Investec Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1985/005574/06)
("Inhold")
Share Code : INH
ISIN Code : ZAE000003562
Investec Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1925/002833/06)
("Investec")
Share Code : INT
ISIN Code : ZAE000012555
ANNOUNCEMENT RELATING TO THE REINSURANCE OF FEDSURE LIFE ASSURANCE LIMITED
("FEDLIFE") INDIVIDUAL LIFE BUSINESS BY CAPITAL ALLIANCE LIFE LIMITED
("CAL")
Introduction
Inhold and Investec shareholders are referred to the CAL announcement
appearing elsewhere in this publication which refers to the fact that
agreement has been reached in terms of which CAL has, with effect from 31
May 2001 ("the effective date"), reinsured all the individual life policies
(other than certain specified contracts) issued by Fedlife which are in
force as at the effective date as well as all individual life policies that
will be issued by Fedlife from the effective date until 31 August 2001 ("the
reinsurance transaction").
2. Rationale
Investec has historically enjoyed a close relationship with CAL, having
played a part in its formation and development as well as managing its
assets.
The reinsurance transaction essentially enables each party to focus on its
core strengths. By shedding that part of the Fedlife individual life
portfolio which is administratively intensive, Investec can concentrate on
offering higher value products and services to its target client base.
Similarly, CAL's back-office core competencies and proven policy
administration expertise will be leveraged for the benefit of both
policyholders and shareholders.
3. The reinsurance agreement
CAL will assume liability for all the risks covered by the individual life
business, and shall, subject to the reinsurance agreement, be liable for all
insurance obligations accepted under the policies covered. In addition, CAL
will administer the individual life business in terms of an administration
agreement.
4. Financial effects
The transfer by Fedlife of R11.2 billion of assets and liabilities to CAL in
terms of the reinsurance agreement will have the effect of releasing Fedlife
reserves of R620 million (618.2 cents per Investec share) and converting
this in force value into tangible net asset value.
5. CAH rights offer
Capital Alliance Holdings Limited ("CAH") will raise approximately R517,5
million before expenses by way of a renounceable rights offer of
approximately 45 million shares at 1 150 cents per share. Investec has
received irrevocable undertakings from CAH shareholders holding in excess of
50% of the issued share capital of CAH that they will renounce, in favour of
Investec, their rights in terms of the rights offer in order to enable
Investec to increase its shareholding in CAH.
Investec has underwritten the subscription of all of the rights shares to be
issued in terms of the rights offer.
Johannesburg
27 August, 2001
Merchant bank
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Legal adviser
Jowell, Glyn & Marais Inc
(Registration number 1990/000849/21)
Sponsor
Investec Securities Limited
Member of the JSE
(Registration No. 1972/008905/06)
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