investment case sustainable value creation
Insurance Financial Planning Retirement Investments Wealth agenda
Overview
Strategic positioning
Strategic delivery
Financial performance – 2014 interim results
Page 2 overview
Leading financial services group in Africa, with presence in India and SE Asia.
Established in 1918, listed in 1998 on the JSE & Namibian Stock Exchange
2 166 million issued shares, 494 000 shareholders
Market Cap of > R100bn
JSE/ALSI40 stock with > 80% free-float
Average daily trading stats 4 - 5 million shares per day >50% of shares trade p.a.
Institutional shareholding of 86%, 32% offshore shareholding
Page 3 operational structure
Sanlam Group
Group Office
100% 100% 100% 60% Sanlam100 Personal Sanlam100 Emerging Sanlam100 60% Santam %Finance %Markets Investments%
SA Retail: long-term Emerging markets ex- SA & Developed General insurance in insurance, investment SA: long-term markets: investment SA & co-investor in & other financial insurance, general management, wealth SEM general insurance services insurance, management, businesses investments, credit & employee benefits banking
Page 4 strategic positioning
focus on growth markets strategic focus remains unchanged maximise shareholder return
Net Business Flows
Diversification
Growth / Efficiency
Operational Operational Efficiency Returns (ROGEV) Optimal Application
Strategic Investments Capital Capital
Efficiency Return of Excess
Page 6 core strategic objectives
progress in all areas during 2014, particularly growth markets Effective capital Effectivecapital management
South Africa Maximising return on Investment in existing business Delivery of sustainable growth Efficient and effective management
International Sourcing new growth opportunities Creating a platform for future growth Identification of core markets for growth & expansion
Page 7 five strategic pillars underpinning the Sanlam Group business model
Improving performance through top-line growth Increasing market share in key segments Diversifying the base (including geographical presence, products, market segments and distribution platforms)
Improved operating and cost efficiencies (including quality)
Prioritising Sanlam’s international positioning (diversification)
Improving capital-efficiency on an on-going basis
Embracing and accelerating transformation of the Group
Page 8 the growth opportunity growth markets in South Africa
50% 47% 45%
40% 36% 35%
30% 25% 25% 22% 22% 20% 17%
% of populationof % 16% 15% 15%
10%
5%
0% 2006 2013
LSM 1-4 LSM 5 LSM 6-7 LSM 8-10
Page 9 the growth opportunity life insurance penetration in Africa
11.4%
5.4%
% GDP % of Global average: 3.7%
1.9% BRIC average: 1.9% 0.9% 1.1% 0.5% 0.4% 0.1% 0.2% 0.1% South Africa Namibia Botswana Malawi Kenya Ghana Zambia Tanzania Nigeria Uganda
Source: Swiss Re and AXCO
Page 10 strategic delivery consistency and prudence top-line earnings growth financial performance in 1H2014
Earnings per share Net operating profit per share increased by 43% Normalised headline earnings per share up 27%
Business volumes New business volumes increased by 8% to R82bn (excl white label) Net fund inflows of R19bn (excl white label), up 40% Net life VNB up 7% to R626m Net VNB margin of 2,68% – maintained on per product basis Group Equity Value of 4 277 cents per share Annualised RoGEV per share of 18% (15,3% adjusted)
Page 12 operational efficiencies profitable volume growth
