Investment Case
Sustainable delivery
page 2
Overview
Strategic positioning
Strategic delivery
Financial performance – 2015 interim results
page 3
Leading financial services group in Africa, with presence in India and SE Asia.
Established in 1918, listed in 1998 on the JSE & Namibian Stock Exchange
2 166 million issued shares, 486 000 shareholders
Market Cap of > US$10bn
JSE/ALSI40 stock with > 80% free-float
Average daily trading stats
4 - 5 million shares per day
>50% of shares trade p.a.
Institutional shareholding of 87%, 35% offshore shareholding
Overview
page 4
Operational structure
100%
100%
100%
60%
SA Retail: life insurance, investment
& other financial services
Sanlam Personal
Finance
Emerging markets ex-SA: life insurance, general insurance,
investments, credit & banking
Sanlam Emerging
Markets
SA & Developed markets: investment management, wealth
management, employee benefits
Sanlam
Investments
General insurance in SA & co-investor in
SEM general insurance businesses
Santam
Sanlam Group
Group Office
100% 61%100%100%
the sanlam strategy
maximising shareholder value
page 6
Strategic focus central to what we doOptimising value creation
Strategic pillars
Transformation
Diversification
Optimal capital utilisation
Operational efficiencies
Earnings growth
Strategic enablers
Environmental footprint
Prosperous society
Responsible products and services
People development
Sound governanceM
axim
isin
gR
oG
EV
Sustainable
value
creation for
shareholders
page 7
A strategy focused on growthDriving geographic, product and services presence
South AfricaSolid base & cash flows
Rest of AfricaDemographics, low
insurance penetration, competitive
environment, Pan-Africa opportunity
India/SE AsiaLower income
segments have similar dynamics than SA ELM
and RoA
DevelopedNiche, solutions
for SA & RoAclients
page 8
Core regional focus areasBalance structural and organic growth
Operational and capital efficiencies key in current environment
Further diversifying distribution capability
Reviewing optimal capital structure under SAM
South AfricaDelivery of
sustainable growth
Effe
ctiv
e c
ap
ital m
an
ag
em
en
t
page 9
Core regional focus areasBalance structural and organic growth
Operational and capital efficiencies key in current environment
Further diversifying distribution capability
Reviewing optimal capital structure under SAM
South AfricaDelivery of
sustainable growth
Increased emphasis on accelerated organic growth
Extracting maximum value from existing relationships
Geographic expansion in line with client and intermediary needs
Other Emerging Markets
Platform for future growth
Effe
ctiv
e c
ap
ital m
an
ag
em
en
t
page 10
Core regional focus areasBalance structural and organic growth
Products and services for SA and Rest of Africa client base
Expand distribution post Intrinsic sale
Wealth and investment management focus
Developed Markets
Niche approach
Increased emphasis on accelerated organic growth
Extracting maximum value from existing relationships
Geographic expansion in line with client and intermediary needs
Other Emerging Markets
Platform for future growth
Effe
ctiv
e c
ap
ital m
an
ag
em
en
t
page 11
The growth opportunityGrowth markets in South Africa
47%
22%
16%17%
22%
36%
15%
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2006 2013
% o
f popula
tion
LSM 1-4 LSM 5 LSM 6-7 LSM 8-10
page 12
The growth opportunityLife insurance penetration in Africa
11.4%
5.4%
1.9%
0.9% 1.1%0.5% 0.4%
0.1% 0.2% 0.1%
South Africa Namibia Botswana Malawi Kenya Ghana Zambia Tanzania Nigeria Uganda
% o
f G
DP
BRIC average: 1.9%
Global average: 3.7%
Source: Swiss Re and AXCO
strategic delivery
exceeding overall targets
page 14
Top-line earnings growth
Earnings per share
