviews

Sanlam Personal Finance 3 Sanlam Developing Markets 11 Sanlam UK 17 Sanlam Investments 23 Sanlam Employee Benefjts 29 Sanlam Investments : Capital Management 33 Santam 37 Management Structure Changes 41

Key features

Earnings

• Net result from fjnancial services per share

increased by 22%

• Normalised headline earnings per share up 35%

Business volumes

• New business volumes up 11% to R55 billion
• Net value of new covered business up 26% to

R356 million

• Net new covered business margin of 2,52%,

up from 2,32%

• Net fund infmows of R11 billion, up 72%

Group Equity Value

• Group Equity Value per share of R28,77
• Annualised return on Group Equity Value per share
• f 12,8%
• Adjusted annualised return on Group Equity Value

per share of 12,6% Capital management

• Discretionary capital of R3,2 billion at

30 June 2011

• Sanlam Life CAR cover of 3,2 times

Sanlam Investments: assets under management

• f R504 billion

Sanlam at a Glance 3 SANLAM INTERIM RESULTS 2011

The Sanlam Group

This is Sanlam

We are a leading fjnancial services group, originally establised as a life insurance company in 1918. We demutualised and listed

• n the JSE Limited and Namibian Stock Exchange in 1998.

Our head offjce is in Bellville near Cape T

• wn in South Africa and

we have offjces throughout South Africa and business interests elsewhere in Africa, Europe, India, the USA and Australia.

Our vision

Our vision is to be the leader in wealth creation and protection in South Africa, leading that process in the emerging markets and playing a niche role in the developed markets.

What we do

We provide fjnancial solutions to individual and institutional clients. These solutions include individual, group and short-term insurance, personal fjnancial services such as estate planning, trusts, wills, personal loans, health management, savings and linked products, business fjtness assessment and insurance investment management, asset management, property asset management, stockbroking, employee benefjts, risk management and capital market activities.

Our values

Our shared business philosophy has its roots in an entrepreneurial culture with its essence captured in traditional values of honesty, diligence, superior ethical behaviour, innovation, stakeholder values and strong ties with business partners. Our business model is focused on client-centricity and on being solution orientated.

Our strategy

The fjve pillars that continue to make up our strategy are: optimal capital utilisation, earnings growth, costs and effjciencies, diversifjcation and transformation. By focusing resolutely on these fjve pillars, we have achieved market-leading growth over the past seven years and have transformed Sanlam into an effjcient and profjtable company with a healthy capital position.

4 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Group structure

Sanlam Limited

1 Retail cluster 2 Institutional cluster

Scope

• f business

The Retail cluster includes Sanlam Personal Finance, Sanlam Developing Markets and Sanlam UK.

• Sanlam Personal Finance is a

major provider of a wide range

• f individual life insurance and

personal financial services and solutions, including estate planning and trusts, personal loans, linked products, money transfer and financial services in South Africa and Namibia.

• Sanlam Developing Markets

provides affordable financial services solutions primarily to the entry-level market in South Africa and to the wider financial services segments in

• ther developing markets in

which Sanlam operates (eight

• ther African countries as well

as India).

• Sanlam UK provides life,

specialist pension, investment management and financial advice services in the United Kingdom market. The Institutional cluster includes Sanlam Investments, Sanlam Employee Benefits and Sanlam Investments : Capital Management.

• Sanlam Investments

incorporates Sanlam’s investment-related businesses in South Africa, Europe, the USA, Rest of Africa, India and

• Australia. Sanlam Investments’

areas of service and solutions include traditional asset management, alternative investment solutions, property asset management, collective investments (unit trusts), private client investment management and stockbroking, multi-manager management and investment administration.

• Sanlam Employee Benefjts

provides life insurance, investment and annuity solutions for group schemes and retirement funds and fund administration for retirement and umbrella funds.

• Sanlam Investments : Capital

Management provides risk management, debt and equity financing, structured product solutions, product development and associated capital market activities.

Contribution to Group Equity Value

R31 815 million R12 370 million

Contribution to net Group

• perating result

R1 037 million R412 million

Contribution to Group new business volumes

R19 852 million R28 098 million

Sanlam at a Glance 5 SANLAM INTERIM RESULTS 2011

3 Short-term Insurance cluster 4 Corporate

The Short-term Insurance cluster is comprised of a 57% shareholding in Santam, the leading short-term insurer in South Africa, which in turn has a 100% interest in MiWay, the Group’s direct financial services business.

• Santam focuses on the

corporate, commercial and personal markets. It has a market share in excess of 20% and a countrywide infrastructure and broker

• network. Santam has related

business interests in Africa.

• MiWay focuses on short-term

insurance through a direct sales channel, with the intention of adding other financial services over time. The corporate head office is responsible for the Group’s centralised functions, which include strategic direction, financial and risk management, group marketing and communications, group human resources and information technology, group sustainability management, corporate social investment and general group services.

R8 611 million R5 089 million R319 million (R52) million R7 112 million

6 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Clear strategy

Sanlam’s strategy is two-pronged. Firstly, it aims to drive increased returns through a continual focus

• n optimising capital, cutting costs and maximising
• effjciencies. Since 2005, approximately R23,5 billion
• f existing capital (close to 40% of the current

Group Equity Value) has been redeployed. The second part of the strategy is growing profitably through diversification by providing the full spectrum of fjnancial services and diversifying revenue streams into new income markets and geographies, thus spreading the risk and underpinning a resilient performance in all market

• conditions. With a large stable life business at its

core, Sanlam provides stability and consistency during diffjcult times, while its investment and capital market businesses capitalise on more favourable equity market conditions. Our vision is to be a diversifjed fjnancial services group that is unrivalled in wealth creation and protection in South Africa, leading in emerging markets, and specialised in developed markets.

Presence

Retail

An internal distribution network of 2 289 tied fjnancial advisers in South Africa servicing the middle- and upper-income markets, and 1 961 agents deployed for the lower-income market in SA, provides scale, fmexibility and effjciency in servicing our broad range of clients. In addition, there are more than 10,000 independent fjnancial advisers (IFAs) who support our various businesses. Sanlam is also expanding its breadth of distribution, by moving into the direct market, thereby entrenching the Group’s leadership position in the future. There are approximately 3 million policyholders in Sanlam’s SA core life businesses, Sanlam Personal Finance and Sanlam Sky Solutions, which equals about a quarter of the economically active population in the country. Sanlam also has a strong corps of tied fjnancial agents in the emerging markets with 2 770 in the rest of Africa and close to 10 000 in India. It has a niche presence in developed markets, following its SA clients’ money abroad, with Sanlam Investments and Pensions and Principal providing life, fund management and private client solutions in the UK.

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1.4 Which images can I use?

1.4 Which images can I use?

1.4 Which images can I use?

1.4 Which images can I use?

Sanlam

Presence Core expertise Clear strategy Delivery

Sanlam – provides a strong case for investors

• Driving increased returns
• Growing profjtability through (product and geographic)

diversifjcation

• Successfully implementing the growth strategy
• Good operational performance over the long term
• Creating shareholder value – outperforming competitors
• Vast agency networks ofgering scale, fmexibility and effjciency

in South Africa

• Leading in emerging markets
• Niche presence in developed markets, servicing existing clients
• Solid risk management
• Innovation resulting in market-leading solutions
• HR talent providing stability and proven track record

Investment case

Sanlam at a Glance 7 SANLAM INTERIM RESULTS 2011

Investment case continued

Institutional

Sanlam has a vast footprint in the corporate market in South Africa with almost every large SA corporation being a client of one of our businesses. Sanlam Investments is predominantly entrenched in South Africa, and has a presence in the US, Europe, Australia, rest of Africa and India. This presence includes traditional asset management, alternative investment solutions, collective investments (unit trusts), private client investment management and stockbroking, multi-manager management and investment administration. Sanlam Employee Benefjts provides life insurance, investment and annuity solutions to group schemes and retirement funds. The Group’s capital markets business, Sanlam Investments: Capital Management, provides risk management, debt and equity fjnancing, structured product solutions, product development and associated capital market activities.

Core expertise

Solid risk management expertise is a core attribute required in running the Sanlam life and investment businesses, ensuring solid safety barriers in the

• perations. Sanlam centrally adopts conservative

risk/return measures in all its pursuits, with a minimum hurdle rate being a prerequisite for all acquisitions and new capital allocations. Capital in existing businesses is also rigorously evaluated against these return hurdles. Not only is the Group planting the seeds for future growth through a disciplined and methodical approach to ventures, it also ensures that overall returns of the Group are enhanced over the long term. Innovation has allowed the Group to pre-empt changes in an uncertain regulatory environment through market-leading solutions such as Glacier International and the Sanlam Empowerment Fund, as well as to increase the breadth of solution and distribution ofgering through the solutions of Sanlam Liquid Splash Account, ICover and MiWay. Sanlam has the human resources talent to boast a stable, proven track record, having operated for 93 years in life insurance. In addition, a relatively stable executive management team has some 170 years of combined experience in life insurance and investments.

Creating shareholder value

Index 200 180 160 140 120 100 80 60 40 SLM Alsi Life Fini Banks Jun-11 Dec-10 Jun-10 Dec-09 Jun-09 Dec-08 Jun-08 Dec-07 Jun-07 Dec-06 Jun-06 +90 +50 +40 +17 +0

8 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Investment case continued

The Group’s employment standards have earned most of its businesses full accreditation from the international “Investors in People Standards”. In working to attract, motivate and retain top talent, Sanlam encourages employees to make a difgerence at every level within the organisation through incentives which are directly aligned with the performance of the businesses. Sanlam pioneered black economic empowerment in South Africa in 1993 and since then has been at the forefront, implementing its own empowerment and transformation strategies to ensure its long-term sustainability.

Delivery

Our vision is to be the leader in wealth creation and

• protection. Our leading position amongst our peers

in this regard was confjrmed by the December 2010 results of the Company Confjdence Predictor (Campbell Belman) which also indicated our continuing improved confjdence ratings in the

• markets. We were particularly pleased that, in

addition to our overall improvement in the Ethics category, Sanlam’s standing in the sub-category for “living up to its promises” improved from 4th to 1st position in our fjnancial services peer-group in

• December. We believe this is a commendable

achievement, in which investors are clearly acknowledging that Sanlam delivers. Management has built solid foundations from which to grow the business by successfully implementing growth strategies in emerging markets in SA, the rest of Africa and India. Good and improving operational performance over the long term is evident in new business fmows, net life cash fmows, change in the mix of ofgerings, strong growth in value of new business and new business margins. In creating shareholder value, Sanlam has

• utperformed its competitors since listing.

ANALYSIS OF RETURN

Sanlam at a Glance 11 SANLAM INTERIM RESULTS 2011

Analysis of Return

GEV Earnings (Rm)

• ROGEV vs Target

Cumulative ROGEV exceeds cost of capital and target rate since listing.

• *Annualised

12 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Calculation of Annual Return on Equity (ROE)

2005 2006 2007 2008 2009 2010 2011 IFRS NAV (Opening balance) 19 685 25 020 29 121 29 334 27 651 30 044 31 778 Restatement: change in accounting policy ( 248) Santam restatement ( 152) Add: Consolidation reserve 2 820 1 931 1 859 1 843 539 503 552 Equity base 22 505 26 951 30 980 31 177 28 190 30 147 32 330 IFRS profjt for the year (shareholders) 10 927 6 945 5 494 2 494 4 397 5 523 2 274 Less: Consolidation reserve transfer ( 730) ( 205) 366 ( 736) 55 20 13 Add: Direct equity entries Share based payments 64 74 74 134 139 191 87 Defjcit on change in subsidiary shareholding ( 2) ( 14) Forex translation efgect 81 318 ( 99) 60 ( 309) ( 408) 96 Equity earnings 10 342 7 132 5 835 1 952 4 282 5 324 2 456 ROE (annualised) 46.0% 26.5% 18.8% 6.3% 15.2% 17.7% 15.8% Opening balance 22 505 26 951 30 980 31 177 28 190 30 147 32 330 Equity earnings 10 342 7 132 5 835 1 952 4 282 5 324 2 456 Dividends paid (1 363) (1 533) (1 768) (1 968) (1 978) (2 112) (2 279) Net shares bought back (4 533) (1 570) (3 870) (2 971) 53 (1 029) (1 186) Change in accounting policies ( 248) Santam restatement ( 152) Closing balance 26 951 30 980 31 177 28 190 30 147 32 330 31 321 (22 505) 5 896 (26 951) 3 103 3 103 (30 980) 5 638 5 638 5 638 (31 177) 4 939 4 939 4 939 4 939 (28 190) 2 325 2 325 2 325 2 325 2 325 (30 147) 35 471 35 471 35 471 35 471 35 471 35 471 IRR up to December 2010 23.8% 17.4% 14.4% 12.4% 16.4% 17.7%

Analysis of Return continued

SHAREHOLDER ANALYSIS

14 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Geographic split of shareholders

Geographic split of investment managers & company related holdings – June 2011

Region Total shareholding % of issued capital South Africa 1 545 075 527 73,58 United States of America & Canada 373 200 380 17,77 United Kingdom 59 816 984 2,85 Rest of Europe 30 441 465 1,45 Rest of World (1) 74 665 683 3,55 Unknown 16 799 961 0,80 Total 2 100 000 000 100,00

(1)Represents all shareholdings except those in the above regions

Geographic split of benefjcial shareholders – June 2011

Region Total shareholding % of issued capital South Africa 1 531 107 163 72,91 United States of America & Canada 334 746 710 15,94 United Kingdom 40 560 751 1,93 Rest of Europe 56 574 074 2,69 Rest of the World(1) 120 211 341 5,73 Unkown 16 799 961 0,80 Total 2 100 000 000 100,00

(1)Represents all shareholdings except those in the above regions

Geographic split of benefjcial shareholders (excluding unknown shareholding) – June 2011

Sanlam at a Glance 15 SANLAM INTERIM RESULTS 2011

• Shareholder categories

An analysis of benefjcial shareholdings supported by the Section 140a enquiry process confjrmed the following benefjcial shareholder types:

Benefjcial shareholder categories – June 2011

Category Total shareholding % of issued capital Pension Fund 526 695 261 25,08 Unit trusts/Mutual funds 480 722 951 22,89 Private Investors 424 208 417 20,20 Black Economic Empowerment 226 000 000 10,76 Insurance Companies 168 156 252 8,01 Foreign Government 321 400 0,02 Other Managed Funds 69 241 284 3,30 Custodians 15 213 730 0,72 Trading Position 17 560 753 0,84 Investment Trust 10 622 348 0,51 Exchange Traded Fund 11 478 914 0,55 University 3 815 790 0,18 American Depository Receipts 2 908 935 0,14 Charity 1 432 089 0,07 Local Authority 485 460 0,02 Sovereign Wealth 67 372 345 3,21 Remainder 73 764 071 3,50 Total 2 100 000 000 100,00

Benefjcial shareholders split by category(1) – June 2011

(1) Includes categories above 1% only

16 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Analysis of investment styles

Analysis into institutional attributes broadly indicates the following split of investment approach within the shareholder base:

Analysis of investment styles(1) – June 2011

(1) Includes categories above 1% only

ECONOMIC REVIEW

18 Sanlam at a Glance SANLAM INTERIM RESULTS 2011

Economic and Financial Markets Review

The global economy has had to deal with a series

• f negative events since the start of 2011. The most

important of these was the ongoing European sovereign debt crisis and the inability of policymakers to get to grips with the issues involved and take decisive steps to deal with them

• nce and for all, causing markets to question the

future of the euro. More recently, the already high level of US sovereign debt and its projected trajectory conspired with political brinkmanship, as in Europe, to highlight the inevitability of near-term fjscal consolidation, diffjcult as it may be. Governments in the developed world fjnd themselves in a catch-22, with renewed weakness in economic activity requiring further stimulus, but fjscal policy being unable to respond due to already high defjcit and debt levels. Monetary policy has therefore been left to carry the can, but here the efgectiveness of unorthodox measures such as quantitative easing is being questioned. Risk appetite has consequently fmuctuated, depending to a large extent on market perceptions regarding policy action to address the problems at hand, with volatility fjnally blowing out in August in response to the weakening economic data and the downgrading of the US’s credit rating by S&P. The sharp increase in oil prices in 2011 acted as a further drag on the world economy, with Brent crude increasing by 33% between the start of the year and its peak in early May. Although the unrest in the Middle-East and North-Africa contributed to the rise in oil prices, the weakness in the US dollar exerted upward pressure on a wide spectrum of commodity prices. Headline infmation rose as a result in most countries, but central banks chose to focus on core infmation, which remained subdued. The most important impact of the increase in commodity prices was to reduce the real spending power of consumers, which contributed to economic weakness. The earthquake and concomitant tsunami in Japan in March not only caused Japan to fall back into recession, but temporarily disrupted global supply chains and manufacturing production. Economic growth therefore slowed down globally in the second quarter, but the consensus was that the decline would be of short duration and that growth would pick up again in the second half of

• 2011. These expectations are now being questioned,

with growth forecasts for 2011 and 2012 being revised down. Equity prices peaked in April after continuing their steady rise that started in August 2010 in the initial months of 2011, and they have since declined by nearly 20% in most markets, with most of the fall

• ccurring in August. The decline should generally

be seen as a realignment of valuations to a less buoyant growth outlook, with markets even contemplating the possibility of a return to recession, but it also refmects a wide ranging reassessment of risk that has touched all risk

• assets. In spite of their superior outlook, emerging

markets have therefore not escaped the reappraisal

• f risk, with bond risk premiums increasing and

equity markets falling in line with the global decline. Economic and market developments in South Africa followed global trends closely. After a surprisingly strong fjrst quarter growth performance, economic growth slowed markedly in the second quarter. Domestic activity has been well supported by South Africa’s terms-of-trade reaching record highs and growth in household consumption expenditure maintaining its positive momentum on the back of healthy increases in real disposable income, ofg-set by the job-less nature of the recovery. However, investment spending continues to lag due to business confjdence lacking conviction and public sector investment tapering ofg.

Sanlam at a Glance 19 SANLAM INTERIM RESULTS 2011

Economic and Financial Markets Review

continued

Growth in real disposable income of households is set to slow as infmation increases towards the 6% upper end of the Reserve Bank’s infmation target range as the support it has received from a strong rand exchange rate diminishes. The Bank has kept interest rates on hold so far in 2011, balancing expectations of higher infmation with the fragility of the economic recovery. Given that the Bank has emphasized the risk to the global economy from a possible adverse turn to events in the developed countries, recent international events are likely to cause any tightening in monetary policy to be further postponed. An additional factor that is restraining the Reserve Bank is the lack-luster growth in private credit extension in spite of the sharp decline in debt servicing costs. Household debt is not declining at the same rate as in previous cycles, with the debt-to-disposable-income ratio still at 77%. Consumer spending has therefore been fjnanced more by cash, and mortgage equity withdrawal has declined sharply in response to a weak recovery in household net wealth. Having lagged the run-up in global equities in the fjrst four months of the year, the subsequent correction has been less severe, leaving the JSE on par with international markets compared with the beginning of the year. At the time of writing the JSE All Share Index has lost 10% of its value since the start of the year, which is marginally better than the FT All World Index. With the All Share Index currently trading at a historic price/earnings ratio of 12.6 compared with 17.2 at the start of the year and below its 10-year average of 14, one can argue that valuations are now better aligned with future earnings prospects. Long-term bond yields have followed the benchmark US Treasury yield downwards until the recent market turmoil, when the general fmight from high to low risk assets caused the yield on SA bonds to increase while the US yield continued to drop in spite of the downgrade to its credit rating by S&P. In summary, the second quarter witnessed a major turn for the worse in the economic outlook with heightened volatility set to continue.

