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Insurance Financial Planning Retirement Investments Wealth
Growing shareholder value
UBS financial services conference
16 October 2014
UBS conference 2014
Strategic positioning
South Africa
Protecting the base
Focus on profitable growth
Operational efficiencies
Investing for growth
Capital efficiency
Shareholder value creation
agenda
strategic positioning
focussed on shareholder returns
UBS conference 2014
strategic focus remains unchanged
maximise shareholder return
strategic positioning
Re
turn
s
(RO
GE
V)
Cap
ita
l
Eff
icie
nc
y Optimal Application
Return of Excess
Strategic Investments
Gro
wth
/
Op
era
tio
na
l
Eff
icie
nc
y Net Business Flows
Operational Efficiency
Diversification
UBS conference 2014
core strategic objectives
using the SA base to diversify into growth markets
strategic positioning
South Africa Delivery of sustainable
growth
International Creating a platform for
future growth
Maximising return on Investment in existing business
Efficient and effective management
Identification of core markets for growth & expansion
Effe
ctiv
e c
ap
ital m
an
ag
em
en
t
Sourcing new growth opportunities
UBS conference 2014
Improving performance through top-line growth
Increasing market share in key segments
Diversifying the base (including geographical presence, products,
market segments and distribution platforms)
Improved operating and cost efficiencies (including quality)
Prioritising Sanlam’s international positioning (diversification)
Improving capital-efficiency on an on-going basis
Embracing and accelerating transformation of the Group
underpinning the Sanlam Group business model
five strategic pillars
strategic positioning
south africa
protecting and growing the base
UBS conference 2014
core strategic objectives - SA
adding growth to stable base
south africa
South Africa Delivery of sustainable
growth
International Creating a platform for
future growth
Maximising return on Investment in existing business
Efficient and effective management
Identification of core markets for growth & expansion
Sourcing new growth opportunities
Effe
ctiv
e c
ap
ital m
an
ag
em
en
t
UBS conference 2014
Client centricity embedded in sales and client service models
Providing clients with appropriate products at fair price
Key driver of retention over the longer term
Value to client = value creation to shareholders
Value proposition driving product range, e.g. no savings product in low
end of market
Proprietary ODDS model key tool in evaluating quality of new business
Focus on quality embedded in distribution culture and remuneration policies
Recruitment, training and retention initiatives
consistent improvement in quality of in-force book
protecting the SA base
south africa
UBS conference 2014
Persistency – SA middle-income market
focus on quality driving persistency improvement
protecting the SA base
south africa
4.8%
3.9% 3.9%
3.6% 3.4%
3.8% 3.9%
3.0% 2.9% 2.9% 2.8% 2.9%
4.2% 4.0%
3.8% 3.7% 3.6%
4.2%
3.4%
2.9% 2.8% 2.7% 2.9%
0%
1%
2%
3%
4%
5%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Lapses, surrenders & fully paid-ups as % of in-force per half year
H1 H2
UBS conference 2014
Persistency – SA lower income market
focus on quality driving persistency improvement
protecting the SA base
south africa
15.2%
17.5%
14.1% 12.7%
11.4% 11.1% 10.0%
11.3%
27.6%
16.8%
14.5% 12.7%
11.1% 10.4% 11.0%
0%
5%
10%
15%
20%
25%
30%
2007 2008 2009 2010 2011 2012 2013 2014
Number of NTUs, lapses and surrenders as % of in-force
H1 H2
UBS conference 2014
SA VNB grew by 17% per annum since 2006 – growing contribution from
Sanlam Sky
pure focus on market share destroys value over longer term
focus on profitable growth
south africa
-0.3%
0.2%
0.7%
1.2%
1.7%
2.2%
2.7%
3.2%
0
200
400
600
800
1 000
1 200
2006 2007 2008 2009 2010 2011 2012 2013
Value of new business Margins - rhs
UBS conference 2014
Focus on quality, costs + prudence = consistent positive experience
experience variances
operational efficiencies
south africa
241
142 138
277 288 278
636
468
681
555
1 021
477
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0
200
400
600
800
1 000
1 200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14
R'million % of VIF (rhs)
investing for growth
sustainable value creation
UBS conference 2014
core strategic objectives – ex SA
Rest of Africa, India, SE Asia identified as growth markets
South Africa Delivery of sustainable
growth
International Creating a platform for
future growth
Maximising return on Investment in existing business
Efficient and effective management
Identification of core markets for growth & expansion
Sourcing new growth opportunities
Effe
ctiv
e c
ap
ital m
an
ag
em
en
t
UBS conference 2014
growth through diversification
international positioning
investing for growth
RSA based
Rest of Africa
Botswana
