|
Project costs
In determining the value of in-force business, the value of future expenses in
respect of certain planned projects that focus on both administration and
distribution aspects of the life insurance business, is deducted. These projects
are of a short-term nature, although similar projects may be undertaken from
time-to-time. No allowance has been made for anticipated future productivity
gains.
Where appropriate, special development costs that relate to investments in the
Group`s distribution platform are not allowed for in the projections. These
costs are included in embedded value earnings from life operations as they are
incurred.
Taxation
Projected tax is based on current tax legislation and rates, except where future
changes in tax legislation or rates have been announced.
Allowance has been made for the impact of capital gains tax on investments in
South Africa, other than investments in Group subsidiaries. The assumed
rollover period for realisation of these investments is five years.
Allowance is made for STC by placing a present value on the tax liability
generated by the net cash dividends paid that are attributable to life insurance
business. It is assumed that all future dividends will be paid in cash.
GROUP EMBEDDED VALUE at 30 June 2007
June December
Reviewed Reviewed Audited
2007 2006 2006
Note R million R million R million
Group shareholders`
fund atfair value 38 737 32 006 37 491
Reverse goodwill and value of
life business acquired (1 510) (1 395) (1 425)
Merchant Investors (356) (356) (356)
African Life (934) (936) (955)
Channel Life (88) (81) (91)
Goodwill included in carrying
value of Shriram Life (105) - -
Other (27) (22) (23)
Shareholders` fund adjustments (1 664) (1 594) (1 518)
Present value of holding company
expenses 1 (760) (924) (667)
Fair value of outstanding equity
compensation shares (878) (618) (772)
Other (26) (52) (79)
Group shareholders` adjusted
net assets 35 563 29 017 34 548
Net value of life insurance business
in-force 2 13 063 11 201 12 263
Value of life insurance business
in-force 15 713 13 312 14 746
Sanlam Personal Finance 12 840 10 769 12 010
Sanlam Developing Markets 1 922 1 535 1 762
Sanlam Employee Benefits 951 1 008 974
Cost of capital at risk (2 199) (1 800) (2 115)
Sanlam Personal Finance (1 614) (1 402) (1 582)
Sanlam Developing Markets (155) (115) (142)
Sanlam Employee Benefits (430) (283) (391)
Minority shareholders` interest
in net value of in-force (451) (311) (368)
Sanlam Personal Finance (83) (46) (51)
Sanlam Developing Markets (368) (265) (317)
Sanlam Employee Benefits - - -
Group embedded value 48 626 40 218 46 811
Embedded value per share (cents) 2 188 1 750 2 047
Number of shares (million) 2 222 2 298 2 287
GROUP RETURN ON EMBEDDED VALUE for the six months ended 30 June 2007
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million Note Value Adjusted
of in- net
force assets Total Total Total
Embedded value from new
life insurance business 667 (407) 260 172 434
Earnings from existing
life insurance business (256) 1 259 1 003 622 1 717
Expected return on value of in
-force business 768 - 768 624 1 256
Expected transfer of profit to adjusted
net assets (1 041) 1 041 - - -
Operating experience
variations 3 2 221 223 32 277
Operating assumption
changes 15 (3) 12 (34) 184
Development
expenses 4 - (31) (31 - -
Embedded value earnings from
life operations 411 821 1 232 794 2 151
Economic assumption
changes 5 (122) 4 (118) (160) (5)
Tax changes 6 283 2 285 102 47
Investment variances 292 (54) 238 485 1 015
Exchange rate movements 9 - 9 100 119
Change in minority interests in
growth from life
business (78) (55) (133) (26) (76)
Growth from life insurance
business 795 718 1 513 1 295 3 251
Investment return on shareholders`
adjusted net assets - 3 828 3 828 3 383 8 345
