| Wed 13 Nov 2002, 16:04 | | SAGE GROUP LIMITED - FURTHER UPDATE ON SAGE LIFE A |
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SAGE GROUP LIMITED - FURTHER UPDATE ON SAGE LIFE ASSURANCE OF AMERICA INC
("Sage")
FURTHER UPDATE ON SAGE LIFE ASSURANCE OF AMERICA INC
Further to previous announcements regarding Sage Life Assurance of America Inc,
("the company") investors are informed that a comprehensive update on recent
developments in the United States has been issued to policyholders and relevant
authorities by way of a supplement to the company`s product prospectuses in
terms of regulatory requirements. This document has been posted on the Sage
website (www.sage.co.za) for the information of investors.
The matters covered in the prospectus supplement include the following:
History and business
Rating agencies
Financial data
Liquidity and capital resources
Marketing and distribution expenses
Re-insurance
Regulaton
Other salient points of clarification are the following:
Shareholding in Sage Life Assurance of America Inc and the Preferred Stock
Purchase Agreement
The company is a wholly owned subsidiary of Sage Life Holdings of America Inc
("SLH)".
* The initial shareholdings in SLH were as follows: Sage held the entire
ordinary share capital and Swiss Re Life and Health America Inc (Swiss Re) the
entire preference share capital of $12,5 million which was introduced as
preference share capital by Swiss Re as their contribution to the capital
required for the strategic partnership with Sage in the US.
* SLH was restructured in April 1999 and 16,8% of the preference shares,
amounting to $2 096 513, were redeemed in exchange for a fresh issue of 110 new
class "A" ordinary shares to Swiss Re. Sage holds 1 000 class "C" ordinary
shares representing 90,1% of the voting rights and are entitled to 100% of the
profits or losses of SLH.
* The salient rights and obligations attaching to the class "A" ordinary shares
held by Swiss Re are the following:
-They do not participate in the profits or losses of SLH.
-They carry 9,9% of the votes of SLH.
-In the event of a liquidation, dissolution or winding up of SLH or in certain
cases a disposal of SLH, Swiss Re are entitled to receive preference to any
distribution of any of the assets or surplus funds of SLH prior to the other
ordinary shareholders, up to an aggregate amount equal to $2 096 513.
-Sage has a right upon giving five days notice to Swiss Re to purchase from
Swiss Re the class "A" ordinary shares for an aggregate price of $2 096 513.
-Sage has the right of first refusal should Swiss Re wish to sell the class "A"
ordinary shares to any party.
* Under the terms of the original Preferred Stock Purchase Agreement between
Sage and Swiss Re, if the statutory-basis capital and surplus of Sage Life of
America fell below $25 million and remained uncured for 60 days then, subject to
obtaining regulatory approval, each share of Swiss Re preferred stock would be
entitled to a number of votes sufficient to provide preferred shareholders 51%
of the voting interest in SLH. As previously announced, in response to
developments, Sage conferred with Swiss Re and on September 30, 2002 reached an
agreement to amend certain terms of the Preferred Stock Purchase Agreement. The
required minimum level for the Company`s statutory capital and surplus was
reduced from $25 to $20 million, subject to the elimination of any cure rights
with respect to the new minimum capital level.
By way of clarification, the distinction between "regulatory" as opposed to
"statutory" capital of Sage Life of America, is as follows. Statutory refers
only to the statutory accounting practice in terms of which capital was agreed
between Sage and Swiss Re, and not to regulatory capital, as defined by the NAIC
(National Association of Insurance Commissioners). Sage Life of America has
substantial excess capital relative to the NAIC requirement, as confirmed by the
rating agencies.
Modified Coinsurance
In 2000, the Company entered into a multi-year modified coinsurance agreement
(the terminology used to describe a coinsurance agreement in respect of variable
life assurance business) whereby a significant portion of the Company`s variable
insurance business is ceded to Swiss Re on a quota share basis. The arrangement
is more fully described in the prospectus supplement under the heading
`Reinsurance`, and provides for the cession of between 65% to 81% of contract
revenues to Swiss Re. Additionally, the Company reinsures risks associated with
guaranteed death benefits, as well as other contract guarantees, with highly
rated reinsurance companies.
During the first quarter of 2002, the Company`s reinsurance agreement with Swiss
Re was amended to include certain variable annuity products introduced by the
Company during the fourth quarter of 2001. This retroactive amendment resulted
in a reduction of written premium, relating to such previously issued contracts
of $9 312 250 for the quarter ended March 31, 2002. Gross written premiums for
the six months ended 30 June, 2002 amounted to $42 662 783 and net written
premiums amounted to $52 825, after proving for reinsurance and the retroactive
amendment.
13 November 2002
Date: 13/11/2002 03:54:51 PM Produced by the JSE SENS Department
