| Wed 27 Mar 2002, 0:00 | | New Africa Capital - Group Results For The Year |
|
Alpha code - NAC
ISIN number - ZAE 000033361
Positives outweigh negatives for New Africa Capital
Despite a recent profit warning, New Africa Capital, the holding company for
all the Metropolitan businesses, has announced results for the financial
year ended 31 December 2001 that reveal the financial services group has
good reason to believe that its drop in headline earnings is of a temporary
nature only.
Commenting on New Africa Capital's overall performance, chief executive
Peter Doyle expressed himself well satisfied with most of the vital aspects
of the group's current financial status - although less than pleased with
its results in respect of earnings.
Most importantly, however, he is optimistic about the future. "The need for
remedial action in certain areas does not alter the fact that the
foundations on which our success has been built are rock solid. We
implemented a number of fundamental changes to our business model during
2001 and believe that these changes, together with other projects still in
the planning stages, will soon begin to bear fruit.
"Once the benefits of corrective steps taken by New Africa Capital as a
whole, and by Metropolitan Life and the Metropolitan Health Group in
particular, start flowing through, I have every confidence that growth in
earnings will be resumed," says Doyle.
"For me, one of the clearest pointers to the inherent financial strength and
stability of the group is our enviable cash flow position, with inflows
exceeding outflows by more than R4 billion over the past twelve months.
"That this is true of all the continuing businesses within New Africa
Capital (ie excluding Commercial Union Life, which is a closed book) is also
a source of great satisfaction to us," comments Doyle.
Further evidence of the group's financial soundness is that its excess of
assets over liabilities remained at
R6 billion despite the tough trading conditions during 2001. This means that
New Africa Capital's capital adequacy requirement (CAR) is covered 4.3 times
compared to the statutory requirement of an excess of 1 times CAR, and the
recommended prerequisite of at least 2 times CAR.
While acknowledging that the road ahead would not be without its challenges
as a result of the reduction in headline earnings for 2001, the directors
declared a dividend indicative of renewed growth expectations in years to
come.
"The policy of the group is to declare dividends that reflect the
anticipated longer term growth in earnings while allowing the dividend cover
to fluctuate. As a board, it is our conviction that New Africa Capital is
headed in the right direction thanks to the new initiatives launched during
the past year. We believe that progress will continue to be made as
evidenced by the 13% increase in the dividend that we have declared, up from
31 cents to 35 cents per share," says group chairman Gloria Tomatoe Serobe.
Given that the prior reporting period comprised 15 months due to a change in
Metropolitan's year-end, all quoted percentage changes are based on the
actual figures for the year ended 31 December 2000, or on an annualised
equivalent where the actual is not available.
New Africa Capital reported a sharp 41% reduction in the full year earnings
before tax from Metropolitan Life, the individual life insurance business
that has historically been the main profit driver for the group, down to
R137 million from R291 million for the previous 15 month period. The second
half-year earnings before tax from the Metropolitan Health Group were also
less than those for the first six months, with full- year earnings before
tax of R18 million compared with R24 million for the 15 months to December
2000.
Nevertheless, New Africa Capital's embedded value per share not only
remained intact but increased by 6% from 1 018 cents in 2000 to 1 079 cents
in 2001.
As group finance director Preston Speckmann points out "both Metropolitan
Employee Benefits and Metropolitan Asset Managers continued to show strong
growth in their contributions to pre-tax earnings, up 28% and 62%
respectively. Yet again this demonstrates the wisdom of our decision, taken
some ten years ago, to diversify our sources of profit."
Most industry commentators regard embedded value - which comprises the
adjusted net asset value of a company plus the value of the insurance
business already on its books, known as the value of in-force business
(VOIF) - as the most important indicator of the intrinsic value of a life
assurer. "At New Africa Capital we succeeded in growing the value of our in-
force business by a commendable 7% under testing circumstances," comments
Speckmann.
Turning to new business, the group announced that it was in receipt of R938
million in total annual premium equivalent
CAPE - recurring premiums plus 10% of single premiums) compared to
R930 million the previous year (annualised). The value added by new business
written by the various life insurance subsidiaries within the group was R25
million (2000: R98 million), with an additional R129 million (2000: R46
million) coming from the non-insurance companies.