Non-life operations - 2 830 2 830 1 512 4 359
Balanced portfolio - 1 302 1 302 1 963 3 954
Shriram goodwill less VIF
acquired - (103) (103) - -
Treasury shares
and other - (201) (201) (92) 32
Change in adjustments to net
worth - (146) (146) 41 116
Total embedded value
earnings 7 795 4 400 5 195 4 719 11 712
Acquired value
of in-force 5 (5) - - -
Dividends paid - (1 771) (1 771) (1 535) (1 535)
Shares cancelled - - - (1 036) (1 644)
Cost of treasury shares
acquired - (1 609) (1 609) (134) 74
Sanlam share buy back - (1 446) (1 446) - -
Share incentive scheme
and other - (163) (163) (134) 74
Change in Group embedded
value 800 1 015 1 815 2 014 8 607
Annualised growth from life insurance business as a % of beginning value of in-
force 26,1% 26,0% 30,7%
Annualised return on embedded value 23,4% 26,2% 30,7%
Annualised return on embedded value per share 22,7% 26,6% 31,0%
Analysis of return on embedded value (ROEV):
June 2007 June 2006 December 2006
Reviewed Reviewed Audited
EV ROEV EV ROEV EV ROEV
R million % R million % R million %
Non-life
operations 2 830 21,4 1 512 15,6 4 359 44,9
Life cluster 136 12,9 223 33,4 303 45,4
Santam 1 393 24,8 (324) -6,8 1 043 22,0
Investment
Management 995 18,6 1 433 44,4 2 711 84,0
Sanlam Capital
Markets 140 35,0 50 12,5 141 35,3
Independent Financial
Services 166 26,6 130 25,7 161 31,9
Balanced portfolio 1 302 5,7 1 963 10,0 3 954 20,2
Shriram goodwill less
VIF acquired (103) - -
Treasury shares and
Other (201) (92) 32
Change in shareholders`
fund adjustments (146) 41 116
Shareholders` adjusted
net assets 3 682 10,7 3 424 12,4 8 461 30,6
Growth from life insurance
business 1 513 12,3 1 295 12,2 3 251 30,7
Value of new life
business 260 2,1 172 1,6 434 4,1
Existing life
business 1 003 8,2 622 5,9 1 717 16,2
Expected return 768 6,3 624 5,9 1 256 11,9
Operating experience
variations 223 1,8 32 0,3 277 2,6
Operating assumption
changes 12 0,1 (34) -0,3 184 1,7
Adjustments 414 3,4 527 5,0 1 176 11,1
Investment variances
and exchange rate
differences 247 2,0 585 5,5 1 134 10,7
Economic assumption
changes (118) -1,0 (160) -1,5 (5) 0,0
Tax changes 285 2,3 102 0,9 47 0,4
Development
expenses (31) -0,3 - - - -
Minority interests in
value of in-force (133) -1,1 (26) -0,2 (76) -0,7
Return on embedded
value 5 195 11,1 4 719 12,4 11 712 30,7
VALUE OF NEW LIFE BUSINESS for the six months ended 30 June 2007
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
Note R million R million R million
Value of new life business (at point of sale)
Gross value of new life business 278 192 472
Sanlam Personal Finance 154 129 276
Sanlam Developing Markets 95 52 149
Sanlam Employee Benefits 29 11 47
Cost of capital at risk (18) (20) (38)
Sanlam Personal Finance (8) (7) (15)
Sanlam Developing Markets (7) (10) (15)
Sanlam Employee Benefits (3) (3) (8)
Net value of new life business 260 172 434
Sanlam Personal Finance 146 122 261
Sanlam Developing Markets 88 42 134
Sanlam Employee Benefits 26 8 39
Net value of new life business attributable to:
Shareholders` fund 222 149 379
Sanlam Personal Finance 145 121 259
Sanlam Developing Markets 51 20 81
Sanlam Employee Benefits 26 8 39
Minority interests 38 23 55
Sanlam Personal Finance 1 1 2
Sanlam Developing Markets 37 22 53
Sanlam Employee Benefits - - -
Net value of new life business 260 172 434
Geographical analysis:
South Africa 202 141 346
Africa 52 30 84
Other international 6 1 4
Net value of new life business 260 172 434
New business profitability
Before minority shareholders` interest
Present value of new business
premiums 8 11 214 9 485 20 308
Sanlam Personal Finance 7 438 6 373 13 735
Sanlam Developing Markets 2 010 1 426 3 107
Sanlam Employee Benefits 1 766 1 686 3 466
Life new business margin 2,3% 1,8% 2,1%
Sanlam Personal Finance 2,0% 1,9% 1,9%
