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SAGE GROUP LIMITED - INTERNATIONAL OPERATIONS - DETAILS OF US SEC 8-K REGULATORY
REPORT FOLLOWING FILING OF ANNUAL US STATUTORY STATEMENTS, AND UPDATE
SAGE GROUP LIMITED
("Sage Group") or ("the Group")
(Incorporated in the Republic of South Africa)
(Registration Number 1970/010541/06)
(Share code SGG ISIN no ZAE000006623)
INTERNATIONAL OPERATIONS - DETAILS OF US SEC 8-K REGULATORY REPORT FOLLOWING
FILING OF ANNUAL US STATUTORY STATEMENTS, AND UPDATE
Shareholders are referred to previous announcements regarding the Group"s
international operations. The salient disclosures in these announcements were:
In the case of Sage Life Assurance of America Inc, it had been decided to
confirm the closure to new business of the USA operations with effect from 1
January 2003, while retaining administration capabilities in the United States
to service existing business.
In the case of the Group"s Bermudan operations, the decision on the closure to
new business was subject to the outcome of negotiations which were in progress
and these activities would consequently remain fully operational and open for
new business.
As of mid February, the Group announced that it had received and was examining a
number of proposals for the purchase of both the USA and Bermudan businesses on
bases which related to their respective net asset values and the respective
values of in-force business. These negotiations were expected to be completed
by early March.
USA Operations
Negotiations for the disposal of the United States operations have not been
successfully concluded at the date of this announcement.
Under accounting principles generally accepted in the United States, Sage Life
of America"s total stockholder equity at 31 December 2002 was approximately
$22m. As previously disclosed, an agreement with Swiss Re Life and Health
America Inc (Swiss Re) provides for a minimum level of statutory - basis capital
and surplus in Sage Life of America of $20m, below which, and subject to
requisite regulatory approvals, Swiss Re has the right to assume effective
voting control of the company. The current 8-K report to the US Securities and
Exchange Commission (SEC) reflects that, after making provision for technical
reserves of $7,7m in respect of run-off expenses over the next 20 years and $5m
for involuntary termination benefits, contract termination and other exit
related costs, Sage Life of America"s statutory capital and surplus as at 31
December 2002 was approximately $8,6m and therefore below the minimum in terms
of the Swiss Re agreement. Swiss Re has not yet exercised and has yet to
indicate whether it would exercise its option to assume effective control of the
company.
The technical provisions referred to have no impact on Sage Group"s results for
the nine months ended 31 December 2002 which will be announced next week, as no
value in excess of the preference share capital held by Swiss Re has been
anticipated or attributed to the Group"s equity investment in Sage Life of
America.
Sage Life of America is satisfied that it has adequate capital resources and
reserves to meet its policy benefits and servicing obligations to existing
contract holders. Additionally, contract holder investments are fully funded
and held in a separate account with the company and protected from its general
creditors. The death benefit and other guaranteed rider features in the
company"s products have been reinsured with highly rated reinsurers.
Bermuda operations
In the case of the wholly-owned Bermudan operations, prolonged negotiations for
the disposal of the business have reached an advanced stage but, as they have
not been concluded, the Group has in the meanwhile attributed a nominal value of
R1 to this investment. A further announcement will be made once the disposal
of the Bermudan operations is concluded. The proceeds of any disposal would be
accounted for in the current year.
By order of the Board
C S Cant - Secretary
25 March 2003
Sponsor
Grant Thornton Kessel Feinstein
Corporate Sponsors (Pty) Ltd
(Registration number 2000/003541/07)
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