Total premium income from continuing operations increased by 27% to R6.65
billion (2000: R5.25 billion), with total recurring and total single premium
income from the same source up 7% and 66% respectively.
Total assets under management by New Africa Capital rose 17% from R36
billion in 2000 to R 42 billion in 2001, while total on-balance sheet
assets, at R34 billion, were also 17% higher than the previous year's R29
billion.
Looking at continuing operations once again, benefits paid to policyholders,
including individual policy surrenders, scheme member withdrawals and scheme
terminations - all of which rose steeply due to the unfavourable economic
climate - only increased by a modest 16% to R3.29 billion (2000: R2.83
billion).
Although administration expenses, at R665 million (2000: R562 million) were
18% up, most of the extra expenditure was incurred via the new initiatives
aimed at improving the longer term performance of the group, which means
that it was of a once-off as opposed to an ongoing nature," says Speckmann.
Doyle confirms that key changes already implemented by the group, including
a strong focus on reducing the fixed base of acquisition costs, complemented
by other strategic plans still on the drawing board, should boost both the
quantity and quality of new business generated, to the advantage of all
stakeholders.
"New Africa Capital's blueprint for increasing prosperity into the future
centres around raising our productivity and profitability levels, as already
indicated. We will at the same time continue to strive for improved capital
management, thereby enhancing our return on embedded value.
"The challenge facing the board and executive management team is to work
together with stakeholders - especially the shareholder grouping which
includes the majority of our staff - towards accelerating a re-rating of our
share price. We are intent on moving it steadily closer to and ultimately
above the group's embedded value per share," is how Doyle sums up.
end
ISSUED BY SUE SNOW
FINANCIAL MEDIA SPECIALIST
NEW AFRICA CAPITAL
TEL 021 9406119 OR 0833009745
DATE 27 MARCH 2002
QUERIES PETER DOYLE
GROUP CHIEF EXECUTIVE
NEW AFRICA CAPITAL
TEL 021 9405681 OR 0828802690
PRESTON SPECKMANN
GROUP FINANCE DIRECTOR
NEW AFRICA CAPITAL
TEL 021 9406634 OR 0832856454
TYRREL MURRAY
GENERAL MANAGER: GROUP FINANCE
NEW AFRICA CAPITAL
TEL 021 9405083 OR 0828892167
NEW AFRICA CAPITAL
Group results for the year ended 31 December 2001
Embedded value grows to R10.79 per share
Restructuring of group and unbundling from NAIL completed
Positive cash flow of R4.2 billion
Total premium income from continuing operations up by 27%
Excess of assets over liabilities of R6 billion
Increase in Metropolitan Employee Benefits premium income of 30%
DIRECTORS' STATEMENT
The directors take pleasure in presenting the audited, unqualified annual
financial statements of the New Africa Capital Financial Services Group for
the year ended 31 December 2001.
The consolidated financial statements are prepared in accordance with the
provisions of the South African Companies Act and the Long-term Insurance
Act and comply with South African Statements of Generally Accepted
Accounting Practice; guidelines issued by the Actuarial Society of South
Africa; and the disclosure requirements of the JSE Securities Exchange of
South Africa.
Group reorganisation
This is the first annual report for the New Africa Capital group. On 6
August 2001 a scheme of arrangement between Metropolitan Life Limited and
its shareholders was announced. The objective of the scheme was to create a
new financial services group through the establishment of New Africa Capital
Limited as the listed holding company for the Metropolitan businesses. On
implementation of the scheme, New Africa Capital became the beneficial owner
of the entire issued share capital of Metropolitan Life Limited with effect
from 1 January 2001. New Africa Capital Limited was listed on the JSE
Securities Exchange South Africa on 21 September 2001 in place of
Metropolitan Life Limited.
The scheme of arrangement was accounted for as a reverse acquisition in
terms of AC131 (business combinations) as this reflects the essence of the
transaction more appropriately than the purchase method.
Metropolitan Life Limited declared a dividend in specie of R1 839 million to
New Africa Capital Limited, transferring certain shareholder assets to the
new holding company in November 2001.
