UBS Financial Services Conference UBS Financial Services Conference - - PDF document
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
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 The The Q Quest fo est for Po r Posi siti tive ve ‘ ‘Jaw Jaws Jaw Jaws’ ’ — — Balancing Growth and Efficiency Balancing Growth and Efficiency Balancing Growth and Efficiency Balancing Growth and Efficiency
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Quest for Positive ‘Jaws’ (Expanding Margins) Quest for Positive Quest for Positive ‘ ‘Jaws Jaws’ ’ (Expanding Margins) (Expanding Margins)
We We se see it e it a lit a little differently tle differently We We se see it e it a lit a little differently tle differently… …
The key focus should not be on The key focus should not be on The key focus should not be on The key focus should not be on Margins
Margins Margins Margins only
We We belie believe ve We We belie believe ve
ROE / ROEV ROE / ROEV ROE / ROEV ROE / ROEV is a more relevant measure
is a more relevant measure is a more relevant measure is a more relevant measure
Therefore the efficient use of ca Therefore the efficient use of capital plays an im pital plays an important role a portant role a 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 s well
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Influenced by Influenced by macro env macro enviro ronment and market factors nment and market factors
Sanlam’s Focus Remains Driving Increased ROEV Sanlam Sanlam’ ’s Focus Remains Driving Increased ROEV s Focus Remains Driving Increased ROEV
A Simple Formula! A Simple Formula! A Simple Formula! A Simple Formula!
ROE/ ROE/ ROE/ ROE/ ROEV ROEV ROEV ROEV Capital Capital Efficiency Efficiency Application of Capital Application of Capital Application of Capital Application of Capital Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Strategic Investments Strategic Investments Strategic Investments Strategic Investments Earnings Earnings Net Top Net Top Net Top Net Top-
Line Growth Line Growth Line Growth Costs Costs Costs Costs Investment Returns Investment Returns Investment Returns Investment Returns
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Analysis of ROEV — 1H06 Analysis of ROEV Analysis of ROEV — — 1H06 1H06
26,2% 26,2%
No Non No Non-
Life Life Life Operations Operations Operations Operations Ba Balanced lanced Ba Balanced lanced Portfolio & Ot Portfolio & Other her Portfolio & Ot Portfolio & Other her Va Value of lue of Va Value of lue of in in in in-
force rce fo force rce
33,6% 22,5% 25,9% 25,6%
(R10.3bn)
46,5%
(R18.7bn)
27,9%
(R11.2bn)
Comp Compon
ents of
EV (weighting) ROEV ROEV (Annualised)
FY05 (+24.4%) FY05 (+24.4%); FY04 (+22.6%) FY04 (+22.6%); FY03 ( FY03 (+14.2%) .2%) — — aided by s ided by strong rong inve investment ment markets markets
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Agenda Agenda Agenda
Macro and market inf market influences es Macro and Macro and market inf market influences es
External influences External influences External influences
Sanlam Sanlam Sanlam’ ’s view s view s view s view
Earnings Earnings Earnings
Growth opportunities Growth opportunities Growth opportunities
Investment returns Investment returns Investment returns
Focus on costs Focus on costs Focus on costs
Capital efficien l efficiency cy Capit Capital efficien l efficiency cy
Conclusion Conclusion Conclusion
Q&A Q&A Q&A
Sa Sanlam UBS Pre 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
Increas Increased Pres d Pressure sure on Life Margins
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Influenced by Influenced by macro env macro enviro ronment and market factors nment and market factors
Macro Environment Macro Environment Macro Environment
ROE/ ROE/ ROE/ ROE/ ROE/ ROE/ ROEV ROEV ROEV ROEV ROEV ROEV Capital Capital Capital Capital Capital Capital Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency Application of Capital Application of Capital Application of Capital Application of Capital Application of Capital Application of Capital Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Strategic Investments Strategic Investments Strategic Investments Strategic Investments Strategic Investments Strategic Investments Earnings Earnings Earnings Earnings Earnings Earnings Net Top Net Top Net Top Net Top Net Top Net Top-
Line Growth Line Growth Line Growth Line Growth Line Growth Costs Costs Costs Costs Costs Costs Investment Returns Investment Returns Investment Returns Investment Returns Investment Returns Investment Returns
