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METROPOLITAN HOLDINGS FINANCIAL SERVICES GROUP - GROUP RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2003
METROPOLITAN HOLDINGS LIMITED
Registration number: 2000/031756/06
JSE code: MET - NSX CODE: MTD - ISIN NO. ZAE000050456
GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
Embedded value of life insurance new business up 51%
Retail recurring premium new business up 20%
Retail operating profit before tax up 37%
Group embedded value up 19%
Twenty year unbroken record of positive cashflows
Growth in Dividend Per Share of 13%
Core headline earnings up 15%
DIRECTORS" STATEMENT
The directors take pleasure in presenting the audited, unqualified annual
financial statements of the Metropolitan Holdings Financial Services Group for
the year ended 31 December 2003.
These results 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 (GAAP); guidelines
issued by the Actuarial Society of South Africa; and the disclosure requirements
of the JSE Securities Exchange South Africa (JSE).
Presentation of financial statements
The consolidated financial statements are prepared on the fair value and going
concern bases. The group"s principal accounting policies are consistent with
those applied at 31 December 2002.
AC133 Financial instruments: recognition and measurement; and ED165 Insurance
contracts
A draft International Financial Reporting Standard (IFRS) on Insurance Contracts
(Phase I) (ED5 or South African ED165) was issued for comment on 31 July 2003.
This standard is due to come into force for listed insurers in Europe and
Australia in 2005. The prior implementation of AC133 in South Africa has,
however, raised many uncertainties about aspects of the statement relating to
the insurance sector. The equivalent international statement, IAS39, is also
only effective in 2005. An ongoing process to develop guidance for this sector,
from both an accounting and an actuarial perspective, could result in changes to
the treatment followed in these results.
Core headline earnings are defined by the group as operating profit plus
investment income on shareholder assets. Capital appreciation, investment
variances and actuarial basis changes, while part of headline earnings, are
excluded from core headline earnings as they tend to be volatile by nature. Core
headline earnings therefore present a more meaningful and stable earnings
figure, and are directly comparable to the figures disclosed in previous
reports.
Corporate transactions
The name of the listed holding company was changed from "New Africa Capital
Limited" to "Metropolitan Holdings Limited" with effect from 15 December 2003.
An offer was made to all shareholders who held in aggregate less than 100
Metropolitan Holdings Limited shares at the close of business on 12 December
2003. Shareholders were given the opportunity to sell their odd-lot holdings to
the company at the offer price of R6.53 plus a premium of 5%, or to subscribe
for a sufficient number of additional Metropolitan Holdings Limited shares at
the offer price in order to increase their odd-lot holdings to 100 shares, or to
retain their odd-lot holdings. As a result of this offer, a net 348 160 shares
were bought back at a cost of R2.4 million and cancelled, while the number of
shareholders reduced from 29 203 to 10779. These shares were deducted from
shareholders" equity.
The company was authorised, as a specific approval in terms of section 85 of the
Companies Act, 1973 as amended, to repurchase 36 356 142 Metropolitan Holdings
ordinary shares held by New Africa Investments Limited (NAIL) or its successors-
in-title. This specific authority is subject to a number of conditions and is to
remain valid until the next annual general meeting of the company.
REVIEW OF OPERATIONS AND PROSPECTS
The past year saw further improvements in all aspects of the business.
The increase in the flow of new business, particularly on the retail side, was
extremely positive.
The unbroken record of positive cashflow from clients continued, exceeding R3
billion for the year.
An increase of 20% in the new business annual premium equivalent (APE) for the
retail business can be attributed to solid growth in both recurring and single
premium income.
Despite the surge in new business, lapse and surrender rates continued to
improve; however, this remains a focus area for the group.
Following the decrease in life administration expenses in the previous year,
this year"s increase was contained within the assumed inflation rate despite
strong volume growth.
This creditable all-round performance resulted in significant growth of 51% in
the embedded value of life insurance new business, which in turn improved the
retail and international profit margins.
Improved investment markets in the latter part of 2003, together with the
group"s defensive investment strategy throughout the year, contributed to
increased funding levels and a particularly sound capital position for the
group.
An excellent investment return of 21% was achieved on the shareholders funds,
driven primarily by good equity stock selection.
Core headline earnings, the most appropriate measure of the group"s performance,
grew by 15%.
