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Presentation to Investment Analysts
Society of Southern Africa6 March 2002
Roy AndersenGroup Chief Executive
Roy AndersenGroup Chief Executive
ContentContent
Building value in Financial Services Operations
Building value in Financial Services Operations
Mike JacksonMike JacksonRoy AndersenRoy AndersenThe future STANLIB and
bancassurance International
operations Human capital Goals for 2002 Conclusion
The future STANLIB and
bancassurance International
operations Human capital Goals for 2002 Conclusion
2001 achievements2001 achievements
Financial highlights 2001
Financial services environmentin 2001Financial services environmentin 2001
Good demand for Offshore products Guaranteed products Bancassurance products
Volatile investment markets Implementation of policyholder protection
rules Implementation of CGT
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
HighlightsHighlights
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%
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%
Headline earnings oncontinuing operationsHeadline earnings oncontinuing operations
Life fund operating surplus
Revenue earnings on shareholders’ funds
Preference dividend in subsidiary
Headline earnings
Headline earnings per share
Headline ROE
Life fund operating surplus
Revenue earnings on shareholders’ funds
Preference dividend in subsidiary
Headline earnings
Headline earnings per share
Headline ROE
2001Rm
2001Rm
2000Rm
2000Rm
% Change
% Change
))
1 320
222
(43
1 499
551
25%
1 320
222
(43
1 499
551
25%
))
1 153
202
(40
1 315
485
16%
1 153
202
(40
1 315
485
16%
14
10
7
14
14
14
10
7
14
14
**
* Total operations* Total operations
Investment return (Managed portfolio)Consistent first and second halves
Investment return (Managed portfolio)Consistent first and second halves
14,4%
7,2%
25,3%
10,6%
0%
5%
10%
15%
20%
25%
30%
First half Second half
Actuarial expectation Actual
Return
Bonus stabilisation reserves boosted
New business 2001 (excluding natural increases)New business 2001 (excluding natural increases)
Single premiums
Corporate Benefits
Individual business
Recurring premiums
Corporate Benefits
Individual business
Total on balance sheet
New business index
Value of new business
Single premiums
Corporate Benefits
Individual business
Recurring premiums
Corporate Benefits
Individual business
Total on balance sheet
New business index
Value of new business
2001Rm
2001Rm
2000Rm
2000Rm
% Change
% Change
1 225
6 415
225
1 475
9 340
2 465
455
1 225
6 415
225
1 475
9 340
2 465
455
2 167
5 589
190
1 251
9 197
2 217
391
2 167
5 589
190
1 251
9 197
2 217
391
(43
15
18
18
2
11
16
(43
15
18
18
2
11
16
)
)
Unit trust salesUnit trust sales
0
1000
2000
3000
4000
5000
6000
1999 2000 2001
Money market Other Total
+25%
+91%
+61%
Three Raging Bull awards
Rm
+99%
+142%
+120%
Net insurance cash flowNet insurance cash flow
102
2 930
3 378
1 622
-633-1000
-500
0
500
1000
1500
2000
2500
3000
3500
4000
1997 1998 1999 2000 2001
Claims and benefits up 10%
Rm
8 346
5 112
1 310
14 768
R54,21
26,4%
8 346
5 112
1 310
14 768
R54,21
26,4%
6 123
4 822
996
11 941
R43,95
11,3%
6 123
4 822
996
11 941
R43,95
11,3%
Embedded valueEmbedded value
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
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
2001Rm
2001Rm
2000Rm
2000Rm
% Change
% Change
36
6
32
24
23
36
6
32
24
23
Capital adequacy coverCapital adequacy cover
3,53,6
7,3
12,2
18,6
0
4
8
12
16
20
1997 1998 1999 2000 2001
Overweight deployment of capital in SAB significantly reduced
DividendDividend
FinalContinuing operationsIn respect of capital reduction
Interim
FinalContinuing operationsIn respect of capital reduction
Interim
2001cents per
share
2001cents per
share
2000cents per
share
2000cents per
share
% Change
% Change
150
150128278
150
150128278
131
19150133283
131
19150133283
+ 15+ 15
**
* Pre capital reduction* Pre capital reduction
Cover 2x earnings
Headline return on equityHeadline return on equity
11%
16%
25%
13%13%
0%
5%
10%
15%
20%
25%
30%
1997 1998 1999 2000 2001
ScorecardScorecard
Goals set for 2001 financial year
1. Redeploy shareholder investments into financial services
2. Individual business – leverage the strong position in the upper income market