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Macro Environment Macro Environment Macro Environment
Pressure Pressure
Margins Margins
Low Low Interest/ Interest/ Infl Inflati ation I I n n c c r r e e a a s s e e d d C C
n s s u u
m e e r r i i s s m m S S h h i i f f t t t t
O f f f f
B a a l l a a n n c c e e S S h h e e e e t t p p r r
d u u c c t t s s FAIS Regulatory uncertainty I I n c n c r r e e a a s s e e d d c c
m p p e e t t i i t t i i
n Trans- parency / Flexi xibility
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Macro Environment (continued) Macro Environment Macro Environment (continued)
(continued)
Economy
Econ Economy
Structurally lower interest rate and inflationary environment and inflationary environment Structurally lower interest rate Structurally lower interest rate and inflationary environment and inflationary environment
Equity market volatility Equity market volatility Equity market volatility
Increased consumerism Increased consumerism Increased consumerism
Policyholder activism led by the media led by the media Policyholder activism Policyholder activism led by the media led by the media
nd for flex r flexib ibilit ility an y and tran d transpar sparency ency Demand f nd for flex r flexib ibilit ility an y and tran d transpar sparency ency
Shift to off Shift to off Shift to off-
balance sheet balance sheet balance sheet -
‘Margin versus ROE Margin versus ROE Margin versus ROE Margin versus ROE’ ’ trade trade trade trade-
Increased competition Increased competition Increased competition
Pricing pr g pres essure sure Pricin Pricing pr g pres essure sure
Competit ition from n ion from non Compet Competit ition from n ion from non-
aditional life players traditional life players aditional life players
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Macro Environment (continued) Macro Environment Macro Environment (continued)
(continued)
gulat latory ry uncertaint uncertainty Regu gulat latory ry uncertaint uncertainty
Increased presence (PFA, bul FA, bulking, s king, secret profit cret profits, etc) s, etc) Increased presence ( Increased presence (PFA, bul FA, bulking, s king, secret profit cret profits, etc) s, etc)
Preparat aration for exp ion for expect cted N ed National Treasu
ry regulations lations Prep Preparat aration for exp ion for expect cted N ed National Treasu
ry regulations lations
Changes to ges to di distri stributio bution Cha Changes to ges to di distri stributio bution
FAIS impacting productivity an ty and in d increas creasing costs ng costs FAIS impacting productivi FAIS impacting productivity an ty and in d increas creasing costs ng costs
Potential broker fallout and bridging financing requirements idging financing requirements Potential broker fallout and br Potential broker fallout and bridging financing requirements idging financing requirements
The need for new distribution initiatives ribution initiatives The need for new dist The need for new distribution initiatives ribution initiatives
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Sanlam’s View Sanlam Sanlam’ ’s View s View
… … on Increased Regulation
Government's response to: sponse to: Government's r Government's response to: sponse to:
Promoting savings (SA savings rate of Promoting savings (SA savings rate of Promoting savings (SA savings rate of -
0.21% of PDI) 0.21% of PDI) 0.21% of PDI)
Addressing th the indu e industry's stry's v valu lue prop e proposit
ion to cust custom
ers Addres Addressing th the indu e industry's stry's v valu lue prop e proposit
ion to cust custom
ers
Awaren eness ess of indu
stry Awar Awaren eness ess of indu
stry’ ’s role in savings s role in savings is gain is gainin ing tract g traction
s role in savings s role in savings is gain is gainin ing tract g traction
gulat latory ry framew framewor
k more align re aligned t d to prom promot
e an Regu gulat latory ry framew framewor
k more align re aligned t d to prom promot
e an exp expansion ionary s ry savings en s environ ronment (low ent (lowerin ering of R g of RFT) FT) exp expansion ionary s ry savings en s environ ronment (low ent (lowerin ering of R g of RFT) FT)
Taken the in e initial p itial pain in (bad (bad PFA publicity, SOI and RIY) PFA publicity, SOI and RIY) Taken th Taken the in e initial p itial pain in (bad (bad PFA publicity, SOI and RIY) PFA publicity, SOI and RIY)… …
… … thereby enhancing the LT positioning & competitiveness thereby enhancing the LT positioning & competitiveness
