UBS financial services conference - Sanlam SA Fin... · UBS conference 2014 investment...

Insurance Financial Planning Retirement Investments Wealth

Growing shareholder value

UBS financial services conference

16 October 2014

UBS conference 2014

Strategic positioning

South Africa

Protecting the base

Focus on profitable growth

Operational efficiencies

Investing for growth

Capital efficiency

Shareholder value creation

agenda

strategic positioning

focussed on shareholder returns

UBS conference 2014

strategic focus remains unchanged

maximise shareholder return


Re

turn

s

(RO

GE

V)

Cap

ita

l

Eff

icie

nc

y Optimal Application

Return of Excess

Strategic Investments

Gro

wth

/

Op

era

tio

na

l

Eff

icie

nc

y Net Business Flows

Operational Efficiency

Diversification

UBS conference 2014

core strategic objectives

using the SA base to diversify into growth markets


South Africa Delivery of sustainable

growth

International Creating a platform for

future growth

Maximising return on Investment in existing business

Efficient and effective management

Identification of core markets for growth & expansion

Effe

ctiv

e c

ap

ital m

an

ag

em

en

t

Sourcing new growth opportunities

UBS conference 2014

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

underpinning the Sanlam Group business model

five strategic pillars


south africa

protecting and growing the base

UBS conference 2014

core strategic objectives - SA

adding growth to stable base

south africa


growth


future growth





Effe

ctiv

e c

ap

ital m

an

ag

em

en

t

UBS conference 2014

Client centricity embedded in sales and client service models

Providing clients with appropriate products at fair price

Key driver of retention over the longer term

Value to client = value creation to shareholders

Value proposition driving product range, e.g. no savings product in low

end of market

Proprietary ODDS model key tool in evaluating quality of new business

Focus on quality embedded in distribution culture and remuneration policies

Recruitment, training and retention initiatives

consistent improvement in quality of in-force book

protecting the SA base

south africa

UBS conference 2014

Persistency – SA middle-income market

focus on quality driving persistency improvement


south africa

4.8%

3.9% 3.9%

3.6% 3.4%

3.8% 3.9%

3.0% 2.9% 2.9% 2.8% 2.9%

4.2% 4.0%

3.8% 3.7% 3.6%

4.2%

3.4%

2.9% 2.8% 2.7% 2.9%

0%

1%

2%

3%

4%

5%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Lapses, surrenders & fully paid-ups as % of in-force per half year

H1 H2

UBS conference 2014

Persistency – SA lower income market

focus on quality driving persistency improvement


south africa

15.2%

17.5%

14.1% 12.7%

11.4% 11.1% 10.0%

11.3%

27.6%

16.8%

14.5% 12.7%

11.1% 10.4% 11.0%

0%

5%

10%

15%

20%

25%

30%

2007 2008 2009 2010 2011 2012 2013 2014

Number of NTUs, lapses and surrenders as % of in-force

H1 H2

UBS conference 2014

SA VNB grew by 17% per annum since 2006 – growing contribution from

Sanlam Sky

pure focus on market share destroys value over longer term

focus on profitable growth

south africa

-0.3%

0.2%

0.7%

1.2%

1.7%

2.2%

2.7%

3.2%

0

200

400

600

800

1 000

1 200

2006 2007 2008 2009 2010 2011 2012 2013

Value of new business Margins - rhs

UBS conference 2014

Focus on quality, costs + prudence = consistent positive experience

experience variances

operational efficiencies

south africa

241

142 138

277 288 278

636

468

681

555

1 021

477

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

0

200

400

600

800

1 000

1 200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1H14

R'million % of VIF (rhs)

investing for growth

sustainable value creation

UBS conference 2014

core strategic objectives – ex SA

Rest of Africa, India, SE Asia identified as growth markets


growth


future growth





Effe

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ap

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UBS conference 2014

growth through diversification

international positioning


RSA based

Rest of Africa

Botswana

Ghana

Kenya

Lesotho

Malawi

Mozambique

Namibia

Nigeria

Rwanda

South Sudan

Swaziland

Tanzania

The Gambia

Uganda

Zambia

South-East Asia

India

Malaysia

Philippines

Developed markets

UK / Ireland

Switzerland

Australia

USA

Emerging Markets - Direct presence

Emerging Markets - Indirect presence

Developed Markets

UBS conference 2014

the growth opportunity

life insurance penetration in growth markets


11.4%

5.4%

1.9%

0.9% 1.1% 0.5% 0.4%

0.1% 0.2% 0.1%

2.5% 2.8%

SouthAfrica

Namibia Botswana Malawi Kenya Ghana Zambia Tanzania Nigeria Uganda India Malaysia

% o

f G

DP

BRIC average: 1.9%

Global average: 3.7%

Source: Swiss Re and AXCO

UBS conference 2014

Gross VNB grew by 19% per annum since 2006

accelerated growth in VNB and margins

contribution of growth markets


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0

200

400

600

800

1 000

1 200

1 400

1 600

2006 2007 2008 2009 2010 2011 2012 2013

South Africa Africa Other International Margins - rhs

UBS conference 2014

Group Equity Value Net operating profit


diversified earnings base provides growth and stability


Life business 57%

Short-term insurance*

13%

Investment management

13%

Credit & banking 14%

Admin, health & other 3%

Life business 53%

Short-term insurance* 17%

Investment management

14%

Credit & banking 8%

Admin, health & other 8%

* General insurance

UBS conference 2014

SA Traditional 98%

Namibia 2%


growth markets delivering value


Net VNB – 1H03 (R100m) Net VNB – 1H14 (R626m)

SA Traditional 55%

SA Entry-level 22%

Namibia 4%

Botswana 8%

Rest of Africa 8%

Other international 3%

UBS conference 2014

SA Traditional 98%

Namibia 1%


SA Traditional 65%

SA Entry-level 11%

Namibia 5%

Botswana 4%

Rest of Africa 2%

India/Malaysia 7%

Other International 6%

SA Traditional 65%

SA Entry-level 11%

Namibia 5%

Botswana 5%

Rest of Africa 1%

India/Malaysia 7%


Contribution to group net operating profit

increasing contribution from growth markets to operating profit



1H03 – R756 million 1H13 – R2 409 million 1H14 – R3 461 million

UBS conference 2014

investment opportunities

filling the gaps


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 ●

Zambia African Life Assurance NICO Insurance African Life Financial Services Letshego

Cavmont ●

Direct presence Indirect presence via associated company l Holding Co., Properties, Employee Benefits, Funeral

UBS conference 2014


markets with potential – life insurance


GD

P g

row

th

UBS conference 2014


markets with potential – general insurance


GD

P g

row

th

capital efficiency

doing more on the same base

UBS conference 2014

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 and India

optimising capital base

capital efficiency

capital efficiency

UBS conference 2014

capital efficiency

capital redeployed since 2005

capital efficiency

-

5 000

10 000

15 000

20 000

25 000

30 000

35 000

Capital released Capital deployed

Discretionary capital

South Africa

Developed markets

Emerging markets

Share buy back/special dividend

UBS conference 2014

capital efficiency

composition of GEV transformed since 2005

capital efficiency

-

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

100 000

GEV 2005 GEV Jun 2014

Discretionary capital

Other capital

Non-life operations

Value of in-force

Life Required Capital

growing shareholder

value

consistent performance

UBS conference 2014

Out perform cumulative growth target of long-bond rate + 400bps since

listing

rogev versus target

growing shareholder value

0

200

400

600

800

1000

1200

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Target Cost of Capital (RFR + 300bps) Actual

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