sanlam to acquire african life shared documents... · microsoft powerpoint - offer by sanlam to...

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A Compelling Deal10 August 2005

Johannesburg

Sanlam to acquire African LifeSanlam to acquire African LifeSanlam to acquire African Life

A COMPELLING DEAL

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Johannesburg

AgendaAgendaAgenda

The Sanlam offer and rationale Johan van Zyl

CEO, Sanlam

The African Life perspective Jeremy Rowse

CE, African Life

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Johannesburg

The Sanlam offer and rationaleThe Sanlam offer and rationaleThe Sanlam offer and rationale

Johan van Zyl

CEO, Sanlam Limited

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Johannesburg

Sanlam strategySanlam strategySanlam strategy

ROEV remains primary value driver, with focus on:

Capital efficiency

Capital returned to shareholders

• R4bn share buy-back in process

Strategic application to achieve structural growth

• Supports strategy & enhance Earnings and ROEV

Growth

Distribution

Product diversification

Markets and market segments

New sources of revenue

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Johannesburg

Sanlam strategic focusSanlam strategic focusSanlam strategic focus

Entry-level life insurance market - an important component

in growth strategy

Fastest growing market in SA

Opportunity:

Insurance penetration low (<10%)

Requires product innovation & effective distribution

Sanlam Group Solutions established Oct 2003

Strong growth but off low base, 250+ advisers

Thebe / Safrican JV established, operational early 2005

But needs more bulk — African Life a real opportunity

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Johannesburg

African Life : Some FactsAfrican Life : African Life : Some FactsSome Facts

Total assets: R13bn *

Recurring premium income: R1,5bn *

Headline earnings: R259m*

Embedded Value: R2,4bn (2276 cents per share) *

Embedded Value of new business: R85m*

Operations in SA, Botswana, Lesotho, Namibia, Zambia,

Kenya, Tanzania, Ghana

Target market: LSM 4-7 (SA) and similar markets

elsewhere

* As at 31/3/2005

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Johannesburg

African Life : Some FactsAfrican Life : African Life : Some FactsSome Facts

Average monthly recurring premium: R145pm

Total annual recurring business sales: ±400,000

Total recurring business filesize: ±1 million

Volumes of claims: No1 in SA

Average claim size: ±R6,000

Funds under management (BIFM): R7,9bn *

* As at 31/3/2005

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Johannesburg

African Life : Benefits to SanlamAfrican Life : African Life : Benefits to SanlamBenefits to Sanlam

Access to new markets via client base and sales force

Strength in entry level market

Provides Sanlam with a meaningful presence and a

sound base to grow from

Management experience & expertise

Improves footprint in Africa

Provides Sanlam with a diversification opportunity

Reduces time to market & risk

Potential revenue & capital synergies

Investment expected to exceed Sanlam’s required

return hurdles

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Johannesburg

Key terms of the OfferKey terms of the OfferKey terms of the Offer

Scheme of arrangement (S311) offer for 100% of the

African Life ordinary shares

Momentum made an offer for African Life Health (‘ALH’)

Terms of Offer:

Sanlam offer is R22.05 per share, including all assets

If Momentum acquires ALH, the price will increase to

R22.50 per share

If a third party acquires ALH, the price will increase

with 85.5% of the net proceeds > R130 million;

BEE shareholders:

Agreed to accept the offer

Business support to continue

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Johannesburg

Support for the offerSupport for the offerSupport for the offer

Sanlam currently holds 20,5% of African Life

African Life Board

BEE partners

Ordinary shareholders’ support :

Approximately 70% of eligible votes

Irrevocable support from

• Momentum

• Share scheme

Institutional support

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Johannesburg

Financial effects on SanlamFinancial effects on SanlamFinancial effects on Sanlam

Earnings accretive

Potential capital synergies >R300m

Meets ROEV target

Added value through new products, markets and

co-operation with Ubuntu-Botho

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Johannesburg

The African Life perspectiveThe African Life perspectiveThe African Life perspective

Jeremy Rowse

CE, African Life

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Johannesburg

Strategic Focus : CurrentStrategic Focus : Strategic Focus : CurrentCurrent

AFRICAN LIFE ASSURANCEAFRICAN LIFE ASSURANCE

LIFELIFE

South AfricaSouth AfricaBotswanaBotswana

KenyaKenyaGhanaGhanaZambiaZambia

TanzaniaTanzaniaNamibiaNamibiaLesothoLesotho

Life and funeral cover,savings & investment

policies for low and middle-income individuals and families

HEALTHHEALTH

South AfricaSouth AfricaBotswanaBotswana

KenyaKenyaLesothoLesotho

Health cover & Administrationfor the emerging market –

Those employed but withoutPrivate medical insurance

FUND MANAGEMENTFUND MANAGEMENT

BotswanaBotswanaZambiaZambia

Investment & fundmanagement

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Johannesburg

Strategic Focus : FutureStrategic Focus : Strategic Focus : FutureFuture

Life will remain primary area of focus

Continue to explore mutual opportunities within fund management

Will look to Sanlam’s evolving health strategy to explore mutual opportunities

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Johannesburg

Strategic Focus : LifeStrategic Focus : Strategic Focus : LifeLife

High volumes

Low transaction value

Low cost

Risk dominant products

Benefit delivery focus

Effective distribution

Product innovation

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Johannesburg

Strategic Focus : AfricaStrategic Focus : Strategic Focus : AfricaAfrica

South Africa 18.2%

Botswana 3.0%

Namibia 9.0%

Ghana 1.0%

Kenya 3.5%

Zambia 4.8%

Lesotho 2.0%

Tanzania 2.9%

Insurance spend as % of GDP(Life and General)

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Johannesburg

Transaction RationaleSetting the Scene

Transaction RationaleTransaction RationaleSetting the SceneSetting the Scene

Industry consolidation

Emergence of Africa opportunities

Growth markets

Pressures on costs

Momentum’s desire to exit

Share price trading at a large discount to EV

Growth requires capital

Bancassurance emergence

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Johannesburg

Transaction Rationale : OptionsTransaction Rationale : Transaction Rationale : OptionsOptions

Option 1

Status Quo and let Momentum sell to whom they wish

Option 2

Pro-actively seek a value-add shareholder

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Johannesburg

Transaction Rationale OutcomeTransaction Rationale OutcomeTransaction Rationale Outcome

Strategic Filter:

Does the transaction:Resolve the Momentum overhangUnlock value for shareholdersMeet a specific need of the acquirorRemains a separate strategic business entityLeverage the brand of the CompanyAdd value to the existing visionKeep business Johannesburg based

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Johannesburg

Transaction Rationale OutcomeTransaction Rationale OutcomeTransaction Rationale Outcome

Avoid the need for retrenchments

Retain Health and Fund Management as strategic legs

Facilitate a bancassurance strategy for the Company

Facilitate and build on BEE relationships already in place

Focus on the revenue line rather than the cost line

Have meaningful impact

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Johannesburg

Appeal of the TransactionAppeal of the TransactionAppeal of the Transaction

Aflife remains a separate strategic business entity

Unlocks shareholder value(share price 4 August 2004 = R12,60)

Continued relationship with Fund Management

Continued Africa Strategy

Shareholder certainty

Strategically important to Sanlam

Access to Sanlam’s capital and other resources

Continued relationship with BEE business supporters

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Johannesburg

A compelling dealA compelling dealA compelling deal

Good for Sanlam

Good for African Life

Good for employees and management

Good for the industry

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Johannesburg

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