Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 UBS Financial Services Conference UBS Financial Services Conference UBS Financial Services Conference The The Q Quest fo est for Po r Posi siti tive ve ‘ ‘Jaw Jaw Jaws’ ’ — — Balancing Growth and Efficiency Balancing Growth and Efficiency Balancing Growth and Efficiency The Q The Quest fo est for Po r Posi siti tive ve Jaws Balancing Growth and Efficiency - Slide 1 -
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 Quest for Positive ‘ ‘Jaws Jaws’ ’ (Expanding Margins) (Expanding Margins) Quest for Positive ‘Jaws’ (Expanding Margins) Quest for Positive We We se We We se see it see it e it a lit e it a lit a little differently a little differently tle differently… tle differently … The key focus should not be on Margins Margins Margins only Margins The key focus should not be on only only The key focus should not be on The key focus should not be on only We belie We We belie We believe believe ve ve ROE / ROEV is a more relevant measure ROE / ROEV ROE / ROEV ROE / ROEV is a more relevant measure is a more relevant measure is a more relevant measure of value creation of value creation of value creation of value creation Therefore the efficient use of ca Therefore the efficient use of capital plays an im pital plays an important role a portant role as well s well s well Therefore the efficient use of capital plays an im Therefore the efficient use of ca pital plays an important role a portant role a s well - Slide 2 -
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 Sanlam’ ’s Focus Remains Driving Increased ROEV s Focus Remains Driving Increased ROEV Sanlam’s Focus Remains Driving Increased ROEV Sanlam A Simple Formula! A Simple Formula! A Simple Formula! A Simple Formula! Strategic Investments Strategic Investments Strategic Investments Strategic Investments Capital Capital Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Efficiency Efficiency Application of Capital Application of Capital Application of Capital Application of Capital ROE/ ROE/ ROE/ ROE/ ROEV ROEV ROEV ROEV Net Top Net Top- -Line Growth Line Growth Line Growth Net Top Net Top Line Growth Earnings Earnings Costs Costs Costs Costs Investment Returns Investment Returns Investment Returns Investment Returns Influenced by macro env Influenced by macro enviro ronment and market factors nment and market factors - Slide 3 -
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 Analysis of ROEV — — 1H06 1H06 Analysis of ROEV — 1H06 Analysis of ROEV Compon Comp onent ents of of E EV (weighting) ROEV ROEV (Annualised) Non- Non No No -Life Life Life Life 25,6% 33,6% Operations Operations Operations Operations (R10.3bn) Ba Ba Balanced Balanced lanced lanced 46,5% 26,2% 26,2% 22,5% Portfolio & Other Portfolio & Ot her Portfolio & Ot Portfolio & Other her (R18.7bn) Value of Va lue of 27,9% Value of Va lue of 25,9% in- in in in -fo force fo force rce rce (R11.2bn) FY05 (+24.4%); FY04 (+22.6%) FY05 (+24.4%) FY04 (+22.6%); FY03 ( FY03 (+14.2%) .2%) — — aided by s ided by strong rong inve investment ment markets markets - Slide 4 -
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 Agenda Agenda Agenda � � Macro and Macro and market inf market influences es Macro and Macro and market inf market influences es External influences External influences External influences External influences � � Sanlam’ Sanlam Sanlam Sanlam ’s view s view s view s view � � � � Earnings Earnings Earnings Earnings Growth opportunities Growth opportunities Growth opportunities Growth opportunities � � Investment returns Investment returns Investment returns Investment returns � � Focus on costs Focus on costs Focus on costs Focus on costs � � � � Capit Capital efficien Capit Capital efficien l efficiency l efficiency cy cy � � Conclusion Conclusion Conclusion Conclusion � � Q&A Q&A Q&A Q&A - Slide 5 -
Sanlam UBS Pre Sa nlam UBS Presentation entation October 2006 Economic and Market Overview Economic and Market Overview Economic and Market Overview Increas Increased Pres d Pressure sure on Life Margins on Life Margins Increas Increased Pres d Pressure sure on Life Margins on Life Margins - Slide 6 -
Sanlam UBS Pre Sa nlam UBS Presentation entation October 2006 Macro Environment Macro Environment Macro Environment Strategic Investments Strategic Investments Strategic Investments Strategic Investments Strategic Investments Strategic Investments Capital Capital Capital Capital Capital Capital Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency Application of Capital Application of Capital Application of Capital Application of Capital Application of Capital Application of Capital ROE/ ROE/ ROE/ ROE/ ROE/ ROE/ ROEV ROEV ROEV ROEV ROEV ROEV Net Top Net Top - Line Growth Line Growth Net Top Net Top- Net Top Net Top -Line Growth Line Growth Line Growth Line Growth Earnings Earnings Costs Costs Earnings Earnings Earnings Earnings Costs Costs Costs Costs Investment Returns Investment Returns Investment Returns Investment Returns Investment Returns Investment Returns Influenced by macro env Influenced by macro enviro ronment and market factors nment and market factors - Slide 7 -
Sanlam UBS Pre Sa nlam UBS Presentation entation October 2006 Macro Environment Macro Environment Macro Environment Low Interest/ Low Interest/ Inflati Infl ation - - f f f f O O I I n n e e c c o o c c r r t t C C e e n n t t o o a a a a t t f f m m e e s s n n s s i i h h l l a a e e t t e e c c e e s s S S h h B B r r u u d d u u S S i i d d s s - - m m o o r r p p Pressure Pressure on on c c parency / I I n n o o Trans- xibility m m c c Margins Margins r r e e p p e e a a Flexi t t s s i i e e t t i i d d o o n n Regulatory FAIS uncertainty - Slide 8 -
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 Macro Environment (continued) Macro Environment (continued) Macro Environment (continued) � � Econ Economy omy Econ Economy omy � Structurally lower interest rate Structurally lower interest rate and inflationary environment Structurally lower interest rate and inflationary environment Structurally lower interest rate and inflationary environment and inflationary environment � � Equity market volatility Equity market volatility Equity market volatility Equity market volatility � � � Increased consumerism Increased consumerism Increased consumerism Increased consumerism � Policyholder activism Policyholder activism Policyholder activism led by the media led by the media Policyholder activism led by the media led by the media � � Demand f Demand f nd for flex nd for flex r flexib r flexib ibilit ibilit ility an ility an y and tran y and tran d transpar d transpar sparency sparency ency ency � � Shift to off Shift to off Shift to off- Shift to off -balance sheet balance sheet balance sheet balance sheet - - ‘ ‘Margin versus ROE Margin versus ROE Margin versus ROE’ Margin versus ROE ’ trade trade trade- trade -off off off off � � � Increased competition Increased competition Increased competition Increased competition � Pricin Pricin Pricing pr Pricing pr g pres g pres essure essure sure sure � � Compet Compet Competit Competit ition from n ition from n ion from non ion from non- -traditional life players traditional life players aditional life players aditional life players � - Slide 9 -
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