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Presentation to Investment Analysts Society of Southern Africa 6 March 2002

Presentation to Investment Analysts Society of Southern Africa 6 March 2002. Roy Andersen Group Chief Executive. Building value in F inancial S ervices O perations. Content. Roy Andersen. Mike Jackson. 2001 achievements. The future STANLIB and bancassurance International operations

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Presentation to Investment Analysts Society of Southern Africa 6 March 2002

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  1. Presentation to Investment Analysts Society of Southern Africa 6 March 2002

  2. Roy Andersen Group Chief Executive

  3. Building value in Financial Services Operations Content Roy Andersen Mike Jackson 2001 achievements The future • STANLIB and bancassurance • International operations • Human capital • Goals for 2002 • Conclusion

  4. Financial highlights 2001

  5. Financial services environmentin 2001 • Good demand for • Offshore products • Guaranteed products • Bancassurance products • Volatile investment markets • Implementation of policyholder protection rules • Implementation of CGT Environment anticipated and addressed well by Liberty

  6. Highlights • Embedded value per share + 23% • Headline ROE continuing operations 25% • Return on embedded value 26% • Headline earnings per share – continuing operations + 14% • Indexed new business premiums + 11% • Recurring new business premiums + 17% • Value of new business + 16% • New business margin 18%

  7. Headline earnings oncontinuing operations 2001Rm 2000Rm % Change Life fund operating surplus Revenue earnings on shareholders’ funds Preference dividend in subsidiary Headline earnings Headline earnings per share Headline ROE 1 320 222 (43 1 499 551 25% 1 153 202 (40 1 315 485 16% 14 10 7 14 14 ) ) * * Total operations

  8. Investment return (Managed portfolio)Consistent first and second halves Return Bonus stabilisation reserves boosted

  9. New business 2001 (excluding natural increases) 2001Rm 2000Rm % Change Single premiums Corporate Benefits Individual business Recurring premiums Corporate Benefits Individual business Total on balance sheet New business index Value of new business 1 225 6 415 225 1 475 9 340 2 465 455 2 167 5 589 190 1 251 9 197 2 217 391 (43 15 18 18 2 11 16 )

  10. Unit trust sales Rm +61% +120% +91% +142% +25% +99% Three Raging Bull awards

  11. Net insurance cash flow Rm Claims and benefits up 10%

  12. Embedded value 2001Rm 2000Rm % Change Shareholders’ funds Net value of life business in force Financial services subsidiaries fair value adjustment Total embedded value Embedded value per share Return on embedded value 8 346 5 112 1 310 14 768 R54,21 26,4% 6 123 4 822 996 11 941 R43,95 11,3% 36 6 32 24 23

  13. Capital adequacy cover Overweight deployment of capital in SAB significantly reduced

  14. Dividend 2001cents per share 2000cents per share % Change Final Continuing operations In respect of capital reduction Interim 150 150 128 278 131 19 150 133 283 + 15 * * Pre capital reduction Cover 2x earnings

  15. Headline return on equity

  16. Scorecard Goals set for 2001 financial year • Redeploy shareholder investments into financial services • Individual business – leverage the strong position in the upper income market • Implement customer value management ½

  17. Scorecard Goals set for 2001 financial year • Expand Liberty Corporate Benefits’ business • Drive continued growth in bancassurance • Provide private banking services to clients

  18. Scorecard Goals set for 2001 financial year • Achieve further synergies with Stanbic • Establish an empowerment partnership • Leverage Liberty Ermitage for international expansion

  19. The future

  20. a new Wealth Management Groupand an enhanced BancassuranceStructure Standard Bank

  21. STANLIBOrganisational structure Stanbic Liberty CEO-Jacko Maree CEO - Roy Andersen 50% 50% STANLIB Limited Executive Chairman Roy Andersen 100% 100% STANLIB Asset Management STANLIB Wealth Management John Liackman Alan Miller “Product / marketing / distribution arm” “The factory”

  22. Asset management components introduced STANLIB Asset Management Libam SCMBAM Best investment processes retained

  23. STANLIB wealth managementcomponents introduced STANLIB Wealth Management 100% 100% 100% 52% Unit Trusts Lisps Liberty Collective Investments Liberty Specialised Investments Lodestone Simeka Standard Bank Investment Services Standard Bank Unit Trusts

  24. Summary of the benefits • Plays to each company’s undisputed strengths • Powerful and far reaching distribution = client convenience • Leverages the power of two blue chip brands • Combines asset management, banking and actuarial skills for product development • Pools and leverages intellectual capital • Economies of scale achieved • New Stanfin and bancassurance contract attractive