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Sanlam’s View (continued) Sanlam Sanlam’ ’s View s View (continued)
(continued)
… … on Distribution
New commis ission prop sion propos
als: New com New commis ission prop sion propos
als:
All stakeh akeholders lders All st All stakeh akeholders lders’ ’ int interest rests are align s are aligned m d more appropriat re appropriately ely int interest rests are align s are aligned m d more appropriat re appropriately ely
Should reduce industry churn Should reduce industry churn Should reduce industry churn
Expected rollout llout Expected r Expected rollout llout — — 1H07, risk pro 1H07, risk produc ducts to ts to fo follow llow 1H07, risk pro 1H07, risk produc ducts to ts to fo follow llow
Already f y fact ctored exp
cted outcome int e into 1 1H06 m 06 margins rgins Alread Already f y fact ctored exp
cted outcome int e into 1 1H06 m 06 margins rgins
Uplift to EV margins Uplift to EV margins Uplift to EV margins — — 10% red 10% reduct ction in PV of comm ion in PV of commis ission sions 10% red 10% reduct ction in PV of comm ion in PV of commis ission sions
Alignment of comm ent of commis ission struct sion structures in order for in ures in order for inter termed ediary iary Alignm Alignment of comm ent of commis ission struct sion structures in order for in ures in order for inter termed ediary iary to b to become amb come ambivalent in ch lent in choi
ce o
produc uct he t he/she /she sell sells to b to become amb come ambivalent in ch lent in choi
ce o
produc uct he t he/she /she sell sells
Overall quality of new business written should improve Overall quality of new business written should improve
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Focus on Earnings Focus on Earnings Focus on Earnings
Top Top Top Top-
line G Growt
, Costs an s and Investment Returns d Investment Returns lin line G Growt
, Costs an s and Investment Returns d Investment Returns
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Driving Increased RoEV Driving Increased RoEV Driving Increased RoEV
ROE/ ROE/ ROE/ ROE/ ROEV ROEV ROEV ROEV Capital Capital Capital Capital Capital Capital Efficiency Efficiency Efficiency Efficiency Efficiency Efficiency Application of Capital Application of Capital Application of Capital Application of Capital Application of Capital Application of Capital Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Strategic Investments Strategic Investments Strategic Investments Strategic Investments Strategic Investments Strategic Investments Earnings Earnings Net Top Net Top Net Top Net Top-
Line Growth Line Growth Line Growth Costs Costs Costs Costs Investment Returns Investment Returns Investment Returns Investment Returns
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
New Business Flows New Business Flows New Business Flows
400 4000 800 8000 1200 12000 1600 16000 2000 20000 2400 24000
1s 1st H H'05 05 1st H' H'06 06 1s 1st H H'05 05 1s 1st H H'06 06
Rm Rm
SA SA L Life SA SA no non n lif life In Inte ternational
17% 17% 79% 79% 47% 47% 107% 107% 42% 42% 33% 33% 1 % 1 % 30% 30%
Retail Retail Institutional Institutional
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Net Business Flows Net Business Flows Net Business Flows
R mil R million lion R mil R million lion 2006 2006 2006 2006 2005 2005 2005 2005
By license By license By license By license 11 822 11 822 11 822 11 822 495 495 495 495 Life in Life insurance surance Life in Life insurance surance (1 175) (1 175) (1 175) (1 175) (2 045) (2 045) (2 045) (2 045) Investments Investments Investments Investments 8 060 8 060 8 060 8 060 (1 010) (1 010) (1 010) (1 010) Short term Short term Short term Short term 1 387 1 387 1 387 1 387 1 475 1 475 1 475 1 475 8 272 8 272 8 272 8 272 (1 580) (1 580) (1 580) (1 580) PS Group (U PS Group (UK) K) PS Group (U PS Group (UK) K) 3 550 3 550 3 550 3 550 2 075 2 075 2 075 2 075 By business By business By business By business 11 822 11 822 11 822 11 822 495 495 495 495 Re Reta tail il Re Reta tail il 6 004 6 004 6 004 6 004 1 043 1 043 1 043 1 043 Institutional Institutional Institutional Institutional 881 881 881 881 (4 098) (4 098) (4 098) (4 098) Short term Short term Short term Short term 1 387 1 387 1 387 1 387 1 475 1 475 1 475 1 475 8 272 8 272 8 272 8 272 (1 580) (1 580) (1 580) (1 580) PS Group (U PS Group (UK) K) PS Group (U PS Group (UK) K) 3 550 3 550 3 550 3 550 2 075 2 075 2 075 2 075
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Strategic Focus Strategic Focus Strategic Focus
