0202 Sanlam Integrated Report 2020 A snapshot of Sanlam // A snapshot of Sanlam

About us

Sanlam was established as a life company in but has since transformed into a diversified financial services group operating across Africa, India and selected emerging and developed markets, with listings on the Johannesburg, A2X and Namibian stock exchanges. The Group has been operating for more than 100 years, most of which as a mutual insurer. Sanlam demutualised and listed on the Johannesburg and Namibian stock exchanges in 1998.

e offer our clients a large and diversified Our purpose is to empower generations range of solutions. Omni-channel distribution ensures that clients are reached and serviced to be financially confident, secure and through their preferred channel, with prosperous. Our vision is to distinguish increased focus on developing our digital ourselves as the most admired financial capability. Read more on page 10. services group in Africa. Our purpose W and vision is enabled through our Our main sources of earnings are the net operating profit strategy, which we discuss in more (net result from financial services) we earn from our different lines of business and the net income we earn from investing detail on page 30. our capital in the financial markets (net investment return). Current and expected future growth in these sources of Our strategy guides our long-term earnings is the main driver behind shareholder value creation as measured by Return on Group Equity Value (RoGEV), our thinking. main financial performance indicator.

Read more about the drivers behind our main sources of earnings and RoGEV from page 67. Becoming an African champion

Building a fortress position in South Africa

Accelerating growth outside of South Africa

Strengthening our position where we operate outside of Africa

Our values underpin what we do

Winning with Lead with Serve with pride Caring that Creating value integrity to be the courage to earn our as we are client comes from respect in everything that unrivalled industry clients’ trust focused for each other we do leader in Africa

03 03 Sanlam Integrated Report 2020

04About us continued

Sanlam has transformed from a small Cape-based insurance company into a leading, diversified financial services group with the biggest non-banking financial services footprint on the African continent. Highlights of the last century reflect our innovative and transformational mindset:

Sanlam launched the first disability cover Demutualisation and listing turned two 1924 and income protection product, with the 1998 million policyholders into shareholders first pay-out made to a railway worker who who became co-owners of Sanlam, thereby lost his eyesight in an accident. sharing in our success and profits. Many policyholders also became first-time equity investors, thereby contributing to Sanlam became an independent mutual life financial education. 1954 insurer and the largest single shareholder in .

We introduced the first computer-backed 1977 financial planning analysis for clients.

We concluded the first major black economic 1993 empowerment deal in South Africa by selling control of Metropolitan Life to a black consortium.

Sanlam Life’s advisers became the first Sanlam became the first South African 2003 to receive accreditation from the 1997 financial institution to enable offshore client internationally recognised Financial Planning investments, enhancing value creation for Institute (FPI). our clients by diversifying their investment portfolios. The offshore exposure in client portfolios added significant value over time, in particular the last 10 years, through relative outperformance of international markets and a weakening in the rand exchange rate. // A snapshot of Sanlam

Sanlam established one of the most Following the conclusion of the last phase 2004 successful broad-based black economic 2018 of the Saham Finances acquisition, Sanlam empowerment (B-BBEE) partnerships when became the largest non-banking financial we sold a stake in the Company to Ubuntu- services group on the African continent. Botho (UB), a group of black investors led by We initiated B-BBEE transactions valued Dr Patrice Motsepe. The partnership between at more than R10 billion that will bring Sanlam and UB has been one of the most further impetus to transformation in South successful empowerment partnerships Africa. This B-BBEE transaction includes in South Africa. It created value of over broad-based groups consisting of trade R14 billion for broad-based black shareholders union companies, religious organisations, when the first 10-year transaction matured. women and youth groups.

Sanlam enters the Indian market through 2005 a partnership with Shriram Capital. Sanlam acquires African Life which increases its presence in the South African entry level market and other African markets.

Despite the challenging operating 2020 environment, Sanlam, together with our partners, UB, pledged R1 billion in relief aid in response to COVID-19. In line with the Group’s transformation agenda, further agreements were concluded with African Rainbow Capital (ARC) Financial Services, establishing the largest black-owned asset management company in South Africa. Sanlam also announced the acquisition of a 25% non-controlling minority shareholding in a wholly owned subsidiary of ARC Financial Services, which is expected Sanlam was the first major South African to conclude in 2021. 2013 insurer to offer cover for people living with HIV/Aids, enhancing inclusive access to insurance products.