Gross VNB grew by 9%; 13% on comparable economic basis
800 3.2%
700 2.7%
600 2.2% 500 1.7% 400 1.2% 300 0.7% 200
100 0.2%
0 -0.3% 1H06 1H07 1H08 1H09 1H10 1H11 1H12 1H13 1H14
South Africa Africa Other International Margins - rhs
Page 13 operational efficiencies focus on quality
Persistency – SA middle-income market Lapses, surrenders & fully paid-ups as % of in-force per half year
5% 4.8%
4.2% 4.2% 3.9%4.0%3.9% 3.9% 4% 3.8% 3.8% 3.6%3.7% 3.6% 3.4% 3.4% 3.0%2.9%2.9% 2.9% 2.9%2.9% 3% 2.8% 2.7%2.8%
2%
1%
0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
H1 H2
Page 14 operational efficiencies focus on quality
Persistency – SA lower income market Number of NTUs, lapses and surrenders as % of in-force 30% 27.6%
25%
20% 17.5% 16.8% 15.2% 15% 14.1% 14.5% 12.7% 12.7% 11.4%11.1% 11.1% 11.0% 11.3% 10.4% 10.0% 10%
5%
0% 2007 2008 2009 2010 2011 2012 2013 2014
H1 H2
Page 15 operational efficiencies experience variances
Focus on quality, costs + prudence = consistent positive experience 1 200 5.0%
1 021 4.5% 1 000 4.0%
3.5% 800 681 3.0% 636 600 555 2.5% 468 477 2.0% 400 1.5% 277 288 278 241 1.0% 200 142 138 0.5%
0 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14
R'million % of VIF (rhs)
Page 16 investment performance focus on long-term performance track record
Percentage of SIM’s AUM to exceed benchmark 100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0% Rolling 3 Yr Rolling 5 Yr
2011 2012 2013 1H14 2011 2012 2013 1H14
Page 17 capital efficiency optimising capital base
Optimising capital allocated to clusters - driving increased returns
Discretionary capital invested in growth markets as preference
Return to shareholders if not utilised in reasonable timeframe
Prudent approach while awaiting final SAM specifications
Discretionary capital earmarked mainly for Africa, India and SE Asia
Page 18 capital efficiency capital redeployed since 2005
35 000
30 000
25 000
20 000
15 000
Discretionary capital 10 000 South Africa Developed markets 5 000 Emerging markets Share buy back/special dividend - Capital released Capital deployed
Page 19 capital efficiency composition of GEV transformed since 2005
100 000
90 000
80 000
70 000
60 000
50 000
40 000 Discretionary capital 30 000 Other capital 20 000 Non-life operations Value of in-force 10 000 Life Required Capital - GEV 2005 GEV Jun 2014
Page 20 diversification international positioning
RSA based
Rest of Africa
Botswana Ghana Kenya Lesotho Malawi South-East Asia Mozambique Namibia India Nigeria Malaysia Rwanda Philippines South Sudan Swaziland Developed markets Tanzania UK / Ireland Developed Markets The Gambia Switzerland Uganda Australia Emerging Markets - Direct presence Zambia USA Emerging Markets - Indirect presence
Page 21 diversification geographic profile
Life insurance General insurance Country – direct stake Main brand Effective interest market share market share South Africa Sanlam/Santam 100%/60% 23% >22% Botswana Botswana Insurance Holdings 60% 82% 3% Namibia Sanlam Namibia 58% - 100% 17% 28% Zambia African Life Zambia 70% 33% 12% Tanzania African Life Tanzania 64% 48% 4% Kenya Pan Africa Life 56% 13% - Malawi NICO Holdings 25% 48% 38% Uganda Sanlam Uganda 100% 13% 2% Ghana Enterprise Life Assurance 49% 23% - Nigeria FBN Life 35% 2% 1% Rwanda Soras Group 63% 35% 37% India Shriram Capital 20% - 26% 0.2% 2% Malaysia Pacific & Orient 49% - 4% Malaysia MCIS Insurance 51% 3% - Developed markets Various 33% - 100% <1% -