Although San gh Sanlam am Althou Although San gh Sanlam am’ ’s group f s group focu cus rem s remains ins s group f s group focu cus rem s remains ins… …
Driving increas creased R ed ROEV EV Driving in Driving increas creased R ed ROEV EV
Businesses Businesses Businesses’ ’ strat strategies are align gies are aligned t d to achiev achieve t e top strat strategies are align gies are aligned t d to achiev achieve t e top-
line growth line growth line growth through: through: through: through:
Focused market in d market init itiatives iatives Focus Focused market in d market init itiatives iatives
Expanding solutions offering Expanding solutions offering Expanding solutions offering
Distribution strategies Distribution strategies Distribution strategies
Business synergies ies Business syner Business synergies ies
Diversification Diversification Diversification
Operational excellence Operational excellence Operational excellence
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line Growing the Top Growing the Top-
line
Acceler Accelerated su ated success tow ccess towards prov rds provid idin ing a w g a wide ran range of client e of client Acceler Accelerated su ated success tow ccess towards prov rds provid idin ing a w g a wide ran range of client e of client-
centric solutions lutions centric s centric solutions lutions
40. 40.0% 0% 40. 40.7% 7% 17. 17.2% 2% 2. 2.1% 1% 52 52.9% 25 25.8% 17 17.4% 3. 3.9% 9% 58. 58.4% 4% 18. 18.7% 7% 12. 12.9% 9% 9. 9.9% 9% 57. 57.3% 3% 16. 16.1% 1% 12. 12.1% 1% 14. 14.4% 4% 63. 63.4% 4% 15. 15.9% 9% 11. 11.2% 2% 9. 9.5% 5%
2002 2002 2003 2003 2004 2004 2005 2005 1H2006 1H2006
Ne New bus w business f flows
Inve vest stments Life fe In Insurance Short rt t term rm PS PS G Group
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Sanlam Developing Markets Sanlam Developing Markets — — Growth Potential Growth Potential
Fastest grow est growin ing m g market in term rket in terms of ab s of absolu lute num te number bers Fast Fastest grow est growin ing m g market in term rket in terms of ab s of absolu lute num te number bers
Penetration rate of black em ack emergin erging m market rket is on is only 37 ly 37% Penetration rate of b Penetration rate of black em ack emergin erging m market rket is on is only 37 ly 37%
31 31.0% 40 40.0% 26 26.0% 3. 3.0% 0% 11 11.4% 45 45.6% 37 37.2% 5. 5.8% 8%
19 1994 94 20 2006 06
Growth c centere red a d around L
M 3 -
LS LSM 1 1-2 LS LSM 3 3-5 LS LSM 6 6-7 LS LSM 8 8
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Sanlam Developing Markets (SA) Sanlam Developing Markets (SA)
1H06 focu cuss ssed on th ed on the int e integr egration of ation of 1H06 f 1H06 focu cuss ssed on th ed on the int e integr egration of ation of Aflife Aflife Aflife Aflife (systems, etc) (systems, etc) (systems, etc) (systems, etc)
Strong growth from Channel, while
Strong growth fr Strong growth from Channel, while
Aflife Aflife Aflife maint maintained volum ined volumes maint maintained volum ined volumes
Market share in E are in ELM of 14.7% in 1
06 Market sh Market share in E are in ELM of 14.7% in 1
06 vs vs vs vs 1.6% (1H05) 1.6% (1H05) 1.6% (1H05) 1.6% (1H05)
Selling more than 30,000 policies per month in SA policies per month in SA Selling more than 30,000 Selling more than 30,000 policies per month in SA policies per month in SA Strategy for Growth Strategy for Growth
Leverage Sanlam Leverage Sanlam Leverage Sanlam’ ’s ELM base in SA s ELM base in SA s ELM base in SA s ELM base in SA
Expanding into underrepresented regions Expanding into underrepresented regions Expanding into underrepresented regions
Expanding our solution set Expanding our solution set Expanding our solution set
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Sanlam Developing Markets (Non Sanlam Developing Markets (Non-
SA)
New busin ines ess v s volum lumes of R2 s of R278m New bus New busin ines ess v s volum lumes of R2 s of R278m
Shriram Shriram Shriram a future call option on growth a future call option on growth a future call option on growth a future call option on growth
Sound basis for growth,
9 000 agents accredited Sound basis for gr Sound basis for growth,
9 000 agents accredited
Limited in d initial cap itial capital out l outlay ay Limit Limited in d initial cap itial capital out l outlay ay Strategy for Growth Strategy for Growth
Explore partnering opportunities out ities outsid ide SA, includ e SA, including ing Explore partnering opportun Explore partnering opportunities out ities outsid ide SA, includ e SA, including ing