Results Presentation 1 SANLAM INTERIM RESULTS 2011

INVESTOR PRESENTATION

2011 INTERIM RESulTS

Agenda

• Highlights
• Macro environment
• Strategy
• Financial Review
• Outlook and priorities

2 Results Presentation SANLAM INTERIM RESULTS 2011

HIGHlIGHTS

Highlights for 1H2011

Proven strategy underpins strong performance in volatile conditions Provides solid base for growth

Results Presentation 3 SANLAM INTERIM RESULTS 2011

Financial performance in 1H2011 Macro environment

General: Strong global headwinds

• Sovereign debt crisis
• Natural disasters
• High oil prices
• Growth slowing
• Increased volatility and uncertainty

Impacts on key performance drivers

• SA economy
• Equity markets
• Interest rates
• Currencies

Earnings per share

• Net operating profjt per share up 22%
• Normalised headline earnings per share up 35%

Business volumes (on comparable basis)

• New business volumes increased by 11% to R55bn
• Net fund infmows of R11bn (up 72%)
• Net life VNB up 18% to R333m
• VNB margin of 2,36% (from 2,32%)

Group Equity Value per share of 2 877cps

• ROGEV per share of 12,8%
• Adjusted ROGEV per share of 12,6%

4 Results Presentation SANLAM INTERIM RESULTS 2011

SA Environment

Households remain under pressure

• Jobless recovery; household debt remains high in middle-income

market

SA Environment

Slow recovery

• Consumption driven recovery
• Developed market downturn poses risk

Results Presentation 5 SANLAM INTERIM RESULTS 2011

SA Equity Market SA Interest Rates

• lT rates slightly down on 1H2010
• Average ST rates 160bps (21%) lower – lower earnings on

working capital & net investment returns

• Market fmat in 1H2011, but 2H2010 rally supporting higher average

asset base for interim reporting period (avg Alsi up 17%)

• Higher fund-based fee income

6 Results Presentation SANLAM INTERIM RESULTS 2011

Strategic Delivery Exchange rate

• Negative impact on translated Rand results of the Group’s

foreign entities (profjts, net fund fmows and VNB) Maximise shareholder value Gearing for growth

Results Presentation 7 SANLAM INTERIM RESULTS 2011

Strategic Focus on Returns

• Maximise profjtable growth
• Maximise capital effjciencies

Returns (ROGEV) Optimal Application Strategic Investments Return of Excess Capital Effjciency Growth/ Earnings Net Business Flows Diversifjcation Operational Effjciencies

Growth & diversifjcation

Profjtable volume growth

• Gross VNB grew by 25%, at sustained underlying margins

8 Results Presentation SANLAM INTERIM RESULTS 2011

Growth & diversifjcation

Gearing for growth – new management structure

• Management structure aligned with strategic focus on growth
• South African retail

– SPF and SDM activities merged – Client-centric ‘Journey For life’ experience – Efgective management of client solution set as needs and disposable income change

• Emerging markets (ex-SA)

– Rest of Africa & India managed in separate cluster – Product-based approach in emerging markets transformed into holistic country-based view – Strategic future growth accelerator

Diversifjcation

Diversifying the risk profjle and base for growth

Results Presentation 9 SANLAM INTERIM RESULTS 2011

Growth & diversifjcation

Gearing for growth (continued)

• Developed markets

– Provides investment solutions to SA client base – Augmented by niche local footprint & scale for effjciency – Investment management focus – Sanlam uK included in Institutional cluster

Focus on Quality

Persistency – Middle income market (SA)

10 Results Presentation SANLAM INTERIM RESULTS 2011

Focus on Quality

Persistency – Successful retention of business

• Retention of maturing policies continue to improve
• Focus on Quality

Persistency – Lower income market (SA)

Results Presentation 11 SANLAM INTERIM RESULTS 2011

Investment Performance

Focus on top half investment performance Kokkie Kooyman

2nd year running

Market recognition

• FIA Awards –

Best Commercial & Corporate Insurer

• SAMBRA Insurer
• f the Year (SA

Motor Body Repairers Association)

• Financial Mail /

Empowerdex Top Empowerment Companies 2011

• Joint winner of

Climate Change leadership Awards (CClA) Sanlam Group received the award for Best Reporting & Communications in life Insurance Sector

PMR Survey

Top 3 for best actuarial & consulting business

Client Contact Centre

• Best Client Contact

Centre in SA

• Best Business Processing Centre in the country
• Community involvement programme won national 1st

prize

12 Results Presentation SANLAM INTERIM RESULTS 2011

SEB recognised for excellence Discretionary Capital

Ongoing focus on effjcient utilisation of capital

• Allocated for strategic growth initiatives

Balance 1 January 2011 4 000 Share buy back (944) Net corporate activities (17) Investment return & other 161 Subtotal 3 200 Committed (2 400) Shriram (1 900) Other (500) Available discretionary capital 800

Results Presentation 13 SANLAM INTERIM RESULTS 2011

Shriram acquisition

Expanding interests in India

• Conditional agreement reached to acquire 26% in Shriram Capital

– Subject to regulatory and SARB approvals

• Transaction value

– Cash investment of some R1,9bn – Roll up of 26% interests in Shriram life and Shriram General Insurance

• On completion Shriram Capital to consist of

– +/- 21% of Shriram Transport Finance Company – +/- 27% of Shriram City union Finance – 77% of Shriram life and Shriram General Insurance – Distribution and other fjninancial services interests

• Rationale

– Broadening Sanlam’s fjnancial services exposure in growth market – Sharing in synergies through closer cooperation

SANlAM GROuP

FINANCIAl REVIEW

14 Results Presentation SANLAM INTERIM RESULTS 2011

Changes in Presentation / Key Assumptions

• No accounting policy changes with impact on operational results
• STC elimination :

– Added R1.2 billion to Value of In Force life book – Added R23 million to net VNB

• Changes in RDR : (Sanlam life 11.2%)

– 50 bp down on June 2010 – Positive impact on relative VNB and margins – 30 bp up from December 2010 – Marginal negative impact on valuations and ROGEV

Salient features

2011 2010 ∆ Group Equity Value cps 2 877 2 818 * ROGEV per share (annualised) % 12.8 9.1 ROGEV per share (adjusted) % 12.6 13.2 CAR cover (Sanlam life) 3.2 3.4 * Net operating profjt R mil 1 716 1 422 21% cps 84.7 69.4 22% Normalised Headline earnings R mil 2 202 1 650 33% cps 108.6 80.5 35% Headline earnings cps 109.6 84.1 30% New business volumes** R mil 51 851 47 256 10% Net fund fmows** R mil 11 042 6 419 72% SIM average FuM R bn 499 451 11% New life business EV (net) R mil 356 283 26% New life EV margin % 2.52 2.32

*December 2010 **Excluding white label

Results Presentation 15 SANLAM INTERIM RESULTS 2011

Sanlam Personal Finance Sanlam Personal Finance

R million 2011 2010 ∆ New business fmows 15 960 14 954 7% life business 6 712 6 007 12% Investment business 9 248 8 947 3% Glacier 5 731 4 989 15% Namibia 3 517 3 958 (11%) Net fmows 2 236 2 012 life business 985 1 205 Investment business 1 251 807 Value of new life business 203 154 32% Including STC 192 25% Margin 2.19% 1.85% R million 2011 2010 ∆ Gross operating profjt 1 146 972 18% Individual life 852 741 15% Glacier 83 71 17% Personal loans 105 72 46% Namibia 88 72 22% Other 18 16 13% Net operating profjt 820 712 15% Group Equity Value 24 978 23 542 RoGEV (annualised) 21.7% 11.6%

16 Results Presentation SANLAM INTERIM RESULTS 2011

Sanlam Developing Markets Sanlam Developing Markets

R million 2011 2010 ∆ New life business 1 603 1 279 25% South Africa 637 615 4% Botswana 609 388 57% Rest of Africa 235 156 51% India 122 120 2% Net life fmows 1 763 1 025 South Africa 844 335 Other 919 690 Value of new life business 173 146 18% Including STC 164 12% Margin 5.20% 5.13% R million 2011 2010 ∆ Gross operating profjt 360 222 62% South Africa 179 42 326% Rest of Africa 180 190 (5%) India 1 ( 10) Net operating profjt 196 82 139% Group equity value 5 064 4 356 RoGEV (annualised) 27.9% 18%

Results Presentation 17 SANLAM INTERIM RESULTS 2011

Institutional cluster Institutional cluster

R million 2011 2010 ∆ Net investment business fmows 4 299 2 090 106% SA institutional (209) 1 775 SA retail 4 497 3 202 Non-South Africa 11 (2 887) New life business 618 450 37% Recurring premiums 134 91 47% Single premiums 484 359 35% Net life business (607) (1 171) Value of new life business 19 11 73% Including STC 16 45% Margin 1.26% 1.02% R million 2011 2010 ∆ Gross operating profjt 561 477 18% Sanlam Investments 299 327 (9%) Employee Benefjts 129 86 50% Capital management 133 64 108% Net operating profjt 412 357 15% Group Equity Value 12 370 12 492 Employee Benefjts 5 084 4 992 Other 7 286 7 500 RoGEV (annualised) 10.0% 1.8%

18 Results Presentation SANLAM INTERIM RESULTS 2011

Short-term insurance

R million 2011 2010 ∆ Net earned premiums 7 112 6 646 7% Gross operating profjt 793 688 15% underwriting surplus 601 463 30% Working capital income 192 225 (15%) Net operating profjt 319 266 20% underwriting margin 8.5% 7.0% Group Equity Value 8 611 8 529 1% RoGEV (annualised) 5.8% 11.6%

Business Flows

R million Gross Net 6 months to June 2011 2010 ∆ 2011 2010 by business Personal Finance 15 960 14 954 7% 2 236 2 012 SDM 1 603 1 279 25% 1 763 1 025 Sanlam uK 2 289 1 499 53% 1 172 378 Institutional Cluster 24 887 22 878 9% 3 316 689 Short-term 7 112 6 646 7% 2 555 2 315 by license life insurance 9 607 8 293 16% 2 402 1 033 Investment 35 132 32 317 9% 6 085 3 071 Short-term 7 112 6 646 7% 2 555 2 315 Total 51 851 47 256 10% 11 042 6 419

Results Presentation 19 SANLAM INTERIM RESULTS 2011

Value of New Covered Business

Value of New Business Margin R million 2011 2010 ∆ 2011 2010 401 320 25% 2.71% 2.50% Personal Finance 203 154 32% 2.19% 1.85% Developing Markets 173 146 18% 5.20% 5.13% Sanlam uK 6 9 (33%) 0.86% 1.56% Employee Benefjts 19 11 73% 1.26% 1.02% Net of minorities 356 283 26% 2.52% 2.32% Including STC 333 18% 2.36%

Net operating profjt

R million 2011 2010 ∆ Personal Finance 820 712 15% Developing Markets 196 82 139% Sanlam uK 21 31 (32%) Institutional cluster 412 357 15% Short-term insurance 319 266 20% Corporate & other ( 52) ( 26) Total 1 716 1 422 21%

20 Results Presentation SANLAM INTERIM RESULTS 2011

Income Statement

Equity Value RoGEV (Annual) R million Jun 11 Dec 10 Rm ∆ Group operations 52 796 50 458 4 003 16.5% Personal Finance 24 978 23 542 2 432 21.7% Developing Markets 5 064 4 356 570 27.9% Sanlam uK 1 773 1 539 147 20.0% Institutional Cluster 12 370 12 492 609 10.0% Short-term insurance 8 611 8 529 245 5.8% Discretionary & Other 5 089 6 903 (252) (7,2%) TOTAL 57 885 57 361 3 751 13.5% cps 2 877 2 818 174 12.8% Adjusted return 12.6% Return target 12.4% R million 2011 2010 ∆ Net operating profjt 1 716 1 422 21% Per share 84.7 69.4 22% Net investment return 766 499 54% Investment income 413 417 (1%) Investment surpluses 299 22 Equity-accounted income 54 60 (10%) Other ( 280) ( 271) (3%) Normalised headline earnings 2 202 1 650 33% Per share 108.6 80.5 35% Fund transfers 3 60 Headline earnings 2 205 1 710 29% Per share 109.6 84.1 30%

Group Equity Value

Results Presentation 21 SANLAM INTERIM RESULTS 2011 R million Actual Adjusted Net value of new business 356 356 Existing business 1 450 1 450 Expected return on VIF 1 181 1 181 Operating experience variance 231 231 Operating assumption changes 38 38 1 806 1 806 Inv variances in force ( 76) 76 – Tax adjustment (STC) 1 249 (1 249) – Economic assumption changes ( 215) 215 – 2 764 ( 958) 1 806 Return on net worth 394 127 521 EV earnings 3 158 ( 831) 2 327 Non-life 593 785 1 378 GEV earnings 3 751 ( 46) 3 705

Summary Group Equity Value Earnings

Strategic objectives are being achieved:

• Shareholder value

– Adjusted ROGEV per share of 12,6%

• Profjtable growth

– Strong net infmows of R11bn – Net VNB +26% and margins of 2,52% – Net operating profjt per share up 22%

• Diversifjcation

– Increasing contribution from growth markets

• Capital management

– utilised R1,2bn for share buy backs and Group ventures – R2bn to be utilised for investment in India – Remainder of discretionary capital fully allocated

22 Results Presentation SANLAM INTERIM RESULTS 2011

ROGEV versus Target

PRIORITIES FOR REMAINDER OF 2011

Results Presentation 23 SANLAM INTERIM RESULTS 2011

Sanlam Personal Finance

Establish retail growth platform in SA

Sanlam Emerging Markets

Creating a platform for accelerated growth

• Focus on sales growth and maintain VNB margins
• Grow profjt – but full year growth slowdown vs 1H11 (good 2H10)
• leverage combining SKY with SPF - penetrate mass middle market
• Continue focus on distribution growth initiatives
• Improve collaboration within SPF & wider Sanlam group
• Focus on transformation & remain employer of choice
• Maintain operational effjciencies
• Respond to regulatory requirements
• Bedding down the new Sanlam Emerging Markets business
• Continue to explore further co-operation with Shriram Group
• Enter Mozambique
• Focus on bolt-on transactions
• Finalise plans for SE Asia
• Continue focus on organic growth in “smaller” African

businesses to rebalance portfolio

24 Results Presentation SANLAM INTERIM RESULTS 2011

Sanlam Employee Benefjts

Focus on operational effjciency

Sanlam Investments

Enhancing operational performance

• Continue to focus on administration business
• “Sanlam for Sanlam” to enable synergies and improve access

to clients

• Implement or enhance technology to be leading edge and to

deliver operational effjciencies

• Target new business in umbrella Fund and Retirement Fund

Administration to achieve economies of scale

• Targeting Corporate market via consultants to increase single

premium fmows

• Achieving consistent upper quartile, long-term investment

performance across all businesses

• Focus – disciplined growth
• Enhancing operational effjciencies
• leveraging ofg strengths and abilities
• leverage synergies between SIIP & Sanlam uK to achieve growth

Results Presentation 25 SANLAM INTERIM RESULTS 2011

Santam

Entrench leadership position

OuTlOOK

• Extending our leadership position in South Africa in terms of:

– Market share – Financial performance – Brand positioning

• Focus on growing and diversifying the book of business through:

– Expanding the range of distribution channels – Ensuring sustainability of intermediated business model

• Continue to pursue operational and capital effjciency
• Re-engineering our underwriting capability across diverse distribution

channels and geographies

26 Results Presentation SANLAM INTERIM RESULTS 2011

Outlook for remainder of 2011 Outlook for remainder of 2011

Business Environment:

• uncertainty and volatility in global fjnancial markets (risk aversion)
• Slow economic recovery best case scenario
• Risks emanating from developed economies
• Continued regulatory changes

Low income market:

• High real wage increases in unionised sectors
• lack of employment growth, except public sector
• Selective profjtable growth opportunities

Middle-income market:

• Salary increases more in line with infmation
• Needs to reduce debt, increase savings
• lack of sustained recovery in housing market constrains mortgage

equity withdrawal High-income market:

• less constrained by income growth
• Only partial recovery in net wealth
• Still high leverage
• Benefjts relatively more from growth

Sets the stage for a diffjcult second half, but we have the strategy and human resources to deliver on performance targets

Group Financial Review 1 SANLAM INTERIM RESULTS 2011

Overview

Key features 2 Salient results 3 Executive review 4 Comments on the results 8

Interim financial statements

Shareholders’ information – Group Equity Value 28 – Change in Group Equity Value 30 – Return on Group Equity Value 31 – Adjusted return on Group Equity Value 33 – Shareholders’ fund at fair value 34 – Shareholders’ fund income statement 38 – Notes to the shareholders’ fund information 42 – Embedded value of covered business 50

Contents

Key features

Earnings

• Net result from fjnancial services per share

increased by 22%

• Normalised headline earnings per share up 35%

Business volumes

• New business volumes up 11% to R55 billion
• Net value of new covered business up 26% to

R356 million

• Net new covered business margin of 2,52%,

up from 2,32%

• Net fund infmows of R11 billion, up 72%

Group Equity Value

• Group Equity Value per share of R28,77
• Annualised return on Group Equity Value per

share of 12,8%

• Adjusted annualised return on Group Equity Value

per share of 12,6% Capital management

• Discretionary capital of R3,2 billion at

30 June 2011

• Sanlam Life CAR cover of 3,2 times

Sanlam Investments: assets under management

• f R504 billion

Group Financial Review 3 SANLAM INTERIM RESULTS 2011

Salient Results

for the six months ended 30 June 2011

2011 2010 ∆ SANLAM GROUP Earnings Net result from fjnancial services per share cents 84,7 69,4 22% Normalised headline earnings per share (1) cents 108,6 80,5 35% Diluted headline earnings per share cents 109,6 84,1 30% Net result from fjnancial services R million 1 716 1 422 21% Normalised headline earnings (1) R million 2 202 1 650 33% Headline earnings R million 2 205 1 710 29% Group administration cost ratio (2) % 29,5 29,1 Group operating margin (3) % 19,8 17,9 Business volumes New business volumes R million 55 062 49 781 11% Net fund fmows R million 11 418 6 649 72% Net new covered business Value of new covered business R million 356 283 26% Covered business PVNBP (4) R million 14 112 12 220 15% New covered business margin (5) % 2,52 2,32 Group Equity Value Group Equity Value (6) R million 57 885 57 361 1% Group Equity Value per share (6) cents 2 877 2 818 2% Annualised return on Group Equity Value per share (7) % 12,8 9,1 Adjusted annualised return on Group Equity Value per share (8) % 12,6 13,2 SANLAM LIFE INSURANCE LIMITED Shareholders’ fund (6) R million 40 572 40 521 Capital Adequacy Requirements (CAR) (6) R million 7 475 7 375 CAR covered by prudential capital (6) times 3,2 3,4

Notes

(1) Normalised headline earnings = headline earnings, excluding fund transfers. (2) Administration costs as a percentage of income after sales remuneration. (3) Result from fjnancial services as a percentage of income after sales remuneration. (4) PVNBP = present value of new business premiums and is equal to the present value of new recurring premiums plus single

premiums.

(5) New covered business margin = value of new covered business as a percentage of PVNBP. (6) Comparative fjgures are as at 31 December 2010. (7) Growth in Group Equity Value per share (with dividends paid, capital movements and cost of treasury shares acquired

reversed) as a percentage of Group Equity Value per share at the beginning of the period.

(8) Return on Group Equity Value per share, based on investment return assumptions as at the beginning of the period.

4 Group Financial Review SANLAM INTERIM RESULTS 2011

Executive Review

It is particularly pleasing to present another set of satisfactory results to our stakeholders, delivering

• n our promise of sustained value creation.

The Group’s strategy, focused on the fjve pillars of

• ptimal capital utilisation, earnings growth, costs

and effjciencies, diversifjcation and transformation, has been in place for a number of years and remains relevant in a continuously changing world. Our strategy provided a solid base to perform in a challenging business environment over the last three years. The fjrst half of the 2011 fjnancial year was no exception. In the 2010 annual report we indicated that we did not expect the South African economy to stage a large-scale recovery but to refmect slow, yet steady,

• progress. We also expected volatility to remain in

global investment markets, as well as weakness in developed economies. These expectations summarise actual conditions experienced in the fjrst six months of 2011. Despite overall positive economic growth in South Africa, the economy remains fragile with many consumers still struggling with high debt levels despite historic low lending rates. Increases in administered prices aggravate the pressure on disposable income and are also expected to refmect in an increase in infmation over the next year. The other African economies in which the Group operates continue to exhibit a delayed recovery on the back of higher resource prices. Operating conditions in Botswana were impacted by industrial action in the public sector, of which the full adverse impact on business results may still materialise. Against this backdrop, the Group delivered a solid performance. Our primary performance target is to optimise shareholder value through maximising the return

• n Group Equity Value (ROGEV) per share. This

measure of performance is regarded as the most appropriate given the nature of the Group’s diversifjed business and incorporates the result of all the major value drivers in the business. The ROGEV target for 2011 is 12,4%, based on the

• bjective to exceed the Group’s cost of capital by

100 basis points. Cost of capital is set at the government (9-year) bond yield at the start of each fjnancial year plus 300 basis points. Over a short- term measurement period the actual return achieved can be distorted by volatile market

• movements. An ‘adjusted’ ROGEV that aims to

exclude the impact of investment market volatility and other signifjcant items not under management’s control is therefore also reported. This is calculated principally by assuming that for purposes of the investment return earned on the supporting capital

• f covered business and the valuation of other

Group operations, the investment return assumptions used at the beginning of the reporting period were actually achieved in that period. The actual annualised ROGEV per share achieved for the fjrst half of 2011 was 12,8%, impacted negatively by unfavourable equity market performance, but partly ofgset by the release in the valuation base of the allowance for Secondary Tax

• n Companies (‘STC’). This follows the imminent

replacement of STC with a dividend withholding tax efgective 1 April 2012. The adjusted annualised ROGEV per share for the same period amounted to 12,6%, exceeding the target. Sustainable value creation remains a key component of the Group’s

• strategy. On a cumulative basis the Group has
• utperformed the ROGEV performance target

since being demutualised in 1998. Other key performance indicators for the Group’s interim results are as follows:

• Net result from fjnancial services increased by

22% on 2010 to 84,7 cents per share;

• New business volumes of R55 billion, up 11% on

2010;

• Value of new life business up 26% to R356

million; and

• Net fund infmows of R11 billion in 2011 compared

to R7 billion in 2010. Sanlam shareholders have been handsomely rewarded by the success of the Group’s strategy over the past few years. Over the last fjve years, the Sanlam share price (excluding dividends) signifjcantly

• utperformed the major JSE/FTSE indices.