Headline earnings and earnings were boosted by capital appreciation on the
shareholders" investment assets and on other assets, as well as by basis
changes.
All four businesses in the group continued to contribute positively to core
headline earnings.
Retail led the way with an increase of 37% in pre-tax operating profit while for
corporate the equivalent figure was 17% up.
In the international business, Namibia and Botswana increased their operating
profits by 104% and 98% respectively; however, investments in new foreign
ventures dampened international"s contribution to core headline earnings.
The core business of the health group improved with a particularly good
contribution from Qualsa, the managed healthcare arm; total core headline
earnings were, however, reduced by ongoing investment in the new Kenyan
business.
Shareholders" tax has continued to grow as the full effects of the existing four
fund tax legislation, together with CGT legislation, are starting to be felt.
The economic conditions under which Metropolitan operated improved throughout
2003. The main underlying factors were further decreases in individual personal
income tax together with real increases in salaries. These improvements are
expected to continue into 2004.
The improvement in the capital markets experienced in the last quarter of 2003
has been sustained during the first part of 2004.
Metropolitan remains the largest long-term financial services group in Southern
Africa focused on the low and middle income markets. The benefits of this
focus, enhanced by Metropolitan"s commitment to black economic empowerment, are
reflected in these results.
The board is satisfied that several significant operational issues have been
successfully addressed and that operational improvements achieved in 2003 will
carry on into 2004, with a strong focus on further increases in new business
profit margins.
CORPORATE GOVERNANCE
The board has satisfied itself that locally recognised principles of corporate
governance were applied throughout the group during the year under review.
Additional governance recommendations, as set out in the second King report, are
currently being addressed and implemented.
DIRECTORATE CHANGES AND DIRECTORS" SHAREHOLDING
Mr MM Ngoasheng and Dr IA Goldin, both non-executive directors, resigned from
the board on 25 June and 18 August 2003 respectively. No further changes have
been made to the directorate since 31 December 2002. All transactions in listed
shares involving directors were disclosed on SENS as required.
CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The group announced on 25 November 2003 that it had concluded an agreement to
acquire the Metropolitan shares currently held by NAIL. The total capital
commitments of the group as at 31 December 2003, including this repurchase,
amounted to R274 million. These commitments will be funded from internal
sources. The group is party to legal proceedings in the normal course of
business, and appropriate provisions are made when losses are expected to
materialise.
POST BALANCE SHEET EVENTS
No material post balance sheet events occurred between the balance sheet date
and the date of approval of the annual financial statements.
DIVIDEND DECLARATION
The dividend policy approved by the directors, and consistent with prior years,
is to provide shareholders with stable dividend growth that reflects expected
growth in underlying earnings in the medium term, while allowing the dividend
cover to fluctuate.
A final dividend of 25.00 cents per share has been declared on 9 March 2004,
giving a total dividend for 2003 of 43.00 cents and resulting in a dividend
cover of 1.4 times based on core headline earnings. This dividend is payable to
holders of ordinary shares recorded in the register of the company at the close
of business on Friday, 2 April 2004 and will be paid on Monday, 5 April 2004.
The last day to trade "cum" dividend will be Friday, 26 March 2004. The shares
start trading "ex" dividend from the commencement of business on Monday, 29
March 2004. Share certificates may not be dematerialised or rematerialised
between Monday, 29 March and Friday, 2 April 2004, both days inclusive.
Where applicable, dividends in respect of certificated shareholders will be
transferred electronically to shareholders" bank accounts on payment date. In
the absence of specific mandates, dividend cheques will be posted to
certificated shareholders on or about payment date. Shareholders who have
dematerialised their shares will have their accounts with their CSDP or broker
credited on Monday, 5 April 2004.
AUDIT OPINION
The auditors, Ernst & Young and PricewaterhouseCoopers Inc, have issued their
opinion on the group financial statements for the year ended 31 December 2003. A
copy of their unqualified report is available for inspection at the company"s
registered office.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the cautionary announcement relating to the
trading statement issued on 26 February 2004 has now been lifted.