05 05 Sanlam Integrated Report 2020

06About us continued

We remained resilient despite the challenges of 2020 and continued contributing to the resilience of all our stakeholders

Sanlam is an emerging market participant with a unique footprint that spans countries with high economic growth potential and low financial services penetration outside of South Africa (our largest

in Sanlam market). This provides us with a leveraged future growth opportunity as we are well positioned to meet Why invest invest Why the demand for financial solutions that arises when African and Indian demographic profiles change and aspirational lifestyles develop due to economic growth, urbanisation and young people entering the formal economy.

We have a well-diversified business across product set, market segment and geography. We offer our clients a range of financial solutions that can fully meet the needs of individuals and organisations across 44 countries. We have strong market positions in all segments.

Our large, stable South African base, which contributes 68% to net result from financial services, and mature book allows us to invest in other high-growth territories through a partnership model.

We have a first-mover advantage in Africa and an unmatched Pan-African presence in 32 countries (ex- South Africa) on the continent.

Our distribution approach creates seamless interaction and comprehensive support to enhance the personal intermediary model – encompassing more than 3 000 supporting brokers and 6 000 advisers.

We have adopted increased digitisation, data analytics and direct distribution to support digital transformation as a key enabler in meeting strategic goals.

We have a dynamic new Executive committee (Exco) with diverse skills and experience. They have appropriate accountabilities and incentives linked to financial and non-financial indicators to drive high performance and embed a competitive culture.

We continually assess our strategy to ensure it remains relevant and that we can continue to create value over the short, medium and long term – enabling consistent cumulative outperformance of our RoGEV target since listing.

We have a stable dividend policy which maintains a cash dividend cover ratio of between 1,0 and 1,2 times. We aim to manage smooth real dividend growth of 2% to 4% per annum over a three-year rolling period.

R187,7 billion of wealth distributed in 2020 R149,8 billion R7,3 billion to clients to shareholders

R4,0 billion R13,7 billion to government to employees and the balance to suppliers Sanlam Integrated Report 2020 // A snapshot of Sanlam

There’s never been a better time to partner with us

Over 20 years since we started helping children become smarter and kinder through 20 years Takalani Sesame

R630 million invested in communities over the past 10 years

of South Africa retirement industry research via Sanlam Benchmark Symposium – one of the most referenced research papers in the retirement fund industry that provides 39 years insights to help effect positive financial retirement outcomes for South Africans

More than 41 678 South Africans empowered by our consumer financial education 41 678 (CFE) programme

99% of death claims paid out in SA Retail Affluent, maintaining a five-year record

Sanlam Investment Group manages more than R900 billion in assets under R900 billion management and offers a wide range of investment capabilities

Sanlam, in conjunction African Rainbow Capital and others, and through the Motsepe Foundation, contributed R1 billion towards the fight against COVID-19.

R255 million R463 million to intermediaries in structured payment relief programmes for clients

R15 million R246 million to assist beneficiaries of the Sanlam Enterprise to support various initiatives in response to the and Supplier Development programme pandemic across Africa

R531 million in excess claims paid by Sanlam Life and Savings in 2020, after allowing for annuity and disability offsets

07 Sanlam Integrated Report 2020

08About us continued

Our operating model Our areas of expertise include financial planning, investments, insurance, retirement and wealth. We conduct operations through business clusters that deliver tailored, comprehensive and client- centric financial solutions to individual and institutional clients.

We implemented structural changes to the operating model during the year to support strategic execution. Sanlam Personal Finance was replaced by two businesses: SA Retail Mass and SA Retail Affluent. This will facilitate a better focus on important South African client segments. We further established the Sanlam Life and Savings cluster, which incorporates Sanlam Corporate, SA Retail Mass and SA Retail Affluent to ensure appropriate focus on collaboration and cross-selling across the three business clusters.