Group Financial Review 5 SANLAM INTERIM RESULTS 2011

Sanlam Relative Share Price Performance

Index 200 180 160 140 120 100 80 60 40 SLM Alsi Life Fini Banks Jun-11 Dec-10 Jun-10 Dec-09 Jun-09 Dec-08 Jun-08 Dec-07 Jun-07 Dec-06 Jun-06 +90 +50 +40 +17 +0

Delivering on strategy

We made steady progress on the priorities for 2011 that were outlined in the Group’s 2010 Integrated Annual Report. Some major initiatives are:

• Pursue profjtable growth opportunities with the

aim of effjciently redistributing discretionary capital Agreement has been reached with the Shriram Group, our partners in India, to increase Sanlam’s exposure to the fjnancial services activities of the Shriram Group. These are held through a holding company, Shriram Capital, and include commercial fjnancing, retail fjnancing, a distributor of wealth products and stock broking businesses, as well as a 51% holding in each of the life and general insurance joint ventures with Sanlam. The activities of all these businesses are closely interrelated through cross selling, shared management and services as well as a shared distribution force. A Sanlam investment in Shriram Capital therefore better aligns the current and the future expansion interests of Sanlam with that of our Indian partner, while it also provides Sanlam access to the strong growth and profjt generating capacity of the fjnancing entities. This investment is also in line with Sanlam’s strategy to diversify both geographically and into broader fjnancial services. In terms of the agreement with Shriram, Sanlam will subscribe for an efgective 26% interest in Shriram Capital through a cash contribution of R1,9 billion, while Sanlam’s 26% interest in both Shriram Life Insurance and Shriram General Insurance will also be transferred to Shriram Capital. The existing management and governance arrangements in the insurance ventures, as well as Sanlam’s entitlement to acquire a further 23% in both ventures, will remain unchanged. The transaction is still subject to regulatory and SARB approval. We are also investigating a number of

• pportunities for expansion in Africa. This

includes potential consolidation in some markets, as well as expansion into new countries, with Mozambique likely to be added in 2011. Other initiatives are at various stages of development and further information will be provided when appropriate. The potential for expansion into South East Asia will also be considered during the remainder of the year.

• Expand our adviser and broker footprint

Both SPF and SDM are expanding their distribution footprint. After a reduction in SDM’s South African sales force as part of its focus on writing quality business, steady progress is being made to increase adviser numbers again. Nucleus, our Independent Financial Adviser (IFA) controlled investment platform in the United Kingdom (UK) continues to grow strongly. Net infmows of R3,7 billion were achieved during the fjrst half of 2011, increasing Nucleus’ funds under administration to R13 billion. The target is to further expand

• ur distribution reach during the remainder of

the year.

• To ensure appropriate strategic focus across

the Group, the management structure was changed with efgect from 1 July 2011 (reported results for the fjrst six months of 2011 are still based on the old structure): – Emerging markets outside of South Africa have been identifjed as a strategic future growth accelerator for the Group. To ensure appropriate management attention on these markets, all of the operations in Africa (excluding South Africa) and India have been combined into a Sanlam Emerging Markets cluster under the leadership of

6 Group Financial Review SANLAM INTERIM RESULTS 2011 Heinie Werth (former chief executive of Sanlam Developing Markets). This includes

• perations formerly managed within the

Sanlam Personal Finance, Short-term Insurance and Institutional clusters, thereby efgectively transforming the Group’s product-based approach in emerging markets into a holistic country-based

• approach. This will enable structured and

focussed development of the Group’s exposure in these markets and contribute to leveraged growth opportunities. – The South African consumer landscape is continuously transforming, with particularly entry-level clients migrating to the middle- income market. In line with the Group’s client centric strategy to provide clients with a superior ‘Journey For Life’ experience, it became appropriate to merge the South African operations of Sanlam Developing Markets with that of Sanlam Personal Finance under the leadership of Lizé Lambrechts. This will ensure improved client service and the opportunity for a seamless addition of Sanlam solutions to clients’ portfolios as their needs and level of disposable income change. At the same time it will ensure better coordination in targeting the full spectrum of the South African retail client market. – The Group’s presence in the developed markets is primarily aimed at providing South African retail and institutional clients with international investment opportunities, while augmenting these niche operations with some local distribution footprint to enhance effjciency and economies of scale. The Sanlam UK operations are essentially investment management businesses and directly linked to the Institutional clusters’

• perations in these markets. The potential

exists to extract further synergies from the Group’s difgerent UK operations. Management responsibility for Sanlam UK has accordingly been transferred to the Institutional cluster under Johan van der Merwe to ensure focussed management of the Group’s developed market exposure. We are confjdent that the new management structure will contribute to enhanced growth and value creation for all our stakeholders.

• Expand our customer base in South Africa

through innovation in product design and distribution mechanisms The restructuring of the South African retail business (as outlined above) is an important step towards focussed management of changing client needs, including the further development of innovative product solutions and distribution channels. This will be a key focus for Sanlam Personal Finance. Within the middle-income and affmuent market segments, two new innovative solutions were launched since the fourth quarter of 2010. The Cumulus single premium savings solution was launched in 2011 to alleviate the impact of low short-term interest rates on sales of the traditional guaranteed solutions. Glacier also launched its international ofgering in October 2010. Both products were well accepted in the market. The development of MiWay’s platform for the direct distribution of life insurance solutions will add to the Group’s distribution platforms.

Capital management

The Group held discretionary capital of R4 billion at the end of 2010. During 2011, R170 million was added to the pool from the disposal of Fundamo. Utilisation of discretionary capital comprised of R944 million to acquire 34,8 million Sanlam shares in terms of the share buy-back programme, R71 million for the acquisition of some 552 000 Santam shares, R31 million for the establishment of our Nigerian life operations and R87 million for the acquisition of Border Asset Management in the UK and other smaller transactions. The net efgect of these cash fmows, allowance for illiquid assets and investment return earned on the discretionary capital portfolio, was to reduce the level of

Executive Review

continued

Group Financial Review 7 SANLAM INTERIM RESULTS 2011 discretionary capital to R3,2 billion at 30 June 2011. Capital effjciency is a major strategic focus of the Group and any discretionary capital that will not be used for corporate activity within a reasonable timeframe will be returned to shareholders. The discretionary capital at 30 June 2011 is substantially earmarked for corporate activity and expansion of the Group’s footprint in Africa and India. Further share buy-backs will also be considered in periods

• f share price weakness.

Looking ahead

Operating conditions are expected to remain diffjcult for the remainder of 2011. The economies

• f developed markets are likely to remain weak

with downside risk increasing signifjcantly since the end of June. This elevates the risk of a slowdown in demand for commodities, which will impact on growth in the resource-based economies in which the Group operates. Volatility in investment markets is commensurately also expected to

• remain. The outlook for the remainder of the 2011

fjnancial year therefore remains cautious. Investment market performance for the second half

• f the year will also impact on the level of headline

earnings growth to be reported for the full year.

8 Group Financial Review SANLAM INTERIM RESULTS 2011

Introduction

The Sanlam Group results for the six months ended 30 June 2011 are presented based on and in compliance with International Financial Reporting Standards (IFRS), as applicable. The basis of presentation and accounting policies are consistent with those applied in the 2010 interim and annual report, apart from the following:

• Further clarifjcation has been obtained

regarding the accounting treatment of investments in associates since the release of the Group’s interim results for 2010. IFRS contains an exemption to the equity-accounting

• f investments in associates for those

investments held in life insurance funds (i.e. policyholders’ funds). These investments can be recognised at fair value in the statement of fjnancial position. The Group’s general interpretation of this exemption up to 30 June 2010 was that it only applied in instances where all shares are held in the policyholders’ fund. Where a portion of the investment is held by the shareholders’ fund, the full investment had to be equity-accounted. The clarifjcation referred to above, however, confjrmed that ‘split’ accounting can be applied and that the policyholders’ fund’s interest can in all instances be recognised at fair value. This applies to the Group’s interest in Vukile. The shareholders’ fund’s investment is equity-accounted whereas the interest held in the policyholders’ fund is carried at fair value. This split accounting now prevents the previous economic mismatch between policy liabilities and policyholder

• assets. For the six months to 30 June 2010, a

fund transfer of R100 million was recognised in respect of the Vukile units held in the policyholders’ fund as these holdings were also equity-accounted. This fund transfer has been reversed in the comparative information congruent to the change in clarifjcation. A reallocation between equity-accounted earnings and net investment return was also required in the IFRS income statement. This change aligns the accounting policy applied in the 2010 comparative period to that applied in the 2010 annual report.

• The replacement of STC in South Africa with a

withholding tax basis required the elimination

• f STC as a future Sanlam cost in the valuation
• base. This resulted in an increase in the future

profjtability of new life insurance business written (VNB) as well as the in-force life insurance book (VIF).

Business environment

By their nature the Group’s operations are exposed to the volatility of fjnancial markets and economic conditions in general. The main features of the business environment during the fjrst six months of 2011 to take cognisance of in evaluating the Group’s results are highlighted below.

Economic conditions

Economic growth in the main geographical regions in Africa and the United Kingdom (UK) where the Group operates remained weak. Administered infmation also continued to put pressure on disposable income of South African retail clients.

Equity markets

The South African equity market delivered a lacklustre performance in the fjrst half of 2011, albeit a relative improvement on the fjrst six months of the 2010 fjnancial year. The FTSE/JSE All Share and Swix Indices both closed 1% down on their 31 December 2010 levels. This compares to the respective 5,1% and 3,5% declines in the fjrst six months of 2010. The strong equity market performance in the latter half of 2010, however, contributed to a 17% higher average market level during the fjrst six months of 2011, as compared to the same period in 2010. This had a positive impact

• n the relative level of assets under management in

2011 compared to 2010.

Interest rates

Long-term interest rates (9-year) increased by 30bps since 31 December 2010, but are 50bps

Comments on the results

Group Financial Review 9 SANLAM INTERIM RESULTS 2011 lower than 30 June 2010. Short-term interest rates declined sharply in the latter half of 2010 and remained at these low levels during the fjrst six months of 2011. Compared to the fjrst half of 2010, short-term interest rates were on average 160bps (20%) lower in 2011.

Foreign currency exchange rates

The rand weakened against the major developed market currencies since December 2010, but continued to strengthen against the emerging market currencies to which the Group has the largest exposure. However, the average rand exchange rate for the fjrst half of 2011 was stronger against all applicable currencies compared to the fjrst half of 2010, as refmected in the table below (negative variances indicate a strengthening of the rand). FOREIGN CURRENCY/ ZAR EUROPE EUR UNITED KINGDOM GBP USA USD BOTSWANA BWP INDIA INR KENYA KES 31/12/2009 10,56 11,89 7,36 1,13 0,16 0,10 30/06/2010 9,39 11,47 7,66 1,10 0,16 0,10

• 11,1%
• 3,5%

4,1%

• 2,7%

0,0% 0,0% 31/12/2010 8,88 10,36 6,62 1,05 0,15 0,09 30/06/2011 9,83 10,88 6,79 1,04 0,15 0,08 10,7% 5,0% 2,6%

• 1,0%

0,0%

• 11,1%

Average: fjrst half 2010 9,97 11,47 7,52 1,12 0,16 0,10 Average: fjrst half 2011 9,67 11,14 6,89 1,07 0,15 0,08

• 3,0%
• 2,9%
• 8,4%
• 4,5%
• 6,3%
• 20,0%

10 Group Financial Review SANLAM INTERIM RESULTS 2011

Group Equity Value (GEV)

GEV is the aggregate of the following components:

• The embedded value of covered business, being the life insurance businesses of the Group, which

comprises the required capital supporting these operations and the net present value of their in-force books of business (VIF);

• The fair value of other Group operations based on longer term assumptions, which includes the

investment management, capital markets, credit, short-term insurance and the non-covered wealth management operations of the Group; and

• The fair value of discretionary and other capital.

GEV provides an indication of the value of the Group’s operations, but without placing any value on future new covered business to be written by the Group’s life insurance businesses. Sustainable return

• n GEV is the primary performance benchmark used by the Group in evaluating the success of its

strategy to maximise shareholder value.

Group Equity Value at 30 June 2011

June 2011 December 2010 R million Total Fair value

• f assets

Value of in-force Total Fair value

• f assets

Value of in- force Embedded value of covered business 33 045 14 225 18 820 31 045 14 033 17 012 Sanlam Personal Finance 22 854 8 207 14 647 21 488 8 144 13 344 Sanlam Developing Markets 4 507 1 274 3 233 3 952 1 104 2 848 Sanlam UK 637 177 460 638 212 426 Sanlam Employee Benefjts 5 047 4 567 480 4 967 4 573 394 Other group operations 19 751 19 751 – 19 413 19 413 – Retail cluster 3 817 3 817 – 3 359 3 359 – Institutional cluster 7 323 7 323 – 7 525 7 525 – Short-term insurance 8 611 8 611 – 8 529 8 529 – Other capital and net worth adjustments 1 889 1 889 – 2 903 2 903 – 54 685 35 865 18 820 53 361 36 349 17 012 Discretionary capital 3 200 3 200 – 4 000 4 000 – Group Equity Value 57 885 39 065 18 820 57 361 40 349 17 012 Issued shares for value per share (million) 2 011,7 2 035,5 Group Equity Value per share (cents) 2 877 2 818 Share price (cents) 2 756 2 792 Discount

• 4%
• 1%

Comments on the Results

continued

Group Financial Review 11 SANLAM INTERIM RESULTS 2011 The GEV per share increased by 2% from 2 818 cents at 31 December 2010 to 2 877 cents at 30 June 2011, after payment of a 115 cents per share dividend in May 2011. The Sanlam share price traded at a 4% discount to GEV by close of trading on 30 June 2011, with the discount widening somewhat since December 2010 in the volatile investment market conditions. The Group operations have a signifjcant exposure to investment markets, both in respect of the shareholder capital portfolio that is invested in fjnancial instruments, as well as a signifjcant portion of the fee income base that is linked to the level of assets under management. The lacklustre investment market performance during the fjrst six months of 2011 had a marked negative impact on the ROGEV for the period. After achieving a ROGEV per share of 9,1% in 2010, an annualised ROGEV per share of 12,8% was recorded for the fjrst half of

• 2011. This was, however, impacted by the reversal of the STC allowance in the value of in-force (VIF) of R1,2

billion (refer above). The adjusted annualised ROGEV per share for the fjrst half of 2011, which assumes long-term investment return assumptions and excludes items not under management’s control, was 12,6%, in excess of the return target.

Return on Group Equity Value for the six months ended 30 June 2011

June 2011 June 2010 Earnings R million Return % Earnings R million Return % Covered business 3 158 21,4 1 158 8,2 Sanlam Personal Finance 2 242 22,0 928 9,6 Sanlam Developing Markets 560 30,3 237 14,3 Sanlam UK 72 23,8 9 2,7 Sanlam Employee Benefjts 284 11,8 (16)

• 0,6

Other operations 845 8,9 947 11,6 Sanlam Personal Finance 190 19,4 284 38,3 Sanlam Developing Markets 10 5,0 81 71,4 Sanlam UK 75 17,3 55 13,6 Institutional cluster 325 8,8 125 3,6 Short-term insurance 245 5,8 402 11,6 Discretionary and other capital (252) 127 Balance of portfolio 205 366 Treasury shares and other (224) (127) Change in net worth adjustments (233) (112) Return on Group Equity Value 3 751 13,5 2 232 8,9 Return on Group Equity Value per share 12,8 9,1 Covered business yielded an annualised return of 21,4% compared to 8,2% in 2010. Excluding the reversal of STC, investment variances and economic assumption changes, the ROGEV of covered business amounted to 15,5%, a solid performance. Strong VNB growth and continued positive operating experience variances supported the performance. The valuations of the other Group operations were in general positively impacted by a higher average level of assets under management, supporting increased future profjtability. The investment return earned on Santam and SDM’s non-life operations, based on their listed share prices, refmects the overall low market returns.

12 Group Financial Review SANLAM INTERIM RESULTS 2011

Earnings

Summarised shareholders’ fund income statement for the six months ended 30 June 2011

R million 2011 2010 ∆ Net result from fjnancial services 1 716 1 422 21% Net investment return 766 499 54% Net investment income 413 417

• 1%

Net investment surpluses 299 22 >100% Net equity-accounted earnings 54 60

• 10%

Project expenses (21) (19)

• 11%

BEE transaction costs (2) (3) 33% Secondary tax on companies (192) (209) 8% Amortisation of intangible assets (65) (40)

• 63%

NORMALISED HEADLINE EARNINGS 2 202 1 650 33% Other non-headline earnings and impairments 69 376 Normalised attributable earnings 2 271 2 026 12%

Net result from fjnancial services

The net result from fjnancial services or net operating profjt increased by a satisfactory 21%, with particularly strong contributions from the retail and short-term insurance businesses.

Net result from fjnancial services for the six months ended 30 June 2011

R million 2011 2010 ∆ Retail cluster 1 037 825 26% Sanlam Personal Finance 820 712 15% Sanlam Developing Markets 196 82 139% Sanlam UK 21 31

• 32%

Institutional cluster 412 357 15% Sanlam Investments 212 239

• 11%

Sanlam Employee Benefjts 93 58 60% Capital Management 107 60 78% Short-term insurance cluster 319 266 20% Corporate and other (52) (26)

• 100%

Net result from financial services 1 716 1 422 21% The performance of the individual clusters is discussed in further detail below.

Comments on the Results

continued

Group Financial Review 13 SANLAM INTERIM RESULTS 2011

Normalised headline earnings

• Normalised headline earnings of R2,2 billion are 33% higher than in 2010, largely attributable to the 21%

increase in the net result from fjnancial services and a 54% increase in net investment return. A strong six-month performance from international equity markets, combined with the weakening of the rand against developed market currencies during the fjrst half of 2011, contributed to a marked relative improvement in the investment return earned on the Group’s capital portfolio. Despite delivering a weak performance in the fjrst half of 2011, the South African investment market also performed better relative to the fjrst six months of 2010. This supported the increase in net investment return. Normalised headline earnings exclude the IFRS accounting impact of investments in Sanlam shares and Group subsidiaries held by the policyholders’ fund. Including the efgect of fund transfers recognised in terms of IFRS in respect of these shares, headline earnings increased by 29%.

Business volumes New business fmows

New business volumes for the Group increased by 11% to R55 billion (up 10% to R52 billion excluding white label business), a solid performance in a diffjcult operating environment. The growth is supported by an 18% increase in new life business and a 27% increase in South African retail investment business. Net fund infmows refmect an exemplary 72% growth.

Business volumes for the six months ended 30 June 2011

New business Net flows R million 2011 2010 ∆ 2011 2010 ∆ Sanlam Personal Finance 15 960 14 954 7% 2 236 2 012 11% Sanlam Developing Markets 1 603 1 279 25% 1 763 1 025 72% Sanlam UK 2 289 1 499 53% 1 172 378 210% Institutional cluster 24 887 22 878 9% 3 316 689 381% Short-term insurance 7 112 6 646 7% 2 555 2 315 10% 51 851 47 256 10% 11 042 6 419 72% White label 3 211 2 525 27% 376 230 63% Total new business 55 062 49 781 11% 11 418 6 649 72%

Value of new covered business

The value of new life business (VNB) written during the fjrst six months of 2011 increased by 25% on 2010 to reach R401 million. After minorities, VNB increased by 26% to R356 million. The replacement of Secondary Tax

• n Companies (STC) in South Africa with a withholding tax basis, results in the elimination of STC as a cost for

Sanlam in the future. This increases the future profjtability of new business written and commensurately VNB. The change in tax basis increased net VNB by R23 million for the fjrst half of 2011. Excluding this, net VNB increased by a very pleasing 18% at overall sustained margins.

