Sanlam Limited · JSE:SLM
Sanlam — Merger or Acquisition (August 2005)
23 slides from Sanlam's merger presentation, Aug 10, 2005
Slide 1: Sanlam to acquire African Life
A Compelling Deal 10 August 2005 Johannesburg Sanlam to acquire African Life A COMPELLING DEAL -1-
Slide 2: Agenda
A Compelling Deal 10 August 2005 Johannesburg Agenda § The Sanlam offer and rationale Johan van Zyl CEO, Sanlam § The African Life perspective Jeremy Rowse CE, African Life -2-
Slide 3: The Sanlam offer and rationale
A Compelling Deal 10 August 2005 Johannesburg The Sanlam offer and rationale Johan van Zyl CEO, Sanlam Limited -3-
Slide 4: Sanlam strategy
A Compelling Deal 10 August 2005 Johannesburg Sanlam strategy ROEV remains primary value driver, with focus on: § Capital efficiency f Capital returned to shareholders • R4bn share buy-back in process f Strategic application to achieve structural growth • Supports strategy & enhance Earnings and ROE
Slide 5: Sanlam strategic focus
A Compelling Deal 10 August 2005 Johannesburg Sanlam strategic focus Entry-level life insurance market - an important component in growth strategy § Fastest growing market in SA § Opportunity: f Insurance penetration low (<10%) f Requires product innovation & effective distribution § Sanlam Group So
Slide 6: African Life: Some Facts
A Compelling Deal 10 August 2005 Johannesburg African Life : Some Facts § Total assets: R13bn * § Recurring premium income: R1,5bn * § Headline earnings: R259m* § Embedded Value: R2,4bn (2276 cents per share) * § Embedded Value of new business: R85m* § Operations in SA, Botswana, Lesotho, Namibia, Z
Slide 7: African Life: Some Facts
A Compelling Deal 10 August 2005 Johannesburg African Life : Some Facts § Average monthly recurring premium: R145pm § Total annual recurring business sales: ±400,000 § Total recurring business filesize: ±1 million § Volumes of claims: No1 in SA § Average claim size: ±R6,000 § Funds under management
Slide 8: African Life: Benefits to Sanlam
A Compelling Deal 10 August 2005 Johannesburg African Life : Benefits to Sanlam § Access to new markets via client base and sales force f Strength in entry level market f Provides Sanlam with a meaningful presence and a sound base to grow from § Management experience & expertise § Improves footprint
Slide 9: Key terms of the Offer
A Compelling Deal 10 August 2005 Johannesburg Key terms of the Offer § Scheme of arrangement (S311) offer for 100% of the African Life ordinary shares § Momentum made an offer for African Life Health (‘ALH’) § Terms of Offer: f Sanlam offer is R22.05 per share, including all assets f If Momentum acq
Slide 10: Support for the offer
A Compelling Deal 10 August 2005 Johannesburg Support for the offer § Sanlam currently holds 20,5% of African Life § African Life Board § BEE partners § Ordinary shareholders’ support : f Approximately 70% of eligible votes f Irrevocable support from • Momentum • Share scheme f Institutional support
Slide 11: Financial effects on Sanlam
A Compelling Deal 10 August 2005 Johannesburg Financial effects on Sanlam § Earnings accretive § Potential capital synergies >R300m § Meets ROEV target § Added value through new products, markets and co-operation with Ubuntu-Botho - 11 -
Slide 12: The African Life perspective
A Compelling Deal 10 August 2005 Johannesburg The African Life perspective Jeremy Rowse CE, African Life - 12 -
Slide 13: Strategic Focus: Current
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Current AFRICAN LIFE ASSURANCE LIFE HEALTH FUND MANAGEMENT South Africa Botswana Kenya South Africa Ghana Botswana Botswana Zambia Kenya Zambia Tanzania Lesotho Namibia Lesotho Life and funeral cover, Health cover & Administration savin
Slide 14: Strategic Focus: Future
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Future S Life will remain primary area of focus S Continue to explore mutual opportunities within fund management S Will look to Sanlam’s evolving health strategy to explore mutual opportunities - 14 -
Slide 15: Strategic Focus: Life
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Life S High volumes S Low transaction value S Low cost S Risk dominant products S Benefit delivery focus S Effective distribution S Product innovation - 15 -
Slide 16: Strategic Focus: Africa
A Compelling Deal 10 August 2005 Johannesburg Strategic Focus : Africa Insurance spend as % of GDP (Life and General) South Africa 18.2% Botswana 3.0% Namibia 9.0% Ghana 1.0% Kenya 3.5% Zambia 4.8% Lesotho 2.0% Tanzania 2.9% - 16 -
Slide 17: Transaction Rationale: Setting the Scene
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale Setting the Scene S Industry consolidation S Emergence of Africa opportunities S Growth markets S Pressures on costs S Momentum’s desire to exit S Share price trading at a large discount to EV S Growth requires capital S Bancassuran
Slide 18: Transaction Rationale: Options
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale : Options S Option 1 Status Quo and let Momentum sell to whom they wish S Option 2 Pro-actively seek a value-add shareholder - 18 -
Slide 19: Transaction Rationale Outcome
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale Outcome Strategic Filter: Does the transaction: S Resolve the Momentum overhang 9 S Unlock value for shareholders 9 S Meet a specific need of the acquiror 9 S Remains a separate strategic business entity 9 S Leverage the brand of th
Slide 20: Transaction Rationale Outcome
A Compelling Deal 10 August 2005 Johannesburg Transaction Rationale Outcome S Avoid the need for retrenchments 9 S Retain Health and Fund Management as strategic legs 8 S Facilitate a bancassurance strategy for the Company 9 S Facilitate and build on BEE relationships already in place 9 S Focus on t
Slide 21: Appeal of the Transaction
A Compelling Deal 10 August 2005 Johannesburg Appeal of the Transaction S Aflife remains a separate strategic business entity S Unlocks shareholder value (share price 4 August 2004 = R12,60) S Continued relationship with Fund Management S Continued Africa Strategy S Shareholder certainty S Strategic
Slide 22: A compelling deal
A Compelling Deal 10 August 2005 Johannesburg A compelling deal S Good for Sanlam S Good for African Life S Good for employees and management S Good for the industry - 22 -
Slide 23: A Compelling Deal
A Compelling Deal 10 August 2005 Johannesburg - 23 -