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Interim results June 2000

Interim results June 2000. Highlights. + 22% + 23% +58% + 3% + 121%. New business Value of new business Bancassurance new business Claims & policyholder benefits Net c ash flow from insurance operations. Highlights. + 10% +3% + 22%. EPS and DPS Embedded value

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Interim results June 2000

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  1. Interim results June 2000

  2. Highlights + 22% + 23% +58% + 3% + 121% New business Value of new business Bancassurance new business Claims & policyholder benefits Net cash flow from insurance operations

  3. Highlights + 10% +3% + 22% EPS and DPS Embedded value Sale of interest in Liberty International – premium

  4. Revenue earnings –Continuing operations 30.6.00 (Rm) 30.6.99 (Rm) % Change Life fund operating surplus Revenue earnings – shareholders’ funds Headline earnings Headline EPS (cents) DPS (cents) 516 204* 720 265,9 133,0 519 133 652 242,7 120,9 (1) 54 10 10 10 * Includes interest R122m

  5. Net cash inflows ofinsurance operations 30.6.00 (Rm) 30.6.99 (Rm) % Change Single premiums Recurring premiums Total premiums Claims & policyholder benefits Net cash flow 3119 2799 5918 4861 1057 2665 2514 5179 4700 479 17 11 14 3 121

  6. New business % Change Total Recurring Single Index Present value of profits +22 +25 +21 +24 +23 Reasons: Product innovation Growth in sales force Bancassurance (no longer vulnerable)

  7. Agency headcount1995 – June 2000 1592 1310 1135 970

  8. Bancassurance 30.6.00 (Rm) 30.6.99 (Rm) %Change New business premiums ex Stanbic 632 400 58 • Number of funeral policies in-force – 120 000 • Funeral policies* +100% • Loan protection policies* +41% • Improved penetration of banking customer base, but slower than we plan for • * Period 1 January 2000 – 30 June 2000

  9. Note: Main portfolios in first quartile of performance Life fund operating surplus –Investment returns JSE All Share % Liberty Equity % 1999 – first half 2000 – first half 1999 – second half 2000 – second half +31,6 -8,7 +22,6 ? +30.1 -4,6 +26,7 ?

  10. Taxation 30.6.00 (Rm) 30.6.99 (Rm) Life fund Corporate Secondary tax 125 35 29 189 14 5 25 44

  11. Embedded value 30.6.00 (Rm) 31.12.99 (Rm) % Change Shareholders’ funds Value of life business in force Adjustment to financial services subsidiaries Value per share (R) 8979 4395 881 14255 52,63 9092 4756 n/a 13848 51,25 (1,2) (7,6) 2,9 2,7

  12. Present value of new business profits 30.6.00 (Rm) 30.6.99 (Rm) % Change Value of new business 208 169 +23 • Notes: • Calculated on new tax basis • Comparative figure not restated for increased LIBAM charges • Margins maintained

  13. Financial servicessubsidiaries • Libam operating profit up from R7 million toR29 million • Positive inflow to unit trusts up to R1363 million from R227 million • Healthcare membership lower than target at 18 815 principal members – costs managed accordingly

  14. Shareholders’funds 30.6.00 (Rm) 31.12.99 (Rm) 996 2628 1 933 330 – 365 5 355 2 790 – 1 559 (1 531) 2 537 8 979 956 4700 2 482 688 1 235 295 3 436 2 096 646 – (1 557) 2 251 9 092 Financial services activities Listed investments • SAB • Metro • Liberty International • Other Other investments • Cash • Due iro GNI • Proceeds of Liberty International • Convertible bond (net of cash) • Other TOTAL

  15. Sale of interest in Liberty International • In line with focus on financial services • Premium to market price achieved - 22% • Negative gearing on convertible bond eliminated • Bond payable September 2004 (Rm) 1 807 • Cash held offshore 1 811

  16. Summary of cash position R billion 2,79 1,81 4,60 1,50 0,87 2,37 For shareholders • South Africa • Offshore • Security for convertible bond For policyholders – ex sale of Lib Int • Remitted to South Africa • Held offshore

  17. Progress with strategies • Deployment of capital • Disposal of interest in Liberty International • Options for deployment of cash resources being evaluated “with discipline” • Focusing on core financial services • Focus on upper income market • Satisfactory new business volumes from this market segment

  18. Progress with strategies • Leverage LIBAM’s research • Innovative and successful products brought to the market and planned • Expanding product range for Liberty and Liberty Unit Trust • Expand corporate benefits • New business up 85%

  19. Progress with strategies • Achieve critical mass in Liberty Healthcare • The healthcare environment has become restrictively regulated • Future profits dependant on regulatory certainty • Acquire distribution for emerging market • Strengthened bancassurance relationship will be prime channel for access to the emerging market

  20. Progress with strategies • Structures to deliver offshore products • New structures to enhance offshore products are being implemented • Develop an e-commerce offering • MyLife.co.za to be launched in September 2000

  21. Prospects • FSV profits for the second half of the year are dependant upon the performance of the investment markets • Revenue earnings on shareholders’ funds are dependant upon deployment of cash • Embedded value is also geared to investment markets

  22. Conclusion • Good progress on issues under management control • New business • Bancassurance • Management of in-force business • CRM and customer service • Relative investment performance • Recruitment

  23. Conclusion • Focus on financial services further improved • Employment of capital a priority • Ready for upturn in markets

  24. Questions

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