Presentation of financial statements
The consolidated financial statements are prepared on the fair value and
going concern bases. As a result of the group's change in year-end from 30
September to 31 December in the prior period, the comparative figures, being
the results published for the 15 months to 31 December 2000, are not
necessarily comparable to the current year-end results.
Actual results for the year ended 31 December 2000 have been included in the
tables where appropriate and percentages quoted have been based on actuals
for 2000 or an annualised equivalent of the 15 month period as applicable.
The principal accounting policies applied are consistent with those of the
prior period, with the exception of new accounting policies adopted in order
to comply with new Statements of Generally Accepted Accounting Practice.
New Statements of Generally Accepted Accounting Practice
In terms of the requirements of AC107 (events after the balance sheet date)
dividends proposed or declared after the balance sheet date, and the related
secondary tax on companies (STC), are not recognised as a liability at the
balance sheet date. The final dividend of R135 million (19.50 cents per
share), declared on 26 March 2002, will give rise to an estimated STC charge
of R15 million. Similarly, no provision has been made for audit fees of R3
million. Since the effect of these changes is evident from the financial
statements, they have not been retrospectively applied and the comparative
figures have therefore not been restated.
Early application of new Statements of Generally Accepted Accounting
Practice
In terms of the requirements of AC133 (financial instruments: recognition
and measurement) gains or losses on financial assets should be included in
net profit or loss for the period in which they arise. The insurance
industry practice has been to apply the fair value basis of accounting for a
number of years. The effect of AC133 has therefore not been material. In
terms of the statements, this change has not been retrospectively applied
and the comparative figures have therefore not been restated.
Headline earnings
The headline earnings of the group declined from R559 million (annualised)
to R379 million - a decline of 32%. The main drivers of the reduced earnings
were the individual life business of Metropolitan Life and reduced
investment returns.
Several projects aimed at reversing this downtrend have been initiated,
including the remodelling of the client service function, the revision of
policyholder charges, the introduction of a lapse prediction tool and
Project Goldrush (increasing share of middle income market in Gauteng).
Transfer of surplus in the long-term insurance fund
The surplus in the long-term insurance fund, except for the surplus in
Commercial Union Life Assurance Company of South Africa Limited (90:10), has
been transferred to the distributable reserve which results in the long-term
insurance fund being equal to the actuarial liabilities, as set out in the
statement of actuarial values of assets and liabilities, plus the surplus in
Commercial Union Life Assurance Company of South Africa Limited.
Share buy-back
During the course of the year Metropolitan Life Limited, a wholly owned
subsidiary of New Africa Capital Limited, acquired 28 million New Africa
Capital shares. These transactions were in accordance with the company's
constitution and complied with all aspects of the South African Companies
Act and the requirements of the JSE Securities Exchange South Africa. The
total amount of R234 million paid to acquire the shares has been deducted
from shareholders' equity.
Subsequent to year-end the group acquired an additional 13 million shares,
again through Metropolitan Life Limited. The total amount paid to acquire
these shares was R110 million. New Africa Capital's total shareholding,
through policyholders' and shareholders' funds, held by Metropolitan Life
Limited, is now 10%, reaching the limit set in terms of the general approval
granted by the shareholders on 29 May 2001. New Africa Capital can still
acquire a further 10% directly.
Directorate changes since the listing of New Africa Capital Limited
Messrs M M Ngoasheng and J C van Reenen were appointed as non-executive
directors with effect from 1 December 2001 while Mrs F Jakoet resigned from
the board on 6 November. Mr P C Lamprecht was appointed on 26 March 2002.
Directors' shareholding and emoluments
On 31 December 2001, the directors of New Africa Capital Limited had
beneficial and non-beneficial shareholdings of 3.3 million shares (0.5%;
2000: 2.5 million, 0.4%) in the company. A further 620 000 shares were
allocated to executive directors in the share purchase scheme at an issue
price of R8.30 per share in December 2001 and were accepted by them after
year-end in January 2002.
The following directors' emoluments were paid for the period under review:
2001 2000 *
R'000 R'000
Executive directors 3 431 8 241
Non-executive directors 895 847
Total 4 326 9 088
* The prior year comprised a 15 month period.
