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COMPANY'S ANNUAL GENERAL MEETING ON MONDAY 12 AUGUST 2001
AFRICAN LIFE ASSURANCE COMPANY
("Registration number: 1911/003818/06
Share Code: AFL
ISIN Code: ZAE000000253
Shareholders are advised of feedback given to those attending the Company's
Annual General Meeting on Monday 13 August 2001.
South African Life Operations
Persal
Access to Persal payroll deductions for new business resumed in July. Total
deductions for insurances will not be allowed to exceed 15% of salary.
Rationalisation of existing policy deductions in excess of 15% will continue
for some months. Industry and company plans are in place to ensure
rationalisation proceeds efficiently and effectively. Detailed feedback on
progress by African Life will be given at the half-year.
Orfeo
The migration from our legacy insurance administration system, ALIS, to the
new system Orfeo, is progressing according to timetable and within budget.
Orfeo is expected to contribute significantly to improved customer service
levels and reduced unit costs.
Performance
New business performance for the quarter exceeded budget but was 15% below
that of first quarter, previous year, which had enjoyed full new business
access to Persal payroll deductions. The remaining nine months of F2002
will have Persal access compared to one month of the corresponding period in
F2001.
Persistency levels remained at similar levels to that at F2001 year-end. The
exact impact of Persal rationalisation is unclear at this stage, but
shareholders are reminded of the R82m Persal rationalisation reserve created
in response to the likely impact of rationalisation on persistency and other
factors.
Costs are within budget and marginally up on Q1 F2001.
Single premium business is below budget and Q1 F2001 in a tough and
competitive environment for Guaranteed Plans at current rates.
Health (Ingwe HPO)
Minorities
During the quarter, the acquisition of the Ingwe minority shareholding was
finalised. The 40% was acquired for R20,8m which places a value of R52m on
the company as a whole. The acquisition represents a vote of confidence in
Ingwe's future prospects. Key management remains in place.
Performance
Good sales growth reflects excellent market acceptance of the Ingwe product.
Cumulative member months are below an aggressive budget but are expected to
catch up before year-end. Costs are correspondingly under budget. Whilst a
profit contribution is expected in F2002, the establishment of Ingwe as the
dominant player in its market remains the current priority.
International
Botswana
Botswana Life has continued the trend of the previous year with strong new
business growth, reduced unit costs and satisfactory persistency levels.
Botswana Insurance Fund Management (BIFM) experienced a fairly quiet
operational quarter but enjoyed good investment performance domestically.
Namibia
Although an important contributor to International's growth, Namlife is not
contributing to its full potential. Action is being taken to remedy this
situation.
Kenya (Pan Africa)
The Kenyan Life operation is enjoying rapid growth in sales, albeit off a
small base. Market acceptance of the funeral product, unique to Kenya, has
been remarkable and already contributes over 30% of monthly sales. Our
successful efforts to implement good corporate governance in Pan Africa drew
media attention and resulted in a significantly changed Board of Directors.
Pan Africa is expected to be a material group profit contributor from F2004.
Ghana (Enterprise)
Our new insurance administration system, Orfeo was implemented, on schedule,
in July in Ghana. A licence issued by the Insurance Commission is expected
by the end of August.
CONCLUSION
Whilst the first half of F2002 will continue to reflect the impact on new
business and persistency of 12 months of no new business access to Persal in
South Africa, early signs of recovery in the Group are visible.
24 August, 2001
Johannesburg
Sponsor:
Deutsche Securities (SA) (Proprietary) Limited
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