Signed on behalf of the board
Gloria Tomatoe Serobe Group chairman
Peter Doyle Group chief executive
Cape Town, 9 March 2004
Registration number: 2000/031756/06
Registered office:
7 Parc du Cap, Mispel Road, Bellville 7535
Transfer secretaries: Computershare Limited
(registration number 2000/006082/06), 70 Marshall Street, Johannesburg 2001, PO
Box 61051 Marshalltown 2107
Sponsor: Merrill Lynch
JSE code: MET - NSX CODE: MTD - ISIN NO. ZAE000050456
Directors: Gloria Tomatoe Serobe (non-executive group chairman), Peter Doyle
(group chief executive), Abel Sithole (executive), Preston Speckmann
(executive), Ntuthukoyezwe Buthelezi, Irene Charnley, Willie Esterhuyse, Peter
Lamprecht, Syd Muller, John Newbury, Marius Smith, Franklin Sonn, Johan van
Reenen, Sandile Zungu
Secretary: Bongiwe Gobodo-Mbomvu
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 1: CONSOLIDATED INCOME STATEMENT 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Income from insurance and investment business 1 205 (236)
(table 6; note 6)
Income from administration business (note 1) 65 62
Income from holding company (note 2) 140 (131)
Income before goodwill and tax 1 410 (305)
Goodwill amortised (53) (52)
Income before tax 1 357 (357)
Shareholders" tax paid (272) (25)
Income after tax 1 085 (382)
Outside shareholders" share of earnings (21) (3)
Earnings 1 064 (385)
TABLE 2: RECONCILIATION OF HEADLINE EARNINGS 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Earnings 1 064 (385)
Goodwill amortised 53 52
Headline earnings (1) 1 117 (333)
Capital (appreciation)/depreciation on excess (494) 729
Basis changes and investment variances (189) (18)
Core headline earnings (2) (note 3) 434 378
Core headline earnings per share (cents) 62.09 55.26
Headline earnings per share (cents) 159.80 (48.68)
Earnings per share (cents) 152.22 (56.29)
Weighted average number of shares in issue 699 684
(million)
Dividend per ordinary listed shares (cents)
Interim 18.00 17.50
Final 25.00 20.50
Total 43.00 38.00
Headline earnings consist of operating profit, investment income, capital
appreciation, investment variances and basis and other changes.
Changes in market value of investments can be volatile, therefore core headline
earnings have been disclosed which comprise operating profit and investment
income only.
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 3: CONSOLIDATED BALANCE SHEET 31.12.2003 31.12.2002
Rm Rm
ASSETS
Non-current assets 35 493 30 931
Investment assets 34 930 30 279
Goodwill 337 389
Intangible assets 81 97
Deferred tax 24 40
Tangible assets 121 126
Current assets 1 615 1 468
Total assets (note 5) 37 108 32 399
EQUITY AND LIABILITIES
Capital and reserves (table 4) 5 199 4 329
Outside shareholders" interest 72 52
Non-current liabilities 30 268 26 610
Policyholders" fund (note 6) 30 231 26 600
Deferred tax 37 10
Current liabilities 1 569 1 408
Total equity and liabilities 37 108 32 399
TABLE 4: CONSOLIDATED STATEMENT OF CHANGES IN 12 mths to 12 mths to
EQUITY 31.12.2003 31.12.2002
Rm Rm
Shareholders" equity at beginning 4 329 5 101
Changes in share capital 77 (86)
Issue of share capital - -
Share premium on new issue 79 174
Treasury shares acquired - (110)
Shares acquired and cancelled (2) (150)
Changes in distributable reserve 830 (705)
Revaluation of owner-occupied properties 33 (33)
Earnings 1 064 (385)
Dividend (267) (287)
Changes in foreign currency translation reserve (4) (14)
Foreign currency translation changes (16) (4)
Transfer to policyholders" fund 12 (10)
Change in non-distributable reserve (33) 33
Revaluation of owner-occupied properties (33) 33
Shareholders" equity at end (table 3; note 9) 5 199 4 329
