Growing shareholder value

Transcription

1 Growing shareholder value UBS financial services conference 16 October 2014 Insurance Financial Planning Retirement Investments Wealth

2 agenda Strategic positioning South Africa Protecting the base Focus on profitable growth Operational efficiencies Investing for growth Capital efficiency Shareholder value creation

3 strategic positioning focussed on shareholder returns

4 Capital Efficiency Returns (ROGEV) Growth / Operational Efficiency strategic focus remains unchanged maximise shareholder return Net Business Flows Diversification Operational Efficiency Optimal Application Strategic Investments Return of Excess strategic positioning

5 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 Sourcing new growth opportunities Identification of core markets for growth & expansion Effective capital management strategic positioning

6 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 strategic positioning

7 south africa protecting and growing the base

8 core strategic objectives - SA adding growth to stable base South Africa Delivery of sustainable growth International Creating a platform for future growth Maximising return on Investment in existing business Efficient and effective management Sourcing new growth opportunities Identification of core markets for growth & expansion Effective capital management south africa

9 protecting the SA base consistent improvement in quality of in-force book 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 south africa

10 protecting the SA base focus on quality driving persistency improvement Persistency SA middle-income market Lapses, surrenders & fully paid-ups as % of in-force per half year 5% 4% 3% 4.8% 4.2% 4.2% 3.9% 4.0% 3.9% 3.8% 3.9% 3.8% 3.6% 3.7% 3.6% 3.4% 3.4% 3.0% 2.9% 2.9% 2.8% 2.9% 2.8% 2.9% 2.9% 2.7% 2% 1% 0% H1 H2 south africa

11 protecting the SA base focus on quality driving persistency improvement Persistency SA lower income market Number of NTUs, lapses and surrenders as % of in-force 30% 27.6% 25% 20% 15% 10% 15.2% 17.5% 16.8% 14.1% 14.5% 12.7% 12.7% 11.4% 11.1% 11.1% 10.4% 11.0% 10.0% 11.3% 5% 0% H1 H2 south africa

12 focus on profitable growth pure focus on market share destroys value over longer term SA VNB grew by 17% per annum since 2006 growing contribution from Sanlam Sky % % 2.2% 1.7% 1.2% 0.7% 0.2% % Value of new business Margins - rhs south africa

13 operational efficiencies experience variances Focus on quality, costs + prudence = consistent positive experience % % 4.0% % % % % % 1.0% 0.5% H14 0.0% R'million % of VIF (rhs) south africa

14 investing for growth sustainable value creation

15 core strategic objectives ex SA Rest of Africa, India, SE Asia identified as 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 Sourcing new growth opportunities Identification of core markets for growth & expansion Effective capital management

16 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 Developed Markets Emerging Markets - Direct presence Emerging Markets - Indirect presence investing for growth

17 % of GDP the growth opportunity life insurance penetration in growth markets 11.4% 5.4% Global average: 3.7% 1.9% 0.9% 1.1% 0.5% 0.4% 2.5% 2.8% BRIC average: 1.9% 0.1% 0.2% 0.1% South Africa Namibia Botswana Malawi Kenya Ghana Zambia Tanzania Nigeria Uganda India Malaysia Source: Swiss Re and AXCO investing for growth

18 contribution of growth markets accelerated growth in VNB and margins Gross VNB grew by 19% per annum since South Africa Africa Other International Margins - rhs 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% investing for growth

19 contribution of growth markets diversified earnings base provides growth and stability Group Equity Value Net operating profit Credit & banking 8% Admin, health & other 8% Credit & banking 14% Admin, health & other 3% Investment management 14% Investment management 13% Short-term insurance* 17% Life business 53% Short-term insurance* 13% Life business 57% * General insurance investing for growth

20 contribution of growth markets growth markets delivering value Net VNB 1H03 (R100m) Net VNB 1H14 (R626m) Namibia 2% Botswana 8% Rest of Africa 8% Other international 3% Namibia 4% SA Traditional 98% SA Entry-level 22% SA Traditional 55% investing for growth

21 contribution of growth markets increasing contribution from growth markets to operating profit Contribution to group net operating profit 1H03 R756 million 1H13 R2 409 million 1H14 R3 461 million Namibia 1% Other internation 1% India/Malaysia 7% Rest of Africa 2% Botswana 4% Namibia 5% Other International 6% India/Malaysia 7% Rest of Africa 1% Botswana 5% Namibia 5% Other international 6% SA Traditional 98% SA Entry-level 11% SA Traditional 65% SA Entry-level 11% SA Traditional 65% investing for growth

22 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 Holding Co., Properties, Employee Benefits, Funeral investing for growth

23 GDP growth investment opportunities markets with potential life insurance investing for growth

24 GDP growth investment opportunities markets with potential general insurance investing for growth

25 capital efficiency doing more on the same base

26 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 and India capital efficiency

27 capital efficiency capital redeployed since Discretionary capital South Africa Developed markets Emerging markets - Capital released Capital deployed Share buy back/special dividend capital efficiency

28 capital efficiency composition of GEV transformed since GEV 2005 GEV Jun 2014 Discretionary capital Other capital Non-life operations Value of in-force Life Required Capital capital efficiency

29 growing shareholder value consistent performance

30 rogev versus target Out perform cumulative growth target of long-bond rate + 400bps since listing Target Cost of Capital (RFR + 300bps) Actual growing shareholder value

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