Page 22 diversification product mix
COUNTRY LIFE ASSURANCE SHORT-TERM INSURANCE ASSET MANAGEMENT CREDIT BANKING OTHER
Botswana Botswana Life BIHL SURE Botswana Insurance Fund Management Letshego Bank Gaborone ●
Ghana Enterprise Life ●
India Shriram Life Shriram General STFC, SCUF ●
Kenya Pan Africa Life Pan Africa Asset Management Letshego ●
Lesotho Letshego
Malawi NICO Life NICO General Insurance NICO Asset Management NBS Bank ●
Malaysia MCIS Insurance Pacific & Orient
Mozambique NICO Vida Letshego
Namibia Sanlam Life Santam Sanlam Investment Management Letshego Bank Windhoek ●
Nigeria FBN Life Oasis Insurance
Philippines Monarch
Rwanda Soras VIE Soras AG Letshego
Tanzania African Life Assurance NIKO Insurance Letshego
The Gambia Enterprise Life
Uganda Sanlam Life NIKO Insurance Letshego ●
Letshego Zambia African Life Assurance NICO Insurance African Life Financial Services Cavmont ●
Direct presence Indirect presence via associated company l Holding Co., Properties, Employee Benefits, Funeral
Page 23 diversification diversified earnings base
Group Equity Value Net operating profit
Admin, health & other Admin, health & other 8% 3% Credit & banking Credit & banking 14% 8%
Investment Investment management management 14% 13%
Short-term Short-term insurance* Life business insurance* Life business 17% 53% 13% 57%
* General insurance
Page 24 diversification growth markets delivering value
Net VNB – 1H03 (R100m) Net VNB – 1H14 (R626m)
Other international Rest of Africa 3% Namibia 8% 2% Botswana 8%
Namibia 4%
SA Traditional SA Entry-level 98% 22%
SA Traditional 55%
Page 25 diversification increasing contribution from growth markets
Contribution to group net operating profit
1H03 – R756 million 1H13 – R2 409 million 1H14 – R3 461 million
Other international 6% India/Malaysia Other International 7% India/Malaysia 6% Rest of Africa Namibia Other international 7% 1% 1% Rest of Africa 1% Botswana 2% Botswana 5% 4% Namibia Namibia 5% 5%
SA Entry-level 11% SA Entry-level 11% SA Traditional 98% SA Traditional 65%
SA Traditional 65%
Page 26 diversification contribution from businesses outside of South Africa
Net operating profit Net VNB Group Equity Value
82% 81% 76% 76% 77% 77%
20% 18% 18% 16% 14% 13% 6% 6% 7% 6% 3% 4%
1H14 1H13 1H14 1H13 1H14 1H13
South Africa Other emerging markets Developed markets
Page 27 diversification competitive advantage
Largest exposure to ex-SA emerging markets of South African insurers
Diversified operations shield Group earnings from difficult operating environment in specific countries
Expanding SA entry-level footprint
Strengthening relationships in Africa
Shriram Capital – unique business model in India
Expansion into South-East Asia – synergies and organic growth
Page 28 sanlam group financial performance – 2014 interim results operating environment
Challenging operating conditions Slow growth in global demand Weak economic growth in SA Industrial action, in particular platinum mines SA consumer under pressure
SA economy Growth Interest rates Equity markets Currencies
Africa/India/Malaysia
Page 30 rest of africa/india/malaysia
Botswana Resilient economy and consumer base
Rest of Africa GDP growth prospects exceed SA, despite slow growth in global demand Ghana economy struggling; devaluation of currency
India Below-trend economic growth Buoyant equity market Positive environment post elections
Malaysia Growth prospects remain in place