3. Implement customer value management
Goals set for 2001 financial year
1. Redeploy shareholder investments into financial services
2. Individual business – leverage the strong position in the upper income market
3. Implement customer value management
½½
ScorecardScorecard
Goals set for 2001 financial year
4. Expand Liberty Corporate Benefits’ business
5. Drive continued growth in bancassurance
6. Provide private banking services to clients
Goals set for 2001 financial year
4. Expand Liberty Corporate Benefits’ business
5. Drive continued growth in bancassurance
6. Provide private banking services to clients
ScorecardScorecard
Goals set for 2001 financial year
7. Achieve further synergies with Stanbic
8. Establish an empowerment partnership
9. Leverage Liberty Ermitage for international expansion
Goals set for 2001 financial year
7. Achieve further synergies with Stanbic
8. Establish an empowerment partnership
9. Leverage Liberty Ermitage for international expansion
The future
a new Wealth Management Groupand an enhanced Bancassurance
Structure
a new Wealth Management Groupand an enhanced Bancassurance
Structure
StandardBankStandardBank
STANLIBOrganisational structureSTANLIBOrganisational structure
Stanbic Liberty
STANLIBLimited
50%50%
Executive ChairmanRoy Andersen
CEO - Roy AndersenCEO-Jacko Maree
STANLIB
Asset ManagementSTANLIB
Wealth Management
100%
100%
Alan Miller John Liackman
“The factory” “Product / marketing /distribution arm”
Asset management components introducedAsset management components introduced
SCMBAM
Best investment processes retained
Libam
STANLIB AssetManagement
STANLIB wealth managementcomponents introducedSTANLIB wealth managementcomponents introduced
STANLIB WealthManagement
Simeka
100% 100%100% 52%
StandardBank
Unit Trusts
Unit Trusts Lisps
StandardBank
InvestmentServices
LibertyCollective
Investments
LibertySpecialise
dInvestmen
ts
LodestoneLodestone
Summary of the benefits 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
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
Mike JacksonExecutive Director: FSO
Mike JacksonExecutive Director: FSO
Building value inFinancial ServicesOperations
Building value inFinancial ServicesOperations
783 715 642 669 738
187 420 668994
1 197
0
300
600
900
1200
1500
1800
2100
1997 1998 1999 2000 End Feb2002
Agency Franchise
9701 135
1 310
1 663
1 935
Building distributionBuilding distribution
Intermediaries
Consultancy new business up 18%
Rm
Growing bancassurance productionGrowing bancassurance production
1 6611 556
1 155
757680
0
200
400
600
800
1000
1200
1400
1600
1800
1997 1998 1999 2000 2001
Complex Simple
• R12,7 million loss in 2001• R12,7 million loss in 2001
Liberty HealthcareApproaching critical massLiberty HealthcareApproaching critical mass
Principal membersTotal lives
Principal membersTotal lives
36 34386 50036 34386 500
18 87045 16118 87045 161
February
2002
February
2002
Focusing on quality growth and profitability
December
2000
December
2000
Liberty Corporate BenefitsEnhancing new business profitability
Liberty Corporate BenefitsEnhancing new business profitability
Single premiums
Recurring premiums
Total
Embedded value of in-force
Single premiums
Recurring premiums
Total
Embedded value of in-force
26
21
47
674
26
21
47
674
2001Rm
2001Rm
2000Rm
2000Rm
%Change
%Change
38
4
42
588
38
4
42
588
))(32
425
12
15
(32
425
12
15
Focusing on expense control and margins
Liberty Personal BenefitsNew business – average policy size
Liberty Personal BenefitsNew business – average policy size
Recurring premiumsRAsRisk and
investment
Single premiums
Recurring premiumsRAsRisk and
investment
Single premiums
Industry(Values for
first half 2001)
R
Industry(Values for
first half 2001)
R
5 6506 179
136 104
5 6506 179
136 104
LibertyFull year
2001
R
LibertyFull year
2001
R
4 0432 429
56 699
4 0432 429
56 699
%Differenc
e
%Differenc
e
Focused on the profitable segment
40
154
140
40
154
140
Liberty Personal BenefitsBuilding market share – New recurring individual
Liberty Personal BenefitsBuilding market share – New recurring individual
17,2%
15,7%15,5%16,4%
14,1%14,9%
16,2%
17,7%18,2%
8%
12%
16%
20%
June 2000 December 2000 June 2001
All offices Brokers Agents
14,8%