Ghana
Kenya
Lesotho
Malawi
Mozambique
Namibia
Nigeria
Rwanda
South Sudan
Swaziland
Tanzania
The Gambia
Uganda
Zambia
South-East Asia
India
Malaysia
Philippines
Developed markets
UK / Ireland
Switzerland
Australia
USA
Emerging Markets - Direct presence
Emerging Markets - Indirect presence
Developed Markets
UBS conference 2014
the growth opportunity
life insurance penetration in growth markets
investing for growth
11.4%
5.4%
1.9%
0.9% 1.1% 0.5% 0.4%
0.1% 0.2% 0.1%
2.5% 2.8%
SouthAfrica
Namibia Botswana Malawi Kenya Ghana Zambia Tanzania Nigeria Uganda India Malaysia
% o
f G
DP
BRIC average: 1.9%
Global average: 3.7%
Source: Swiss Re and AXCO
UBS conference 2014
Gross VNB grew by 19% per annum since 2006
accelerated growth in VNB and margins
contribution of growth markets
investing for growth
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
200
400
600
800
1 000
1 200
1 400
1 600
2006 2007 2008 2009 2010 2011 2012 2013
South Africa Africa Other International Margins - rhs
UBS conference 2014
Group Equity Value Net operating profit
contribution of growth markets
diversified earnings base provides growth and stability
investing for growth
Life business 57%
Short-term insurance*
13%
Investment management
13%
Credit & banking 14%
Admin, health & other 3%
Life business 53%
Short-term insurance* 17%
Investment management
14%
Credit & banking 8%
Admin, health & other 8%
* General insurance
UBS conference 2014
SA Traditional 98%
Namibia 2%
contribution of growth markets
growth markets delivering value
investing for growth
Net VNB – 1H03 (R100m) Net VNB – 1H14 (R626m)
SA Traditional 55%
SA Entry-level 22%
Namibia 4%
Botswana 8%
Rest of Africa 8%
Other international 3%
UBS conference 2014
SA Traditional 98%
Namibia 1%
Other international 1%
SA Traditional 65%
SA Entry-level 11%
Namibia 5%
Botswana 4%
Rest of Africa 2%
India/Malaysia 7%
Other International 6%
SA Traditional 65%
SA Entry-level 11%
Namibia 5%
Botswana 5%
Rest of Africa 1%
India/Malaysia 7%
Other international 6%
Contribution to group net operating profit
increasing contribution from growth markets to operating profit
contribution of growth markets
investing for growth
1H03 – R756 million 1H13 – R2 409 million 1H14 – R3 461 million
UBS conference 2014
investment opportunities
filling the gaps
investing for growth
COUNTRY LIFE ASSURANCE SHORT-TERM INSURANCE ASSET MANAGEMENT CREDIT BANKING OTHER
Botswana Botswana Life BIHL SURE Botswana Insurance Fund Management Letshego Bank Gaborone ●
Ghana Enterprise Life ●
India Shriram Life Shriram General STFC, SCUF ●
Kenya Pan Africa Life Pan Africa Asset Management Letshego ●
Lesotho Letshego
Malawi NICO Life NICO General Insurance NICO Asset Management NBS Bank ●
Malaysia MCIS Insurance Pacific & Orient
Mozambique NICO Vida Letshego
Namibia Sanlam Life Santam Sanlam Investment Management Letshego Bank Windhoek ●
Nigeria FBN Life Oasis Insurance
Philippines Monarch
Rwanda Soras VIE Soras AG Letshego
Tanzania African Life Assurance NIKO Insurance Letshego
The Gambia Enterprise Life
Uganda Sanlam Life NIKO Insurance Letshego ●
Zambia African Life Assurance NICO Insurance African Life Financial Services Letshego
Cavmont ●
Direct presence Indirect presence via associated company l Holding Co., Properties, Employee Benefits, Funeral
UBS conference 2014
investment opportunities
markets with potential – life insurance
investing for growth
GD
P g
row
th
UBS conference 2014
investment opportunities
markets with potential – general insurance
investing for growth
GD
P g
row
th
capital efficiency
doing more on the same base
UBS conference 2014
Optimising capital allocated to clusters - driving increased returns
Discretionary capital invested in growth markets as preference
Return to shareholders if not utilised in reasonable timeframe
Prudent approach while awaiting final SAM specifications
Discretionary capital earmarked mainly for Africa and India
optimising capital base
capital efficiency
capital efficiency
UBS conference 2014
capital efficiency
capital redeployed since 2005
capital efficiency
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
Capital released Capital deployed
Discretionary capital
South Africa
Developed markets
Emerging markets
Share buy back/special dividend
UBS conference 2014
capital efficiency
composition of GEV transformed since 2005
capital efficiency
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
GEV 2005 GEV Jun 2014
Discretionary capital
Other capital
Non-life operations
Value of in-force
Life Required Capital
growing shareholder
value
consistent performance
UBS conference 2014
Out perform cumulative growth target of long-bond rate + 400bps since
listing
rogev versus target
growing shareholder value
0
200
400
600
800
1000
1200
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Target Cost of Capital (RFR + 300bps) Actual