Capital commitments and contingent liabilities
At 31 December the group had capital commitments of R33 million in respect
of furniture, computer equipment and promotional campaigns that will be
financed from internal sources.
The group had no contingent liabilities with respect to guarantees (2000:
R6.5 million guarantee provided by Metropolitan Life Limited in respect of
its fellow subsidiary, Metropolitan Health (Proprietary) Limited).
The group is aware of a potential claim arising against Metropolitan Health
(Proprietary) Limited to be instituted by the liquidator of Publiserve
Medical Scheme. Senior counsel has been consulted and the directors believe
that no material liability will arise.
POST BALANCE SHEET EVENTS
Share allocation
A total of 2.2 million shares were allocated to participants in the staff
share purchase scheme in December 2001 at an issue price of R8.30 per share
and were accepted in January 2002. The loans to participants in order to
fund these acquisitions increased by R18 million.
Metropolitan Health Group
At the end of February 2002 the Metropolitan Health Group restructured its
operations and retrenched 280 staff.
Saambou Holdings Limited
On 11 February 2002 the shares in Saambou Holdings Limited were suspended
from the JSE Securities Exchange South Africa. As at 31 December 2001 the
group held 19 million Saambou Holdings Limited shares valued at R87 million
and fixed deposits totalling R60 million. The New Africa Capital shareholder
exposure to these equities amounted to R10 million.
No other material post balance sheet events occurred between the balance
sheet date and the date of approval of the annual financial statements.
PROSPECTS
After the spate of corporate activity in previous years, management is now
able to focus primarily on the core businesses in the group.
The group believes that there are good prospects for increasing new business
volumes across all the businesses in the group while reducing the existing
expense base over the longer term. Once this is achieved, the value of new
business added during the year will increase towards the targeted profit
margin of 15%. The group is confident that this can be accomplished on a
monthly basis in the second half of the year.
Improved persistency and a substantial reduction in lapses are also high on
the agenda.
New Africa Capital will use its new group structure to continue improving
capital management throughout the group and strive to generate a return on
embedded value in excess of the shareholders' cost of capital.
As soon as these objectives have been met, the group has every confidence
that the share price will reflect these achievements by moving closer to the
disclosed embedded value per share.
DIVIDEND DECLARATION
The policy approved by the directors is to declare dividends that reflect
the longer term growth in earnings, while allowing the dividend cover to
fluctuate.
A final dividend of 19.50 cents per share has been declared for 2001, giving
a total dividend for the period of 35.00 cents and resulting in a dividend
cover of 1.5 times. This dividend is payable to holders of ordinary shares
recorded in the register of the company at the close of business on Friday,
19 April 2002, and will be paid on 22 April 2002. The last day to trade
"cum" dividend will be Friday, 12 April 2002. The shares will commence
trading "ex" dividend from the commencement of business on Monday, 15 April
2002. Share certificates may not be dematerialised or rematerialised between
Monday, 8 April and Friday 19 April 2002, both days inclusive.
A special dividend of R33 million (2000: R31 million) was declared to
participants in the share purchase scheme while participants in the share
incentive scheme receive the same dividend as ordinary shareholders.
ANNUAL GENERAL MEETING
The first annual general meeting of New Africa Capital shareholders will be
held at 12h30 on Tuesday, 28 May 2002 in the Executive Suite, First Floor,
Parc du Cap 7, Mispel Road, Bellville, Cape Town.
