Our vision is to be the benchmark of PAGE 1 Business Structure PAGE 2 Salient Features PAGE 4 Non-executive Directors PAGE 7 Chairman’s Statement PAGE 15 Executive Committee PAGE 16 Report of the Financial Director PAGE 24 Corporate Governance Statement PAGE 27 Human Resources Report PAGE 30 Business Reviews • Sanlam Personal Finance contents • Sanlam Employee Benefits • Gensec • Sanlam Health • New Business Development PAGE 60 Sanlam Corporate, Support Services and Namibia PAGE 61 Corporate Social Involvement and Sponsorships SANLAM IS BASED PAGE 64 Annual Financial Statements IN SOUTH AFRICA PAGE 120 BUT NOT Definitions and Glossary of Technical Terms LIMITED TO IT PAGE 121 Notice of Annual General Meeting PAGE 124 Shareholding and Administration business structure sanlam personal finance SPF is a major provider of life insurance, retirement annuities, savings products, unit trusts and trust services to individuals through Sanlam Life, Sanlam Unit Trusts and Sanlam Trust. sanlam employee benefits SEB is the second largest provider of investment and risk products to group funds and schemes in South Africa. It also provides administration, actuarial and con- sulting services to the group retirement industry and money transfer services. sanlam investment management (previously Gensec Asset Management) South Africa’s second largest asset manager measured by assets under management. gensec bank Providing investment banking solutions for the South African savings industry, public sector enterprises and corporates. sanlam health Underwriting and risk management to medical schemes. core business core gensec property services Property management services such as letting, rental collection, marketing, con- tracting and administration. new business development Explores opportunities for investment and for launching new initiatives for the development of new business in the Sanlam group. SANTAM – 59,5% ABSA – 23,0% strategic investment associated company The largest short term insurance company and One of the largest commercial banks market leader in the motor and personal insurance in South Africa sector in South Africa 14,8% HELD BY SHAREHOLDERS 36,3% HELD BY SHAREHOLDERS 8,2% HELD BY POLICYHOLDERS 23,2% HELD BY POLICYHOLDERS PAGE 1 salient features for the year ended 31 December 2000 PAGE 2 2000 1999 SANLAM LIMITED GROUP New business volumes R million 37 700 25 810 Net inflow/(outflow) of funds R million 777 (10 427) Operating profit before tax R million 1 924 1 722 Headline earnings based on the LTRR(1) R million 3 478 2 721 Headline earnings per share based on the LTRR(1) cents 130,9 102,1 Embedded value of new business R million 209 101 New business embedded value as % of APE(2) % 8,0 5,7 Embedded value per share cents 1 035 1 004 Growth from life business % 24 30 Dividend per share cents 30 25 FINANCIAL RATIOS Returns • Operating profit before tax(3) 8,2% 7,7% • Operating profit after tax(3) 7,2% 6,4% • Headline earnings based on the long term rate of return(4) 18,7% 16,3% • Return on embedded value(5) 5,1% 24,4% • Return on the Sanlam share price(6) 27,0% 41,0% Group administration cost ratio(7) 29,7% 29,8% Group operating margin(8) 17,4% 17,9% SANLAM LIFE INSURANCE LIMITED Shareholders’ funds to total policy liabilities 12% 12% Shareholders’ funds to non-market-related policy liabilities 20% 20% Capital adequacy requirement covered(9) times 2,4 2,7 NOTES (1) LTRR = Long term rate of return. (2) APE = Annual premium equivalent and is equal to new recurring premiums (excluding indexed growth premiums) plus 10% of single premi- ums. (3) Operating profit before and after tax as a percentage of the average monthly shareholders’ funds for the year. (4) Headline earnings based on the long term rate of return as a percentage of the average monthly shareholders’ funds for the year. (5) Growth in embedded value (before dividends paid) as a percentage of embedded value at the beginning of the year. (6) Annualised growth rate on the Sanlam share price since listing plus dividends paid. (7) Administration costs as a percentage of income earned by the shareholders’ funds less sales remuneration. (8) Operating profit as a percentage of income earned by the shareholders’ funds less sales remuneration. (9) Represents the times by which the shareholders’ funds of Sanlam Life Insurance Limited cover the capital adequacy requirements (refer to definitions on page 120). delivering on our targets P A GE 3 “In our 1999 annual report we identified growth as one of our key financial focus areas for 2000. In this year’s annual report we report back on how we delivered against these targets.” EXECUTIVE CHAIRMAN MARINUS DALING The growth goals that we set: REVERSE THE OUTFLOW OF FUNDS The outflow of funds in 1999 of R10 427 million was reversed and a net inflow of R777 million was achieved in 2000. 