14 Group Financial Review SANLAM INTERIM RESULTS 2011

Value of new covered business for the six months ended 30 June 2011 – after STC change

R million 2011 2010 ∆ Value of new covered business 401 320 25% Sanlam Personal Finance 203 154 32% Sanlam Developing Markets 173 146 18% Sanlam UK 6 9

• 33%

Sanlam Employee Benefjts 19 11 73% Net of minorities 356 283 26% Present value of new business premiums 14 785 12 811 15% Sanlam Personal Finance 9 264 8 306 12% Sanlam Developing Markets 3 324 2 847 17% Sanlam UK 695 577 20% Sanlam Employee Benefjts 1 502 1 081 39% Net of minorities 14 112 12 220 15% New covered business margin 2,71% 2,50% Sanlam Personal Finance 2,19% 1,85% Sanlam Developing Markets 5,20% 5,13% Sanlam UK 0,86% 1,56% Sanlam Employee Benefjts 1,26% 1,02% Net of minorities 2,52% 2,32%

Comments on the Results

continued

Group Financial Review 15 SANLAM INTERIM RESULTS 2011

Value of new covered business for the six months ended 30 June 2011 – before STC change

R million 2011 2010 ∆ Value of new covered business 378 320 18% Sanlam Personal Finance 192 154 25% Sanlam Developing Markets 164 146 12% Sanlam UK 6 9

• 33%

Sanlam Employee Benefjts 16 11 45% Net of minorities 333 283 18% Present value of new business premiums 14 785 12 811 15% Sanlam Personal Finance 9 264 8 306 12% Sanlam Developing Markets 3 324 2 847 17% Sanlam UK 695 577 20% Sanlam Employee Benefjts 1 502 1 081 39% Net of minorities 14 112 12 220 15% New covered business margin 2,56% 2,50% Sanlam Personal Finance 2,07% 1,85% Sanlam Developing Markets 4,93% 5,13% Sanlam UK 0,86% 1,56% Sanlam Employee Benefjts 1,07% 1,02% Net of minorities 2,36% 2,32% The performance of the individual clusters is discussed in further detail below.

16 Group Financial Review SANLAM INTERIM RESULTS 2011

Cluster performance Sanlam Personal Finance

Key performance indicators for the six months ended 30 June 2011

R million 2011 2010 ∆ Group Equity Value Group Equity Value 24 978 23 542 6,1% Covered business 22 854 21 488 6,4% Other operations 2 124 2 054 3,4% Annualised return on Group Equity Value 21,7% 11,6% Covered business 22,0% 9,6% Other operations 19,4% 38,3% Business volumes New business volumes 15 960 14 954 7% Life business 6 712 6 007 12% Investment business 9 248 8 947 3% South Africa 5 731 4 989 15% Namibia 3 517 3 958

• 11%

Net fund fmows 2 236 2 012 11% Life business 985 1 205

• 18%

Investment business 1 251 807 55% South Africa 894 541 65% Namibia 357 266 34% Value of new covered business Value of new business 203 154 32% Including STC allowance 192 154 25% Reversal of STC allowance 11 – Present value of new business premiums 9 264 8 306 12% New business margin 2,19% 1,85% Earnings Gross result from fjnancial services 1 146 972 18% Middle market life and investments 852 741 15% Glacier 83 71 17% Sanlam Personal Loans 105 72 46% Namibia 88 72 22% Other operations 18 16 13% Net result from fjnancial services 820 712 15% Administration cost ratio 37,0% 36,6% Excluding growth initiatives 34,0% 34,8% Operating margin 36,0% 33,9%

Comments on the Results

continued

Group Financial Review 17 SANLAM INTERIM RESULTS 2011 Sanlam Personal Finance (SPF) recorded overall strong results for the fjrst six months of 2011. SPF reported annualised ROGEV of 21,7% for 2011, compared to 11,6% for the comparable period in

• 2010. Both covered and other operations

contributed to the performance. The covered business results were supported by the reversal of STC from the VIF. Adjusted ROGEV for SPF, which excludes tax changes, investment variances and economic assumption changes, amounts to 15,4%. The return on other operations were positively impacted by an increase in the valuation of Glacier and Sanlam Personal Loans, attributable to an increase in the level of assets under management and the size of the loan book respectively. New business volumes increased by 7%. South African new business volumes increased by 14%, the combined efgect of a 13% increase in new life business and a 15% increase in investment business

• sales. The low interest rate environment continues

to place pressure on demand for guarantee plan and guaranteed annuity single premium business. The Group’s diversifjed solution ofgering and product innovation, however, proved efgective in

• fgsetting the low sales volumes of these traditional
• products. SPF launched its new Cumulus product

in 2011, which is less sensitive to interest rates. Glacier also launched new ofgshore solutions in the last quarter of 2010. Market reaction to these new solutions is very positive. Glacier’s living annuity solution is also popular in the current low interest rate environment as it ofgers investment choice and does not lock clients into current interest rates. This contributed to 14% growth in South African single premiums. South African recurring premiums grew by 10%, supported by strong demand for investment products. Competitive market pricing impacted on risk business sales. The Group remains prudent in its approach towards new business growth that does not yield acceptable return. Namibian sales declined by 11%, largely due to a decrease in unit trust sales from a high base in 2010 in a very competitive environment. The value of new covered business increased by 25% before removal of the allowance for STC, driven by the increase in new life business volumes, efgective cost management and good growth in high margin credit life business. New business margins increased in 2011, driven by these same factors. Overall net fund fmows increased by 11%, supported by a 55% increase in net investment business fmows. Net life business fmows decreased by 18% due to lower single premium sales of guaranteed solutions and an increase in the value of benefjt payments following higher average market levels in the fjrst half of 2011 compared to 2010. The gross result from fjnancial services increased by 18%. The individual life business recorded growth in operating profjt of 15%, attributable to higher risk profjts from improved claims experience and an increase in administration profjt following higher average assets under management. Sanlam Personal Loans increased its contribution to

• perating profjt by a healthy 46% on the back of

an increase in its book size and improved bad debt

• experience. Glacier also reported a satisfactory 17%

increase in profjt, due to higher management fees earned on the overall higher level of assets under management.

18 Group Financial Review SANLAM INTERIM RESULTS 2011

Sanlam Developing Markets

Key performance indicators for the six months ended 30 June 2011

R million 2011 2010 ∆ Group Equity Value Group Equity Value 5 064 4 356 16,3% Covered business 4 507 3 952 14,0% Other operations 557 404 37,9% Return on Group Equity Value 27,9% 18,0% Covered business 30,3% 14,3% Other operations 5,0% 71,4% Business volumes New business volumes 1 603 1 279 25% South Africa 637 615 4% Botswana 609 388 57% Rest of Africa 235 156 51% India 122 120 2% Net fund fmows 1 763 1 025 72% South Africa 844 335 152% Botswana 530 357 48% Rest of Africa 264 190 39% India 125 143

• 13%

Value of new covered business Value of new business 173 146 18% Including STC allowance 164 146 12% Reversal of STC allowance 9 – Present value of new business premiums 3 324 2 847 17% New business margin 5,20% 5,13% Earnings Gross result from fjnancial services 360 222 62% South Africa 179 42 326% Rest of Africa 180 190

• 5%

India 1 (10) >100% Net result from fjnancial services 196 82 139% Administration cost ratio 32,2% 32,3% Operating margin 20,2% 14,3%

Comments on the Results

continued

Group Financial Review 19 SANLAM INTERIM RESULTS 2011 Sanlam Developing Markets (SDM) had an overall satisfactory fjrst half despite some temporary disruption in the South African distribution channels (given various steps to improve the quality and retention of new business written) and a strong rand exchange rate impacting negatively

• n the rand-based results of the Rest of Africa
• perations.

SDM’s annualised ROGEV for the period was negatively impacted by low return on its listed non-life operations in Botswana, in line with general equity market performance. This was compensated in Botswana for by a 30,3% return on covered business, supported by strong VNB, operating experience variances and operating assumption

• changes. Excluding tax changes, investment

variances and economic assumption changes, SDM achieved an exemplary adjusted ROGEV of 24,9%. New business volumes increased by 25%, with strong growth from Africa supporting the overall

• result. South African new business grew by 4%,

supported by group business, with individual life recurring premiums declining on 2010. Strategic focus on the quality of business written had, as expected, a temporary negative impact on business volumes. This has been addressed with stability returning to the distribution channels. The positive impact of the focus on quality is refmected in an improvement in persistency. Rest of Africa sales were supported by strong single premium and credit life sales and grew by 55%. Following the regulatory changes in India towards the end of last year, we experienced signifjcant pressure on new recurring premium sales. This was, however,

• fgset by strong growth in single premiums.

The value of new life business written, increased by 12% before the reversal of the STC allowance. Margins, before the positive STC reversal impact, decreased marginally on 2010 largely due to the decrease in individual life recurring premiums in South Africa. SDM achieved a 62% increase in its gross result from fjnancial services. The South African contribution increased threefold, due to lower new business strain (attributable to the change in business mix from individual life recurring premiums to group business), improvements in persistency and claims experience, further synergies being extracted from the combined South African business and increased release of margins from the in-force book given the growth in size of the book over the last number of years. The Rest of Africa operations recorded a 5% decline in gross operating profjt, with non-life operations recording particularly good growth. This was, however, ofgset by start-up losses at new

• perations and the negative impact of the stronger

average rand exchange rate.

20 Group Financial Review SANLAM INTERIM RESULTS 2011

Institutional cluster

Key performance indicators for the six months ended 30 June 2011

R million 2011 2010 ∆ Group Equity Value Group Equity Value 12 370 12 492

• 1%

Sanlam Investments 6 451 6 569

• 2%

Sanlam Employee Benefjts 5 084 4 992 2% Sanlam Capital Management 835 931

• 10%

Return on Group Equity Value 10,0% 1,8% Sanlam Investments 6,4% 3,8% Sanlam Employee Benefjts 12,2%

• 0,7%

Sanlam Capital Management 24,3% 2,8% Business volumes Net fund fmows Investments 4 299 2 090 106% South Africa retail 4 497 3 202 40% South Africa institutional (209) 1 775

• 112%

Non-South Africa 11 (2 887) 100% Life business (607) (1 171) 48% New life business volumes 618 450 37% Recurring premiums 134 91 47% Single premiums 484 359 35% Value of new covered business Value of new business 19 11 73% Including STC allowance 16 11 45% Reversal of STC allowance 3 – Present value of new business premiums 1 502 1 081 39% New business margin 1,26% 1,02% Earnings Gross result from fjnancial services 561 477 18% Sanlam Investments 299 327

• 9%

Sanlam Employee Benefjts 129 86 50% Sanlam Capital Management 133 64 108% Net result from fjnancial services 412 357 15% Cluster administration cost ratio 44,2% 45,0%

Comments on the Results

continued

Group Financial Review 21 SANLAM INTERIM RESULTS 2011 The institutional cluster’s 10% annualised ROGEV is the combined result of a very strong performance by the Capital Management operations and a relatively low return by Sanlam Investments. The lacklustre investment market performance during the fjrst six months of 2011 resulted in marginal growth in Sanlam Investments’ assets under management since 31 December 2010, impacting directly on the valuation, and hence return, of these operations, which are valued based on assets under management. The strong operating profjt performance of the Capital Management

• perations refmects in the ROGEV achieved for the
• period. Sanlam Employee Benefjts’ ROGEV

continues to be dampened by the relative size of required capital held in respect of its covered business. The Institutional cluster reported strong net fund fmows during the fjrst half of the 2011 fjnancial year. Operating profjt growth was supported by the Capital Management and Employee Benefjts businesses, with Sanlam Investments recording a 9% decline in profjtability. New business volumes grew by 37% at Sanlam Employee Benefjts (SEB), with both recurring and single premium business performing well. Sanlam Umbrella Solutions achieved record sales and increased its assets under management to some R6 billion. This contributed to a marked improvement in SEB’s net fund fmows, albeit still

• negative. The value of new business and new

business margins also improved commensurately. The retail investment businesses had a strong six-month period, with Sanlam Collective Investments recording exemplary net infmows. Gross result from fjnancial services increased by 18%. Sanlam Employee Benefjts benefjted from a marked improvement in claims experience compared to the same period in 2010. Good progress is being made with the restructuring of the administration business, despite still contributing an operational loss. Sanlam Capital Management recorded a 108% increase in

• perating profjt, with all business lines contributing

to the growth. The 2011 results includes profjt realised on a property fjnancing transaction of some R45 million, which will not recur. The decline in Sanlam Investments’ operating profjt is attributable to a reduction in performance fees from R78 million in the fjrst half of 2010 to R33 million in 2011 and a R20 million decline in investment return earned on seeding capital provided for some of the cluster’s hedge fund

• portfolios. Excluding these, operating profjt

increased by 16%, well in excess of the 11% growth in average assets under management. Performance fees were earned across the business, with the

• verall decline attributable to a lower contribution

from SIM Global. Volatility in performance fees earned by SIM Global is expected given the specialist nature of its investment portfolios.

22 Group Financial Review SANLAM INTERIM RESULTS 2011

Sanlam UK

Key performance indicators for the six months ended 30 June 2011

R million 2011 2010 ∆ Group Equity Value Group Equity Value 1 773 1 539 15,2% Covered business 637 638

• 0,2%

Other operations 1 136 901 26,1% Return on Group Equity Value 20,0% 8,7% Covered business 23,8% 2,7% Other operations 17,3% 13,6% Business volumes New business volumes 2 289 1 499 53% Life business 674 557 21% Investments 1 615 942 72% Net fund fmows 1 172 378 210% Life business 261 (26) >100% Investments 911 404 125% Value of new covered business Value of new business 6 9

• 33%

Present value of new business premiums 695 577 20% New business margin 0,86% 1,56% Earnings Gross result from fjnancial services 19 30

• 37%

Net result from fjnancial services 21 31

• 32%

Sanlam UK continues to operate in a very challenging economic environment. After some relief in the second half of 2010, market volatility returned, combined with uncertainty relating to the impact of the European debt crisis. Growth prospects for the UK economy have also been revised downwards, with consumers starting to feel the impact of austerity measures. Consumer sentiment commensurately turned cautious again, setting the stage for a much more diffjcult fjrst half of 2011. Sanlam UK recorded an annualised ROGEV of 20,0%, supported by a weakening in the rand exchange rate and an increase in the base valuations of the non-life operations, particularly Principal and Nucleus, following a substantial increase in assets under management. The increase in assets under management was driven by positive investment market performance as well as strong net fund infmows. Sanlam UK achieved strong growth in comparable new business volumes of 53% despite the challenging business environment, with both life and investment business supporting the growth. Sanlam UK continues to deliver on its niche strategy, which refmects in the new business growth. The decrease in operating profjt is largely attributable to positive economic assumption changes in the fjrst half of 2010, which did not recur in 2011. Costs associated with expanding distribution capacity also impacted on the results. Excluding these, Sanlam UK’s operating profjt is in line with growth in assets under management.

Comments on the Results

continued

Group Financial Review 23 SANLAM INTERIM RESULTS 2011 The favourable underwriting experience of 2010 continued into the fjrst half of 2011. The strategic focus on claims management is refmected in the low claims ratio. Growth in net earned premiums was below expectations, with strong competition from the established direct insurers and banks. With claims management initiatives largely implemented, it afgords Santam the opportunity to shift focus to gaining market share. Several initiatives are being explored in the traditional intermediated market. At the same time MiWay is continuing to successfully build its direct distribution capacity. The ROGEV of the short-term insurance cluster largely refmects the investment return earned on the listed Santam shares, which underperformed in line with the South African equity market.

Short-term insurance

Key performance indicators for the six months ended 30 June 2011

R million 2011 2010 ∆ Group Equity Value Group Equity Value 8 611 8 529 1,0% Return on Group Equity Value 5,8% 11,6% Business volumes Net earned premiums 7 112 6 646 7% Net fund fmows 2 555 2 315 10% Earnings Gross result from fjnancial services 793 688 15% Net result from fjnancial services 319 266 20% Ratios Claims 63,8% 65,2% Administration costs 27,6% 27,9% Combined 91,5% 93,0% Underwriting 8,5% 7,0%

24 Group Financial Review SANLAM INTERIM RESULTS 2011

Comments on the Results

continued

Solvency

All of the life insurance businesses within the Group were suffjciently capitalised at the end of June 2011. The total admissible regulatory capital (including identifjed discretionary capital) of Sanlam Life Insurance Limited, the holding company of the Group’s major life insurance subsidiaries, of R23,7 billion covered its capital adequacy requirements (CAR) 3,2 times. No policyholder portfolio had a negative bonus stabilisation reserve at the end of June 2011. FitchRatings has affjrmed the following ratings of the Group in 2011 and the outlook remained stable:

Sanlam Limited

• National Long-term: AA- (zaf)

Sanlam Life Insurance Limited

• National Insurer Financial Strength: AA+ (zaf)
• National Long-term: AA (zaf)
• National Short-term: F1+ (zaf)
• Subordinated debt: A+ (zaf)

Santam Limited

• National Insurer Financial Strength: AA+ (zaf)
• National Long-term: AA (zaf)
• Subordinated debt: A+ (zaf)

Dividend

The Group only declares an annual dividend due to the costs involved in distributing an interim dividend to our large shareholder base. Desmond Smith Johan van Zyl Chairman Group Chief Executive Sanlam Limited Cape Town 7 September 2011

RETAIL CLUSTER SANLAM GROUP FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

Group Financial Review 27 SANLAM INTERIM RESULTS 2011

Contents

Group Equity Value 28 Change in Group Equity Value 30 Return on Group Equity Value 31 Adjusted return on Group Equity Value 33 Shareholders’ fund at fair value 34 Shareholders’ fund income statement 38 Notes to the shareholders’ fund information 42 Embedded value of covered business 50

Shareholders’ Information

for the six months ended 30 June 2011

28 Group Financial Review SANLAM INTERIM RESULTS 2011

Group Equity Value

at 30 June 2011

June Reviewed 2011 R million Note Total Fair value

• f assets

Value of in-force Sanlam Personal Finance 24 978 10 331 14 647 Covered business (1) 22 854 8 207 14 647 Glacier 1 061 1 061 – Sanlam Personal Loans 406 406 – Multi-Data 110 110 – Sanlam Trust 143 143 – Sanlam Home Loans – – – Anglo African Finance 49 49 – Sanlam Healthcare Management 250 250 – Sanlam Namibia Holdings 105 105 – Sanlam Developing Markets 5 064 1 831 3 233 Covered business (1) 4 507 1 274 3 233 Other SDM operations 557 557 – Sanlam UK 1 773 1 313 460 Covered business (1) 637 177 460 Principal 419 419 – Sanlam Private Wealth 36 36 – Punter Southall Group 260 260 – Other UK operations 175 175 – Preference shares and interest-bearing instruments 246 246 – Institutional cluster 12 370 11 890 480 Covered business (1) 5 047 4 567 480 Sanlam Investments 6 451 6 451 – Coris Administration and Infjnit 37 37 – Capital Management 835 835 – Short-term insurance 8 611 8 611 – MiWay – – – Shriram General Insurance 145 145 – Santam 8 466 8 466 – Group operations 52 796 33 976 18 820 Capital diversifjcation – – – Discretionary capital 3 200 3 200 – Balanced portfolio – other 3 376 3 376 – Group Equity Value before adjustments to net worth 59 372 40 552 18 820 Net worth adjustments (1 487) (1 487) – Present value of holding company expenses (1 474) (1 474) – Fair value of outstanding equity compensation shares granted by subsidiaries on own shares (13) (13) – Group Equity Value 57 885 39 065 18 820 Value per share (cents) 6 2 877 1 942 936 Analysis per type of business Covered business (1) 33 045 14 225 18 820 Sanlam Personal Finance 22 854 8 207 14 647 Sanlam Developing Markets 4 507 1 274 3 233 Sanlam UK 637 177 460 Institutional cluster 5 047 4 567 480 Other Group operations 5 19 751 19 751 – Discretionary and other capital 5 089 5 089 – Group Equity Value 57 885 39 065 18 820

(1) Refer embedded value of covered business on page 50.