Page 31 salient features
2014 2013 Group Equity Value* cps 4 277 4 121 4% Annualised RoGEV per share % 18,0 14,3 Annualised RoGEV per share (adjusted) % 15,3 15,1 CAR cover (Sanlam Life)* 4,4 4,5 Net operating profit R mil 3 461 2 409 44% cps 169,2 118,1 43% Normalised Headline earnings R mil 4 393 3 449 27% cps 214,8 169,1 27% New business volumes + R mil 81 833 75 796 8% Net fund flows + R mil 19 222 13 746 40% New Life business EV (net) R mil 626 587 7% New Life EV margin % 2,68 2,83 * Comparative information as at 31 December 2013 + Excludes white label
Page 32 business flows
Gross Net R million 2014 2013 2014 2013 by business Personal Finance 23 662 19 239 23% 8 087 6 564 Emerging Markets 4 030 5 933 -32% 1 762 607 Sanlam Investments 45 682 42 528 7% 6 362 4 194 Santam 8 459 8 096 4% 3 011 2 381 by licence Life insurance 17 536 14 956 17% 6 137 5 159 Investment 55 251 52 436 5% 9 979 6 160 Short-term 9 046 8 404 8% 3 106 2 427 Total 81 833 75 796 8% 19 222 13 746
* Excludes white label
Page 33 value of new covered business
Value of New Business Margin R million 2014 2013 2014 2013
Personal Finance 437 450 -3% 2,73% 3,07%
Emerging Markets 196 136 44% 7,30% 6,52%
Employee Benefits 42 30 40% 2,30% 1,45%
Sanlam UK 22 23 -4% 0,59% 0,87%
Total 697 639 9% 2,88% 2,98%
Net of minorities 626 587 7% 2,68% 2,83%
Comparable economic basis 650 587 11% 2,77% 2,83%
Page 34 net operating profit
R million 2014 2013
Personal Finance 1 763 1 409 25%
Emerging Markets 624 391 60%
Sanlam Investments 727 523 39%
Santam 353 128 176%
Corporate & other (6) (42) 86%
Total 3 461 2 409 44%
Page 35 income statement
R million 2014 2013 Net operating profit 3 461 2 409 44% Per share 169,2 118,1 43% Net investment return 1 122 1 150 -2% Other (190) (110) -73% Normalised headline earnings 4 393 3 449 27% Per share 214,8 169,1 27% Fund transfers 54 25 Headline earnings 4 447 3 474 28% Per share 220,2 171,4 28%
Page 36 group equity value
Equity Value* RoGEV+ R million 2014 2013 Rm %
Group operations 82 446 76 470 7 282 9,5% Personal Finance 36 976 35 666 3 107 8,7% Emerging Markets 12 967 10 189 1 258 12,3% Investments 19 267 17 971 2 031 11,2% Santam 13 236 12 644 886 7,0% Discretionary & Other 5 142 7 939 6 0,1% TOTAL 87 588 84 409 7 288 8,6% cps 4 277 4 121 356 8,6% Adjusted return 7,4% Return target 5,9% * Comparative information as at 31 December 2013 + Return for six months
Page 37 group equity value earnings
R million Actual Adjusted Net value of new business 626 626 Existing business 2 260 2 260 Expected return on VIF 1 659 1 659 Operating experience variance 477 477 Operating assumption changes 124 124 2 886 2 886 Inv variances in-force 497 (497) - Tax changes (3) 3 - Economic assumption changes (200) 200 - 3 180 (294) 2 886 Return on net worth 765 (189) 576 EV earnings 3 945 (483) 3 462 Non-life 3 343 (578) 2 765 GEV earnings 7 288 (1 061) 6 227
Page 38 group equity value out perform growth target of long-bond rate + 400bp
25
20
9.8 4.8 15 3.1 5.8 5.5 3.3 6.2
10
13.1 13.4 12.4 12.2 12.2 12.4 5 10.8
0 2009 2010 2011 2012 2013 2014 Avg
Target Outperformance
Page 39 group equity value (adjusted return) out perform growth target of long-bond rate + 400bp
25
20
15 2.6 2.4 2.8 3.1 2.5 3.8
10
13.1 13.4 12.4 12.2 12.2 12.4 5 10.8
0 2009 2010 2011 2012 2013 2014 Avg
Target Outperformance
Page 40 rogev versus target
Out perform cumulative growth target of long-bond rate + 400bps since listing 1200
