Investor Presentation 2015 Interim Results 3 September 2015
The Sanlam strategy Operating environment Strategic delivery Financial review Priorities Outlook 2015 interim results agenda
the sanlam strategy maximising shareholder value
Strategic focus central to what we do Optimising value creation Strategic enablers Strategic pillars Earnings growth Sound governance Maximising RoGEV Operational efficiencies People development Sustainable value Responsible products and Optimal capital utilisation creation for services shareholders Diversification Prosperous society Transformation Environmental footprint 2015 interim results sanlam strategy
A strategy focused on growth Driving geographic, product and services presence Rest of Africa Demographics, low insurance penetration, competitive South Africa environment, Pan-Africa opportunity Solid base & cash flows India/SE Asia Lower income Developed segments have similar Niche, solutions dynamics than SA ELM for SA & RoA and RoA clients 2015 interim results sanlam strategy
Core regional focus areas Balance structural and organic growth Operational and capital efficiencies key in current environment Effective capital management South Africa Further diversifying distribution capability Delivery of sustainable growth Reviewing optimal capital structure under SAM 2015 interim results sanlam strategy
Core regional focus areas Balance structural and organic growth Operational and capital efficiencies key in current environment South Africa Effective capital management Further diversifying distribution capability Delivery of sustainable growth Reviewing optimal capital structure under SAM Increased emphasis on accelerated organic growth Other Emerging Extracting maximum value from existing Markets relationships Platform for future growth Geographic expansion in line with client and intermediary needs 2015 interim results sanlam strategy
Core regional focus areas Balance structural and organic growth Increased emphasis on accelerated organic growth Other Emerging Effective capital management Extracting maximum value from existing Markets relationships Platform for future growth Geographic expansion in line with client and intermediary needs Products and services for SA and Rest of Africa client base Developed Expand distribution post Intrinsic sale Markets Niche approach Wealth and investment management focus 2015 interim results sanlam strategy
operating environment economic and internal pressures
External operating environment Commodity-based economies under pressure Macro environment and electricity supply constraining capital investment and economic activity South Africa Modest growth in employment and disposable income Highly competitive market across all products Commodity prices impacting on growth and currencies Rest of Increase in competition, including large internationals Africa Longer term growth potential remains intact, but challenges in the short term Slower than expected improvement in Indian economic growth India / SE Asia Delays in roll out of infrastructure projects in India Good GDP growth in Malaysia despite low oil prices 2015 interim results operating environment
SA economy Modest growth in all key metrics Growth in real retail sales, GDP and PDI 15% 10% 5% 0% -5% -10% Growth y-o-y in real retail sales Growth y-o-y in real GDP Growth y-o-y in real PDI 2015 interim results operating environment
SA interest rates LT rates increased marginally Impact on growth Sanlam Sky VNB -3% SA bond yields and short-term interest rates Higher float income 10% 9% +40bps 8% 7% +40bps 6% 5% 4% 9-year 5-year Short-term Avg Short-term 2015 interim results operating environment
SA equity and bond markets Supporting fee income and new business Average Alsi up 9% Higher average AuM Average Albi up 13% 145 140 135 130 125 6,7% 120 115 110 11,8% 1,6% 105 100 3,4% 95 All Share rebased All Bond rebased 2015 interim results operating environment
Average exchange rate Marginal net impact on non-SA results Contribution to growth Net result from financial services +R20m 15% New business +R80m 11.3% Net VNB –R3m 10% 7.6% 5% 1.6% 0.9% 0% -5% -5.9% -10% -9.4% -15% Europe United USA Botswana India Rest of Africa Kingdom 2015 interim results operating environment