Sanlam Life and Savings (SLS) offers retail and Sanlam Emerging Markets (SEM) constitutes Sanlam’s SLS corporate life insurance and investment products in SEM financial services offering in emerging markets outside South Africa. The cluster provides clients with a South Africa, with the aim of ensuring sustainable comprehensive range of appropriate and competitive delivery and growth across its various businesses and financial solutions, designed to facilitate long-term markets. SEM is divided into Sanlam Pan-Africa (SPA) wealth creation and protection. SLS has strong market and Other International, with the latter comprising positions in its businesses and is well diversified across India, Malaysia and Lebanon. The key focus of SEM is product and segment. The cluster is well positioned to on building Sanlam’s Pan-African operations to create further entrench its market presence to build a fortress a Pan-African champion, and to strengthen and grow position in South Africa. Sanlam’s operations outside of Africa. SEM believes in local partnerships and skills development to create Key strengths sustainable businesses. SLS uses its advice and distribution capabilities to Sanlam Life and Savings and Savings Sanlam Life

serve client needs from simple to complex insurance Markets Sanlam Emerging Key strengths and savings products. SLS embraces partnerships and SEM leverages its expertise and experience to provide innovation to better meet client needs. The Capitec a wide range of support services and resources to its partnership and Indie direct distribution platform are in-country operations, which in turn provide clients examples of this. Read more on page 32. with innovative financial solutions. Additional capacity and technical expertise are sourced from other clusters Key financial solutions as necessary. • life insurance and funeral cover Key financial solutions • retail credit • life insurance • Investments and savings • general insurance • Employee benefits • investment management • administration, health and other • Credit: secured and unsecured Key financial information • administration, health and other Net result from Key financial information financial services R4 600 million (2019: Net result from R4 855 million) financial services R 2 377 million (2019: Contribution to R2 632 million) Group net result from financial Contribution to 55% services Group net result (2019: 50%) from financial 28% services Number of (2019: 27%) employees 12 125 (2019: 12 758) Number of 5 036 employees Number of (2019: 4 920) 6 260 advisers // A snapshot of Sanlam

SIG Sanlam Investment Group (SIG) provides retail and SNT Santam provides a diversified range of general insurance institutional clients in South Africa and the United products and services in Southern Africa and internationally Kingdom with access to a comprehensive range of to clients, ranging from individuals to commercial and specialised investment management, credit and risk specialist business owners and institutions. Sanlam and management expertise. SIG is a key part of the strategy Santam continue to work collaboratively to strengthen their to build a fortress position in South Africa. The recent respective market positions.

transaction with ARC Financial Services will contribute to Santam this. Read more on page 61. Key strengths Santam is a 102-year-old business and the leading South Key strengths African general insurer. The company has deep experience SIG has successfully adapted its traditional investment in underwriting general insurance risks from personal to management capabilities to serve investors’ needs for corporate and commercial. Santam provides products and investment solutions that include passive and alternative services through a network of intermediaries and direct investments. SIG’s performance history highlights the

Sanlam Investment Group Sanlam Investment channels. success it has achieved for its clients. Read more about this investment philosophy in our Resilience Report, Key financial solutions available online. • Commercial and personal motor and property insurance Key financial solutions • Specialist lines of insurance • • investment management • wealth management Key financial information

• international investments Net result from financial • credit and structuring services R686 million (2019: R1 221 million) Key financial information

Net result from financial Contribution to Group net R805 million services result from financial services (2019: R1 070 million) 8% (2019: 13%)

Contribution to Group net Number of employees result from financial (2019: 6 049) 10% services (2019: 11%) 5 851

Number of employees 1 841 (2019: 1 731)

The clusters are supported by the Sanlam Group Office, which maintains synergies and co-operation among the clusters and provides guidance on market and environment-related developments.

The Group Office is responsible for Group strategy, capital and risk management, and capital allocation. The following functions provide Group-wide support and co-ordination:

• Finance (including financial reporting, internal audit, taxation and investor relations) • Actuarial and risk management • Human resources (HR) • Market development • Strategy (including Corporate Finance)

Read more about our key financial solutions, business activities and distribution channels on our investor relations website. 09 09 Sanlam Integrated Report 2020

10About us continued

Our global presence

Sanlam has a unique Pan-African footprint, scale and expertise.

Sanlam is the largest insurance group in Africa as measured by USA market capitalisation. It is one of the largest internationally active insurance groups in the world, as measured by in-country presence, with a direct and indirect presence in 44 countries excluding South Africa. Through SEM, Sanlam has the most extensive insurance footprint on the African continent. We have a direct presence in 32 countries in Africa.

Our holistic approach ensures ease of doing business, aimed at international insurance brokers and developed market insurers that need to provide their client base with insurance and employee benefits solutions across Africa.

Net result from financial services New business premiums 82 89 % 15 % 1 2 10

Africa Other emerging markets Developed markets

Our partnership model Our distribution partnerships with banks, telecommunication companies, affinity groups, international brokers and other financial and non-financial participants enable us to improve access to financial services. These partnerships support market share gains in the segments where our partners operate. The partnership between Sanlam and UB has been one of the most successful empowerment partnerships in South Africa. Read more about this partnership in our leadership reports from page 61.

