| Mon 30 Aug 2004, 11:47 | | Metropolitan Holdings Limited - Notice To The Hold |
|
Metropolitan Holdings Limited - Notice To The Holders Of Cu
Release Date: 30/08/2004 11:10:02 Code(s): MET
METROPOLITAN HOLDINGS LIMITED - NOTICE TO THE HOLDERS OF CU
LIFE POLICIES THAT WERE TRANSFERRED TO METROPOLITAN LIFE
METROPOLITAN HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2000/031756/06
JSE Code: MET
NSX Code: MTD
ISIN Code: ZAE000050456
(`Metropolitan`)
NOTICE TO THE HOLDERS OF CU LIFE POLICIES THAT WERE
TRANSFERRED TO METROPOLITAN LIFE
Background Information
The Commercial Union Life Assurance Company of South Africa
Limited (`CU Life`) was acquired by and became a wholly
owned subsidiary of Metropolitan Life Limited
(`Metropolitan`) with effect from 31 December 1998. In
December 2001, Metropolitan effected a corporate
restructuring and both Metropolitan and CU Life became
wholly owned subsidiaries of a newly created holding
company, New Africa Capital, subsequently renamed
Metropolitan Holdings Limited (`MHL`).
In December 2002, the High Court of South Africa sanctioned
the transfer of the business of CU Life into Metropolitan
with effect from 1 January 2002. The transfer was effected
in terms of a Transfer Agreement between the parties and the
rights and expectations of the CU Life policyholders were
secured by transferring the business of CU Life into a ring-
fenced sub-fund within Metropolitan. This ring-fenced sub-
fund continued to follow the same bonus and profit sharing
structures that prevailed in CU Life before the transfer.
Further amalgamation of the businesses was made subject to
compliance with any additional terms and conditions imposed
by Registrar of Long-Term Insurance (`the Registrar`) and to
receipt of his written approval.
Amalgamation Proposals
The Directors of Metropolitan have submitted proposals for
amalgamating the ex-CU Life business with the Metropolitan
business to the Registrar and requested his approval. The
salient features of the amalgamation proposals are as
follows:
1. The effective date of amalgamation will be 1 January
2004.
2. The sub-fund structure will be terminated and the ex-CU
Life business will be amalgamated with and be subject to
the same profit participation mechanisms as the
Metropolitan business.
3. The ex-CU Life business will continue to be administered
by companies in the Metropolitan group, and will
continue to be conducted on substantially the same
principles and philosophies as are adopted for the
Metropolitan business.
4. Amounts of R 120 million and R 50 million will be
attributed to the ex-CU Life deposit administration
funds and pre-1992 individual reversionary bonus
policies respectively, in order to raise asset shares to
funding levels that will allow policyholders` reasonable
expectations to be satisfied.
5. Additional `windfall` attributions of a further R 60
million and R 110 million will be made to the ex-CU Life
deposit administration funds and individual with profit
business respectively.
6. An amount of R 25 million will be used to enhance the
payments made during 2002 and 2003 in respect of
individual with profit maturity and death claims.
7. The balance of the surplus remaining after the
appropriations described above will be transferred to
shareholders` funds and will be retained in a non-
distributable reserve for a period of 10 years to
enhance the security of policyholder benefits. The
investment return on the non-distributable reserve will
be for the account of shareholders.
8. At the end of each financial year until 2013, a
certification to the Financial Services Board from the
statutory actuary of Metropolitan will provide an
additional safeguard for the reasonable expectations of
the ex-CU Life policyholders.
Effect on Eligible Policyholders
Benefits to with profit policyholders depend on the bonuses
declared, which in turn, are determined largely by the so-
called `asset share` built up over the term of the policy.
The amounts described above, in total R 340 million, will be
injected into the asset share of the with profit business -
deposit administration funds and individual reversionary
bonus and smoothed bonus policies - and will enhance their
future bonus prospects. For reversionary bonus policies,
this will be by means of enhanced future terminal bonuses,
and for individual smoothed bonus policies, by way of a
vesting bonus. It is estimated that approval and
implementation of the proposed amalgamation will enhance the
future benefit expectations of eligible policyholders by
some 7%. The statutory actuary of Metropolitan has confirmed
that the proposed amalgamation will enhance the benefit
expectations of the ex-CU Life with profit policyholders and
will not adversely affect the benefit expectations of the ex-
CU Life non-profit policyholders, nor those of the
Metropolitan policyholders.
Approval of the Registrar
The amalgamation remains subject to the written approval of
the Registrar which will be based on, inter alia, the report
of Mr T Hartwig, the independent actuary appointed by the
Registrar, the report of the statutory actuary of
Metropolitan and written representations received from
policyholders.
Board Approval
The Board of Metropolitan Life has a mandate from MHL to
approve the structure and terms of the amalgamation. The
proposals made to the Registrar have already received such
approval, but any additional requirements imposed by the
Registrar must still be submitted for the approval of the
Board of Metropolitan Life.
Additional Information
Copies of the report containing Metropolitan`s amalgamation
proposals, as well as the reports of the statutory actuary
and the independent actuary will be available for inspection
by interested parties during office hours between Monday 6
September 2004 and Tuesday 21 September 2004 at the
company`s offices at Parc du Cap 7, Mispel Road, Cape Town
and at Constantia Office Park, Corner of 14th Avenue and
Hendrik Potgieter Street, Roodepoort. Alternatively,
interested parties may access the documents electronically
on the Metropolitan website at www.Metropolitan.co.za.
Representations to the Registrar
Policyholders are invited to submit written representations
concerning the proposals to the Company Secretary,
Metropolitan Life, P.O. Box 2212, Bellville 7535, or
directly to the Registrar of Long-Term Insurance, P.O. Box
35655, Menlo Park, 0102. Representations, in writing, should
reach these offices by the close of business on Tuesday 21
September 2004.
P R Doyle
Group Chief Executive
Metropolitan Holdings Limited
Cape Town
30 August 2004
Sponsor
Merrill Lynch South Africa (Pty) Limited