Group Financial Review 29 SANLAM INTERIM RESULTS 2011 June Reviewed 2010 December Audited 2010 Total Fair value

• f assets

Value of in-force Total Fair value

• f assets

Value of in-force 21 800 9 758 12 042 23 542 10 198 13 344 20 120 8 078 12 042 21 488 8 144 13 344 758 758 – 965 965 – 194 194 – 365 365 – 143 143 – 149 149 – 171 171 – 185 185 – 115 115 – – – – 46 46 – 50 50 – 160 160 – 235 235 – 93 93 – 105 105 – 4 059 1 542 2 517 4 356 1 508 2 848 3 696 1 179 2 517 3 952 1 104 2 848 363 363 – 404 404 – 1 560 1 123 437 1 539 1 113 426 659 222 437 638 212 426 294 294 – 318 318 – 47 47 – 42 42 – 256 256 – 227 227 – 50 50 – 140 140 – 254 254 – 174 174 – 11 408 11 143 265 12 492 12 098 394 4 836 4 571 265 4 967 4 573 394 5 736 5 736 – 6 569 6 569 – – – – 25 25 – 836 836 – 931 931 – 7 422 7 422 – 8 529 8 529 – 127 127 – – – – 115 115 – 143 143 – 7 180 7 180 – 8 386 8 386 – 46 249 30 988 15 261 50 458 33 446 17 012 (700) (700) – – – – 2 800 2 800 – 4 000 4 000 – 3 157 3 157 – 4 157 4 157 – 51 506 36 245 15 261 58 615 41 603 17 012 (1 304) (1 304) – (1 254) (1 254) – (1 274) (1 274) – (1 232) (1 232) – (30) (30) – (22) (22) – 50 202 34 941 15 261 57 361 40 349 17 012 2 479 1 725 754 2 818 1 982 836 29 311 14 050 15 261 31 045 14 033 17 012 20 120 8 078 12 042 21 488 8 144 13 344 3 696 1 179 2 517 3 952 1 104 2 848 659 222 437 638 212 426 4 836 4 571 265 4 967 4 573 394 16 938 16 938 – 19 413 19 413 – 3 953 3 953 – 6 903 6 903 – 50 202 34 941 15 261 57 361 40 349 17 012

30 Group Financial Review SANLAM INTERIM RESULTS 2011

Change in Group Equity Value

for the six months ended 30 June 2011

Six months Reviewed Full year Audited R million 2011 2010 2010 Earnings from covered business (1) 3 158 1 158 5 057 Earnings from other Group operations 918 947 4 100 Operations valued based on ratio of price to assets under management 233 96 1 136 Assumption changes – (79) 137 Change in assets under management 171 48 622 Earnings for the period and changes in capital requirements 12 98 564 Foreign currency translation difgerences and other 50 29 (187) Operations valued based on discounted cash fmows 255 340 782 Expected return 205 151 301 Operating experience variances and other 25 3 34 Assumption changes (10) 205 521 Foreign currency translation difgerences 35 (19) (74) Operations valued at net asset value – earnings for the period 120 28 56 Listed operations – investment return 237 483 2 126 Earnings from discretionary and other capital (252) 127 165 Investment return 205 366 400 Intangible assets less value of in-force acquired – – (20) Treasury shares and other (224) (127) (153) Change in adjustments to net worth (233) (112) (62) Group Equity Value earnings 3 751 2 232 9 322 Dividends paid (2 279) (2 112) (2 112) Shares cancelled – (1 233) (1 234) Cost of treasury shares acquired (948) 302 372 Sanlam share buy back (944) (866) (887) Transfer to shares cancelled – 1 233 1 234 Share incentive scheme and other (4) (65) 25 Change in accounting policy – (11) (11) Group Equity Value at beginning of the period 57 361 51 024 51 024 Group Equity Value at end of the period 57 885 50 202 57 361

(1) Refer embedded value of covered business on page 51.

Group Financial Review 31 SANLAM INTERIM RESULTS 2011

Return on Group Equity Value

for the six months ended 30 June 2011

Six months Reviewed Full year Audited 2011 2010 2010 Earnings R million Return* % Earnings R million Return* % Earnings R million Return % Sanlam Personal Finance 2 432 21,7 1 212 11,6 4 525 21,1 Covered business (1) 2 242 22,0 928 9,6 3 782 19,0 Other operations 190 19,4 284 38,3 743 46,1 Sanlam Developing Markets 570 27,9 318 18,0 774 21,0 Covered business (1) 560 30,3 237 14,3 676 19,7 Other operations 10 5,0 81 71,4 98 37,4 Sanlam UK 147 20,0 64 8,7 41 2,7 Covered business (1) 72 23,8 9 2,7 (7) (1,1) Other operations 75 17,3 55 13,6 48 5,8 Institutional cluster 609 10,0 109 1,8 1 761 14,8 Covered business (1) 284 11,8 (16) (0,6) 606 12,2 Sanlam Investments 206 6,4 113 3,8 1 023 17,1 Coris Administration and Infjnit 12 119,0 (2) – 23 – Capital Management 107 24,3 14 2,8 109 11,1 Short-term insurance 245 5,8 402 11,6 2 056 28,8 Discretionary and other capital (252) 127 165 Balance of portfolio 205 366 400 Shriram Life Insurance goodwill less value of in-force acquired – – (20) Treasury shares and other (224) (127) (153) Change in net worth adjustments (233) (112) (62) Return on Group Equity Value 3 751 13,5 2 232 8,9 9 322 18,3 Return on Group Equity Value per share 12,8 9,1 18,2

* Annualised

(1) Refer embedded value of covered business on page 51.

32 Group Financial Review SANLAM INTERIM RESULTS 2011

Return on Group Equity Value

for the six months ended 30 June 2011

Six months Reviewed Full year Audited R million 2011 2010 2010 Reconciliation of return on Group Equity Value: The return on Group Equity Value reconciles as follows to normalised attributable earnings: Normalised attributable earnings per shareholders’ fund income statement on page 41 2 271 2 026 5 544 Earnings recognised directly in equity 82 75 160 Dilution from Santam treasury share transactions (5) (6) (31) Share-based payments 87 81 191 Net foreign currency translation gains recognised in

• ther comprehensive income

111 (92) (408) Movement in fair value adjustment – shareholders’ fund at fair value (66) 179 2 165 Movement in adjustments to net worth (206) (108) (17) Present value of holding company expenses (242) (109) (67) Fair value of outstanding equity compensation shares granted by subsidiaries on own shares 9 (3) 5 Change in intangible assets less value of in-force acquired 27 4 45 Treasury shares and other (224) (127) (152) Growth from covered business: value of in-force (1) 1 783 279 2 030 Return on Group Equity Value 3 751 2 232 9 322

(1) Refer embedded value of covered business on page 51.

Group Financial Review 33 SANLAM INTERIM RESULTS 2011

Adjusted return on Group Equity Value

for the six months ended 30 June 2011

Six months Reviewed Full year Audited 2011 2010 2010 Earnings R million Return* % Earnings R million Return* % Earnings R million Return % Sanlam Personal Finance 1 749 15,4 1 788 17,3 3 826 17,8 Covered business 1 559 15,0 1 504 15,7 3 083 15,5 Other operations 190 19,4 284 38,3 743 46,1 Sanlam Developing Markets 513 24,9 246 13,8 770 20,9 Covered business 487 26,2 227 13,7 730 21,3 Other operations 26 13,3 19 15,0 40 15,3 Sanlam UK 111 14,9 130 18,1 107 7,1 Covered business 28 9,0 38 11,8 65 9,8 Other operations 83 19,2 92 23,3 42 5,0 Institutional cluster 711 11,7 633 10,9 1 753 14,7 Covered business 253 10,4 220 9,1 578 11,7 Other operations 458 12,6 413 12,2 1 175 16,8 Short-term insurance 715 17,5 446 12,9 1 614 22,6 Discretionary and other capital (94) (47) 182 Adjusted return on Group Equity Value 3 705 13,3 3 196 12,9 8 252 16,2 Adjusted return on Group Equity Value per share 12,6 13,2 16,0

* Annualised

34 Group Financial Review SANLAM INTERIM RESULTS 2011

Shareholders’ fund at fair value

at 30 June 2011

June Reviewed 2011 R million Fair value Fair value adjustment Net asset value Covered business, discretionary and other capital 22 210 184 22 026 Property and equipment 258 – 258 Owner-occupied properties 487 – 487 Goodwill (2) 497 – 497 Value of business acquired (2) 696 – 696 Other intangible assets 34 – 34 Deferred acquisition costs 1 551 – 1 551 Investments 19 887 196 19 691 Equities and similar securities 8 474 112 8 362 Associated companies 1 268 84 1 184 Joint ventures Shriram Life Insurance and other (3) 267 – 267 Public sector stocks and loans 13 – 13 Investment properties 792 – 792 Other interest-bearing and preference share investments 9 073 – 9 073 Net term fjnance – – – T erm fjnance (5 801) – (5 801) Assets held in respect of term fjnance 5 801 – 5 801 Net deferred tax 290 (12) 302 Net working capital (761) – (761) Minority shareholders’ interest (729) – (729) Other Group operations 19 751 10 456 9 295 Sanlam Investments 6 451 4 947 1 504 SIM Wholesale 4 042 3 280 762 International 1 885 1 199 686 Sanlam Collective Investments 524 468 56 Sanlam Personal Finance 2 124 1 419 705 Glacier 1 061 798 263 Sanlam Personal Loans (4) 406 88 318 Multi-Data 110 101 9 Sanlam Trust 143 142 1 Sanlam Home Loans – – – Anglo African Finance 49 31 18 Sanlam Healthcare Management 250 166 84 Sanlam Namibia Holdings 105 93 12 Sanlam UK 1 136 116 1 020 Principal 419 45 374 Sanlam Private Wealth 36 (9) 45 Punter Southall Group 260 (21) 281 Other UK operations 175 101 74 Preference shares, interest-bearing instruments and other 246 – 246 Sanlam Developing Markets: other operations 557 71 486 Coris Administration and Infjnit 37 27 10 Capital Management 835 79 756 MiWay – – – Shriram General Insurance 145 – 145 Santam 8 466 5 044 3 422 Goodwill held on Group level in respect of the above businesses – (1 247) 1 247 Shareholders’ fund at fair value 41 961 10 640 31 321 Value per share (cents) 2 086 529 1 557

Group Financial Review 35 SANLAM INTERIM RESULTS 2011 Restated June Reviewed 2010 December Audited 2010 Fair value Fair value adjustment Net asset value Fair value Fair value adjustment Net asset value 20 738 118 20 620 23 623 217 23 406 237 – 237 222 – 222 503 – 503 493 – 493 500 – 500 497 – 497 737 – 737 716 – 716 44 – 44 39 – 39 1 503 – 1 503 1 528 – 1 528 19 136 118 19 018 19 992 217 19 775 7 298 112 7 186 7 947 112 7 835 874 6 868 1 168 105 1 063 247 – 247 257 – 257 77 – 77 17 – 17 780 – 780 993 – 993 9 860 – 9 860 9 610 – 9 610 – – – – – – (5 272) – (5 272) (5 577) – (5 577) 5 272 – 5 272 5 577 – 5 577 139 – 139 284 – 284 (1 385) – (1 385) 520 – 520 (676) – (676) (668) – (668) 16 938 8 602 8 336 19 413 10 489 8 924 5 736 4 348 1 388 6 569 4 977 1 592 3 515 3 151 364 4 247 3 515 732 1 787 818 969 1 810 1 024 786 434 379 55 512 438 74 1 680 1 056 624 2 054 1 365 689 758 519 239 965 685 280 194 – 194 365 104 261 143 133 10 149 130 19 171 169 2 185 166 19 115 – 115 – – – 46 32 14 50 33 17 160 132 28 235 157 78 93 71 22 105 90 15 901 55 846 901 34 867 294 – 294 318 17 301 47 16 31 42 (8) 50 256 (11) 267 227 (43) 270 50 50 – 140 68 72 254 – 254 174 – 174 363 154 209 404 94 310 – 10 (10) 25 15 10 836 108 728 931 83 848 127 142 (15) – – – 115 – 115 143 – 143 7 180 3 976 3 204 8 386 5 168 3 218 – (1 247) 1 247 – (1 247) 1 247 37 676 8 720 28 956 43 036 10 706 32 330 1 860 431 1 430 2 114 526 1 588

36 Group Financial Review SANLAM INTERIM RESULTS 2011 June Reviewed 2011 R million Total Fair value

• f assets

Value of in-force Reconciliation to Group Equity Value Group Equity Value before adjustments to net worth 59 372 40 552 18 820 Add: Goodwill and value of business acquired replaced by value of in-force 1 409 1 409 – Sanlam Life and Pensions Limited UK 356 356 – Sanlam Developing Markets 825 825 – Shriram Life Insurance (3) 210 210 – Other 18 18 – Less: Value of in-force (18 820) – (18 820) Shareholders’ fund at fair value 41 961 41 961 – June Reviewed December Audited 2011 2010 2010 Reconciliation to Group statement of fjnancial position Shareholders’ fund at net asset value 31 321 28 956 32 330 Consolidation reserve (531) (418) (552) Shareholder’s fund per Group statement of fjnancial position 30 790 28 538 31 778

(1) Group businesses listed above are not consolidated, but refmected as investments at fair value. (2) The fair value of business acquired and goodwill relate mainly to the consolidation of Sanlam Sky Solutions, Channel Life and

Sanlam Life and Pensions Limited UK and are excluded in the build-up of the Group Equity Value, as the current value of in- force business for these life insurance companies are included in the embedded value of covered business.

(3) The carrying value of Shriram Life Insurance includes goodwill of R210 million that is excluded in the build-up of the Group

Equity Value, as the current value of in-force business for Shriram Life Insurance is included in the embedded value of covered business.

(4) The life insurance component of Sanlam Personal Loans’ operations is included in the value of in-force business and therefore

excluded from the Sanlam Personal Loans fair value.

Shareholders’ fund at fair value continued

at 30 June 2011

Group Financial Review 37 SANLAM INTERIM RESULTS 2011 June Reviewed 2010 December Audited 2010 Total Fair value

• f assets

Value of in-force Total Fair value

• f assets

Value of in-force 51 506 36 245 15 261 58 615 41 603 17 012 1 431 1 431 – 1 433 1 433 – 356 356 – 356 356 – 873 873 – 849 849 – 190 190 – 210 210 – 12 12 – 18 18 – (15 261) – (15 261) (17 012) – (17 012) 37 676 37 676 – 43 036 43 036 –

38 Group Financial Review SANLAM INTERIM RESULTS 2011

Shareholders’ fund income statement

for the six months ended 30 June 2011

Sanlam Personal Finance Sanlam Developing Markets Sanlam UK R million 2011 2010 2011 2010 2011 2010 Financial services income 3 854 3 465 2 296 2 062 209 182 Sales remuneration (670) (601) (516) (508) (27) (26) Income after sales remuneration 3 184 2 864 1 780 1 554 182 156 Underwriting policy benefjts (860) (844) (847) (830) – – Administration costs (1 178) (1 048) (573) (502) (163) (126) Result from fjnancial services before tax 1 146 972 360 222 19 30 Tax on fjnancial services income (297) (243) (85) (73) 1 – Result from fjnancial services after tax 849 729 275 149 20 30 Minority shareholders’ interest (29) (17) (79) (67) 1 1 NET RESULT FROM FINANCIAL SERVICES 820 712 196 82 21 31 Net investment income 369 278 30 28 4 11 Dividends received – Group companies 128 61 – – – – Other investment income 296 274 43 41 4 13 T ax on investment income (55) (57) 5 (9) – (2) Minority shareholders’ interest – – (18) (4) – – Project expenses (1) (10) (7) (9) – – Amortisation of intangibles (3) (3) (19) (20) (19) (11) BEE transaction costs – – – – – – Net equity-accounted headline earnings – – 2 13 – – Equity-accounted headline earnings – – 3 26 – – Minority shareholders’ interest – – (1) (13) – – Net investment surpluses 104 28 9 (4) (1) – Investment surpluses – Group companies (20) 72 – – – – Other investment surpluses 136 (43) 9 13 (1) – T ax on investment surpluses (12) (1) 25 4 – – Minority shareholders’ interest – – (25) (21) – – Secondary tax on companies – after minorities (105) (39) (1) (15) – – NORMALISED HEADLINE EARNINGS 1 184 966 210 75 5 31 Profjt/(loss) on disposal of operations – – – – – – Impairments – 30 (1) (1) – 23 NORMALISED ATTRIBUTABLE EARNINGS 1 184 996 209 74 5 54 Fund transfers – – – – – – Attributable profjt per Group statement of comprehensive income 1 184 996 209 74 5 54 Ratios Admin ratio (1) 37,0% 36,6% 32,2% 32,3% 89,6% 80,8% Operating margin (2) 36,0% 33,9% 20,2% 14,3% 10,4% 19,2% Diluted earnings per share Adjusted weighted average number of shares (million) Net result from fjnancial services (cents) 40,5 34,7 9,7 4,0 1,0 1,5 Core earnings (cents)

(1) Administration costs as a percentage of income earned by the shareholders’ fund less sales remuneration. (2) Result from fjnancial services before tax as a percentage of income earned by the shareholders’ fund less sales

remuneration.

(3) Comparative information for Sanlam Investments, Sanlam Employee Benefjts and Capital Management were

restated.

(4) Corporate and Other includes the consolidation entries in respect of the dividends received and the investment

surpluses on the Sanlam Limited shares held by Sanlam Life Insurance Limited.

Group Financial Review 39 SANLAM INTERIM RESULTS 2011 Sanlam Employee Benefjts (3) Short–term insurance Sanlam Investments

(3)

Capital Management Subtotal: Operating businesses 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 1 433 1 354 7 222 6 871 1 024 994 286 204 16 324 15 132 (16) (16) (1 037) (1 006) – – – – (2 266) (2 157) 1 417 1 338 6 185 5 865 1 024 994 286 204 14 058 12 975 (960) (919) (4 487) (4 331) – – – – (7 154) (6 924) (328) (333) (905) (846) (725) (667) (153) (140) (4 025) (3 662) 129 86 793 688 299 327 133 64 2 879 2 389 (36) (28) (225) (193) (75) (79) (26) (4) (743) (620) 93 58 568 495 224 248 107 60 2 136 1 769 – – (249) (229) (12) (9) – – (368) (321) 93 58 319 266 212 239 107 60 1 768 1 448 69 66 13 25 25 4 – 1 510 413 – – – – – – – – 128 61 85 83 18 52 46 11 – 1 492 475 (16) (17) 6 (7) (3) (4) – – (63) (96) – – (11) (20) (18) (3) – – (47) (27) – – – – (4) – – – (12) (19) – (1) (20) (2) (4) (3) – – (65) (40) – – (2) (3) – – – – (2) (3) – – 26 17 1 – (1) 18 28 48 – – 46 30 2 – (1) 18 50 74 – – (20) (13) (1) – – – (22) (26) 55 (32) 53 16 (18) 39 – – 202 47 – – – – – – – – (20) 72 60 (31) 74 13 (4) 55 – – 274 7 (5) (1) 18 14 (3) (11) – – 23 5 – – (39) (11) (11) (5) – – (75) (37) (1) – (19) (17) – – – (1) (126) (72) 216 91 370 302 212 279 106 78 2 303 1 822 – – – – (6) – – 326 (6) 326

• (2)

– – (21) – – – (22) 50 216 89 370 302 185 279 106 404 2 275 2 198 – – – – – – – – – – 216 89 370 302 185 279 106 404 2 275 2 198 23,1% 24,9% 14,6% 14,4% 70,8% 67,1% 53,5% 68,6% 28,6% 28,2% 9,1% 6,4% 12,8% 11,7% 29,2% 32,9% 46,5% 31,4% 20,5% 18,4% 4,6 2,8 15,7 13,0 10,5 11,7 5,3 2,9 87,2 70,7

40 Group Financial Review SANLAM INTERIM RESULTS 2011

Shareholders’ fund income statement continued

for the six months ended 30 June 2011

Subtotal: Operating businesses R million 2011 2010 Financial services income 16 324 15 132 Sales remuneration (2 266) (2 157) Income after sales remuneration 14 058 12 975 Underwriting policy benefjts (7 154) (6 924) Administration costs (4 025) (3 662) Result from fjnancial services before tax 2 879 2 389 Tax on result from fjnancial services (743) (620) Result from fjnancial services after tax 2 136 1 769 Minority shareholders’ interest (368) (321) NET RESULT FROM FINANCIAL SERVICES 1 768 1 448 Net investment income 510 413 Dividends received – Group companies 128 61 Other investment income 492 475 T ax on investment income (63) (96) Minority shareholders’ interest (47) (27) Project expenses (12) (19) Amortisation of intangibles (65) (40) BEE transaction costs (2) (3) Net equity-accounted headline earnings 28 48 Equity-accounted headline earnings 50 74 Minority shareholders’ interest (22) (26) Net investment surpluses 202 47 Investment surpluses – Group companies (20) 72 Other investment surpluses 274 7 T ax on investment surpluses 23 5 Minority shareholders’ interest (75) (37) Secondary tax on companies – after minorities (126) (72) NORMALISED HEADLINE EARNINGS 2 303 1 822 Profjt/(loss) on disposal of operations (6) 326 Impairments (22) 50 NORMALISED ATTRIBUTABLE EARNINGS 2 275 2 198 Fund transfers – – Attributable profjt per Group statement of comprehensive income 2 275 2 198 Ratios Admin ratio 28,6% 28,2% Operating margin 20,5% 18,4% Diluted earnings per share Adjusted weighted average number of shares (million) Net result from fjnancial services (cents) 87,2 70,7