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 5: CONSOLIDATED CASH FLOW STATEMENT 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Net cash inflow from operating activities 1 953 2 061
Net cash outflow from investing activities (1 549) (1 705)
Net cash in/(out)flow from financing activities 77 (86)
Net cash flow 481 270
Cash resources and funds on deposit at 3 395 3 125
beginning
Cash resources and funds on deposit at end 3 876 3 395
TABLE 6: STATEMENT OF ACTUARIAL VALUES OF 31.12.2003 31.12.2002
ASSETS AND LIABILITIES Rm Rm
Total assets per balance sheet (table 3) 37 108 32 399
Current liabilities and deferred tax per (1 606) (1 418)
balance sheet
Outside shareholders" interest per balance (72) (52)
sheet
Net assets - group 35 430 30 929
Actuarial liabilities under unmatured policies (29 570) (25 857)
Excess - group (table 7 & 8; note 9) 5 860 5 072
Net assets - non-insurance (1 165) (984)
Excess - insurance and investment business 4 695 4 088
Change in excess of insurance and investment 607 (651)
business
Increase in share capital (15) (7)
Foreign currency translation changes 4 5
Dividend paid 278 313
Total surplus arising 874 (340)
Operating profit 246 246
Investment income 163 137
Basis and other changes 49 61
Investment variances 10 (85)
Capital appreciation/(depreciation) 406 (699)
Surplus arising (90:10 fund) 50 117
Shareholder"s earnings (90:10 fund) 33 (12)
Consolidation adjustments 16 (21)
Net profit from insurance and investment 973 (256)
business
Shareholders" tax paid 217 5
Goodwill amortised 15 15
Income from insurance and investment business 1 205 (236)
(before goodwill and tax) (table 1)
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 6: STATEMENT OF ACTUARIAL VALUES OF 31.12.2003 31.12.2002
ASSETS AND LIABILITIES Rm Rm
Capital adequacy requirement (CAR) (Rm) 1 640 1 726
Capital adequacy multiple (group excess) 3.6 2.9
Capital adequacy multiple (insurance and 2.9 2.4
investment business)
Second-tier margins 1 216 1 078
NOTE 1 - INCOME FROM 12 mths to 12 mths to
ADMINISTRATION BUSINESS (before 31.12.2003 31.12.2002
tax, goodwill and outside
shareholders)
Revenue Expenses Total Total
Rm Rm Rm Rm
Health administration 289 (259) 30 31
Asset management 71 (48) 23 20
Asset administration 37 (25) 12 11
Total income from 397 (332) 65 62
administration business (table
1)
NOTE 2 - INCOME FROM HOLDING COMPANY (before 12 mths to 12 mths to
tax) 31.12.2003 31.12.2002
Rm Rm
Investment income 42 35
Realised and unrealised capital 132 (142)
appreciation/(depreciation)
Administration expenses (34) (24)
Net income from holding company (table 1) 140 (131)
METROPOLITAN HOLDINGS - GROUP RESULTS
NOTE 3 - ANALYSIS OF CORE HEADLINE EARNINGS 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Corporate business 111 94
Operating profit 154 132
Tax (43) (38)
Retail business 207 170
Operating profit 283 206
Tax (76) (36)
International business 3 13
Operating profit 8 16
Tax (5) (3)
Metropolitan Health Group 20 22
Operating profit 24 28
Tax (4) (6)
Shareholders" equity 93 79
Holding company expenses (34) (24)
Investment income on total shareholders" 168 145
assets
Income tax on investment income (41) (42)
Core headline earnings (table 2) 434 378
Total operating profit 469 382
Holding company expenses (34) (24)
Investment income on total shareholder assets 168 145
Total tax (169) (125)
Core headline earnings (table 2) 434 378
METROPOLITAN HOLDINGS - GROUP RESULTS
NOTE 4 - FUNDS RECEIVED 12 mths 12 mths
FROM CLIENTS Gross Gross Net inflow Net inflow
inflow outflow 31.12.2003 31.12.2002
Rm Rm Rm Rm
On-balance sheet
Retail business 3 900 (2 467) 1 433 1 288
Corporate business 2 463 (2 281) 182 347
International business 721 (367) 354 268
Total premiums/claims (note 7 084 (5 115) 1 969 1 903
7, 8)
Off-balance sheet
Health group 3 648 (3 245) 403 239