Sanlam Developing Markets 4,4% 2,9% 4,3%
Sanlam Employee Benefits 1,5% 0,5% 1,1%
After minority shareholders` interest
Present value of new business
premiums 8 10 535 8 991 19 426
Sanlam Personal Finance 7 390 6 302 13 663
Sanlam Developing Markets 1 379 1 003 2 297
Sanlam Employee Benefits 1 766 1 686 3 466
Life new business margin 2,1% 1,7% 2,0%
Sanlam Personal Finance 2,0% 1,9% 1,9%
Sanlam Developing Markets 3,7% 2,0% 3,5%
Sanlam Employee Benefits 1,5% 0,5% 1,1%
NOTES TO THE GROUP EMBEDDED VALUE RESULTS
for the six months ended 30 June 2007
1. Present value of holding company expenses
The present value of holding company expenses has been calculated by applying a
multiple of 7,2 to the projected full year after tax recurring corporate
expenses. From December 2006 corporate expenses include allowance for interest
earned on cash held in respect of the annual dividend between year-end and
actual payment date.
2. Sensitivity to risk discount rate at 30 June 2007
Gross value Net
of in-force Cost of value of Change
business capital in-force from
at risk business base
R R R value
million million million %
Net value of in-force business
Base value 15 216 (2 153) 13 063
* Increase risk discount
rate by 1,0% 14 303 (2 436) 11 867 -9
* Decrease risk discount
rate by 1,0% 16 246 (1 834) 14 412 10
Gross value Net
of new Cost of value of Change
business capital new from
at risk business base
R R R value
million million million %
Net value of new life business
Base value (after minorities) 237 15) 222
* Increase risk discount
rate by 1,0% 206 (17) 189 -15
*Decrease risk discount
rate by 1,0% 273 (14) 259 17
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
3. Operating experience variations
Risk experience 111 120 280
Group stabilised
business outflows (14) (77) (108)
Working capital and other 126 (11) 105
Total operating
experience variations 223 32 277
4. Development expenses
Development expenses relate to once-off expenditure on the Group`s distribution
platform that has not been allowed for in the embedded value assumptions.
5. Economic assumption changes
Investment yields and
inflation gap (80) (154) (51)
Long-term asset mix
assumptions (38) (6) 46
Total economic
assumption changes (118) (160) (5)
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
6. Tax changes
Change in policyholders`
fund tax rate 135 102 117
Reduction in STC rate
from 12,5% to 10% 150 - -
STC modeling changes
and other - - (70)
Total tax changes 285 102 47
7. Reconciliation of embedded value earnings
The embedded value earnings reconcile as follows to attributable earnings for
the year:
Normalised attributable earnings per
shareholders` fund
income statement 3 740 2 835 6 740
Earnings recognised
directly in equity 23 356 392
Net foreign currency translation
(losses)/gains (5) 311 318
Share-based payments 28 45 74
Movement in fair value adjustment -
non-life operations 1 236 1 020 2 876
Treasury shares and other (373) (92) 32
Earnings: shareholders`
fund at fair value 4 626 4 119 10 040
Movement in adjustments to shareholders`
Fund (226) - 19
Present value of holding company
expenses (93) 23 280
Fair value of share
incentive scheme (106) 175 21
Other shareholders`
fund adjustments 53 (158) (185)
Change in goodwill and VOBA adjustments
less VIF acquired (80) (40) (97)
Earnings: shareholders`
adjusted net assets 4 400 4 119 10 059
Growth from life business 795 600 1 653
Total embedded value earnings 5 195 4 719 11 712
8. Present value of new business premiums
The present value of new business premiums is based on the new life insurance
business as disclosed in note 1 of the shareholders` fund information, excluding
Sanlam Developing Markets white label new business.
June December
Reviewed Reviewed Audited
2007 2006 2006
% p.a. % p.a. % p.a.