Key partnerships in South Africa

The distribution Our 30% Our 58% stake The joint venture Sanlam Credit Solutions The introduction agreement stake in in life insurance with MTN, which (in partnership with of ARC Financial where Capitec innovative provider, includes making Intelligent Debt Services as an distributes investment Brightrock, our funeral cover Management) is a empowerment Sanlam platform, to ensure the and a range of digital platform that shareholder in underwritten EasyEquities continued growth life insurance aims to help clients with SIG’s third-party funeral cover of this innovative products available advice around their asset manager to its clients business to clients who credit portfolio, which is want to transact key to ensuring financial digitally health // A snapshot of Sanlam

Sanlam is one of the top three market leaders Ireland in 10 African countries for life insurance. United Kingdom

Luxembourg

Switzerland Sanlam is one of the top three market leaders France in 10 African countries for general insurance.

Tunisia Morocco Lebanon

Algeria

Mali Niger India

Senegal Burkina Faso Nigeria Guinea Philippines Côte d’Ivoire

Togo Cameroon Benin Republic of Congo Ghana Malaysia Uganda

Gabon Kenya Rwanda Burundi

Tanzania Zambia

Angola Mozambique

Malawi Zimbabwe Madagascar Botswana Mauritius

Namibia Australia eSwatini

Lesotho

South Africa

Emerging markets Emerging markets Developed direct presence indirect presence markets

Key partnerships in emerging markets (outside South Africa)

The Shriram Capital Investment in India is a key partnership, Sanlam in turn has a wealth of experience in product supported by numerous other strong and rewarding development, financial and actuarial support, risk management in-country partnerships. In particular, strategic alliances and sound governance, thereby fulfilling the role of technical with bancassurance partners, telecommunication companies partner. We manage each partnership in a bespoke manner, and aggregators offer strong distribution channels across which proved to be a key differentiator for Sanlam’s success in the continent. operating across our chosen emerging markets. This model Our general preference in emerging markets outside of South makes Sanlam more competitive and better placed to extract Africa is to have local partners as equity investors in our future opportunities emanating from shifting demographic businesses. These partners provide us with distribution profiles. capability, an understanding of the local market conditions, culture and existing relationships with regulators, independent brokers and institutional clients. 11 11 Sanlam Integrated Report 2020

12About us continued Our employees

Sanlam believes people are its single most important resource. We will therefore not operate in a market unless we have the right people for that market. Sanlam values diversity in its people and will drive strategies which foster this. The Group supports a set of defining core competencies embedded into all roles.

We have 147 541 employees working in 44 countries, supported by HR teams at Group and cluster levels. The Group’s Human Resources and Remuneration committee and the SES committee have oversight of different aspects of employee-related matters.

Salient features of our human resources (HR) strategy The HR strategy is underpinned by our Group values and the following enablers:

• World-class HR function and capability • Leading edge digitally enabled HR practices and solutions • Proactive governance and risk management

The key focus areas are:

• Talent: attracting, hiring, developing, and retaining the best talent in the market to address the evolving talent needs in our business • Culture: evolving our culture to suit a changing business and strategic context • Digitise: adapt HR functions to improve efficiency and capability to deliver superior employee experiences • Agile workplace of the future: simplify, harmonise and evolve people practices and processes to promote cross-cluster interactions and mobility • Ways of working: creating a work environment that addresses the current and future needs of our workforce in a digitalised workplace • Diversity, equity and inclusion: ensure diversity in our workforce and workplace in line with diverse markets being served

Global employee footprint

Sanlam South Africa Sanlam Emerging Markets Africa region

Sanlam Life and Savings (SA Retail South Africa/Casablanca Affluent and SA Retail Mass) Head Offices 10 586 (2019: 11 231) 236 (2019: 210)

Sanlam Investment Group Northern region 920 (2019: 892) 2 651 (2019: 2 531) Sanlam Corporate Western region 1 539 (2019: 1 527) 3 179 (2019: 2 753) Sanlam Group Office Southern region 640 (2019: 620) 3 981 (2019: 3 932) Santam Eastern region 5 851 (2019: 6 049) 2 925 (2019: 3 660) Total Total 19 536 (2019: 20 319) 12 972 (2019: 13 086)