Signed on behalf of the board
Gloria Tomatoe Serobe Group chairman
Peter Doyle Group chief executive
Cape Town
NEW AFRICA CAPITAL GROUP RESULTS
CONSOLIDATED INCOME STATEMENT 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Income from insurance business 589 791
Revenue 10 343 13 479
Premium income 7 009 7 106
Recurring premiums 4 087 4 938
Single premiums 2 922 2 168
Investment return 3 334 6 373
Investment income 2 317 2 071
Realised and unrealised changes 1 017 4 302
in market value of investments
Outgo 5 850 5 969
Policyholders' benefits paid 4 493 4 384
Sales and distribution costs 575 731
Administration expenses 665 702
Policyholders' tax paid 117 152
Revenue less outgo 4 493 7 510
Transfer to long-term insurance fund (3 904) (6 719)
Income from administration business 45 23
Income before goodwill and tax 634 814
Goodwill amortised (42) (46)
Income before tax 592 768
Shareholders' tax paid (198) (216)
Income after tax 394 552
Outside shareholders' share of (9) 6
profit
Earnings 385 558
Deferred tax - Transitional levy - 95
Capital appreciation on excess (172)
Deferred tax - CGT 124
Goodwill amortised 42 46
Headline earnings 379 699
Earnings per share (cents) 53.32 78.56
Headline earnings per share (cents) 52.49 98.46
Weighted average number of shares in 722 710
issue (million)
Dividend per ordinary share (cents)
Interim 15.50 13.00
Final 19.50 25.50
Total 35.00 38.50
Life insurance administration expenses 9.5 9.9
as a % of premium income
NEW AFRICA CAPITAL GROUP RESULTS
CONSOLIDATED BALANCE SHEET 31.12.2001 31.12.2000
Rm Rm
ASSETS
Non-current assets
Investment assets 31 801 27 662
Equipment 147 131
Intangibles 446 458
Deferred tax 7 -
Current assets 1 425 1 241
Total assets 33 826 29 492
EQUITY AND LIABILITIES
Capital and reserves 5 101 2 335
Outside shareholders' interest 83 62
Non-current liabilities 27 172 25 858
Current liabilities 1 470 1 237
Total equity and liabilities 33 826 29 492
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Shareholders' equity at beginning of year 2 335 1 976
Changes in share capital 1 709 97
Shares issued in terms of scheme of 1 839
arrangement
Issue of share capital to staff schemes - 6
Share premium on new issue 128 91
Share issue cost written off (24) -
Treasury shares acquired (234) -
Changes in distributable reserves 1 036 262
Dividend in specie (1 839)
Transfer from long-term insurance fund 2 619 -
Transfer to foreign currency translation (21) -
reserve
Earnings 385 558
Dividend (108) (296)
Changes in foreign currency translation 21 -
reserve
Shareholders' equity at end of year 5 101 2 335
NEW AFRICA CAPITAL GROUP RESULTS
CONSOLIDATED CASH FLOW STATEMENT 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Net cash inflow from operating activities 3 352 3 208
Net cash outflow from investing activities (2 588) (3 832)
Net cash (out) / inflow from financing (130) 97
activities
Net cash flow 634 (527)
Cash resources and funds on deposit at 2 491 3 018
beginning of year
Cash resources and funds on deposit at end of 3 125 2 491
year
STATEMENT OF ACTUARIAL VALUES OF ASSETS 31.12.2001 31.12.2000
AND LIABILITIES
Rm Rm
Total assets per balance sheet 33 826 29 492
Current liabilities per balance sheet (1 594) (1 332)
Outside shareholders' interest per balance (83) (62)
sheet
Actuarial liabilities under unmatured (26 200) (22 181)
policies
Excess of assets over liabilities 5 949 5 917
Total surplus arising during period 313 1 569
FSV profit 372 705
Operating profit 168 408
Investment income on excess 204 297
Effect of change in basis * (195) -
Capital appreciation on excess 136 864
Plus: Effect of change in basis 195
Less: Commercial Union Life (90:10) (123) (52)
Capital appreciation on excess (864)
Provision for transitional tax (95)
Earnings 385 558
Capital adequacy requirement 1 397 1 190
Capital adequacy multiple (times) 4.3 5.0
Bonus stabilisation reserve 85 398
Second-tier margins (2000: restated for 1 231 983
transfer tax)
* The change in basis relates to increase future renewal expenses, lighter
AIDS mortality, higher lapse and surrender assumptions and a reduction in
discount rates. Data and program corrections increase policy liabilities by
a further R43 million.
