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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
- 2 -
A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
Johannesburg
The Sanlam offer and rationaleThe Sanlam offer and rationaleThe Sanlam offer and rationale
Johan van Zyl
CEO, Sanlam Limited
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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
Johannesburg
The African Life perspectiveThe African Life perspectiveThe African Life perspective
Jeremy Rowse
CE, African Life
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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
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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A Compelling Deal10 August 2005
Johannesburg
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