11,5%
10,7%
13,3%
9,5%9,1%
13,4%
17,0% 16,7%
8%
12%
16%
20%
June 2000 December 2000 June 2001
All offices Brokers Agents
Liberty Personal BenefitsBuilding market share –New single individual
Liberty Personal BenefitsBuilding market share –New single individual
Liberty Managed
Variable
Equity Performance
Global Managed
Liberty Managed
Variable
Equity Performance
Global Managed
20,0
20,2
21,0
35,8
20,0
20,2
21,0
35,8
Liberty Personal Benefits Policyholder returnsLiberty Personal Benefits Policyholder returns
PortfolioPortfolio
Fund returns(after tax)
%
Fund returns(after tax)
%
Dollar MoneyAlpha ClassAsset SelectionGlobal EquityNorth American EquityPan European EquityAsia Pacific Equity
Dollar MoneyAlpha ClassAsset SelectionGlobal EquityNorth American EquityPan European EquityAsia Pacific Equity
51,550,853,047,452,246,431,7
51,550,853,047,452,246,431,7
Fund returns(after tax)
%
Fund returns(after tax)
%
Runner-up to Goldman Sachs – Global Investor Award for Excellence 2001
Liberty Personal BenefitsLiberty Ermitage returns in RandLiberty Personal BenefitsLiberty Ermitage returns in Rand
Liberty Personal Benefits Leveraging existing clientsLiberty Personal Benefits Leveraging 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
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
Rm
Liberty Personal Benefits Individual surrenders and maturities
Liberty Personal Benefits Individual surrenders and maturities
0
200
400
600
800
1000
1200
1400
1600
1800
10%
11%
12%
13%
14%
15%
16%
19971997 19981998 19991999 20002000
Trend line
20012001
% of in-force book
Higher retention of in-force book
Product innovationProduct 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
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
Product developmentProduct development
Risk products launched 2001 Optimum/Optimum Plus LivAbility, FemAbility,
CareAbility,EnAbility Procure
Risk products launched 2001 Optimum/Optimum Plus LivAbility, FemAbility,
CareAbility,EnAbility Procure
An exciting futureAn 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
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
Roy AndersenGroup Chief Executive
Roy AndersenGroup Chief Executive
Goals for 2002Goals for 2002
Liberty PropertiesDeveloping value through property
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
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
International growthInternational 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 to
be felt in 2002 Offshore acquisition
Discerning approach
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 to
be felt in 2002 Offshore acquisition
Discerning approach
Human capitalCreating value through peopleHuman capitalCreating value through people
“The best people,doing the best things,
best!”
“The best people,doing the best things,
best!”
B3 VisionB3 Vision
Human capitalCreating value through peopleHuman 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
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
Human capitalCreating value through peopleHuman capitalCreating value through people
The best things Clear and open strategies
A wide understanding of what drives value
Incentivisation aligned with value creation
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
Human capitalCreating value through peopleHuman capitalCreating value through people
Best Use of international benchmarks
Integrity, trust and honesty core values
Best Use of international benchmarks
Integrity, trust and honesty core values
Goals for 2002Goals for 2002
1. Launch and grow STANLIB Limited
2. Develop SBFC (Stanfin) and increase bancassurance sales
3. Reposition Charter in mass and niche markets
4. Focus on profitability in Employee Benefits
1. Launch and grow STANLIB Limited
2. Develop SBFC (Stanfin) and increase bancassurance sales
3. Reposition Charter in mass and niche markets
4. Focus on profitability in Employee Benefits
Goals for 2002Goals for 2002
5. Leverage CVM initiative for new businessand retention
5. Leverage CVM initiative for new businessand retention
6. Grow Liberty Ermitage sales
7. Focus on productivity of Agency and Franchise
6. Grow Liberty Ermitage sales
7. Focus on productivity of Agency and Franchise
Conclusion