Liberty Life Presentation to Investment Analysts’ Society of Southern Africa 2 March 2005

1. Liberty LifePresentation toInvestment Analysts’ Societyof Southern Africa • 2 March 2005 • www.liberty.co.za

2. Agenda What we said What we’ve done Operating climate Operations Financial results Focus areas for next twelve months Questions

3. What we said … more of the same • People • Customer service • Business structure and efficiency • Capital management • Product development • Financial Sector Charter implementation • Domestic operations/other market segments and Africa • Distribution channels • Implement BEE transaction

4. What we’ve done …people • Executive management

5. What we’ve done …people • More new names

6. What we’ve done …people 3600 3500 3400 3300 3200 3100 3000 2900 2800 • 251 people taken on in October 2003 as part of IEB acquisition • IT outsourcing - reduction of 70 people • HR restructuring - reduction of 25 people • 16 Graduates employed under new scheme 3472 3353 3320 3221 3069 Dec 02 Mar 03 Jun 03 Sep 03 Dec 03 Mar 04 Jun 04 Sep 04 Dec 04 Liberty including IEB Liberty excluding IEB

7. What we’ve done …customer service • Customer service campaign • Internal ombudsman and MD of customer service • Internal campaign to staff • Noticeable improvement, but a long way to go

8. What we’ve done …business structure and efficiency • Implemented during 2004 - benefits not yet fully realised: • Group HR • IT • Group Finance • Central Group product development unit formed • Central Group customer service unit formed • Implemented in 2003 - benefits evident in 2004: • Liberty Healthcare rationalised into LPB • STANLIB restructure

9. What we’ve done …capital management • Capital management committee • Long-term shareholder portfolio established • Successful Liblife B.V. bond redemption • Application to the FSB to issue debt • Conditional approval received • BEE transaction successfully implemented • Offer made for Capital Alliance • Dividend policy introduced

10. What we’ve done … FinancialSector Charter implementation • Board transformation sub-committee established • Favourable progress against scorecard • Need more black senior managers • Black managers’ ownership scheme should help • SizweNtsaluba VSP appointed • FSC auditors • STANLIB entities – more to follow

11. What we’ve done … domestic operations, other market segments and Africa • Repositioning of Charter Life (now Liberty Active) • Bobby Malabie and team developed project Khula during 2004 • A build strategy (as opposed to buy) has been developed • Expected R50m to R100m investment in the next 18 to 24 months • We have some time to get the model right

12. What we’ve done … domestic operations, other market segments and Africa • Namibian operation small, but profitable • Investigating opportunities in Uganda and Kenya • Liberty Life offshore model discontinued • Capital Alliance closed book offshore model will be considered in due course

13. What we’ve done …distribution channels • Continued focus on broker relationships • We’re working on it campaign • Regional head office in Cape Town being established • Individual life bancassurance model continues to deliver • Restructured corporate benefits bancassurance model implemented • Focused on productivity of agency and franchise in 2004 - will recruit and develop in 2005 • Well established, stable agency force

14. What we’ve done …BEE transaction • Implemented on 8 November 2004 • Community/educational trust to be finalised in 2005 • Black management allocations done • General staff scheme in place • Timing was good – R1 251m nowR1 677m • Capital repayments could commence in 18 months

15. Operating climate • Increasingly we’ve been dealing with: • More compliance and regulatory requirements • Low interest rate/low inflation environment • Strengthening of the Rand • Volatile investment markets • Risk averse investors • Poor perception of industry (media and consumers)

16. Operating climate (continued) • Some positives are emerging: • Industry has started recognising its shortcomings • Emerging middle class - a reality, but net spenders • South African economy - a success story • Investors becoming more bullish • Good local investment returns • Cash being accumulated by investors = opportunity

17. Deon De Klerk

18. Operational features – 2004/2003 * Maturity of R2 090m in respect of one large client.Excludes STANLIB and Ermitage net cash inflows.

19. New business premiums Total +15% to R13 440m Individual life +22% to R11 374m Corporate benefits -12% to R2 066m Indexed new business premiums Total +10% to R4 186m Individual life +11% to R3 544m Corporate benefits +3% to R642m Life insurance operations 12000 12000 10000 10000 8000 8000 6000 6000 4000 4000 2000 2000 0 0 2001 2001 2002 2002 2003 2003 2004 2004 Rm Rm +22% +11% -12% +3% Corporate benefits Individual life

20. Embedded value of new business Total +34% to R815m Individual life +43% to R819m Corporate benefits -110% to -R4m New business EV margins Total = 24% Individual life = 28% Corporate benefits = -1% Life insurance operations 800 900 600 700 400 500 200 300 15% 30% 20% -5% 25% 0 5% 10% 0% 100 -100 +28% R819m -1% -R4m 2001 2001 2002 2002 2003 2003 2004 2004 Rm Rm Corporate benefits Individual life