Group Financial Review 41 SANLAM INTERIM RESULTS 2011 Corporate & Other (4) Six months Full year 2011 2010 2011 2010 2010 72 82 16 396 15 214 31 839 – – (2 266) (2 157) (4 557) 72 82 14 130 13 057 27 282 – – (7 154) (6 924) (13 817) (147) (137) (4 172) (3 799) (8 069) (75) (55) 2 804 2 334 5 396 23 29 (720) (591) (1 387) (52) (26) 2 084 1 743 4 009 – – (368) (321) (706) (52) (26) 1 716 1 422 3 303 (97) 4 413 417 851 (128) (61) – – – 30 83 522 558 1 110 1 (18) (62) (114) (186) – – (47) (27) (73) (9) – (21) (19) (48) – – (65) (40) (92) – – (2) (3) (8) 26 12 54 60 141 26 12 76 86 193 – – (22) (26) (52) 97 (25) 299 22 1 131 20 (72) – – – 73 50 347 57 1 536 4 (3) 27 2 (217) – – (75) (37) (188) (66) (137) (192) (209) (135) (101) (172) 2 202 1 650 5 143 97 – 91 326 404 – – (22) 50 (3) (4) (172) 2 271 2 026 5 544 3 60 3 60 (21) (1) (112) 2 274 2 086 5 523 29,5% 29,1% 29,6% 19,8% 17,9% 19,8% 2 027,0 2 049,0 2 045,3 (2,6) (1,3) 84,7 69,4 161,5

42 Group Financial Review SANLAM INTERIM RESULTS 2011

Notes to the shareholders’ fund information

for the six months ended 30 June 2011

1. ANAL YSIS OF NEW BUSINESS AND TOTAL FUNDS RECEIVED

Analysed per business, refmecting the split between life and non-life business Total Life Insurance (1) Life Licence (2) Other R million 2011 2010 2011 2010 2011 2010 2011 2010 Sanlam Personal Finance 15 960 14 954 6 712 6 007 – – 9 248 8 947 South Africa 12 170 10 689 6 439 5 700 – – 5 731 4 989 Recurring 606 552 564 527 – – 42 25 Single 10 697 9 328 5 008 4 364 – – 5 689 4 964 Continuations 867 809 867 809 – – – – Africa 3 790 4 265 273 307 – – 3 517 3 958 Recurring 50 50 50 50 – – – – Single 3 740 4 215 223 257 – – 3 517 3 958 Sanlam Developing Markets 1 603 1 279 1 603 1 279 – – – – South Africa 637 615 637 615 – – – – Recurring 451 423 451 423 – – – – Single 186 192 186 192 – – – – Africa 844 544 844 544 – – – – Recurring 198 192 198 192 – – – – Single 646 352 646 352 – – – – Other international 122 120 122 120 – – – – Recurring 20 70 20 70 – – – – Single 102 50 102 50 – – – – Sanlam UK 2 289 1 499 674 557 – – 1 615 942 Other international 2 289 1 499 674 557 – – 1 615 942 Recurring 11 7 11 7 – – – – Single 2 278 1 492 663 550 – – 1 615 942 Sanlam Employee Benefjts 618 450 618 450 – – – – South Africa 618 450 618 450 – – – – Recurring 134 91 134 91 – – – – Single 484 359 484 359 – – – – Sanlam Investments 24 269 22 428 – – 561 606 23 708 21 822 Employee benefjts 350 535 – – 350 535 – – Recurring – 32 – – – 32 – – Single 350 503 – – 350 503 – – Collective investment schemes 11 826 7 191 – – – – 11 826 7 191 Retail funds 8 191 5 181 – – – – 8 191 5 181 Wholesale business 3 635 2 010 – – – – 3 635 2 010 Segregated funds 9 973 13 220 – – – – 9 973 13 220 Wholesale business 6 195 9 451 – – – – 6 195 9 451 Private Investments 3 778 3 769 – – – – 3 778 3 769 Non-South African 2 120 1 482 – – 211 71 1 909 1 411 Short-term insurance 7 112 6 646 – – – – 7 112 6 646 New business excluding white label 51 851 47 256 9 607 8 293 561 606 41 683 38 357 White label 3 211 2 525 – – – – 3 211 2 525 Sanlam Collective Investments 3 211 2 525 – – – – 3 211 2 525 Total new business 55 062 49 781 9 607 8 293 561 606 44 894 40 882 Recurring premiums on existing funds: Sanlam Personal Finance 5 130 4 919 Sanlam Developing Markets 2 022 1 499 Sanlam UK 237 263 Institutional cluster 1 750 2 151 Total funds received 64 201 58 613

(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of

covered business.

(2) Life licence business relates to investment products provided by means of a life insurance policy where there is very little or

no insurance risk. Life licence business is excluded from the calculation of embedded value of covered business.

Group Financial Review 43 SANLAM INTERIM RESULTS 2011

1. ANAL YSIS OF NEW BUSINESS AND TOTAL FUNDS RECEIVED (continued)

R million 2011 2010 Analysed per market Retail Life business 7 076 6 315 Sanlam Personal Finance 6 439 5 700 Sanlam Developing Markets 637 615 Non-life business 17 700 13 939 Sanlam Personal Finance 5 731 4 989 Sanlam Private Investments 3 778 3 769 Sanlam Collective Investments 8 191 5 181 South African 24 776 20 254 Non-South African 7 045 6 428 Sanlam Personal Finance 3 790 4 265 Sanlam Developing Markets 966 664 Sanlam UK 2 289 1 499 Total retail 31 821 26 682 Institutional Group Life business 968 985 Sanlam Employee Benefjts 618 450 Investment Management 350 535 Non-life business 9 830 11 461 Segregated 4 065 5 998 Sanlam Multi-Manager 2 130 3 453 Sanlam Collective Investments 3 635 2 010 South African 10 798 12 446 Investment Management Non-South African 2 120 1 482 Total institutional 12 918 13 928 White label 3 211 2 525 Sanlam Collective Investments 3 211 2 525 Short-term insurance 7 112 6 646 Total new business 55 062 49 781

44 Group Financial Review SANLAM INTERIM RESULTS 2011

Notes to the shareholders’ fund information

for the six months ended 30 June 2011

• 2. ANAL

YSIS OF PAYMENTS TO CLIENTS

Total Life Insurance (1) Life Licence (2) Other R million 2011 2010 2011 2010 2011 2010 2011 2010 Sanlam Personal Finance 18 854 17 861 10 782 9 642 – – 8 072 8 219 South Africa 15 080 13 690 10 168 9 163 – – 4 912 4 527 Surrenders 1 560 1 564 1 560 1 564 – – – – Other 13 520 12 126 8 608 7 599 – – 4 912 4 527 Africa 3 774 4 171 614 479 – – 3 160 3 692 Surrenders 52 53 52 53 – – – – Other 3 722 4 118 562 426 – – 3 160 3 692 Sanlam Developing Markets 1 862 1 753 1 862 1 753 – – – – South Africa 1 246 1 318 1 246 1 318 – – – – Surrenders 154 209 154 209 – – – – Other 1 092 1 109 1 092 1 109 – – – – Africa 558 413 558 413 – – – – Surrenders 161 11 161 11 – – – – Other 397 402 397 402 – – – – Other international 58 22 58 22 – – – – Surrenders 58 16 58 16 – – – – Other – 6 – 6 – – – – Sanlam UK 1 354 1 384 650 846 – – 704 538 Other international 1 354 1 384 650 846 – – 704 538 Surrenders 1 202 1 192 498 654 – – 704 538 Other benefjts 152 192 152 192 – – – – Sanlam Employee Benefjts 2 680 3 407 2 680 3 407 – – – – South Africa 2 680 3 407 2 680 3 407 – – – – T erminations 600 1 306 600 1 306 – – – – Other 2 080 2 101 2 080 2 101 – – – – Sanlam Investments 20 641 20 932 – – 1 245 1 382 19 396 19 550 Employee benefjts 1 062 1 299 – – 1 062 1 299 – – T erminations 742 873 – – 742 873 – – Other 320 426 – – 320 426 – – Collective investment schemes 8 450 6 114 – – – – 8 450 6 114 Retail funds 5 220 3 948 – – – – 5 220 3 948 Wholesale business 3 230 2 166 – – – – 3 230 2 166 Segregated funds 9 020 9 150 – – – – 9 020 9 150 Wholesale business 6 768 7 350 – – – – 6 768 7 350 Private Investments 2 252 1 800 – – – – 2 252 1 800 Non-South African 2 109 4 369 – – 183 83 1 926 4 286 Short-term insurance 4 557 4 331 – – – – 4 557 4 331 Payments to clients excluding white label 49 948 49 668 15 974 15 648 1 245 1 382 32 729 32 638 White label 2 835 2 295 – – – – 2 835 2 295 Sanlam Collective Investments 2 835 2 295 – – – – 2 835 2 295 Total payments to clients 52 783 51 963 15 974 15 648 1 245 1 382 35 564 34 933

(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of

covered business.

(2) Life licence business relates to investment products provided by means of a life insurance policy where there is very little or

no insurance risk. Life licence business is excluded from the calculation of embedded value of covered business.

Group Financial Review 45 SANLAM INTERIM RESULTS 2011

• 3. ANAL

YSIS OF NET INFLOW/(OUTFLOW) OF FUNDS

Total Life Insurance (1) Life Licence (2) Other R million 2011 2010 2011 2010 2011 2010 2011 2010 Sanlam Personal Finance 2 236 2 012 985 1 205 – – 1 251 807 South Africa 1 916 1 656 1 022 1 115 – – 894 541 Africa 320 356 (37) 90 – – 357 266 Sanlam Developing Markets 1 763 1 025 1 763 1 025 – – – – South Africa 844 335 844 335 – – – – Africa 794 547 794 547 – – – – Other international 125 143 125 143 – – – – Sanlam UK 1 172 378 261 (26) – – 911 404 Sanlam Employee Benefjts (607) (1 171) (607) (1 171) – – – – Sanlam Investments 3 923 1 860 – – (389) (412) 4 312 2 272 Employee benefjts (417) (400) – – (417) (400) – – Collective investment schemes 3 376 1 077 – – – – 3 376 1 077 Retail funds 2 971 1 233 – – – – 2 971 1 233 Wholesale business 405 (156) – – – – 405 (156) Segregated funds 953 4 070 – – – – 953 4 070 Wholesale business (573) 2 101 – – – – (573) 2 101 Private Investments 1 526 1 969 – – – – 1 526 1 969 Non-South African 11 (2 887) – – 28 (12) (17) (2 875) Short-term insurance 2 555 2 315 – – – – 2 555 2 315 Net infmow/(outfmow) excluding white label 11 042 6 419 2 402 1 033 (389) (412) 9 029 5 798 White label 376 230 – – – – 376 230 Sanlam Collective Investments 376 230 – – – – 376 230 Total net infmow/(outfmow) 11 418 6 649 2 402 1 033 (389) (412) 9 405 6 028

(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of

covered business.

(2) Life licence business relates to investment products provided by means of a life insurance policy where there is very little or

no insurance risk. Life licence business is excluded from the calculation of embedded value of covered business.

46 Group Financial Review SANLAM INTERIM RESULTS 2011

Notes to the shareholders’ fund information

for the six months ended 30 June 2011

• 3. ANAL

YSIS OF NET INFLOW/(OUTFLOW) OF FUNDS (continued)

R million 2011 2010 Analysed per market Retail Life business 1 866 1 450 Sanlam Personal Finance 1 022 1 115 Sanlam Developing Markets 844 335 Non-life business 5 391 3 743 Sanlam Personal Finance 894 541 Sanlam Private Investments 1 526 1 969 Sanlam Collective Investments 2 971 1 233 South African 7 257 5 193 Non-South African 2 411 1 424 Sanlam Personal Finance 320 356 Sanlam Developing Markets 919 690 Sanlam UK 1 172 378 Total retail 9 668 6 617 Institutional Group Life business (1 024) (1 571) Sanlam Employee Benefjts (607) (1 171) Investment Management (417) (400) Non-life business (168) 1 945 Segregated (422) 2 015 Sanlam Multi-Manager (151) 86 Sanlam Collective Investments 405 (156) South African (1 192) 374 Investment Management Non-South African 11 (2 887) Total institutional (1 181) (2 513) White label 376 230 Sanlam Collective Investments 376 230 Sanlam Developing Markets – – Short-term insurance 2 555 2 315 Total net infmow 11 418 6 649

Group Financial Review 47 SANLAM INTERIM RESULTS 2011

• 4. NORMALISED EARNINGS PER SHARE

In terms of IFRS, the policyholders’ fund’s investments in Sanlam shares and Group subsidiaries, are not refmected as equity investments in the Sanlam statement of fjnancial position, but deducted in full from equity

• n consolidation (in respect of Sanlam shares) or refmected at net asset value (in respect of subsidiaries). The

valuation of the related policy liabilities however includes the fair value of these shares, resulting in a mismatch between policy liabilities and policyholder investments, with a consequential impact on the Group’s

• earnings. The number of shares in issue must also be reduced with the treasury shares held by the

policyholders’ fund for the calculation of IFRS basic and diluted earnings per share. This is, in management’s view, not a true representation of the earnings attributable to the Group’s shareholders, specifjcally in instances where the share prices and/or the number of shares held by the policyholders’ fund varies

• signifjcantly. The Group therefore calculates normalised earnings per share to eliminate the impact of

investments in Sanlam shares and Group subsidiaries held by the policyholders’ fund. Six months Reviewed Full year Audited 2011 2010 2010 Cents Cents Cents Normalised earnings per share: Net result from fjnancial services 84,7 69,4 161,5 Headline earnings 108,6 80,5 251,5 Profjt attributable to shareholders’ fund 112,0 98,9 271,1 R million R million R million Analysis of normalised earnings (refer shareholders’ fund income statement on page 41): Net result from fjnancial services 1 716 1 422 3 303 Headline earnings 2 202 1 650 5 143 Profjt attributable to shareholders’ fund 2 271 2 026 5 544 Reconciliation of normalised headline earnings: Headline earnings 2 205 1 710 5 122 Less: Fund transfers (3) (60) 21 Normalised headline earnings 2 202 1 650 5 143 million million million Adjusted number of shares: Weighted average number of shares for diluted earnings per share 2 011,0 2 033,4 2 029,0 Add: Weighted average Sanlam shares held by policyholders 16,0 15,6 16,3 Adjusted weighted average number of shares for normalised earnings per share 2 027,0 2 049,0 2 045,3

48 Group Financial Review SANLAM INTERIM RESULTS 2011

Notes to the shareholders’ fund information

for the six months ended 30 June 2011

• 5. FAIR VALUE OF OTHER GROUP OPERATIONS

The shareholders’ fund at fair value includes the value of the Sanlam businesses based on directors’ valuation, apart from Santam and the non-life businesses in Sanlam Developing Markets, which are valued according to ruling share prices. Valuation methodology The fair value of the unlisted Sanlam businesses has been determined by the application of the following valuation methodologies: Fair value June Reviewed December Audited 2011 2010 2010 Valuation method R million R million R million Ratio of price to assets under management 6 867 5 984 6 946 SIM Wholesale 4 042 3 515 4 247 SIM International 1 673 1 516 1 598 Sanlam Collective Investments 524 434 512 Capital Management 104 132 166 Principal 419 294 318 Sanlam Namibia Holdings 105 93 105 Discounted cash fmows 2 773 2 194 2 557 Glacier 1 061 758 965 Sanlam Personal Loans 406 194 365 Multi-Data 110 143 149 Sanlam Trust 143 171 185 Sanlam Home Loans – 115 – Punter Southall Group 260 256 227 Other 793 557 666 Net asset value 1 153 1 240 1 171 SIM International 212 271 212 MiWay – 127 – Shriram General Insurance 145 115 143 SDM other operations 65 23 51 Sanlam Capital Management 731 704 765 Fair value of unlisted businesses 10 793 9 418 10 674 The main assumptions applied in the primary valuation for the unlisted businesses are presented below. The sensitivity analysis is based on the following changes in assumptions: Assumption Change in assumption Ratio of price to assets under management (P/AuM) 0,1% Risk discount rate (RDR) 1,0% Perpetuity growth rate (PGR) 1,0% Fair value of Sanlam businesses R million Weighted average assumption Base value Decrease in assumption Increase in assumption Ratio of price to assets under management P/AuM = 1,09% (Dec 2010: 1,08%) 6 867 6 264 7 467 Discounted cash fmows RDR = 18,2% (Dec 2010: 18,4%) 2 773 2 989 2 603 PGR = 2,5% – 5% (Dec 2010: 2,5% – 5%) 2 773 2 710 2 864

Group Financial Review 49 SANLAM INTERIM RESULTS 2011

• 7. SHARE REPURCHASES

The Sanlam shareholders granted general authorities to the Group at the 2011 and 2010 annual general meetings to repurchase Sanlam shares in the market. The Group acquired 34,8 million shares from 22 February 2011 to 30 June 2011 in terms of the general authorities. The lowest and highest prices paid were R26,57 and R27,85 per share respectively. The total consideration paid of R944 million was funded from existing cash resources. All repurchases were efgected through the JSE trading system without any prior understanding or arrangement between the Group and the counter parties. Authority to repurchase 412,1 million shares, or 19,6% of Sanlam’s issued share capital at the time, remain outstanding in terms of the general authority granted at the annual general meeting held on 8 June 2011. The fjnancial efgects of the share repurchases during 2011 on the IFRS earnings and net asset value per share are illustrated in the table below. Tangible net asset value excludes goodwill, value of business acquired, other intangible assets and deferred acquisition cost included in the shareholders’ fund at net asset value. Cents Before repurchases After repurchases Basic earnings per share: Profjt attributable to shareholders’ fund 116,4 117,0 Headline earnings 112,9 113,5 Diluted earnings per share: Profjt attributable to shareholders’ fund 112,5 113,1 Headline earnings 109,1 109,6 Value per share: Equity value 2 875 2 877 Net asset value 1 551 1 531 T angible net asset value 1 242 1 216

• 6. VALUE PER SHARE

June Reviewed December Audited 2011 2010 2010 million million million Number of shares for value per share: Number of ordinary shares in issue at beginning of the period 2 100,0 2 160,0 2 160,0 Shares cancelled – (60,0) (60,0) Number of ordinary shares in issue 2 100,0 2 100,0 2 100,0 Shares held by subsidiaries in shareholders’ fund (157,9) (126,3) (125,7) Outstanding shares and share options in respect of Sanlam Limited long-term incentive schemes 38,3 28,3 34,9 Number of shares under option that would have been issued at fair value (1,2) (2,4) (1,9) Convertible deferred shares held by Ubuntu-Botho 32,5 25,7 28,2 Adjusted number of shares for value per share 2 011,7 2 025,3 2 035,5

50 Group Financial Review SANLAM INTERIM RESULTS 2011

Embedded value of covered business

at 30 June 2011

EMBEDDED VALUE OF COVERED BUSINESS

June Reviewed December Audited R million Note 2011 2010 2010 Sanlam Personal Finance 22 854 20 120 21 488 Adjusted net worth 8 207 8 078 8 144 Net value of in-force covered business 14 647 12 042 13 344 Value of in-force covered business 16 543 13 883 15 273 Cost of capital (1 650) (1 659) (1 695) Minority shareholders’ interest (246) (182) (234) Sanlam Developing Markets 4 507 3 696 3 952 Adjusted net worth 1 274 1 179 1 104 Net value of in-force covered business 3 233 2 517 2 848 Value of in-force covered business 3 874 3 130 3 475 Cost of capital (283) (261) (267) Minority shareholders’ interest (358) (352) (360) Sanlam UK 637 659 638 Adjusted net worth 177 222 212 Net value of in-force covered business 460 437 426 Value of in-force covered business 485 466 455 Cost of capital (25) (29) (29) Minority shareholders’ interest – – – Sanlam Employee Benefjts 5 047 4 836 4 967 Adjusted net worth 4 567 4 571 4 573 Net value of in-force covered business 480 265 394 Value of in-force covered business 1 395 1 194 1 286 Cost of capital (915) (929) (892) Minority shareholders’ interest – – – Embedded value of covered business 33 045 29 311 31 045 Adjusted net worth (1) 14 225 14 050 14 033 Net value of in-force covered business 1 18 820 15 261 17 012 Embedded value of covered business 33 045 29 311 31 045

(1) Excludes subordinated debt funding of Sanlam Life.