Corporate business 2 685 (1 951) 734 682
Total 13 417 (10 311) 3 106 2 824
NOTE 5 - ASSETS UNDER MANAGEMENT 31.12.2003 31.12.2002
Rm Rm
Investment assets 34 927 30 279
Strategic investments 3 -
Goodwill 337 389
Tangible and intangibles assets 202 223
Current assets and deferred tax 1 639 1 508
Total on-balance sheet assets (table 3) 37 108 32 399
Unit trusts 1 524 1 393
Health administration 1 577 1 281
Metropolitan Asset Managers 4 729 3 649
EB segregated assets 783 805
Total assets under management 45 721 39 527
METROPOLITAN HOLDINGS - GROUP RESULTS
NOTE 6: POLICYHOLDERS" FUND 31.12.2003 31.12.2002
Rm Rm
Balance at beginning 26 600 27 048
Inflow 11 454 5 583
Premiums received (note 7) 7 084 6 824
Investment return 4 370 (1 241)
Investment income 1 762 1 888
Realised and unrealised capital 2 608 (3 129)
appreciation/(depreciation)
Outgo (6 606) (6 277)
Payments to policyholders (note 8) (5 115) (4 921)
Sales and distribution costs (741) (642)
Administration expenses (769) (697)
Policyholders" tax paid 19 (17)
Income from insurance and investment business (1 205) 236
(table 1 & 6)
Foreign currency translation changes (12) 10
Balance at end 30 231 26 600
Liabilities under insurance contracts 23 948 21 172
Liabilities under investment contracts 5 622 4 685
90:10 fund surplus 661 743
Total (table 3) 30 231 26 600
NOTE 7 - PREMIUMS RECEIVED 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Recurring premiums 4 593 4 332
Individual life 3 558 3 270
Employee benefits 1 304 1 278
Re-insurance (269) (216)
Single premiums 2 491 2 492
Individual life 1 040 930
Employee benefits 1 451 1 562
Total (note 6) 7 084 6 824
Insurance contracts 5 199 5 457
Investment contracts 1 885 1 367
7 084 6 824
METROPOLITAN HOLDINGS - GROUP RESULTS
NOTE 7 - PREMIUMS RECEIVED 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Metropolitan Life Ltd 6 107 5 997
Metropolitan Odyssey Ltd 416 333
Metropolitan Life (Namibia) Ltd 322 313
Metropolitan Life of Botswana Ltd 186 181
Metropolitan Lesotho Ltd 53 -
7 084 6 824
NOTE 8 - PAYMENTS TO POLICYHOLDERS 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Individual life 2 735 2 537
Death and disability claims 734 661
Maturity claims 752 603
Annuities 416 378
Surrenders 898 935
Re-insurance recoveries (65) (40)
Employee benefits 2 380 2 384
Death and disability claims 474 342
Maturity claims 703 141
Annuities 278 199
Withdrawal benefits 206 339
Terminations 829 1 423
Re-insurance recoveries (110) (60)
Total (note 6) 5 115 4 921
Insurance contracts 3 719 3 773
Investment contracts 1 396 1 148
5 115 4 921
Metropolitan Life Ltd 4 654 4 468
Metropolitan Odyssey Ltd 207 228
Metropolitan Life (Namibia) Ltd 176 180
Metropolitan Life of Botswana Ltd 75 45
Metropolitan Lesotho Ltd 3 -
5 115 4 921
METROPOLITAN HOLDINGS - GROUP RESULTS
NOTE 9 - ANALYSIS OF ASSETS 31.12.2003 31.12.2002
BACKING GROUP EXCESS
Rm % Rm %
Listed equities 2 818 54.2 2 253 52.0
Foreign investments 439 8.4 599 13.8
Properties 373 7.2 432 10.0
Fixed interest 676 13.0 384 8.9
Money market 425 8.2 166 3.8
Intangible assets 337 6.5 389 9.0
Other assets 131 2.5 106 2.5
Group net asset value 5 199 100.0 4 329 100.0
(table 4)
Surplus in 90:10 fund 661 743
Excess - group (table 6) 5 860 5 072
TABLE 7: EMBEDDED VALUE 31.12.2003 31.12.2002
Rm Rm
Excess - group (table 6) 5 860 5 072
Adjustments for:
Asset management (table 15) 150 139
Health administration (table 15) 74 43
Holding company expenses (220) (163)
Surplus in 90:10 fund and goodwill (807) (927)
(table 8)
Adjusted net asset value 5 057 4 164
Net value of in-force business 2 493 2 159
Individual life 1 993 1 745
Gross value of in-force business 2 078 1 860
Less: Cost of capital (85) (115)
Employee benefits 500 414
Gross value of in-force business 564 538