9. Economic assumptions
Gross investment return, risk discount rate and inflation
Sanlam Life and Sanlam Life Namibia:
Fixed-interest securities 8,4 8,8 7,9
Equities and offshore investments 10,4 10,8 9,9
Hedged equities 8,4 8,8 7,9
Property 9,4 9,8 8,9
Cash 6,4 6,8 5,9
Risk discount rate 10,9 11,3 10,4
Return on capital at risk 7,6 9,1 7,1
Unit cost and salary inflation 4,9 5,3 4,4
Consumer price index inflation 4,9 4,3 4,4
Merchant Investors:
Fixed-interest securities 5,3 4,7 4,6
Equities and offshore investments 7,8 7,1 7,1
Hedged equities 7,8 7,1 7,1
Property 7,8 7,1 7,1
Cash 5,3 4,5 4,6
Risk discount rate 9,0 8,4 8,3
Return on capital at risk 5,3 4,7 4,6
Unit cost and salary inflation 3,9 3,0 3,5
Consumer price index inflation 3,9 3,0 3,5
African Life:
Fixed-interest securities 8,7 8,8 8,0
Equities and offshore investments 10,7 10,8 10,0
Hedged equities n/a n/a n/a
Property 9,7 9,8 9,0
Cash 6,7 6,8 6,0
Risk discount rate 11,2 11,3 10,5
Return on capital at risk 8,7 9,3 8,0
Unit cost and salary inflation 5,7 5,8 5,0
Consumer price index inflation n/a n/a n/a
Botswana Life Insurance:
Fixed-interest securities 10,5 12,0 11,0
Equities and offshore investments 12,5 14,0 13,0
Hedged equities 12,5 14,0 13,0
Property 11,5 13,0 12,0
Cash 8,5 10,0 9,0
Risk discount rate 14,0 15,5 14,5
Return on capital at risk 11,1 12,6 11,8
Unit cost and salary inflation 7,5 9,0 8,0
Consumer price index inflation n/a n/a n/a
June December
Reviewed Reviewed Audited
2007 2006 2006
% % %
9. Economic assumptions (continued)
Long-term asset mix for assets supporting the capital at risk
Sanlam Life and Sanlam Life Namibia:
Equities - 25 -
Hedged equities 20 35 20
Property - 5 -
Fixed-interest securities 50 20 50
Cash 30 15 30
100 100 100
Merchant Investors:
Equities - - -
Hedged equities - - -
Property - - -
Fixed-interest securities - - -
Cash 100 100 100
100 100 100
African Life:
Equities 50 50 50
Hedged equities - - -
Property - - -
Fixed-interest securities - 25 -
Cash 50 25 50
100 100 100
Botswana Life Insurance:
Equities 68 66 75
Hedged equities - - -
Property 8 3 1
Fixed-interest securities 14 31 24
Cash 10 - -
100 100 100
Note: The above life companies represent some 98% of the Group`s net value of
in-
force business at 30 June 2007.
Group secretary
Johan Bester
Registered office
2 Strand Road, Bellville 7530, South Africa
Telephone +27 21 947-9111
Fax +27 21 947-3670
Postal address
PO Box 1, Sanlamhof 7532, South Africa
Registered name: Sanlam Limited
(Registration number 1959/001562/06)
JSE share code: SLM
NSX share code: SLA
ISIN number: ZAE000070660
Incorporated in South Africa
Transfer secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
(Registration number 2004/003647/07)
70 Marshall Street, Johannesburg 2001,
South Africa
PO Box 61051, Marshalltown 2107, South Africa
Tel 086 1100 913
Fax +27 11 688-5201
www.sanlam.co.za
Directors: RC Andersen (Chairman), PT Motsepe (Deputy Chairman), J van Zyl
(Group Chief Executive), MMM Bakane-Tuoane, AD Botha, AS du Plessis, FA du
Plessis, WG James, MV Moosa, JP Moller, RK Morathi, SA Nkosi, I Plenderleith, M
Ramos, GE Rudman, RV Simelane, ZB Swanepoel, PL Zim
6 September 2007
Sponsor
JPMorgan Equities Ltd
Date: 06/09/2007 09:11:44 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