Barclays and ABSA Barclays and ABSA Barclays and ABSA
Shriram Shriram Shriram / Other Partners / Other Partners / Other Partners / Other Partners
Evaluate emerging m market opp rket opportunities rtunities and expand selectively and expand selectively Evaluate emerging Evaluate emerging m market opp rket opportunities rtunities and expand selectively and expand selectively
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Sanlam Personal Finance (Middle Market) Sanlam Personal Finance (Middle Market)
Present sit ent situat ation ion Pres Present sit ent situat ation ion
Share of ABSA broker business > 25% Share of ABSA broker business > 25% Share of ABSA broker business > 25%
uten eng p g presence grow esence growin ing (APE sales + g (APE sales +16% to S 6% to Sept Gaut uten eng p g presence grow esence growin ing (APE sales + g (APE sales +16% to S 6% to Sept-
06) 06) 06)
Improving footprint and distribution efficiency distribution efficiency Improving footprint and Improving footprint and distribution efficiency distribution efficiency Strategy for Growth Strategy for Growth
deni ning ng re retai tail dist distribution and client ribution and client solution lutions activ s activities es Broa
deni ning ng re retai tail dist distribution and client ribution and client solution lutions activ s activities es
Continue expanding into underrepresen rrepresented regions ( ted regions (Gaut auteng) Continue expanding into unde Continue expanding into underrepresen rrepresented regions ( ted regions (Gaut auteng)
Focus on strategic business development to align with development to align with Focus on strategic business Focus on strategic business development to align with development to align with ch chan angin ging business and regu business and regulat latory env ry environment ronment ch chan angin ging business and regu business and regulat latory env ry environment ronment
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Sanlam Personal Finance (Affluent Market) Sanlam Personal Finance (Affluent Market)
Present sit ent situat ation ion Pres Present sit ent situat ation ion
Excellent new business growth:
Excellent new business gr Excellent new business growth:
Innofin Innofin Innofin (+49%), SPI 49%), SPI (+49%), SPI 49%), SPI (+242%) and SCI (+104%) (+242%) and SCI (+104%) (+242%) and SCI (+104%) (+242%) and SCI (+104%)
acier brand launched, pr ched, prov
iding h g holistic s listic solut lutions
Glacier brand laun acier brand launched, pr ched, prov
iding h g holistic s listic solut lutions
SPI joint venture with SPI joint venture with SPI joint venture with Pict Pictet et Pict Pictet et Strategy for Growth Strategy for Growth
Focus on wealt alth cr creat eation
, offer fering a wide range of s a wide range of solution lutions Focus on w Focus on wealt alth cr creat eation
, offer fering a wide range of s a wide range of solution lutions
Important to provide SA clients with offshore fi with offshore financial s ial serv rvices ices Important to provide SA clients Important to provide SA clients with offshore fi with offshore financial s ial serv rvices ices
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Sanlam Personal Finance (Alternative Revenue Sources) Sanlam Personal Finance (Alternative Revenue Sources)
Existing situation: Diversifica icatio ion pa n payi ying ng di divi vide dends nds Existing situation: Divers Existing situation: Diversifica icatio ion pa n payi ying ng di divi vide dends nds
New mortgage and personal loans up by 54%
New mortgage and pers New mortgage and personal loans up by 54%
R3.0bn home loans and personal loans of R1.3bn rsonal loans of R1.3bn R3.0bn home loans and pe R3.0bn home loans and personal loans of R1.3bn rsonal loans of R1.3bn Strategy for Growth Strategy for Growth
Conti ntinue ue to to o
fer a r and m d mainta tain in a compreh a comprehens nsiv ive s e solution s lution set t t to Co Conti ntinue ue to to o
fer a r and m d mainta tain in a compreh a comprehens nsiv ive s e solution s lution set t t to existi ting ng cl clie ients nts existi ting ng cl clie ients nts
Selectively introduce new credit solutions around credit solutions around Selectively introduce new Selectively introduce new credit solutions around credit solutions around mis mis mis mis-
pricin ing o g of pr pricin ing o g of risk situations risk situations risk situations risk situations
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Growing the Top-line (continued) Growing the Top Growing the Top-
line (continued)