NEW AFRICA CAPITAL GROUP RESULTS
Funds received from 12 mths 12 mths
clients for the year ended
Gross Gross Net inflow Net inflow
inflow outflow
31.12.2001 31.12.2000
Rm Rm Rm Rm
Metropolitan 5 913 2 883 3 030 2 181
Life 3 171 1 721 1 450 1 020
Employee benefits 2 781 1 189 1 592 1 179
Re-insurance (39) (27) (12) (18)
Odyssey 329 210 119 80
Commercial Union Life 359 1 202 (843) (288)
Namibia 296 163 133 100
Botswana 112 35 77 60
Total premiums / claims 7 009 4 493 2 516 2 133
Health administration 4 270 3 911 359 315
Asset management 3 729 2 312 1 417 241
15 008 10 716 4 292 2 689
ANALYSIS OF HEADLINE EARNINGS 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Metropolitan Life 137 291
Metropolitan Employee Benefits 99 97
Metropolitan Odyssey 7 7
Commercial Union Life 46 62
Metropolitan Namibia (11) 3
Metropolitan Botswana (1) 6
New Africa Capital 1 -
Health administration 20 24
Metropolitan Asset Managers 22 17
CGU - 36
Metropolitan Unit Trusts 3 -
Ovation (8) (22)
Other subsidiaries (10) (1)
305 520
Investment income 148 300
Income tax (74) (121)
Headline earnings 379 699
Goodwill (42) (46)
Adjustment for Commercial Union Life 35 52
(90:10)
FSV profit 372 705
NEW AFRICA CAPITAL GROUP RESULTS
EMBEDDED VALUE 2001 2000
Rm Rm
Net asset value per actuarial statement 5 949 5 917
Adjustment for:
Asset management 130 118
Health administration 52 85
Commercial Union Life and goodwill (1 001) (1 133)
Adjusted net asset value 5 130 4 987
Net value of in-force business 2 423 2 260
Individual life 1 977 1 898
Gross value of in-force business 2 090 2 038
Less: Cost of capital (113) (140)
Employee benefits 446 362
Gross value of in-force business 570 480
Less: Cost of capital (124) (118)
Embedded value 7 553 7 247
Embedded value per share (cents) 1 079 1 018
Adjusted net asset value per share (cents) 733 700
Number of share in issue (million) (net of 700 712
28 million treasury shares)
Included in the net asset value above is an amount of R10 million in
respect of Saambou Holdings Limited.
NEW AFRICA CAPITAL GROUP RESULTS
ANALYSIS OF CHANGES IN 12 mths 15 mths
GROUP EMBEDDED VALUE Non-life 31.12.2001 31.12.2000
business Life Total Total
Rm business Rm Rm
Rm
Profit from new business 138 27 165 197
Point of sale 129 25 154 179
Expected return to end 9 2 11 18
of year
Profit from existing (117) 371 254 503
business
Expected return 66 377 443 464
Experience variance - - (36) (36)
economic
Experience variance - (183) 30 (153) 39
non-economic
Embedded value profit 21 398 419 700
from operations
Investment return on net - 213 213 941
worth
Transitional tax - - - (95)
Capital gains tax - (138) (138)
Changes in assumptions - 22 38 60 182
economic
Changes in assumptions - (64) 39 (25)
non-economic
Exchange rate movements - 15 15
Total embedded value (21) 565 544 1 728
profit
Plus: Capital raised 128 128 97
Less: Dividend (108) (108) (296)
Share buy-back (258) (258)
and share issue
costs
Increase in embedded (21) 327 306 1 529
value
Return on embedded value 7.5 24.2
(annualised)
NEW AFRICA CAPITAL GROUP RESULTS
PRINCIPAL ASSUMPTIONS % %
Pre-tax investment return
Equities 13.8 15.1
Properties 13.8 15.1
Government stock 11.8 13.1
Cash 9.8 9.5
Risk discount rate 15.3 16.6
Investment return (before tax) - smoothed 13.2 14.4
bonus
Expense inflation rate 8.5 8.5
VALUE OF LIFE INSURANCE NEW BUSINESS 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Individual life (16) 44