Internal operating environment 6-months results impacted by internal challenges Loss of PIC funds in 2014 impacting on SI performance fees; additional R10bn outflow in 2H15 South Africa SI admin costs elevated by projects and capacity building in Retail and Institutional units System implementation issues Rest of More focus required on bedding down acquisitions Africa Improve balance sheet management Credit granted in anticipation of infrastructure roll out Delays in releasing state funding causing significant bad India debts in equipment finance subsidiary Book closely managed by STFC to limit further losses 2015 interim results operating environment
strategic delivery exceeding overall targets
Top-line earnings growth Financial performance in 1H15 Earnings per share Net operating profit per share increased by 5% ( 11% excl one-offs) Normalised headline earnings per share up 4% Business volumes New business volumes increased by 22% to R100bn Net fund inflows of R7bn Net life VNB up 5% to R655m Net VNB margin of 2.66% – maintained on per product basis Group Equity Value Group Equity Value of R47.53 per share Annualised RoGEV per share of 13% 2015 interim results strategic delivery
Operational efficiencies Under performance in some key markets SEB, Sanlam UK, Kenya and Zambia offsetting strong performance by other businesses 800 3.5% 700 3.0% 600 2.5% 500 2.0% 400 1.5% 300 1.0% 200 0.5% 100 0 0.0% 1H06 1H07 1H08 1H09 1H10 1H11 1H12 1H13 1H14 1H15 South Africa Rest of Africa Other International Margins - rhs 2015 interim results strategic delivery
Operational efficiencies Focus on quality Persistency – SA middle-income market Lapses, surrenders & fully paid-ups as % of in-force per half year 5 4.8 4.5 4.2 4.2 4.0 3.9 3.9 3.9 3.8 4 3.8 3.7 3.6 3.6 3.4 3.4 3.5 3.0 2.9 2.9 2.9 2.9 2.9 2.9 2.8 2.8 2.8 3 2.7 2.5 2 1.5 1 0.5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 H2 2015 interim results strategic delivery
Operational efficiencies Focus on quality Persistency – SA lower income market Lapses, surrenders & fully paid-ups as % of in-force per half year 12 10.6 9.8 9.6 9.6 10 9.2 8.7 8.5 8 6 4 2 0 2012 2013 2014 2015 H1 H2 2015 interim results strategic delivery
Operational efficiencies Experience variances Positive experience continuing 1 200 5.0% 4.5% 1 021 991 1 000 4.0% 3.5% 800 3.0% 681 636 600 2.5% 555 468 2.0% 408 400 1.5% 288 277 278 241 1.0% 200 142 138 0.5% 0 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15 R'million % of VIF (rhs) 2015 interim results strategic delivery
Investment performance Focus on long-term performance track record Percentage of SIM’s AUM to exceed benchmark 2011 2012 2013 2014 1H15 100% 80% 60% 40% 20% 0% 20% 40% 60% 80% 100% Rolling 3 year Rolling 5 year 2015 interim results strategic delivery
Diversification Building a balanced portfolio Group Equity Value Net Operating Profit Life insurance 50% 61% General insurance 17% 13% Investment management 15% 12% Credit & structuring 9% 12% Admin, health & other 9% 2% 2015 interim results strategic delivery
Diversification International positioning focused on emerging markets United Kingdom Ireland Switzerland USA India The Gambia Philippines Kenya Ghana Uganda Malaysia Nigeria Rwanda Burundi Tanzania Malawi Zambia Namibia Mozambique Botswana Emerging Markets - Direct presence Lesotho Emerging Markets - Indirect presence South Africa Australia Developed Markets 2015 interim results strategic delivery
Diversification – better balanced portfolio Focus on accelerated organic as apposed to structural growth Net VNB Net operating profit 16% average Other international growth rate per Other international Rest of Africa 3% Rest of Africa 10% 7% share p.a. 2% Botswana Botswana 9% SA Traditional 5% 68% Namibia Namibia 4% 4% 1H15 1H15 R655m R3 622m SA Entry-level 11% SA Traditional SA Entry-level 54% 23% Namibia Namibia Other international 2% 1% 1% 17% average 1H03 1H03 growth rate p.a. R100m R756m SA Traditional SA Traditional 98% 98% 2015 interim results strategic delivery
Diversification Contribution from businesses outside of South Africa Net operating profit Net VNB Group Equity Value 2015 2015 2015 5% 2% 8% 16% 22% 6% 3% 7% 16% 20% 18% 16% 2014 2014 2014 76% 77% 77% 76% 76% 79% South Africa Other emerging markets Other international 2015 interim results strategic delivery
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