(continued)
Institutional Businesses Institutional Businesses
SIM SIM SIM — — Strong growth in op rong growth in operat eratin ing pr g prof
itab ability +5 ility +56% to R324 6% to R324m, m, Strong growth in op rong growth in operat eratin ing pr g prof
itab ability +5 ility +56% to R324 6% to R324m, m, LMW: rolling 12 months LMW: rolling 12 months LMW: rolling 12 months LMW: rolling 12 months — — 2/1 2/11 (D (Dom
estic); 3/1 c); 3/11 (G (Glob lobal), l), 2/1 2/11 (D (Dom
estic); 3/1 c); 3/11 (G (Glob lobal), l), Acquired Acquired Acquired Acquired Coris Coris Coris Coris’ ’ mu mult lti mu mult lti-
manager (R20bn of FUM) manager (R20bn of FUM) manager (R20bn of FUM)
SCM — Continued delivery on growth and ROE
SEB SEB SEB — — Risk margins under pr Risk margins under pressure, JV with essure, JV with Risk margins under pr Risk margins under pressure, JV with essure, JV with Coris Coris Coris Coris positions positions positions positions adm admin bu n business ss for a turnaroun for a turnaround in loss in losses es adm admin bu n business ss for a turnaroun for a turnaround in loss in losses es Strategy for Growth Strategy for Growth
Conti ntinue ue to to fo focus o cus on i improvin proving LT inv g LT invest stment p ment perf rforman
Co Conti ntinue ue to to fo focus o cus on i improvin proving LT inv g LT invest stment p ment perf rforman
Build on compreh ild on comprehensive bus ive busin ines ess offer s offering and s and solu lutions tions Bu Build on compreh ild on comprehensive bus ive busin ines ess offer s offering and s and solu lutions tions
Co Co Co-
ation to off
r integr egrat ated solut ed solutions t
clients
ation to off
r integr egrat ated solut ed solutions t
clients
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
SCI : Performance Highlights SCI : Performance Highlights
30 September 2006 30 September 2006
3/7 and 20 3/7 and 20th
th ov
erall all (444
444 f fund unds) s)
1/7 and 2 1/7 and 2nd
nd overa
l (373
373 f fund unds) s)
2nd
nd ov
erall all 44.29 44.29 46.41 46.41 43.10 43.10 2 3 4 Small Cap Fu Small Cap Fund R R 4/18 4/18 3/18 3/18 5.50 5.50 9.36 9.36 1 2 Bond Fu Fund nd 7/31 7/31 7/26 7/26 6/24 6/24 25.92 25.92 31.89 31.89 31.69 31.69 1 2 3 Balanced ced Fu Fund nd
% Years
6.80 6.80 14.05 14.05 24.18 24.18 38.48 38.48 20.66 20.66 29.07 29.07 45.74 45.74 46.10 46.10 44.30 44.30 45.55 45.55
Category ranking (and overall ranking where applicable) Annualised returns Fund
1 YTD YTD 1 2 YTD YTD 1 2 3 2 3 2/7 and 19 2/7 and 19th
th ov
erall all (444
444 f fund unds) s)
1/7 and 8 1/7 and 8th
th overa
l (373
373 f fund unds) s)
Value Fu Value Fund nd 1/11 1/11 2/17 2/17 2/16 2/16 2/12 2/12 2/7 2/7 2/7 2/7 1/7 and 10 1/7 and 10th
th ov
erall all (444
444 f fund unds) s)
1/7 and 4 1/7 and 4th
th overa
l (373
373 f fund unds) s)
Income Fu Income Fund nd Property Fund
Indust Industrial Fun ial Fund R R
Source : S&P Fund Services; Lump sum, NAV to NAV excl. initial fees, Income reinvested on ex-div date, total growth rate for periods 1 year and h t
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Focus on Costs Focus on Costs Focus on Costs
ightened competition and a lo tion and a low inf w inflation en ation envi vironment demand th ronment demand th Heightened competi ightened competition and a lo tion and a low inf w inflation en ation envi vironment demand th ronment demand that at at at we we co conti ntinue nue to to tig tighten o ten our gri r grip on cos
t structures we we co conti ntinue nue to to tig tighten o ten our gri r grip on cos
t structures
49 49.6% 44 44.1% 42 42.1% 38 38.9% 38 38.6% 35 35.7%
1H 1H2006 2006 2005 2005 2004 2004 2003 2003 2002 2002 2001 2001
SP SPF A F Admi min C n Cost R Rati tio
35. 35.2% 2% 34 34.7% 33. 33.6% 6% 31 31.4% 29. 29.1% 1% 25 25.7%
1H 1H2006 2006 2005 005 2004 2004 2003 2003 2002 2002 2001 2001
Group A p Admi min C n Cost R Rati tio
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Focus on Costs (continued) Focus on Costs Focus on Costs (continued)
(continued)
tena nance nce costs costs Mainte tena nance nce costs costs
SEB JV wi JV with th SEB SEB JV wi JV with th Coris Coris Coris Coris (R50m annualised cost savings) 50m annualised cost savings) (R50m annualised cost savings) 50m annualised cost savings)
Rationalization of IT systems in acquired ELM businesses in acquired ELM businesses Rationalization of IT systems Rationalization of IT systems in acquired ELM businesses in acquired ELM businesses
Continued focus across the spectrum Continued focus across the spectrum Continued focus across the spectrum