Gross value of new business (9) 71
Less: Cost of capital (7) (27)
Employee benefits 63 78
Gross value of new business 72 92
Less: Cost of capital (9) (14)
Metropolitan Advisory and Retail Services (22)
- start-up costs
25 122
VALUE OF NON-LIFE NEW BUSINESS 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Health administration 83 49
Asset management 46 8
NEW AFRICA CAPITAL GROUP RESULTS
NEW BUSINESS PREMIUMS 12 mths to 15 mths to
31.12.2001 31.12.2000
Rm Rm
Recurring premiums
Individual life 484
Gross premiums 582 705
Lapses from inception (98)
Employee benefits 155 241
639 946
Single premiums
Individual life 1 033 453
Employee benefits 1 958 1 715
2 991 2 168
Annual premium equivalent (APE) 938 1 163
PREMIUM INCOME PER COMPANY 12 mths to 12 mths to
31.12.2001 31.12.2000
Rm Rm
Recurring premiums 4 087 3 914
Metropolitan Life Ltd 3 158 2 999
Metropolitan Odyssey Ltd 247 231
Metropolitan Life (Namibia) Ltd 229 191
Metropolitan Life of Botswana Ltd 111 70
CU Life Association Company of SA Ltd 342 423
Single premiums 2 922 1 791
Metropolitan Life Ltd 2 755 1 656
Metropolitan Odyssey Ltd 82 59
Metropolitan Life (Namibia) Ltd 67 39
Metropolitan Life of Botswana Ltd 1 1
CU Life Association Company of SA Ltd 17 36
Total premiums 7 009 5 705
GROUP INDIVIDUAL LIFE SOURCE OF NEW BUSINESS 2001 2000
% %
General intermediary channel 39 40
Direct writers 43 58
Direct mail and telemarketing 7 2
MARS - since July 2001 11 -
NEW AFRICA CAPITAL GROUP RESULTS
POLICYHOLDERS' BENEFITS PAID PER COMPANY 12 mths to 12 mths to
31.12.2001 31.12.2000
Rm Rm
Individual life 2 425 2 275
Death and disability claims 634 620
Maturity claims 515 540
Annuities 325 274
Surrenders 976 864
Re-insurance recoveries (25) (23)
Employee benefits 2 068 1 297
Death and disability claims 287 226
Maturity claims 230 142
Annuities 89 37
Withdrawal benefits 247 165
Terminations 1 252 751
Re-insurance recoveries (37) (24)
Total policyholders' benefits paid 4 493 3 572
Metropolitan Life Ltd 2 883 2 474
Metropolitan Odyssey Ltd 210 211
Metropolitan Life (Namibia) Ltd 163 129
Metropolitan Life of Botswana Ltd 35 11
CU Life Assurance Company of SA Ltd 1 202 747
4 493 3 572
INCOME FROM ADMINISTRATION BUSINESS 12 mths to 31.12.2001
(before tax, goodwill and outside
shareholders)
Revenue Expenses Total
Rm Rm Rm
Health administration 308 282 26
Asset management 119 100 19
New Africa Capital 15 4 11
Metropolitan Asset Managers 58 36 22
Metropolitan Unit Trusts 19 16 3
Ovation 19 27 (8)
Investment subsidiaries (6) 4 (10)
Properties 14 13 1
Total income from administration 427 382 45
business
NEW AFRICA CAPITAL GROUP RESULTS
ASSETS UNDER MANAGEMENT 2001 2000
Rm Rm
Investment assets 31 756 27 598
Strategic investments 45 64
Goodwill 375 410
Equipment and intangibles 218 179
Current assets and deferred tax 1 432 1 241
Total on-balance sheet assets 33 826 29 492
Unit trusts 1 020 1 088
Health administration 1 603 1 159
Ovation 1 018 741
Metropolitan Asset Managers 4 370 3 297
Total assets under management 41 837 35 777
EMBEDDED VALUE PER COMPANY Net Value 2001 2000
asset of Total Total
value in- Rm Rm
Rm force
Rm
Metropolitan Life Ltd 3 344 2 018 5 362 6 146
Metropolitan Odyssey Ltd 148 88 236 190
CU Life Assurance Company of SA 206 190 396 321
Ltd
Metropolitan Life (Namibia) Ltd 122 88 210 189
Metropolitan Life of Botswana Ltd 72 38 110 53
Health administration 278 52 330 343
Asset management 79 130 209 180