Group Financial Review 51 SANLAM INTERIM RESULTS 2011

CHANGE IN EMBEDDED VALUE OF COVERED BUSINESS

Six months Reviewed Six months Reviewed Full year audited 2011 2010 2010 R million Note Total Value

• f

in- force Cost

• f

capital Adjusted net worth Total Value

• f

in- force Cost

• f

capital Adjusted net worth Total Embedded value of covered business at the beginning of the period 31 045 19 840 (2 828) 14 033 28 988 17 626 (2 885) 14 247 28 988 Restatement for change in accounting policies 9 – – – – (49) 201 36 (286) (49) Restated embedded value of covered business at the beginning of the period 31 045 19 840 (2 828) 14 033 28 939 17 827 (2 849) 13 961 28 939 Value of new business 2 356 1 035 (42) (637) 283 955 (42) (630) 666 Net earnings from existing covered business 1 450 (181) 58 1 573 1 138 (300) 36 1 402 2 639 Expected return

• n value of

in-force business 1 181 1 116 65 – 1 088 1 020 68 – 2 218 Expected transfer of profjt to adjusted net worth – (1 443) – 1 443 – (1 255) – 1 255 – Operating experience variances 3 231 15 (16) 232 82 (99) (15) 196 468 Operating assumption changes 4 38 131 9 (102) (32) 34 (17) (49) (47) Expected invest- ment return on adjusted net worth 521 – – 521 568 – – 568 1 151 Embedded value earnings from

• perations

2 327 854 16 1 457 1 989 655 (6) 1 340 4 456 Economic assumption changes 5 (215) (195) (19) (1) 88 72 15 1 430 T ax changes 6 1 249 1 244 2 3 – – – – – Investment variances – value

• f in-force

(87) (153) 15 51 (436) (449) 16 (3) 332 Investment variances – investment return on adjusted net worth (127) – – (127) (441) – – (441) 4 Exchange rate movements 19 20 (1) – (24) (26) 2 – (119) Net project expenses 7 (8) – – (8) (18) – – (18) (46)

52 Group Financial Review SANLAM INTERIM RESULTS 2011

CHANGE IN EMBEDDED VALUE OF COVERED BUSINESS

Six months Reviewed Six months Reviewed Full year audited 2011 2010 2010 R million Note Total Value

• f

in- force Cost

• f

capital Adjusted net worth Total Value

• f

in- force Cost

• f

capital Adjusted net worth Total Embedded value earnings from covered business 3 158 1 770 13 1 375 1 158 252 27 879 5 057 Acquired value

• f in-force

99 30 (5) 74 6 5 (1) 2 6 Change in utilisation of capital diversifjcation – – – – – – – – (700) Transfers from covered business (1 257) – – (1 257) (792) – – (792) (2 257) Embedded value of covered business at the end of the period 33 045 21 640 (2 820) 14 225 29 311 18 084 (2 823) 14 050 31 045 Analysis of earnings from covered business Sanlam Personal Finance 2 242 1 256 47 939 928 220 36 672 3 782 Sanlam Developing Markets 560 375 (15) 200 237 152 8 77 676 Sanlam UK 72 30 4 38 9 (14) 3 20 (7) Sanlam Employee Benefjts 284 109 (23) 198 (16) (106) (20) 110 606 Embedded value earnings from covered business 3 158 1 770 13 1 375 1 158 252 27 879 5 057

Embedded value of covered business continued

at 30 June 2011

Group Financial Review 53 SANLAM INTERIM RESULTS 2011

VALUE OF NEW BUSINESS

Six months Reviewed Full year Audited R million Note 2011* 2011** 2010 2010 Value of new business (at point of sale): Gross value of new business 452 429 366 866 Sanlam Personal Finance 224 213 172 428 Sanlam Developing Markets 187 178 160 373 Sanlam UK 7 7 11 14 Sanlam Employee Benefjts 34 31 23 51 Cost of capital (51) (51) (46) (104) Sanlam Personal Finance (21) (21) (18) (42) Sanlam Developing Markets (14) (14) (14) (28) Sanlam UK (1) (1) (2) (3) Sanlam Employee Benefjts (15) (15) (12) (31) Value of new business 401 378 320 762 Sanlam Personal Finance 203 192 154 386 Sanlam Developing Markets 173 164 146 345 Sanlam UK 6 6 9 11 Sanlam Employee Benefjts 19 16 11 20 Value of new business attributable to: Shareholders’ fund 2 356 333 283 666 Sanlam Personal Finance 195 184 147 367 Sanlam Developing Markets 136 127 116 268 Sanlam UK 6 6 9 11 Sanlam Employee Benefjts 19 16 11 20 Minority shareholders’ interest 45 45 37 96 Sanlam Personal Finance 8 8 7 19 Sanlam Developing Markets 37 37 30 77 Sanlam UK – – – – Sanlam Employee Benefjts – – – – Value of new business 401 378 320 762 Geographical analysis: South Africa 298 275 224 522 Africa 95 95 84 224 Other international 8 8 12 16 Value of new business 401 378 320 762

* Excluding STC allowance ** Including STC allowance

54 Group Financial Review SANLAM INTERIM RESULTS 2011

VALUE OF NEW BUSINESS

Six months Reviewed Full year Audited R million 2011* 2011** 2010 2010 Analysis of new business profjtability: Before minorities: Present value of new business premiums 14 785 14 785 12 811 27 334 Sanlam Personal Finance 9 264 9 264 8 306 17 555 Sanlam Developing Markets 3 324 3 324 2 847 6 584 Sanlam UK 695 695 577 996 Sanlam Employee Benefjts 1 502 1 502 1 081 2 199 New business margin 2,71% 2,56% 2,50% 2,79% Sanlam Personal Finance 2,19% 2,07% 1,85% 2,20% Sanlam Developing Markets 5,20% 4,93% 5,13% 5,24% Sanlam UK 0,86% 0,86% 1,56% 1,10% Sanlam Employee Benefjts 1,26% 1,07% 1,02% 0,91% After minorities: Present value of new business premiums 14 112 14 112 12 220 25 891 Sanlam Personal Finance 9 141 9 141 8 179 17 293 Sanlam Developing Markets 2 774 2 774 2 383 5 403 Sanlam UK 695 695 577 996 Sanlam Employee Benefjts 1 502 1 502 1 081 2 199 New business margin 2,52% 2,36% 2,32% 2,57% Sanlam Personal Finance 2,13% 2,01% 1,80% 2,12% Sanlam Developing Markets 4,90% 4,58% 4,87% 4,96% Sanlam UK 0,86% 0,86% 1,56% 1,10% Sanlam Employee Benefjts 1,26% 1,07% 1,02% 0,91%

* Excluding STC allowance ** Including STC allowance

Embedded value of covered business continued

at 30 June 2011

Group Financial Review 55 SANLAM INTERIM RESULTS 2011

Notes to the embedded value of covered business

for the six months ended 30 June 2011

1. VALUE OF IN-FORCE SENSITIVITY ANAL YSIS

Gross value

• f in-force

business Cost of capital Net value of in-force business Change from base value R million R million R million % Base value 21 640 (2 820) 18 820

• Risk discount rate increase by 1%

20 457 (3 418) 17 039 (10)

• 2. VALUE OF NEW BUSINESS SENSITIVITY ANAL

YSIS

Gross value

• f new

business Cost of capital Net value of new business Change from base value R million R million R million % Base value 398 (42) 356

• Risk discount rate increase by 1%

342 (52) 290 (19) Six months Reviewed Full year Audited R million 2011 2010 2010

• 3. OPERATING EXPERIENCE VARIANCES

Risk experience 207 138 352 Working capital and other 24 (56) 116 Total operating experience variances 231 82 468

• 4. OPERATING ASSUMPTION CHANGES

Mortality and morbidity (131) 7 (13) Persistency (29) (148) (89) Modelling improvements and other 198 109 55 Total operating assumption changes 38 (32) (47)

• 5. ECONOMIC ASSUMPTION CHANGES

Investment yields and risk premiums (222) 103 448 Long-term asset mix assumptions 7 (15) (18) Total economic assumption changes (215) 88 430

• 6. TAX CHANGES

Tax changes are mostly due to the removal of STC in the embedded value calculations. STC will be replaced by a new dividend withholding tax system in South Africa efgective from 1 April 2012.

• 7. NET PROJECT EXPENSES

Net project expenses relate to once-ofg expenditure on the Group’s distribution platform that has not been allowed for in the embedded value assumptions.

56 Group Financial Review SANLAM INTERIM RESULTS 2011

• 8. ECONOMIC ASSUMPTIONS

June Reviewed December Audited % 2011 2010 2010 Gross investment return, risk discount rate and infmation Sanlam Life Point used on the relevant yield curve 9 year 9 year 9 year Fixed-interest securities 8,7 9,2 8,4 Equities and ofgshore investments 12,2 12,7 11,9 Hedged equities 9,2 9,7 8,9 Property 9,7 10,2 9,4 Cash 7,7 8,2 7,4 Return on required capital 9,6 10,0 9,3 Infmation rate (1) 5,7 6,2 5,4 Risk discount rate 11,2 11,7 10,9 SDM Limited Point used on the relevant yield curve 5 year 6 year 5 year Fixed-interest securities 8,1 8,4 7,7 Equities and ofgshore investments 11,6 11,9 11,2 Hedged equities n/a n/a n/a Property 9,1 9,4 8,7 Cash 7,1 7,4 6,7 Return on required capital 9,4 9,7 9,0 Infmation rate 5,1 5,4 4,7 Risk discount rate 10,6 10,9 10,2 Sanlam Life and Pensions UK Limited (2) Point used on the relevant yield curve 15 year 15 year 15 year Fixed-interest securities 4,0 3,9 4,0 Equities and ofgshore investments 7,2 7,2 7,2 Hedged equities n/a 7,2 n/a Property 7,2 7,2 7,2 Cash 4,0 3,9 4,0 Return on required capital 4,0 3,9 4,0 Infmation rate 3,5 3,2 3,5 Risk discount rate 7,7 7,7 7,7 Botswana Life Insurance Fixed-interest securities 10,0 10,0 9,5 Equities and ofgshore investments 13,5 13,5 13,0 Hedged equities n/a n/a n/a Property 11,0 11,0 10,5 Cash 9,0 9,0 8,5 Return on required capital 10,1 10,1 9,6 Infmation rate 7,0 7,0 6,5 Risk discount rate 13,5 13,5 13,0

(1) Expense infmation of 7,7% (Dec 2010: 7,4%) assumed for Retail business administered on old platforms. (2) Formerly Merchant Investors

Notes to the embedded value of covered business continued

for the six months ended 30 June 2011

Group Financial Review 57 SANLAM INTERIM RESULTS 2011

• 8. ECONOMIC ASSUMPTIONS (continued)

June Reviewed December Audited % 2011 2010 2010 Asset mix for assets supporting required capital Sanlam Life Equities 34 34 34 Hedged equities 13 13 13 Property 3 3 3 Fixed-interest securities 15 15 15 Cash 35 35 35 100 100 100 SDM Limited Equities 50 50 50 Hedged equities – – – Property – – – Fixed-interest securities – – – Cash 50 50 50 100 100 100 Sanlam Life and Pensions UK Limited Equities – – – Hedged equities – – – Property – – – Fixed-interest securities – – – Cash 100 100 100 100 100 100 Botswana Life Insurance Equities 15 15 15 Hedged equities – – – Property 10 10 10 Fixed-interest securities 25 25 25 Cash 50 50 50 100 100 100

• 9. CHANGE IN ACCOUNTING POLICIES

During 2010, Channel Life’s accounting policies for insurance contracts were aligned with the rest of the Sanlam

• Group. In terms of the amended accounting policies, no negative rands reserves are recognised on a individual

policy level. Channel Life’s capital and economic bases have also been aligned with that of SDM Limited. The full impact is recognised as a change to the opening embedded value of covered business on 1 January 2010.

RETAIL CLUSTER

Cluster Reviews 3 SANLAM INTERIM RESULTS 2011

Who we are

We provide clients in the middle, affmuent, self- employed and professional markets of South Africa and Namibia with a comprehensive range of appropriate and competitive fjnancial services solutions designed to facilitate long-term wealth creation, protection and niche fjnancing needs. Engineering these solutions around client needs and delivering the solutions through credible fjnancial advice enables us to grow SPF on a sustainable basis, thereby maximising shareholder value while building long-term relationships with

• ur clients.

Our competitive advantage is our established client centric strategy, which is driven by focused market segmentation and diversifjcation of our fjnancial services solutions, as well as our extensive distribution footprint. At SPF we foster a culture of passion for our clients and place great emphasis on diversity and

• innovation. We strive to be an employer of choice

for people who share these values. SPF ofgers the following fjnancial services and advice, either directly or in conjunction with Group companies or other business partners:

South Africa

• Client and Business Protection

– Life and disability insurance, dread disease, permanent incapacity and sickness insurance, short-term insurance, and medical scheme administration

• Providing for retirement

– Retirement annuity and preservation fund solutions

• Providing for non-retirement savings needs

– Endowments, savings accounts and fjxed deposits

• Protecting and growing wealth

– Linked investment solutions

Sanlam Personal Finance

• Managing assets in retirement

– Flexible investment-linked annuities and guaranteed annuities

• Ensuring transfer of wealth between

generations – Estate and trust services

• Transactional requirements

– Debit card

• Financing and credit needs

– Personal loans – Niche trade and bridging fjnance

Namibia

• Life (individual and group), linked and unit trust

solutions

4 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Personal Finance

R million 1H11 %∆

Net operating profjt 820 15 New business fmows 15 960 7 – SA Recurring 606 10 – SA Single 11 564 14 – Namibia 3 790 (11) PVNB Premiums* 9 264 12 VNB* 203 32 Margin* 2,19% vs 1,85% ROGEV (annualised) 21,7% Adjusted ROGEV (annualised) 15,4%

* Excludes non-life business, before minorities

Group Profjle and Shareholding Structure

South African operations % Middle market and self-employed focus Sanlam Individual Life division 100 Life insurance Sanlam Personal Loans 70 Personal loans joint venture Multi Data 100 Electronic money transfer Sanlam Trust 100 Estate and trust services Sanlam Liquid 100 Debit card and savings facility Anglo African Finance 65 Niche trade and bridge fjnance Sanlam Health Management 80 Medical scheme services Sanlam Linked Investments 100 Linked product provider Affmuent market focus Glacier(1) 100 Financial services for affmuent market

(1) Glacier will also source solutions from the middle and self-employed market above,

Non-South African operations % Sanlam Namibia Holdings 54 Financial services in Namibia Sanlam Life Namibia 100 Closed fund business in Namibia

Sanlam Personal Finance continued

Cluster Reviews 5 SANLAM INTERIM RESULTS 2011

Sanlam Personal Finance continued

Analysis of Operating Profjt (per Business Unit)

June 2011 R million June 2010 R million Middle Market 852 741 Admin income 110 115 Risk income 280 181 Non-participating business mismatch 198 182 Cash pool 146 169 Other 118 94 SBD 123 88 Sanlam Personal Loans 105 72 Other 18 16 Glacier 83 71 Namibia 88 72 Operating profjt before tax & minorities 1 146 972 Minorities (29) (19) Operating profjt before tax 1 117 953

6 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Personal Finance continued

Administration Costs (Rm)

• * Excludes the costs associated with new ventures of R147m in 2011, and R80m in 2010 (the majority relating to Sanlam Healthcare

Management/Health distribution, Glacier International and broker initiatives)

Administration Cost Ratio (%)

Cluster Reviews 7 SANLAM INTERIM RESULTS 2011

Analysis of New Business (per Product Line)

R million June 2011 Total June 2011 Life June 2011 Non-Life June 2010 Total June 2010 Life June 2010 Non-Life SA Recurring 606 564 42 552 527 25 Risk 237 237 – 220 220 – Investment 127 99 28 116 96 20 RA’s 125 122 3 116 114 2 Premium changes 117 106 11 100 97 3 SA Single 11 564 5 875 5 689 10 137 5 173 4 964 Discretionary savings* 7 108 1 441 5 667 5 755 823 4 932 Retirement Savings 320 311 9 359 352 7 Continuations 867 867 – 809 809 – Contractual Life business** 3 131 3 131 – 3 086 3 086 – Other 138 125 13 128 103 25 Namibia 3 790 273 3 517 4 265 307 3 958 Life (Retail & Institutional) 273 273 – 307 307 – Non-Life 3 517 – 3 517 3 958 – 3 958 Unit trust 3 093 – 3 093 3 585 – 3 585 Linked discretionary 424 – 424 373 – 373

* Discretionary – includes endowments, term annuities, guaranteed plans and Glacier (money market, wrap, hedge and non-life linked), ** Contractual – life annuities and ILLA’s

Sanlam Personal Finance continued

8 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Personal Finance continued

SA New Recurring Premiums (%)

• SA Single Premiums (life & non-life) (%)
• SA Total Premiums (life & non-life) (%)

Cluster Reviews 9 SANLAM INTERIM RESULTS 2011

SA New Business Recurring Premiums (Rm)

• SA Single Premiums (life vs non-life) (Rm)
• Sanlam Personal Finance continued

10 Cluster Reviews SANLAM INTERIM RESULTS 2011

SA Persistency: Number of Lapses, Surrenders & Fully Paid-Up Policies as % of In Force

• SA Surrender Benefjts Paid (Rm)
• SA Total Benefjts Paid

June 2011 R million June 2010 R million Total life benefjts 10 168 9 163 Death & disability benefjts 1 067 1 005 Maturity benefjts 5 280 4 452 Life & term annuities 2 161 2 027 Surrenders 1 560 1 564 Other 100 115 Non-life benefjts (linked) 4 912 4 527 Total benefjts paid 15 080 13 690

Sanlam Personal Finance continued

Cluster Reviews 11 SANLAM INTERIM RESULTS 2011

Who we are

Sanlam Developing Markets (SDM) provides afgordable fjnancial solutions to the entry-level market in South Africa and all market segments in

• ther developing markets where Sanlam has

established a presence, currently Botswana, Kenya, Tanzania, Zambia, Ghana, Uganda, Malawi, Nigeria and India. We focus on establishing a diverse mix of

• perations across the African continent and in India

with the aim of ensuring sustainable delivery and growth across the various businesses that make up SDM. Our client-centric approach is aimed at protecting and growing the fjnancial interests of our clients across all our markets by providing superior and afgordable fjnancial solutions. The success of SDM can largely be ascribed to our principle of partnering with reputable and established operations in developing markets where potential for growth has been identifjed. Our preference for partnerships rather than outright acquisitions has enabled us to allocate our capital resources and expertise to support these partnerships by strengthening their operational base and distribution channels to enable further growth.

Sanlam Developing Markets

12 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Developing Markets

R million 1H11 %∆ Net operating profjt 196 139 New business fmows 1 603 25 – SA Recurring 451 7 – SA Single 186 (3) – Non-SA Recurring 218 (17) – Non-SA Single 748 86 PVNB premiums 3 324 17 VNB 173 18 Margin 5,20% vs 5,13% ROGEV (annualised) 27,9% Adjusted ROGEV (annualised) 24,9%

Group Profjle and Shareholding Structure

South Africa Rest of Africa Other international Sanlam Sky(1) (100%) Botswana Life (54%) Shriram Life India (26%) Safrican (85%) Pan Africa Life Kenya (50%) ELAC Ghana (49%) African Life Tanzania (65%) African Life Zambia (70%) Sanlam Life Uganda (100%) NICO Life Malawi (49%) FBN Life Nigeria (35%)

(1)

Includes Channel Life

Sanlam Developing Markets continued

Cluster Reviews 13 SANLAM INTERIM RESULTS 2011

Operating profjt for the six months ended 30 June 2011

Operating profjt before tax R million Tax R million Operating profjt after tax R million Minorities R million Operating profjt after tax & minorities June 2011 R million Operating profjt after tax & minorities June 2010 R million RSA 179 (44) 135 (3) 132 16 Africa 180 (42) 138 (76) 62 77 Other International 1 1 2 – 2 (11) Total 360 (85) 275 (79) 196 82

New Business Premiums for the six months ended 30 June 2011 (by Product Type)

RSA R million Africa R million Other International* R million Total June 2011 R million Total June 2010 R million Risk 423 366 15 804 709 Savings 36 131 107 274 239 Investments 178 – – 178 192 Immediate Annuities – 347 – 347 139 Total new business 637 844 122 1 603 1 279

* Sanlam’s share only

New Business recurring premiums for the six months ended 30 June 2011 (by Distribution Channel)

RSA R million Africa R million * Other International R million Total June 2011 R million Total June 2010 R million Brokers 98 65 – 163 157 Agents 167 111 20 298 383 Bancassurance – 17 – 17 14 Direct 13 5 – 18 13 Group and other 173 – – 173 118 Total new business 451 198 20 669 685

* Sanlam’s share only

Sanlam Developing Markets continued

14 Cluster Reviews SANLAM INTERIM RESULTS 2011

New Business single premiums for the six months ended 30 June 2011 (by Distribution Channel)

RSA R million Africa R million * Other International R million Total June 2011 R million Total June 2010 R million Brokers 186 12 – 198 214 Agents – 1 102 103 50 Bancassurance – 265 – 265 213 Direct – 33 – 33 – Group and other – 335 – 335 117 Total New business 186 646 102 934 594

* Sanlam’s share only

Present Value of New Business Premiums for the six months ended 30 June 2011 (by Distribution Channel)

RSA R million Africa R million Other International* R million Total June 2011 R million Total June 2010 R million Brokers 515 140 – 655 727 Agents 559 413 157 1 129 1 242 Bancassurance – 315 – 315 249 Direct 18 52 – 70 45 Group and other 820 335 – 1 155 584 Total New business 1 912 1 255 157 3 324 2 847

* Sanlam’s share only

Sanlam Sky (including Channel Life) – Number of Sales Cases (’000)

• Sanlam Developing Markets continued

Cluster Reviews 15 SANLAM INTERIM RESULTS 2011

Sanlam Developing Markets continued

Sanlam Sky (including Channel Life) – Number of Not-Taken-Ups (NTU’s), lapses and surrenders as percentage of in-force

• Sanlam Sky (including Channel Life) NTU rates (by month of inception)

Cluster Reviews 17 SANLAM INTERIM RESULTS 2011

Who we are

The Sanlam UK cluster consists of subsidiary companies Sanlam Investments and Pensions (formerly Merchant Investors) (100% owned), Principal (93% owned) and Sanlam Private Wealth (formerly Buckles) (75% owned). The portfolio is further complemented by Sanlam’s minority holdings in Intrinsic, Nucleus and the Punter Southall Group. Our growing portfolio of fjnancial services businesses operates in distribution, product packaging, administration and asset management services. Sanlam UK’s role is to create a framework that will enable each of our businesses to thrive through the establisment of quality intermediary relationships, the linking of business opportunities, sharing of knowledge and experience, and having access to the necessary capital for growth.