Acquisition costs Acquisition costs Acquisition costs
Improve cost eff e cost efficien ciencies in d cies in dist stribution area ribution area Improv Improve cost eff e cost efficien ciencies in d cies in dist stribution area ribution area
Increase agency productivity Increase agency productivity Increase agency productivity
Increase average file size Increase average file size Increase average file size
Cross Cros Cross-
selling opportunit rtunities (an es (and selling opp selling opportunit rtunities (an es (and bancassurance bancassurance bancassurance bancassurance) )
den di n distri stributio bution c channe nels ls Broa
den di n distri stributio bution c channe nels ls
stribution eff ion efficien ciencies at cies at Distribut stribution eff ion efficien ciencies at cies at Shrir Shriram am Shrir Shriram am should
result in lt in should
result in lt in acqu acquis isition ition cost costs of s of 3 30% acqu acquis isition ition cost costs of s of 3 30%-
40% of competitors 40% of competitors 40% of competitors
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Capital Efficiency Capital Efficiency Capital Efficiency
Enhancing ROEV Enhancing ROEV Enhancing ROEV Enhancing ROEV
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006 Earnings Earnings Earnings Earnings Earnings Earnings Net Top Net Top Net Top Net Top Net Top Net Top-
Line Growth Line Growth Line Growth Line Growth Line Growth Costs Costs Costs Costs Costs Costs Investment Returns Investment Returns Investment Returns Investment Returns Investment Returns Investment Returns
Driving Increased ROEV Driving Increased ROEV Driving Increased ROEV
ROE/ ROE/ ROE/ ROE/ ROEV ROEV ROEV ROEV Capital Capital Efficiency Efficiency Application of Capital Application of Capital Application of Capital Application of Capital Balanced Portfolio Balanced Portfolio Balanced Portfolio Balanced Portfolio Strategic Investments Strategic Investments Strategic Investments Strategic Investments
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Driving Increased ROEV (continued) Driving Increased ROEV Driving Increased ROEV (continued)
(continued)
4 446 13.0 359 2005 442 83
million Number of shares
5 737 Total 1 291 3.5 2006 to date Purchased & cancelled
R mil % Total cost
Net reduction in share capital issued of 16%
Share buy Share buy Share buy Share buy-
back program back program back program
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Capital Efficiency Capital Efficiency Capital Efficiency
Debt raisi bt raising De Debt raisi bt raising
R2bn raised, still have R1bn of R2bn raised, still have R1bn of R2bn raised, still have R1bn of ‘ ‘fi fire repower power fi fire repower power’ ’
Reduce duced vo d vola latil tility i ty in Sa Sanla nlam L Life fe c capi pital tal po portfoli rtfolio Re Reduce duced vo d vola latil tility i ty in Sa Sanla nlam L Life fe c capi pital tal po portfoli rtfolio
Group Grou Group’ ’s ov s overall cap erall capital re l requirement reduced quirement reduced s ov s overall cap erall capital re l requirement reduced quirement reduced
Released R4bn of surpl surplus ca s capi pita tal Released R4bn of Released R4bn of surpl surplus ca s capi pita tal
Continue with share buy e buy Continue with shar Continue with share buy e buy-
back program back program back program
Explore addit ditional growth opp
rtunities Explore ad Explore addit ditional growth opp
rtunities
Further optim timisation of capit
l structure ructure Further op Further optim timisation of capit
l structure ructure — — Work in Progress Work in Progress Work in Progress Work in Progress
Realignment of assets backing C ssets backing CAR Realignment of a Realignment of assets backing C ssets backing CAR
An alternativ rnative w e would be t d be to en encourage clients t courage clients to s swit itch t ch to An alt An alternativ rnative w e would be t d be to en encourage clients t courage clients to s swit itch t ch to less capital intensive products less capital intensive products less capital intensive products less capital intensive products
Restructuring the NAV and VIF V and VIF Restructuring the NA Restructuring the NAV and VIF V and VIF — — ass assess ssin ing each por g each portfolio tfolio ass assess ssin ing each por g each portfolio tfolio
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Capital Efficiency (continued) Capital Efficiency Capital Efficiency (continued)
(continued)
Santam Santam Santam … … wh what n at now? w? wh what n at now? w?