Sanlam Emerging Markets Sanlam International Investments

Malaysia Sanlam UK Group 2 834 (2019: 2 790) 471 (2019: 514) India Sanlam Global Investment Solutions 111 054 (2019: 67 747) 402 (2019: 281) Lebanon Sanlam Private Wealth Africa 224 (2019: 220) 48 (2019: 44) Total Total 114 112 (2019: 70 757) 921 (2019: 839) // A snapshot of Sanlam

South African employee diversity profile (%)

19 Top management (2019: 15%) 81 Top management (2019: 85%)

33 Senior management (2019: 32%) 67 Senior management (2019: 68%)

Gender 49 Middle management (2019: 49%) Gender 51 Middle management (2019: 51%) – Male (%)

– Female (%) – Female 61 Junior management (2019: 61%) 39 Junior management (2019: 39%) 69 Semi-skilled (2019: 67%) 31 Semi-skilled (2019: 33%) 69 Unskilled (2019: 72%) 31 Unskilled (2019: 28%) 61 Combined (2019: 61%) 39 Combined (2019: 39%)

38 Top management (2019: 43%) 62 Top management (2019: 57%)

39 Senior management (2019: 37%) 61 Senior management (2019: 63%) Race Race Race 53 Middle management (2019: 51%) 47 Middle management (2019: 49%) – Black (%) 70 Junior management (2019: 69%) (%) – White 30 Junior management (2019: 31%) 95 Semi-skilled (2019: 95%) 5 Semi-skilled (2019: 5%) 98 Unskilled (2019: 98%) 2 Unskilled (2019: 2%) 75 Combined (2019: 75%) 25 Combined (2019: 25%)

During 2020, cluster executive teams were categorised as part of top management. Additional changes to the top management structure is effective in 2021. Employee numbers include the SEM Chief Executive and Deputy Chief Executive. Employee numbers include the SEM Chief Executive and Vice Chair of Sanlam Pan-Africa.

Employee race composition (%) Employees with disabilities (2020 Target: 3%; Achieved: 1,61%)

46 187 2016 71 2016 29 275

49 208 2017 74 2017 26 300 50 218 2018 75 2018 25 306 49 218 2019 75 2019 25 307 48 232 2020 75 2020 25 314 0 16 32 48 64 80 0 64 128 192 256 320

African Black White • Black • Total

Sanlam was awarded the Top Employers certification in South Africa for the sixth consecutive year. The Top Employers HR best practices survey certified more than 1 500 top companies around the world against global standards. 13 13 Sanlam Integrated Report 2020

14About us continued

Our employee experience is shaped by: Developing talent and improving skills

A compelling and differentiated employee value Talent management is a key strategic business matter and is proposition (EVP) designed to ensure we recruit, appoint, retain and develop the most talented employees available in the job market. We collaborate with our employees to help them realise their A high-performance and values-driven culture worth. We are committed to providing a stimulating work environment and development opportunities. Learning and development are prioritised in our HR strategy, which is A dedicated focus on diversity and inclusion designed to drive internal career advancement.

An environment where technology, analytics and digital In South Africa: advancement are prioritised Training and Opportunities for growth, development and mobility R345 million development spend* across the Group % of total employees received training With the introduction of a new Group strategy, changes in 70,3% leadership and reorganisation of the Group, we decided to * Including associated management expenses. take stock of our culture. A culture journey assessment was launched across the Group in September. 71% of employees participated. Read more from page 34.

Group employee diversity focus areas Learning and development is among the areas most Sanlam remains committed to create a culture that values heavily impacted by COVID-19 and, as a result, needed diversity and inclusivity in the multiple geographies and to adapt to changing conditions. As Sanlam could not locations in which we operate. In South Africa, the focus on push the pause button on critical workplace learning, diversity in terms of race, gender and people with disabilities there was a greater reliance on technology and virtual is largely guided by Employment Equity and B-BBEE platforms. The majority of the programmes pivoted to legislation, which aim to address the impact of race, gender, the use of virtual platforms. Despite the adjustments people with disabilities and economic discrimination. required, all the delegates who started development Read more about our progress and scorecard in our programmes completed their programmes successfully. Resilience Report, available online.

A number of interventions have been implemented to encourage greater sensitivity and appreciation for diversity and inclusion. These include, for example, disability sensitivity workshops for line managers, and a series of online webinars focusing on the broader understanding of diversity, inclusion and unconscious bias.