involvement with Saambou Holding Limited ("Saambou")
Investec Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1925/002833/06)
Share code: INT ISIN code: ZAE 000012555
("Investec")
Further information relating to Investec Group Limited's ("Investec")
involvement with Saambou Holding Limited ("Saambou")
Following the acquisition by Investec of the financial and life assurance
businesses from Fedsure Holdings Limited ("Fedsure"), Investec has played a
custodial role in respect of the Fedsure life funds' investment in Saambou.
Subsequent to concluding a reinsurance agreement on the Fedsure Individual
Life policies with Capital Alliance Limited ("CAL") (effective 1 June 2001)
in terms of which 3.2% of the total issued share capital of Saambou was
transferred to CAL, the total exposure of the Fedsure life funds to Saambou
was 64 636 452 shares, equivalent to 35.5% of the undiluted number of shares
currently in issue.
Towards the latter part of 2001, an exercise to restructure the assets
supporting the portfolios within the Fedsure main life fund was embarked
upon so as to achieve a more direct matching of assets with policyholders'
liabilities. This culminated in a more defined split between shareholders
and policyholders' portfolios with effect from 31 December 2001, final
implementation of which is currently nearing completion. This restructure
resulted in 7 257 679 Saambou shares being allocated to the shareholders'
portfolio at 31 December 2001 at the ruling price of 450 cents per share.
Against this background, the total return generated on the Fedsure main life
fund's assets from 1 October to 31 December 2001 was 1.89% over the quarter.
This return recognizes the value of the Saambou shares at 450 cents as at 31
December 2001.
In relation to the 57 378 773 Saambou shares retained in the policyholders'
portfolios at 31 December 2001, these shares are held in the "Guaranteed"
and "Group With Profits Annuity" portfolios in such a way that
policyholders' capital and guaranteed return are not reliant on the
performance of the Saambou shares, obviating any future potential transfer
from shareholders assets to policyholder portfolios to satisfy these
policyholder liabilities.
In the absence of an actuarial valuation as at 31 December 2001 coupled with
the fact that the restructuring exercise had not been completed by that
date, it is impossible to determine the portion of the total return of the
main life fund attributable to shareholders over the three month period.
However, assuming a nil value ascribed to Saambou under the worst case
scenario, Investec could suffer a maximum loss of R 32.6 million in respect
of its shareholding in Saambou held via the Fedsure life fund from December
2001. This clearly excludes any revaluations that could take place of the
other investments in the balance of the shareholders' portfolio post
December 2001 and should accordingly not be viewed in isolation thereof.
Aside from the equity investment, Investec has an interbank call line which
is fully utilized to Saambou of R50 million. Should any amount of this line
not be recovered following the curator's attempts to do so, Investec's
general provisions would adequately cover the exposure.
Sandton
13 February 2002
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