New Africa Capital (after 852 853
consolidation adjustments)
Goodwill (153) (153) (175)
4 948 2 604 7 553 7 247
Adjustment for Commercial Union 1 001
Life and goodwill
Net asset value per actuarial 5 949
statement
NEW AFRICA CAPITAL GROUP RESULTS
VALUE OF NEW BUSINESS 12 mths to 15 mths to 31.12.2000
PER COMPANY 31.12.2001
Gros Cost of Net Gros Cost of Net
s capital s capital
Rm Rm Rm Rm
Rm Rm
Metropolitan 59 (15) 44 163 (39) 124
Life (12) (8) (20) 77 (26) 51
Employee benefits 71 (7) 64 86 (13) 73
Metropolitan Odyssey (8) - (8) (8) - (8)
Metropolitan Namibia 6 (1) 5 2 (1) 1
Metropolitan Botswana 6 - 6 6 (1) 5
MARS - start-up costs (22) (22)
41 (16) 25 163 (41) 122
VALUATION OF NON-LIFE SUBSIDIARIES Value as Write-up Embedded
per to fair value
balance value Rm
sheet Rm
Rm
Asset management - share 47 130 177
- loan 32 - 32
Health administration - share - 52 52
- loan 278 - 278
VALUE OF NEW BUSINESS AS A % OF ANNUAL Value of APE * Margin
PREMIUM EQUIVALENTS (APE) new
business Rm %
Rm
Individual life (16) 587 (2.7)
Employee benefits 63 351 17.9
Total 47 938 5.0
* APE represents new recurring premiums (net of lapses at inception)
plus 10% of single premiums
NEW AFRICA CAPITAL GROUP RESULTS
ANALYSIS OF ASSETS BACKING GROUP NET ASSET VALUE 2001
Rm %
Listed equities 2 488 48.8
Foreign investments 1 298 25.5
Properties 326 6.4
Fixed interest 241 4.7
Money market 223 4.4
Intangibles 446 8.7
Other assets 79 1.5
Group net asset value 5 101 100.0
Surplus of Commercial Union Life 848
Net asset value per actuarial statement 5 949
SENSITIVITY OF THE IN-FORCE VALUE AND Change in base value
THE VALUE OF NEW BUSINESS of:
In-force New
business business
% % Notes
1% increase in risk discount rate (5.2) (42.3) (i)
1% reduction in risk discount 6.0 41.5 (i)
rate
10% reduction in per policy 5.4 61.0 (ii)
expenses
1% reduction in expense and 2.3 9.2 (ii)
salary inflation
10% reduction in policy 1.4 38.8
discontinuance rates
10% reduction in mortality, 12.7 141.1 (ii)
morbidity and medical rates
1% increase in the assumed 7.9 28.4 (iii)
investment return
10% increase in the premium 11.5
indexation take-up rate 1.5
(from 70% to 80%)
10% Increase in the number of new 46.0
business
Base value (rand million) 2 660 41
(i) The risk discount rate appropriate to an investor depends on
the investor's own requirements, tax position and perception
of the risks associated with the realisation of the future
profits of New Africa Capital and its subsidiaries.
(ii) No corresponding changes in variable policy charges are
assumed, although in practice it is likely that variable
charges will be modified according to circumstances.
(iii) Bonus rates are assumed to change commensurately.
NEW AFRICA CAPITAL GROUP RESULTS
STOCK EXCHANGE PERFORMANCE 12 mths 12 mths
31.12.2001 31.12.2000
Value of shares traded (rand million) * 2 472 1 810
Volume of shares traded (million) * 273 209
Shares traded (% of total shares in issue) 39.0 29.4
Trade prices (cents per share)
Highest 1 060 1 175
Lowest 650 690
Last sale in period (closing) 800 980
Price / headline earnings ratio 15.28 9.95
Dividend yield % (normal dividend) 3.16
Total shares issued (million) 700 712
Listed * 667 690
Public * 661 685
Share incentive scheme 6 5
Unlisted 33 22
Share purchase scheme 33 22
Market capitalisation at year-end (rand 5.60 6.98
billion) *
* Net of 28 million treasury shares acquired for R234 million in 2001.