Continue to extract synergies from majority stake ies from majority stake Continue to extract syner Continue to extract synergies from majority stake ies from majority stake
Increased co Increased co Increased co-
eration and int ion and integrat gration ion opportun
ities
eration and int ion and integrat gration ion opportun
ities
Introduce new distribution initiatives bution initiatives Introduce new distr Introduce new distribution initiatives bution initiatives
The need for a BEE partner The need for a BEE partner The need for a BEE partner
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Conclusion Conclusion Conclusion
A Simple Formula A Simple Formula A Simple Formula A Simple Formula
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Conclusions Conclusions Conclusions
ROEV co EV conti ntinue ues a s as the the mai main dri driver of str er of strategy and op gy and operat erations ions RO ROEV co EV conti ntinue ues a s as the the mai main dri driver of str er of strategy and op gy and operat erations ions at Sa Sanl nlam am at Sa Sanl nlam am
We wish to position ourselv
s as We wish to positi We wish to position ourselv
s as
A diversif rsified f ied financial s ial services rvices group s group servicin rvicing th g the retail an e retail and d A div A diversif rsified f ied financial s ial services rvices group s group servicin rvicing th g the retail an e retail and d inst institut itution ional m l market, not on rket, not only a lif ly a life off e office ce inst institut itution ional m l market, not on rket, not only a lif ly a life off e office ce
With a leadership p ip posit sition in
, with all that it implies ies With a leadersh With a leadership p ip posit sition in
, with all that it implies ies
Leverage Sanlam Leverage Sanlam Leverage Sanlam’ ’s em s emergin erging market b market base se s em s emergin erging market b market base se
Specialist activity in de develo velope ped m d marke rkets Specialist activity in Specialist activity in de develo velope ped m d marke rkets
In all our activities we will have scale and have scale and relevance which relevance which In all our activities we will In all our activities we will have scale and have scale and relevance which relevance which provides us with acceptable provides us with acceptable ROEV relative to our target EV relative to our target provides us with acceptable provides us with acceptable ROEV relative to our target EV relative to our target
Botto ttom Bo Botto ttom-
line: line: line: There There There There’ ’s still s still pl plenty o ty of wo work rk to to be be do done! ne! s still s still pl plenty o ty of wo work rk to to be be do done! ne!
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006
Fundamental Assumption Fundamental Assumption Fundamental Assumption
A sustainable re A sustainable re A sustainable re-
rating can be achieved through R eved through ROEV EV rating can be achi rating can be achieved through R eved through ROEV EV enh enhancem ement v ent via: a: enh enhancem ement v ent via: a:
Further optim timisation of capit
l structure ructure Further op Further optim timisation of capit
l structure ructure
Continue t to d deliver t liver top line growth & p line growth & operation
l efficien ciency cy Continu Continue t to d deliver t liver top line growth & p line growth & operation
l efficien ciency cy
200 400 600 800 1000 1200 1400 1600 1800 2000 Dec '03 Dec '04 Jun'05 Dec '05 Jun '06 Oct '06
cps Share price Discount to EV 19% 19% 3% 3% 22% 22% 6% 6% 17% 17% 7% 7%
Sa Sanlam UBS Pre nlam UBS Presentation entation October 2006