21. Life insurance operations 6000 5000 4000 3000 2000 1000 0 -1000 -2000 • Net cash inflows from insurance operations • Total -19% to R3 640m • Individual life +76% to R5 492m • Corporate benefits -234% to -R1 852m R5 492m -R1 852m 2001 2003 2002 2004 Rm Net cash inflows from individual life business Net cash inflows from corporate benefits business

22. Life insurance operations 35 30 25 20 15 10 5 0 • New individual business market share (including Liberty Active) % 27 26 25 25 24 23 20 20 17 15 Recurring individual Single individual Year ended 31 December 2000 Year ended 31 December 2001 Source: LOA market share statistics for all life offices Year ended 31 December 2002 Year ended 31 December 2003 Nine months ended 30 September 2004

23. Other operations • STANLIB: assets under management and funds under administration • Net cash inflows of R15,3 billion • Normalised earnings after tax of R192m up 62%

24. Other operations • STANLIB: net cash inflows

25. Other operations • Ermitage: assets under management • Net cash inflows of US$572m +160% (R3 681m) • Headline earnings of £4m +11% (R46m)

26. Financial results – 2004/2003 * BEE normalised embedded value per share = R65,69 up 14%

27. Headline earnings

28. Operating profit from life insurance operations – major influencing factors • Shareholders’ 10% participation and higher asset base • Investment guarantee reserve • Expenses • Costs per policy • Non-recurring expenses • Liberty Corporate Benefits

29. Gross investment returns 25 20 15 10 5 0 -5 -10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -15 22,7% 12,5% Year-to-date return 2003 Year-to-date return 2004 Actuarial assumption 2004

30. Main factors affecting the guarantee reserves Volatility basis change (set up as a second-tier margin) = R148m

31. Expenses Including non-recurring expenses

32. Non-recurring expenses • Non-recurring expenses of R137m in 2004 (2003 : R111m) Policyholders’ non-recurring: R116m (2003: R84m) Shareholders’ non-recurring: R21m (2003: R27m)

33. Expenses • Costs per policy R74m after tax release to profit

34. Operating profit from shareholders’ funds

35. Embedded value BEE normalised embedded value per share = R65,69 up 14%

36. Financial services subsidiariesfair value adjustment

37. Capital adequacy cover

38. Dividend policy • Objectives: • Predictable growth • Less volatility • Leave room for new business growth • Strong capital adequacy

39. Dividend policy • Policy: • Yield on EV per share of approximately 4,75% • Going forward – aligned to medium term growth of EV • Taking into account: • economic conditions; and • CAR cover >1,5 • Interim dividend at 40% of previous full year

40. Dividend

41. Conclusion

42. Focus areas for next twelve months • Exciting opportunities • Operational restructuring opportunities • Capital Alliance • new business • efficiency • Products • Capital structuring • Liberty Activeand, as always ... people ... service … costs

43. Focus areas for next twelve months • Liberty’s business is conceptually simple and generic • We develop products • We sell products • We receive money • We invest the money according to product specification • We administer according to product specification • We pay benefits

44. Focus areas for next twelve months • Exciting opportunities • Operational restructuring opportunities • Capital Alliance • new business • efficiency • Products • Capital structuring • Liberty Activeand, as always ... people ... service … costs

45. Questions • Panel

46. Appendices

47. Embedded value (EV) reconciliation

48. Financial services and subsidiaries * the value of the IEB business is included in the group's estimates of the VIF

49. New business excluding contractual increases

50. Effect of the BEE transaction on headline earnings • Costs associated with the Black Economic Empowerment transaction comprise: • R11 million (net of taxation) in respect of the general staff scheme under which each staff member who does not participate in the ownership transaction or the Liberty Group incentive scheme, will receive 100 Liberty Group Limited shares each.This amount has been included in management expenses; and • R7 million (net of taxation) in respect of the general staff scheme under which each Liberty Life agent who does not participate in the ownership transaction or the Liberty Group incentive scheme, will receive 100 Liberty Group Limited shares. This amount has been included in commissions. • Professional fees amounting to R22 million have been written off directly against reserves (retained surpluses). • As a consequence of utilising Liberty Life’s own cash flows (in the form of ordinary dividends paid) to service the empowerment transaction financing structure (in the form of dividends on preference shares), the dividends received on the empowerment preference shares will be accounted for directly in reserves, thereby offsetting the dividends so received against the ordinary dividends paid by the company. • Due to the fact that the Black Economic Empowerment transaction is effectively accounted for as a share buy back (until such time that all funding is repaid), the weighted average number of shares in issue for 2004 has been reduced by 3 805 988 shares. The transaction was implemented on 8 November 2004(25 796 143 x 54/366 = 3 805 988). • Headline earnings for 2004 include R51 million representing the income return on assets utilised to fund the Black Economic Empowerment transaction up to the date of implementation – 8 November 2004. The weighted average number of shares in issue for 2004 has been reduced from this date. Preference dividends received on the empowerment preference share at 65% of prime since the date of implementation amounting to R13 million were not accounted for in income.