Less: Cost of capital (64) (124)
Embedded value (table 8) 7 550 6 323
Embedded value per share (cents) 1 068 911
Adjusted net asset value per share (cents) 715 600
Number of shares in issue (million) 707 694
(net of 41 million treasury shares)
TABLE 8: EMBEDDED VALUE Net Value 31.12.2003 31.12.2002
ATTRIBUTABLE TO GROUP asset of in- Total Total
value force
Rm Rm Rm Rm
Metropolitan Life Ltd 3 642 2 208 5 850 4 812
Metropolitan Odyssey Ltd 129 111 240 210
Metropolitan International 94 - 94 290
Ltd
Metropolitan Life (Namibia) 146 128 274 177
Ltd
Metropolitan Life of 58 42 100 73
Botswana Ltd
Metropolitan Lesotho Ltd 3 4 7 -
Metropolitan Health Group 279 66 345 333
Methealth Namibia 2 8 10 3
Administrators (Pty) Ltd
Asset management 43 150 193 198
Metropolitan Holdings (after 803 (220) 583 411
consolidation adjustments)
Goodwill (146) (146) (184)
Total embedded value 5 053 2 497 7 550 6 323
(table 7)
Adjustment for surplus in 807
90:10 fund and goodwill
(table 7)
Excess - group (table 6) 5 860
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 9: ANALYSIS OF Non- Insurance 31.12.2003 31.12.2002
CHANGES IN GROUP insurance operations Total Total
EMBEDDED VALUE Rm Rm Rm Rm
Profit from new 75 109 184 141
business
Point of sale 72 103 175 132
Expected return to end 3 6 9 9
of period
Profit from existing (118) 492 374 (51)
business
Expected return 55 298 353 425
Operating experience (47) (3) (50) (204)
variances
Operating assumption (126) 197 71 (272)
changes
Embedded value profit (43) 601 558 90
from operations
Investment return on 144 464 608 (566)
net worth
Economic assumption 32 160 192 (29)
changes
Investment variances 2 63 65 (347)
Exchange rate movements - (6) (6) (5)
Total embedded value 135 1 282 1 417 (857)
profit
Capital raised 64 15 79 174
Dividend paid 11 (278) (267) (287)
Share buy-back and (2) - (2) (260)
share issue costs
Increase in embedded 208 1 019 1 227 (1 230)
value
Return on embedded 22.4 (11.3)
value (%)
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 10: VALUE OF LIFE INSURANCE NEW BUSINESS 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Retail business 58 -
Gross value of new business 61 8
Less: Cost of capital (3) (8)
Corporate business 34 60
Gross value of new business 37 67
Less: Cost of capital (3) (7)
International business * 11 8
Gross value of new business 12 10
Less: Cost of capital (1) (2)
103 68
* Net of outside shareholders
Outside shareholders" interest
Metropolitan Namibia - from 1 January to 30 June 2003: 80.2%, from 1 July to 31
December 2003: 78.7%
Metropolitan Botswana - full year: 75%
TABLE 11: SOURCE OF NEW BUSINESS 31.12.2003 31.12.2002
APE % Total % APE % Total %
General intermediary channel 16 13 16 17
Direct writers 49 46 43 40
Direct mail and telemarketing 20 12 27 13
Broker distribution 15 29 14 30
TABLE 12: VALUE OF NON-LIFE NEW BUSINESS 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Health administration 36 14
Asset management 36 50
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 13: NEW BUSINESS PREMIUMS 12 mths to 12 mths to
31.12.2003 31.12.2002
Rm Rm
Recurring premiums
Retail business 608 505
Corporate business 178 213
International business * 98 111
Individual life 84 92
Employee benefits 14 19
884 829
Single premiums
Retail business 1 019 882
Corporate business 1 398 1 556
International business * 67 54
2 484 2 492
Annual premium equivalent (APE) 1 132 1 078
* Net of outside shareholders
TABLE 14: VALUE OF NEW BUSINESS AS A % OF ANNUAL Margin
PREMIUM EQUIVALENT (APE)
31.12.2003 31.12.2002
% %
Retail business 8.2 0.0
Corporate business 10.7 16.3
International business 10.5 6.9
Total 9.1 6.3
APE represents new recurring premiums (net of lapses at inception) plus 10% of
single premiums.