1000
800
600
400
200
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Target Cost of Capital (RFR + 300bps) Actual
Page 41 Sanlam group cluster results for 1H2014 sanlam personal finance
R million 2014 2013
New business flows 23 662 19 239 23% Sanlam Sky 474 503 -6% Individual Life 5 821 5 368 8% Glacier 17 367 13 368 30%
Net flows 8 087 6 564 Sanlam Sky 1 307 1 410 Individual Life (859) (701) Glacier 7 639 5 855
Page 43 sanlam personal finance
R million 2014 2013
Value of new life business 437 450 -3% Sanlam Sky 135 146 -8% Individual Life 228 240 -5% Glacier 74 64 16% Comparable economic basis 467 450 4%
New business margin 2,73% 3,07% Sanlam Sky 7,62% 7,46% Individual Life 2,59% 2,89% Glacier 1,37% 1,45% Comparable economic basis 2,89% 3,07%
Page 44 sanlam personal finance
R million 2014 2013
Gross operating profit 2 439 1 941 26% Sanlam Sky 518 360 44% Individual Life life and investments 1 571 1 267 24% Glacier 171 122 40% Personal loans 148 157 -6% Other 31 35 -11% Net operating profit 1 763 1 409 25% Group Equity Value* 36 976 35 666 RoGEV (six months) 8,7% 6,8%
* Comparative information as at 31 December 2013ite label
Page 45 sanlam emerging markets
R million 2014 2013 New business flows 4 030 5 933 -32% Namibia 1 541 4 263 -64% Botswana 1 137 871 31% Rest of Africa 827 436 90% India/Malaysia 525 363 45% Net fund flows 1 762 607 Namibia 343 (419) Botswana 478 460 Rest of Africa 814 530 India/Malaysia 127 36 Value of new life business 196 136 44% Margin 7,30% 6,52%
Page 46 sanlam emerging markets
R million 2014 2013
Gross operating profit 1 129 697 62% Namibia 254 112 127% Botswana 348 276 26% Rest of Africa 108 76 42% India/Malaysia 432 244 77% Corporate (13) (11) -18% Net operating profit 624 391 60% Group equity value* 12 967 10 189 RoGEV (six months) 12,3% 22,0%
* Comparative information as at 31 December 2013
Page 47 sanlam investments
R million 2014 2013
Net investment business flows 4 871 2 959 Investment management SA 3 883 (810) Wealth management (457) 2 457 International 1 346 1 312 Capital management 99 - New life business 4 389 3 644 20% Employee benefits 952 1 157 -18% Sanlam UK 3 437 2 487 38% Net life business 1 491 1 235 Value of new life business 64 53 21% Margin 1,16% 1,13%
Page 48 sanlam investments
R million 2014 2013
Gross operating profit 982 687 43% Investment management 605 451 34% Employee benefits 216 174 24% Capital management 161 62 160% Net operating profit 727 523 39%
Group Equity Value* 19 267 17 971 Covered business 7 268 6 901 Other 11 999 11 070 RoGEV (six months) 11,2% 9,2%
* Comparative information as at 31 December 2013
Page 49 santam
R million 2014 2013
Net earned premiums 8 459 8 096 4% Gross operating profit 871 296 194% Underwriting surplus 626 101 520% Working capital & other 245 195 26% Net operating profit 353 128 176% Underwriting margin 7,4% 1,3% Group Equity Value* 13 236 12 644 RoGEV (six months) 7,0% 2,9%
* Comparative information as at 31 December 2013
Page 50 Sanlam ADR programme Sponsored level 1 ADR
Ticker symbol: SLLDY CUSIP: 80104Q208 Ratio: 1 ADR : 5 Ordinary Shares Depositary bank: Deutsche Bank Trust Company Americas Depositary bank contact: Stanley Jones ADR broker helpline: +1 212 250 9100 (New York) +44 207 547 6500 (London) e-mail: [email protected] ADR website: www.adr.db.com
Depositary bank’s local custodian: Computershare South Africa
Page 51