10% REAL GROWTH Headline earnings based on the long term rate of return grew by 28% – well in excess of our target for 2000 of 18,3%. Headline return on equity of 18,7% based on the long term rate of return and calculated on the monthly average net asset value of the shareholders’ funds, was in line with our target of 18,3%. RETURN ON EMBEDDED VALUE The return on embedded value of 5,1% is below our target of a 10% real return and was affected by the difficult stock market conditions during 2000. The JSE ALSI was 3% lower in 2000 than in 1999. However, good growth of 24% was achieved in the value of our existing life insurance business (value of in-force) for 2000. NEW BUSINESS EMBEDDED VALUE We set ourselves the target to achieve new business embedded value in excess of R200 million by 2001 and achieved R209 million in 2000 – one year earlier than our target date. non-executive directors JPL Alberts (Johan) (58) K Jowell (Kate) (61) SASS, BCom, CA (SA), IAMP (Geneva) BSc, MBA Appointed 1995 Appointed 1993 Businessman and director of various companies Director of Foschini Limited Prof AC Bawa (Ahmed) (46) DL Keys (Derek) (69) MSc, PhD BCom, CA (SA), FIBSA, Dr Econ Sc (hc) Appointed 1997 First appointed 1989 to 1991 – Reappointed 1995 Deputy Vice-Chancellor of University of Natal Director of Billiton Plc, Munich Reinsurance of Africa and Director of Atomic Energy Corporation of South Africa Limited other companies DC Brink (Dave) (61) DNM Mokhobo (Dawn) (52) MSc Eng (Mining), DCom (hc) BA (Social Sciences) Appointed 1994 Appointed 1996 Chairman of Murray & Roberts Holdings Limited Managing Director of MBM Change Agents (Proprietary) Deputy Chairman of Absa and director of other companies Limited, Chairperson of The Fedics Group Limited, Director of Nozala Investments (Proprietary) Limited, Engen Limited and WM Grindrod (Murray) (65) other companies BA (Mech Sc), DEcon (hc) Appointed 1993 Prof P Smit (Flip) (64) Chairman of Grindrod Unicorn Group Limited and director of MA, DLitt et Phil other companies Appointed 1990 Former Vice-Chancellor and Rector of University of Pretoria PAGE 4 P A GE 5 PEI Swartz (Peter) (59) BOARD COMMITTEES Ad Ed Dip A UDIT COMMITTEE Appointed 1994 JJM van Zyl (chairman) JPL Alberts Director of Absa, Distell (Pty) Ltd, Ellerine Holdings Limited, Prof AC Bawa New Clicks Holdings Limited, Sancino Project Limited and PEI Swartz other companies HUMAN RESOURCES COMMITTEE T Vosloo (chairman) JJM van Zyl (Boetie) (62) DC Brink Pr Eng, BSc Eng K Jowell Appointed 1995 NOMINATIONS COMMITTEE Director of Naspers Limited, Murray & Roberts Holdings Limited Prof P Smit (chairman) and other companies DC Brink WM Grindrod DL Keys T Vosloo (Ton) (63) D Phil (hc) SPECIAL COMMITTEE Appointed 1989 T Vosloo (chairman) JPL Alberts Deputy Chairman since 1998, Chairman of Naspers Limited, Prof AC Bawa MIH Holdings Limited, MIH Limited and Electronic Media DC Brink Network Limited WM Grindrod K Jowell On 7 March 2001, Messrs TS Gcabashe and BP Vundla and DL Keys DNM Mokhobo Professors AF Perold and J van Zyl were appointed as non- Prof P Smit executive directors. Ms K Jowell and Prof P Smit and PEI Swartz Mr WM Grindrod retired as directors on this date. JJM van Zyl Our vision is to be the benchmark of excellence for financial services wherever we operate TO ACHIEVE OUR VISION WE WILL . • Be a leading South African group reaching out to new markets • Continue our culture of empowerment to the benefit of all our stakeholders • Make innovative use of our experience and our human skills and technological resources to deliver products and services of a high quality to all our clients • Establish international structures to support these products and services • Be performance-driven and passionate about client service, and • Create a working environment conducive to attracting, training and retaining skilled people from all sectors of the community AND IN THIS WAY . • Generate excellent returns for our shareholders THE VALUES WE UPHOLD . • Integrity • Respect • Accountability P A GE 6 chairman’s statement PAGE 7 INTRODUCTION Dear shareholder, It is my pleasure to report on the performance of your investment in Sanlam over the past year and to highlight certain of our achievements and activities. Although we made considerable progress in several areas and achieved our objectives for this period, we nevertheless face new challenges and need to tackle certain areas that require further attention. It remains our mission to achieve excellent returns for our shareholders – our immediate focus being to produce the results that will enable the market to convert to a premium EXECUTIVE CHAIRMAN MARINUS DALING the discount of our current share price to embedded value. we achieved most of the financial objectives for 2000 In the period since our listing, from Prof Johan van Zyl, and Mr Peter Vundla to the Board as new 30 November 1998 to 31 December 2000, non-executive directors of Sanlam.