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 15: VALUATION OF NON-LIFE SUBSIDIARIES Value as Write-up Embedded
per to fair value
balance value
sheet
Rm Rm Rm
Asset management 43 150 193
(table 7 & 8)
Health administration (table 7 & 281 74 355
8)
Table 16: PRINCIPAL ASSUMPTIONS 31.12.2003 31.12.2002
% %
Pre-tax investment return
Equities 11.3 12.8
Properties 11.3 12.8
Government stock 9.3 10.8
Cash 7.3 8.8
Risk discount rate 11.8 14.3
Investment return (before tax) - smoothed bonus 10.7 12.2
Expense inflation rate 6.5 8.0
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 17: LIFE BUSINESS: SENSITIVITIES - Change in base value
31.12.2003 of:
In-force New Notes
business business
% %
1% Increase in risk discount rate (5.5) (9.4) (i)
1% Reduction in risk discount rate 5.8 10.6 (i)
10% Increase in initial/maintenance (7.1) (15.5) (ii)
and recurring expenses
1% Increase in expense and salary (3.0) (4.1) (ii)
inflation
10% Increase in assumed lapses and (1.6) (8.1)
surrenders
10% Increase in mortality and (17.2) (62.2) (ii)
morbidity for assurances /
reduction in mortality for
annuities
1% Reduction in assumed investment (10.7) (6.2) (iii)
return
10% Fall in market value of assets (6.0)
10% Reduction in premium indexation (1.6) (4.7)
take-up rate (from 60% to 50%)
10% Reduction in the number of new (22.9)
policies written
10% Increase in non-commission related (19.6)
acquisition expenses
1% Increase in risk discount rate (2.3) (iv)
impact on cost of CAR
1% Reduction in risk discount rate 2.7 (iv)
impact on cost of CAR
Base value before cost of CAR 2 642 110
(rand million)
Notes:
(i) The risk discount rate appropriate to an investor depends on the
investor"s own requirements, tax position and perception of the
risk associated with the realisation of the future profits of
Metropolitan Holdings 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.
METROPOLITAN HOLDINGS - GROUP RESULTS
Notes to embedded value sensitivities (continued)
(iii) Bonus rates are assumed to change commensurately.
(iv) A change in the risk discount rate also has a noticeable effect
on the cost of holding the required CAR levels. The sensitivity
of the cost of CAR to changes in the other assumptions was
tested and found to be immaterial (under 0.1%). Other
sensitivities above exclude the impact on the cost of CAR.
TABLE 18: STOCK EXCHANGE PERFORMANCE 12 mths to 12 mths to 12 mths to
31.12.2003 31.12.2002 31.12.2001
Value of shares traded (rand million) * 994 1 652 2 472
Volume of shares traded (million) * 165 246 273
Shares traded (% of total shares in issue) 23.6 35.4 39.0
Value of shares traded - life insurance 40.8 42.9 40.1
(J084 / IX42 - rand billion)
Value of shares traded - top 40 index (J200 653.4 684.1 504.9
/ FI01 - rand million)
Trade prices (cents per share)
Highest 750 902 1 060
Lowest 470 485 650
Last sale of year (31 December) 685 610 800
Percentage change during year 12.30 (23.75) (18.28)
Percentage change - life insurance 0.45 (18.04) (15.69)
sector (J084)
Percentage change - top 40 index 9.37 (14.13) 28.41
(J200)
31 December
Price / core headline earnings ratio 11.03 11.04 15.24
Dividend yield % (dividend on listed 6.28 6.23 4.38
shares)
Dividend yield - top 40 index (J200) 2.85 5.76 3.37
Total shares issued (million)
Listed 637 635 667
Ordinary shares # 627 628 661
Share incentive scheme 10 7 6
Unlisted 70 59 33
Share purchase scheme 70 59 33
Total 707 694 700
METROPOLITAN HOLDINGS - GROUP RESULTS
TABLE 18: STOCK EXCHANGE PERFORMANCE 12 mths to 12 mths to 12 mths to
31.12.2003 31.12.2002 31.12.2001
Market capitalisation at year-end (rand 4.84 4.23 5.60
billion)#
Percentage of life insurance sector 5.96 5.27 n/a
* 2002 is net of 33 million shares acquired for R260 million and 2001 is net of
28 million shares acquired for R234 million as part of a share buy-back.
# Net of 41 million treasury shares held by a subsidiary company for both 2002
and 2003.
Date: 10/03/2004 07:00:29 AM Produced by the JSE SENS Department
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