A Compelling Deal 10 August 2005 Johannesburg Sanlam to acquire African Life Sanlam to acquire African Life Sanlam to acquire African Life A COMPELLING DEAL - 1 -
A Compelling Deal 10 August 2005 Johannesburg Agenda Agenda Agenda � The Sanlam offer and rationale Johan van Zyl CEO, Sanlam � The African Life perspective Jeremy Rowse CE, African Life - 2 -
A Compelling Deal 10 August 2005 Johannesburg The Sanlam offer and rationale The Sanlam offer and rationale The Sanlam offer and rationale Johan van Zyl CEO, Sanlam Limited - 3 -
A Compelling Deal 10 August 2005 Johannesburg Sanlam strategy Sanlam strategy Sanlam 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 - 4 -
A Compelling Deal 10 August 2005 Johannesburg Sanlam strategic focus Sanlam strategic focus Sanlam 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 - 5 -
A Compelling Deal 10 August 2005 Johannesburg African Life : Some Facts African Life : Some Facts African Life : Some 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 - 6 -
A Compelling Deal 10 August 2005 Johannesburg African Life : Some Facts African Life : Some Facts African Life : Some 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 - 7 -
A Compelling Deal 10 August 2005 Johannesburg African Life : Benefits to Sanlam African Life : Benefits to Sanlam African Life : Benefits 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 - 8 -
A Compelling Deal 10 August 2005 Johannesburg Key terms of the Offer Key terms of the Offer Key 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 - 9 -
A Compelling Deal 10 August 2005 Johannesburg Support for the offer Support for the offer Support 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 - 10 -
A Compelling Deal 10 August 2005 Johannesburg Financial effects on Sanlam Financial effects on Sanlam Financial effects on Sanlam � Earnings accretive � Potential capital synergies >R300m � Meets ROEV target � Added value through new products, markets and co-operation with Ubuntu-Botho - 11 -
A Compelling Deal 10 August 2005 Johannesburg The African Life perspective The African Life perspective The African Life perspective Jeremy Rowse CE, African Life - 12 -
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Current Strategic Focus : Strategic Focus : Current Current AFRICAN LIFE ASSURANCE AFRICAN LIFE ASSURANCE LIFE LIFE HEALTH HEALTH FUND MANAGEMENT FUND MANAGEMENT South Africa South Africa Botswana Botswana Kenya Kenya South Africa South Africa Ghana Botswana Botswana Ghana Botswana Botswana Zambia Kenya Kenya Zambia Zambia Zambia Tanzania Tanzania Lesotho Lesotho Namibia Namibia Lesotho Lesotho Life and funeral cover, Health cover & Administration savings & investment for the emerging market – Investment & fund policies for low and middle- Those employed but without management income individuals and families Private medical insurance - 13 -
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Future Strategic Focus : Strategic Focus : Future Future � 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 - 14 -
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Life Strategic Focus : Strategic Focus : Life Life � High volumes � Low transaction value � Low cost � Risk dominant products � Benefit delivery focus � Effective distribution � Product innovation - 15 -
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Africa Strategic Focus : Strategic Focus : Africa Africa Insurance spend as % of GDP (Life and General) 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% - 16 -
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale Transaction Rationale Transaction Rationale Setting the Scene Setting the Scene Setting 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 - 17 -
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale : Options Transaction Rationale : Transaction Rationale : Options Options � Option 1 Status Quo and let Momentum sell to whom they wish � Option 2 Pro-actively seek a value-add shareholder - 18 -
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale Outcome Transaction Rationale Outcome Transaction Rationale Outcome Strategic Filter: Does the transaction: � � Resolve the Momentum overhang � � Unlock value for shareholders � � Meet a specific need of the acquiror � � Remains a separate strategic business entity � � Leverage the brand of the Company � � Add value to the existing vision � � Keep business Johannesburg based - 19 -
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale Outcome Transaction Rationale Outcome Transaction 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 - 20 -
A Compelling Deal 10 August 2005 Johannesburg Appeal of the Transaction Appeal of the Transaction Appeal 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 - 21 -
A Compelling Deal 10 August 2005 Johannesburg A compelling deal A compelling deal A compelling deal � Good for Sanlam � Good for African Life � Good for employees and management � Good for the industry - 22 -
A Compelling Deal 10 August 2005 Johannesburg - 23 -
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