Sanlam UK

18 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam UK continued

Sanlam UK

R million 1H11 %∆ Net operating profjt 21 (32) New business fmows – Subsidiaries 2 289 53 – Life insurance 674 21 – Investment 1 615 72 New business fmows – Nucleus 3 669 – PVNB premiums 695 (30) VNB 6 (33) Margin 0,86% vs 1,56% ROGEV (annualised) 20,0% Adjusted ROGEV (annualised) 14,9%

Group profjle and shareholding structure

Investment Shareholding Description Sanlam Investments and Pensions (formerly Merchant Investors) 100% Bristol-based niche player in the affmuent life and specialist pension markets Principal 93% Leading independent investment management company specialising in discretionary portfolio management Sanlam Private Wealth (formerly Buckles) 75% Largest independent fjnancial adviser practice based in Wales Nucleus 41% Linked investment product platform controlled by independent fjnancial advisers Intrinsic 28% Multi-tied fjnancial intermediary business consisting of fjnancial planning and mortgage advisory divisions Punter Southall Group 23% UK-based fjnancial services advisory group

Cluster Reviews 19 SANLAM INTERIM RESULTS 2011

Key performance measurements – 30 June 2011

Total controlled entities1 Total - associates2 Sanlam UK Total Funds under Management (£bn) 2011 3,3 2,3 5,7 2010 2,7 2,1 4,8 Funds under Administration (£bn) 2011 – 1,2 1,2 2010 – 0,6 0,6 Number of Advisers 2011 56 1 718 1 774 2010 37 1 663 1 700 Flows

• New business(£m)

2011 205,5 421,0 626,6 2010 130,7 436,6 567,3

• Total (£m)

2011 307,1 421,0 728,2 2010 153,6 436,6 590,2

• Net fmows (£m)

2011 105,3 367,5 472,8 2010 39,5 311,3 350,8

• VNB (Life Insurance) (£m)

2011 0,5 – 0,5 2010 0,8 – 0,8 Operating Profjt (£m) 2011 1,6 0,4 (0,2) 1,8 2010 2,3 0,9 (0,5) 2,6

(1) Total controlled entities comprise of Sanlam Investments and Pensions (100%), Principal (93%) and Sanlam Private Wealth (75%) (2) Total associates comprise of Punter Southall Group (23%), Intrinsic (28%) and Nucleus (41%)

Sanlam UK continued

INSTITUTIONAL CLUSTER

Cluster Reviews 23 SANLAM INTERIM RESULTS 2011

Who we are

Sanlam Investments is one of the core clusters within the Sanlam Group and consists of four sub-clusters incorporating a number of businesses

• perating in collaboration to give individual and

institutional clients access to a comprehensive range of specialised investment and risk management expertise. Our areas of expertise include local and international asset management, private equity, hedge funds, fjnancial engineering, employee benefjts and property investments. Each business within the Sanlam Investments cluster functions as a separate, entrepreneurial entity, with a shared focus on delivering leading performance and exceptional client service. We achieve this by encouraging passionate ownership and a culture of excellence among our employees. We are based in Cape Town, with a strong presence in sub-Saharan Africa and footprints in the United Kingdom, Europe, the United States, Australia and

• India. Our diverse client base includes retirement

funds, corporations, fjnancial institutions, individual investors, trade unions, non-governmental

• rganisations, and governments and their agencies.

Sanlam Investments

24 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Investments

R million 1H11 %∆ Net operating profjt 212 (11) New business fmows* 24 269 8 – SA: Segregated 6 195 (34) – SA: Other 15 954 39 – Non-SA 2 120 43 Net fmows* 3 923 111 FUM (R billion) 504 14 ROGEV (annualised) 6,4% Adjusted ROGEV (annualised) 10,6%

* Excludes White Label, but includes SPE, SSS and Sanlam Properties

Profjle of Sanlam Investments

Asset Management sub-cluster Sanlam Investment Management (SIM) SIM is a multi-specialist investment management business, with small, autonomous teams responsible for the active management of institutional portfolios and retail unit trust funds. It also ofgers other investment capabilities, such as hedge funds, which are managed by SIM’s hedge fund business, GenX, and quantitative investing. SIM Africa SIM Africa contains the Group’s African investment operations, with businesses in Kenya, Nigeria, Namibia, Zambia and Botswana Wealth Management sub-cluster Sanlam Private Investments (SPI) The second largest wealth management business in South Africa, SPI is a private client portfolio management and stock broking business, serving high net worth individuals, charitable trusts and smaller institutions. Calibre Investments Calibre Investments is an Australian investment management business, operating in partnership with SPI through offjces in Sydney and Melbourne to service the needs of both private investors and corporate clients. International Investments sub-cluster Sanlam International Investment Partners (SIIP) SIIP manages the established partnerships with specialist investment management fjrms in the US, Europe and Australasia with the objective to enhance the asset management proposition for South African and international clients. SIM Global SIM Global actively manages long-only international funds for local and international clients. Sanlam Asset Management Ireland (SAMI) SAMI is our international investment management platform based in Dublin, managing funds domiciled in Ireland for the Sanlam Group. SMC Wealth Management (India) SMC wealth management is a joint venture between India’s SMC Group, one of India’s leading investment solutions companies, and the Sanlam Group.

Sanlam Investments continued

Cluster Reviews 25 SANLAM INTERIM RESULTS 2011

Investment Services sub-cluster Sanlam Multi Manager International (SMMI) SMMI is an investment management advisory business dedicated to active multi-management. Sanlam Collective Investments (SCI) One of the largest managers of collective investment portfolios in South Africa, SCI ofgers a wide range of retail, multi-managed, institutional and third-party collective investment funds. Blue Ink Blue Ink Investments is a leading fund of hedge fund manager providing products focussed on both the local South African market and the global investment markets. Blue Ink has offjces in Cape Town and London and provides investment services for retail, private and institutional clients. Fin-Q Financial Services Fin-Q Financial Services is an authorised fjnancial services provider focusing on providing independent advice to people leaving retirement funds.

26 Cluster Reviews SANLAM INTERIM RESULTS 2011

Income Statement per Division

Total Investment Cluster Total South African

• peration

Total Developing Markets

• peration*

Total International

• peration

R million June 2011 June 2010 June 2011 June 2010 June 2011 June 2010 June 2011 June 2010 Income 963 892 747 705 68 66 148 121 Operating expenses (519) (477) (402) (365) (57) (53) (60) (59) Asset Management and distribution fees paid (178) (166) (171) (161) – – (7) (5) Profjt before tax & performance fees 266 249 174 179 11 13 81 57 Performance fees 33 78 28 33 – 1 5 44 Profjt before tax 299 327 202 212 11 14 86 101 Tax (75) (79) (57) (62) (9) (8) (9) (9) Minorities (12) (9) (1) – (9) (8) (2) (1) Operating profjt after tax 212 239 144 150 (7) (2) 75 91

*Includes equity-accounted income of Indian Joint Ventures

Assets under management (R’ billion) 504 443 434 379 29 28 41 36

Comparative numbers for June 2010 restated to exclude Simeka & Distribution Services

Split in Assets Under Management (Rbn)

June 2011 June 2010 Wholesale 384,1 343,9

• Sanlam (SA assets)

197,7 180,1

• Sanlam (International assets)

40,1 33,6

• Segregated *

131,2 117,8

• Sanlam Collective Investments

15,1 12,4 Retail 119,4 99,3

• Sanlam Private Investments

55,8 45,6

• Sanlam Collective Investments

56,5 46,4

• Sanlam Multi Manager (Glacier) **

7,1 7,3 Total AUM (Consolidated) 503,5 443,2

* The assets of SIM Emerging Markets are included in this number. ** The rest of Sanlam Multi Manager assets are included in Sanlam and Segregated assets.

Sanlam Investments continued

Cluster Reviews 27 SANLAM INTERIM RESULTS 2011

Sanlam Investments continued

Investment Cluster: funds under management

AUM June 2011 Asset Mix Total Bonds Equity Property Cash Other Ofgshore Total 503,5 18,9% 43,7% 3,0% 17,7% 2,2% 14,5% 100.0%

Split of Operating Profjt before Tax (South Africa and International) – 6 months ended 30 June

• Net Fund Flows (Rbn) – excluding White Labels
• Note: 2005 excludes PIC outfmows of R6,0bn

2006 excludes PIC outfmows of R21,6bn

Cluster Reviews 29 SANLAM INTERIM RESULTS 2011

Who we are

Sanlam Employee Benefjts (SEB) specialises in the provision of risk and investment solutions as well as administration services to institutions and retirement funds. SEB consists of fjve entrepreneurial divisions: Sanlam Group Risk, Sanlam Structured Solutions, Sanlam Umbrella Solutions and Sanlam Retirement Fund Administration (Coris Platform) and Simeka. Our underlying philosophy is to be driven by the needs

• f our clients. We therefore dedicate our time and

resources to creating employee benefjt solutions that help retirement fund members realise their life-long goal of having suffjcient resources enabling them to enjoy their retirement. We ofger

• ur clients institutional investment products

(market-linked investments and smoothed bonus portfolios), group life benefjts, group disability benefjts, cell insurance schemes, retirement fund administration, annuity solutions and an umbrella fund ofgering and benefjt and asset consulting. The SEB brand is associated with well-established and highly rated retirement fund research. Our research fjndings are presented annually at the SEB Benchmark Symposium and are sought after by pension fund trustees, principal offjcers, consultants as well as competitors.

Sanlam Employee Benefjts

30 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Employee Benefjts continued

Sanlam Employee Benefjts

R million 1H11 %∆ Net operating profjt 93 60 New business fmows 618 37 Recurring 134 47 Single 484 35 PVNB premiums 1 502 39 VNB 19 73 Margin 1,26% vs 1,02% ROGEV (annualised) 12,2% Adjusted ROGEV (annualised) 10,9%

Group profjle and shareholding structure

Employee Benefjts sub-cluster Sanlam Group Risk (SGR) SGR provides corporate life, disability and credit risk benefjts, thereby enabling employers to

• fger competitive risk cover to their employees.

Sanlam Umbrella Solutions The Sanlam Umbrella Fund is a multi-employer pension savings vehicle that ofgers employers an alternative to the administrative and governance burden of stand-alone funds. Sanlam Retirement Fund Administration Sanlam Retirement Fund Administration is a benefjt administration, pensioner payroll and disability management business. Sanlam Structured Solutions (SSS) SSS develops and provides structured investment and retirement solutions, annuity and guaranteed products for the institutional and retirement fund industry. Simeka Simeka Consultants & Actuaries ofgers a comprehensive range of consulting and advisory services, directed at employers, retirement fund trustees and their members.

Note: Simeka included with efgect from 1 January 2011

Analysis of Operating Profjt

June 2011 R million June 2010 R million Underwriting risk 95 48 Investment & other 78 68 Administration (44) (30) Operating profjt 129 86

Cluster Reviews 31 SANLAM INTERIM RESULTS 2011

Analysis of New Business (per Product Line)

June 2011 R million June 2010 R million Recurring 134 91 Guaranteed 56 8 Annuity – – Risk 78 83 Single 484 359 Guaranteed 454 171 Annuity 29 179 Risk 1 9

Cluster Reviews 33 SANLAM INTERIM RESULTS 2011

Who we are

SICM is a sub-cluster in the Institutional Cluster consisting of Sanlam Capital Markets (“SCM”), Sanlam Private Equity (“SPE”), the derivative unit of Sanlam Structured Solutions (“SSS”) and Sanlam Properties (“SP”). The grouping of these businesses is aimed at extracting synergies for the Sanlam Group while respecting necessary governance

• principles. The Market Activity Division of SCM and

SSS are fjnancial engineering businesses that provide risk management solutions for their clients. The Debt and Equity Divisions of SCM and SPE provide fjnancing solutions to clients using debt or equity instruments and their derivatives. SP conducts property development on a limited scale.

Sanlam Investments: Capital Management (SICM)

34 Cluster Reviews SANLAM INTERIM RESULTS 2011

Sanlam Investments: Capital Management

R million 1H11 %∆ Net operating profjt 107 78 Total revenue 286 40 Cost to income ratio 54% vs 69% Group Equity Value 835 ROGEV (annualised) 24,3% Adjusted ROGEV (annualised) 24,6%

Group profjle and shareholding structure

Sanlam Investments: Capital Management sub-cluster Sanlam Capital Markets (SCM) SCM is a niche capital markets operation with limited capital, concentrating on synergies with other businesses in the Sanlam Group and giving the Sanlam Group a substantial fjnancial engineering capability. Sanlam Private Equity (SPE) One of the largest private equity fund managers in South Africa, SPE ofgers both a direct and fund-of-funds investment programme. SPE also drives the Group’s BEE investment programme. Sanlam Properties Sanlam Properties is a property fjnance business. Sanlam Structured Solutions (Derivatives) SSS (D) develops and provides structured investment and retirement solutions for the institutional and retirement fund industry, as well as high net worth individuals.

Analysis of Operating Profjt

June 2011 R million June 2010 R million Sanlam Capital Markets 187 143 Capital 10 12 Equities 80 61 Debt 86 82 Market Activity 11 (12) Sanlam Structured Solutions 19 13 Sanlam Private Equity 22 17 Sanlam Property Developments 58 31 Total Operating Revenue 286 204 Total Operating Expenses (153) (140) Income before taxation 133 64 Taxation (26) (4) Net operating profjt 107 60

Sanlam Investments: Capital Management

continued

SHORT-TERM INSURANCE CLUSTER

Cluster Reviews 37 SANLAM INTERIM RESULTS 2011

Who we are and what we do

Santam is the leading short-term insurer in South Africa ofgering clients a wide variety of highly specialised insurance products and services. Its core business has been the same for over 90 years – to take care of its clients’ insurance needs by protecting the things that are important to them. It has earned a fjrst-rate reputation and signifjcant brand equity as a highly respected risk management partner to a diversifjed set of clients. Santam ofgers personal, commercial, corporate and specialist risk solutions and insures most of the largest 100 companies listed on the Johannesburg Stock Exchange. In 2011 it has been voted as the Best Commercial and Corporate insurer by the Financial Intermediaries Association for the third year in a row. With a countrywide infrastructure and broker network and more than 650 000 policyholders, Santam’s yellow umbrella is truly covering South

• Africa. Santam also has business interests in

Zimbabwe, Malawi, Uganda, Tanzania and Zambia. The company holds strategic investments in various companies in the insurance industry, including a subsidiary Santam Namibia Ltd and various underwriting managers who are specialists in the underwriting and administration of specifjc classes

• f business such as liability, engineering and crop

insurance. Santam has world-class contact centres in cities across South Africa. Highly trained consultants assist brokers and clients with, among other, insurance quotes and policy amendments. Santam holds a 100% interest in MiWay Group Holdings (Pty) Ltd, a direct insurer underwriting predominantly personal lines short-term insurance

• business. It launched in 2008, has reached critical

mass and continues to grow in a competitive

• market. The company leverages ofg state of the art

call centre and information technology. Current services include short-term insurance, motor

Santam Limited

warranty and credit life. Its intention is to expand its product ofgering in the longer term to become a diversifjed fjnancial services provider.

38 Cluster Reviews SANLAM INTERIM RESULTS 2011

Santam Limited continued

Santam

R million 1H11 %∆ Net operating profjt* 317 6 Gross written premium 8 228 7 Net earned premiums 7 028 6 – Net claims ratio 63,8% – Net acquisition ratio 27,6% – Underwriting ratio 8,5% Group solvency 45% ROGEV (annualised) 5,9% Adjusted ROGEV (annualised) 17,8%

* Santam’s contribution to Sanlam’s net operating profjt

Business Profjle

Insurance classes % contribution to gross written premium Motor 46 Property 29 ART 10 Liability 7 Engineering 4 Crop 1 Transportation 2 Accident and health 2 Miscellaneous <1 Guarantee <1

Key Results

R million June 2011 June 2010 %∆

Gross written premium 8 228 7 717 7 Underwriting result 598 539 11 Investment return on insurance funds 193 204 (5) Net insurance result 791 743 6

Cluster Reviews 39 SANLAM INTERIM RESULTS 2011

Net operating profjt for the six months ended 30 June 2011

June 2011 June 2010

%∆

Net earned premiums 7 028 6 646 6 Interest on working capital and other 192 204 (6) Financial services income 7 220 6 850 5 Sales remuneration (1 037) (1 014) (2) Income after sales remuneration 6 183 5 836 6 Underwriting policy benefjts (4 487) (4 331) (4) Administration costs (905) (762) (19) Result from fjnancial services before tax 791 743 6 Tax on result from fjnancial services (225) (208) (8) Result from fjnancial services after tax 566 535 6 Minority shareholders’ interest (249) (235) (6) Net result from fjnancial services (Sanlam’s share) 317 300 6

Key Ratios

June 2011 June 2010 Ratios % % Net claims ratio 63,8 65,2 Net acquisition cost ratio 27,6 26,7 Net underwriting ratio 8,5 8,1 Solvency Net asset value (NAV) Rm 5 480 5 016 NAV per share cps 4 884 4 440 Net written premium** Rm 14 154 13 318 Group Solvency % 45 44

** Net written premium is for rolling 12 months

Santam Limited continued

40 Cluster Reviews SANLAM INTERIM RESULTS 2011

Santam Limited continued

GWP per Insurance Class (%) – Continuing activities only

• Underwriting Surplus per Insurance Class (Rm) – Continuing activities only

MANAGEMENT STRUCTURE CHANGES

Cluster Reviews 43 SANLAM INTERIM RESULTS 2011

New business volumes

R million

2011 2010 % Sanlam Personal Finance 12 807 11 304 13% Entry-level 637 615 4% Middle-income & Affmuent 12 170 10 689 14% Sanlam Emerging markets 4 879 5 204 (6%) Namibia 3 790 4 319 (12%) Other emerging markets 1 089 885 23% Institutional cluster 27 053 24 102 12% Short-term insurance 7 112 6 646 7% 51 851 47 256 10% White label 3 211 2 525 27% New business volumes 55 062 49 781 11%

Value of new life business

R million

2011 2010 % Sanlam Personal Finance 279 213 31% Entry-level 94 78 21% Middle-income & Affmuent 185 135 37% Sanlam Emerging markets 97 87 11% Namibia 18 19 (5%) Other emerging markets 79 68 16% Institutional cluster 25 20 25% Value of new life business 401 320 25%

Management Structure Changes

44 Cluster Reviews SANLAM INTERIM RESULTS 2011

Management Structure Changes continued

Present value of new business premiums

R million

2011 2010 % Sanlam Personal Finance 10 720 9 455 13% Entry-level 1 909 1 629 17% Middle-income & Affmuent 8 811 7 826 13% Sanlam Emerging markets 1 868 1 698 10% Namibia 453 480 (6%) Other emerging markets 1 415 1 218 16% Institutional cluster 2 197 1 658 33% Present value of new business premiums 14 785 12 811 15%

New life business margin

R million

2011 2010 South Africa retail 2,60% 2,25% Entry-level 4,92% 4,79% Middle-income & Affmuent 2,10% 1,73% Sanlam Emerging markets 5,19% 5,12% Namibia 3,97% 3,96% Other emerging markets 5,58% 5,58% Institutional cluster 1,14% 1,21% New life business margin 2,71% 2,50%

Net operating profjt

R million

2011 2010 % Sanlam Personal Finance 904 686 32% Entry-level 139 25 456% Middle-income & Affmuent 765 661 16% Sanlam Emerging markets 121 128 (5%) Institutional cluster 439 390 13% Short-term insurance 304 244 25% Corporate & other (52) (26) 100% Net operating profjt 1 716 1 422 21%