Savings in Transition UBS Financial Services Conference 2007 Johan van Zyl Savings in Utopia � Savings in Utopia ~ Insights into the following questions: � Where does Sanlam see the future growth potential in respect of the various savings markets in which it operates? � What is the group’s associated strategies to penetrate these markets, and grow its market share? � And lastly, what are the associated opportunities and risks? � At Sanlam, we see the current savings environment in transition, and are gearing up our capabilities to make the most of these anticipated changes � To understand our outlook for savings, and answers to the above- mentioned questions, one needs to understand our strategy…
Agenda � Strategy — Client centricity � Changing savings environment � Retail Savings Solutions � Lower-income market (NSSS) � Middle-income Market � Affluent Market � Institutional Savings Solutions � Conclusion 1. Client Centricity
Strategy: Client Centricity � Client centricity:- � Know who our clients are, � Understand their needs, � Design solutions to meet their needs (confirm appropriateness of particular solution set) � Continue to satisfy expectations (through operational efficiencies and continuous advice) � Strategically, we do not intend to grow market share predominantly through product superiority, but mainly through client centricity � However, if we focus on the client, innovation in respect of superior products/solutions will surely follow Understanding and a Understanding and adapting apting to the to the c client ient’ ’s needs, s needs, s needs, through a broader through a broader through a broader Understanding and a Understanding and adapting apting to the to the c client ient s needs, through a broader distribution network, supported by a wider array of service/product distribution network, supported by a wider array of service/prod uct uct distribution network, supported by a wider array of service/prod distribution network, supported by a wider array of service/prod uct offerings and ca offerings and capable ta offerings and ca offerings and capable ta pable talent, and pable talent, and lent, and ‘ lent, and ‘state state state state- -of of of- of -the the the- the -art art’ art art ’ tech technology system tech technology system nology systems nology systems
Understanding Understanding Understanding and a Understanding and a and adapting and adapting apting to the apting to the to the c to the c client client ient’ ient ’s needs, s needs, through a broader s needs, s needs, through a broader through a broader through a broader distribution network, distribution network, supported by a supported by a supported by a wider array of service/product wider array of service/product distribution network, distribution network, supported by a wider array of service/ wider array of service/product product offerings and capable ta offerings and ca pable talent, and lent, and ‘ ‘state state state- -of of of- -the the the- -art art’ art ’ tech technology system tech nology systems offerings and capable ta offerings and ca pable talent, and lent, and state of the art technology system nology systems Understanding Understanding and a and adapting apting to the to the c client ient’ ’s needs, through a broader s needs, through a broader s needs, through a broader Understanding Understanding and a and adapting apting to the to the c client ient s needs, through a broader distribution network, distribution network, supported by a supported by a supported by a wider array of service/product wider array of service/product distribution network, distribution network, supported by a wider array of service/ wider array of service/product product offerings and ca offerings and capable ta offerings and ca offerings and capable ta pable talent, pable talent, lent, and lent, and ‘ and and ‘state state state state- -of of of of- -the the- the the -art art art’ art ’ tech technology system tech technology system nology systems nology systems
Understanding Understanding and a Understanding and a Understanding and adapting and adapting apting to the apting to the to the c to the c client client ient’ ient ’s needs, through a broader s needs, through a broader s needs, through a broader s needs, through a broader distribution network, supported by a wider array of service/prod distribution network, supported by a wider array of service/product uct uct distribution network, supported by a wider array of service/prod distribution network, supported by a wider array of service/prod uct offerings and ca offerings and capable ta pable talent, lent, and and and ‘ ‘state state state- -of of- of -the the- the -art art’ art ’ tech tech technology system nology systems offerings and capable ta offerings and ca pable talent, lent, and state of the art technology system nology systems Competitive advantage: Competitive adva ntage: Wealth Management � Interact with clients � Understand their needs Edu- cation � Provide advice provi- Savings sion � Design solutions & Invest- Retirement ment � Feedback - Maintain relationship Risk Home loan cover Client Client Client Client Car & house- Medical hold cover Personal Life- Comprehensive offering: Comprehensive offering: Cover Banking / Banking / style Wills & Trans- Trans- � Client focus also trusts actional actional Finan- provides various cross- Medium cial term Educa- sell opportunities credit tion � Thereby enhancing Financial overall value proposition Education Sanlam Personal Finance for client Elsewhere in Sanlam Group
Cross-sell Potential at SPF: Clients with a Single Provider and % Untapped 1.6 100% 90% 1.4 SPF’s life clients have the largest 77% untapped potential of 1.4m clients 80% 1.2 70% 1.0 56% 60% 51% lion millio 0.8 50% 44% 41% 36% 40% 0.6 30% 30% 0.4 20% 0.2 10% 0.0 0% SPF (Life only) SCI Santam Wills Glacier SPL Home Loans no. of clients with a single provider - lhs As a % of provider's base (ie untapped potential) - rhs Despite Significant Future Potential, our Progress to Date Group net operating profit (Rm) 1 600 1 60 CAGR: 19%pa 1 400 1 40 Other financial 1 200 1 20 services 1 000 1 00 80 800 60 600 Life 400 40 200 20 0 1H03 1H03 1H04 04 1H05 1H05 1H06 1H07 1H07 SP SPF SDM SD SEB SEB SI SIM SC SCM SNT SNT IFS IFS Accelerated success towards providing a wide range of Accelerated success towards providing a wide range of client-centric solutions client-centric solutions
2. Savings Environment South Africa, a Country of Rapid Change � Increased freedom ↔ increased personal responsibility: � Catalyst behind changing realities in South Africa � Socio-economic realities � Transparency / Access to information � Consumerism / Protection of the individual → Increased regulation � Empowerment � Economic realities � Low inflation environment � Increased market volatility � Shorter time horizons → Flexibility and mobility � Other influences � Proliferation of technology � Expectations created by other industries � Expectations from Government (FAIS, FICA, SOI, NSSS)
Current Savings Environment in SA � Overall a strong improvement in household wealth, driven by: � Strong growth in disposable income (CAGR of 11% over past 3 yrs) � Increasing tax relief � Lower inflationary environment � Strong GDP growth � Higher stock market levels � Escalating house prices � However, not reflected in the official macro statistics (-0.5% savings rate of personal disposable income - PDI) due to aggregation impacts (ie unemployed and lower wage earners) � Despite a sharp rate of growth in household consumption expenditure, a recent survey commissioned by Credit Suisse Standard Securities (TNS Survey — March 2007) paints a very different picture… Current Savings Environment in SA — Higher Savings Rate � After stripping out aggregation impacts, survey showed a higher propensity to save amongst households (savings from 4%-10% of PDI) � Suggests higher income households are not consuming out of savings Savings as a % of Disposable Income Savings as a % of Disposable Inco Savings as a % of Disposable Income Savings as a % of Disposable Inco me (by me (by (by househol (by househol household income groupin household income groupin d income grouping) d income groupin g) g) g) 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% 7000- 000-7999 999 8000 8000-8999 8999 900 9000- 0- 110 11000- 00- 1400 14000- 0- 200 20000- 00- 25000- 25 000- >42000 000 10 10999 999 13999 13 999 19999 19 999 24999 4999 4199 41999 Source : CSSS
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