  25. Building value inFinancial ServicesOperations Mike Jackson Executive Director: FSO

  26. Building distribution Intermediaries 1 935 1 663 1 310 1 135 970 Consultancy new business up 18%

  27. Growing bancassurance production Rm

  28. Liberty HealthcareApproaching critical mass February 2002 December 2000 Principal members Total lives 36 343 86 500 18 870 45 161 • R12,7 million loss in 2001 Focusing on quality growth and profitability

  29. Liberty Corporate BenefitsEnhancing new business profitability 2001Rm 2000Rm %Change Single premiums Recurring premiums Total Embedded value of in-force 26 21 47 674 38 4 42 588 (32 425 12 15 ) Focusing on expense control and margins

  30. Liberty Personal BenefitsNew business – average policy size LibertyFull year2001 R Industry(Values forfirst half 2001) R %Difference Recurring premiums RAs Risk and investment Single premiums 5 6506 179 136 104 4 0432 429 56 699 40154 140 Focused on the profitable segment

  31. Liberty Personal BenefitsBuilding market share – New recurring individual

  32. Liberty Personal BenefitsBuilding market share –New single individual

  33. Liberty Personal BenefitsPolicyholder returns Fund returns (after tax)% Portfolio Liberty Managed Variable Equity Performance Global Managed 20,0 20,2 21,0 35,8

  34. Liberty Personal BenefitsLiberty Ermitage returns in Rand Fund returns (after tax)% Dollar Money Alpha Class Asset Selection Global Equity North American Equity Pan European Equity Asia Pacific Equity 51,5 50,8 53,0 47,4 52,2 46,4 31,7 Runner-up to Goldman Sachs – Global Investor Award for Excellence 2001

  35. Liberty Personal BenefitsLeveraging existing clients • Cross-selling and retention are key objectives • Intermediary productivity tools implemented successfully • Client data mart, data analysis tools and campaign management capabilities established • Enterprise data warehouse infrastructure implementation due April 2002

  36. Liberty Personal BenefitsIndividual surrenders and maturities Rm Trend line % of in-force book 1997 1998 1999 2000 2001 Higher retention of in-force book

  37. Product innovation • Investment products launched 2001 • Global bond – UK Properties • Guaranteed Hedge Fund 100 • Liberty CPI Plus Investment • Liberty Secured RA • Guaranteed Global Equity Index • Sandton Properties • Liberty Ermitage portfolio range • LSI Symphony wrap funds

  38. Product development • Risk products launched 2001 • Optimum/Optimum Plus • LivAbility, FemAbility, CareAbility,EnAbility • Procure

  39. An exciting future • Reaping benefits of an expanding distribution force • Bancassurance – growing SBFC (Stanfin) sales • Ongoing market share growth • Full pipeline of products for 2002 • Managing and leveraging in-force business

  40. Goals for 2002 Roy Andersen Group Chief Executive

  41. Liberty PropertiesDeveloping value through property • Portfolio continually upgraded • Disciplined programme of improvements • Revaluations • Continued conservatism • 5,3% uplift of R466 million to R9,2 billion • Disposals of R141 million confirmed valuations The Earth Summit will boost Sandton

  42. International growth • Liberty Ermitage • AUM up 69% in Rands • Hedge funds doubled – sales force doubled • Capital uplift in 2001 + R146 million • Effect on earnings of depreciated Rand tobe felt in 2002 • Offshore acquisition • Discerning approach

  43. Human capitalCreating value through people “The best people,doing the best things,best!” B3 Vision

  44. Human capitalCreating value through people • The best people • Attitude towards the client – key • Energy and enthusiasm – a requirement • Correct cultural diversity – on track • Measure progress through growth in Human Capital Index Liberty a top ten employer for the second year

  45. Human capitalCreating value through people • The best things • Clear and open strategies • A wide understanding of what drives value • Incentivisation aligned with value creation Top 200 people on incentive scheme linked to growth in appraisal value

  46. Human capitalCreating value through people • Best • Use of international benchmarks • Integrity, trust and honesty core values

  47. Goals for 2002 • Launch and grow STANLIB Limited • Develop SBFC (Stanfin) and increase bancassurance sales • Reposition Charter in mass and niche markets • Focus on profitability in Employee Benefits

  48. Goals for 2002 • Leverage CVM initiative for new businessand retention Grow Liberty Ermitage sales Focus on productivity of Agency and Franchise

  49. Conclusion

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