Net operating profit per share increased by 5% (11% excl one-offs)
Normalised headline earnings per share up 4%
Business volumes
New business volumes increased by 22% to R100bn
Net fund inflows of R7bn
Net life VNB up 5% to R655m
Net VNB margin of 2.66% – maintained on per product basis
Group Equity Value
Group Equity Value of R47.53 per share
Annualised RoGEV per share of 13%
Financial performance in 1H15
page 15
Operational efficienciesProfitable volume growth
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
100
200
300
400
500
600
700
800
1H06 1H07 1H08 1H09 1H10 1H11 1H12 1H13 1H14 1H15
South Africa Rest of AfricaOther International Margins - rhs
page 16
Operational efficiencies
Persistency – SA middle-income market
Focus on quality
4.8
3.9 3.9 3.6
3.4
3.8 3.9
3.0 2.9 2.9 2.8 2.9 2.9
4.2 4.0
3.8 3.7 3.6
4.2
3.4
2.9 2.8 2.7 2.9 2.8
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Lapses, surrenders & fully paid-ups as % of in-force per half year
H1 H2
page 17
Operational efficiencies
Persistency – SA lower income market
Focus on quality
9.6
8.7
10.6
9.8
8.5
9.6 9.2
0
2
4
6
8
10
12
2012 2013 2014 2015
Lapses, surrenders & fully paid-ups as % of in-force per half year
H1 H2
page 18
Operational efficiencies
Positive experience continuing
Experience variances
241
142 138
277 288 278
636
468
681
555
1 021 991
408
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0
200
400
600
800
1 000
1 200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1H15
R'million % of VIF (rhs)
page 19
Investment performance
Percentage of SIM’s AUM to exceed benchmark
Focus on long-term performance track record
2011
2012
2013
2014
1H15
Rolling 3 year Rolling 5 year
100% 80% 60% 40% 20% 0% 20% 40% 60% 80% 100%
page 20
Optimising capital allocated to clusters - driving increased returns
Discretionary capital invested in growth markets as preference
Return to shareholders if not utilised in reasonable timeframe
Discretionary capital earmarked mainly for Africa, India and SE Asia
Optimising capital base
Capital efficiency
page 21
Capital efficiencyCapital redeployed since 2005 (R34bn)
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
Capital released Capital deployed
Discretionary capital
South Africa
Developed markets
Emerging markets
Share buy back/special dividend
page 22
Capital efficiencyComposition of GEV transformed since 2005
-
20 000
40 000
60 000
80 000
100 000
120 000
GEV 2005 GEV Jun 2015
Discretionary capital
Other capital
Non-life operations
Value of in-force
Life Required Capital
page 23
Diversification
Group Equity Value Net Operating Profit
Life insurance 50% 61%
General insurance 17% 13%
Investment management 15% 12%
Credit & structuring 9% 12%
Admin, health & other 9% 2%
Building a balanced portfolio
page 24
DiversificationInternational positioning focused on emerging markets
Emerging Markets - Direct presence
Emerging Markets - Indirect presence
Developed Markets
India
Malaysia
Philippines
NigeriaGhana
The Gambia
Kenya
Uganda
Rwanda
Burundi
Tanzania
Malawi
Zambia
Botswana
Namibia
Lesotho
South Africa
Switzerland
United Kingdom
USA
Australia
Ireland
Mozambique
page 25
DiversificationGeographic profile
Country – direct stakeEffective interest
Life/General insuranceLife insurance
Market share/PositionGeneral insurance
Market share/Position
South Africa 100%/61% 25%/2 23%/1
Botswana 60%/60% 76%/1 3%/5
Namibia 59%-100%/37% 17%/2 28%/1
Zambia 70%/62% 33%/1 12%/4
Tanzania 64%/52% 53%/1 2%/18
Kenya 56%/31% 13%/4 1%/32
Malawi 62%/62% 48%/1 38%/1
Uganda 100%/84% 15%/4 2%/13
Ghana 49%/40% 23%/2 10%/3
Nigeria 35%/35% 5%/7 1%/32
Rwanda 63%/63% 38%/2 32%/1
India 20%/20% <1%/20 2%/14
Malaysia 51%/49% 3%/8 3%/14
Mozambique 60% <1%/5 -
Developed markets Various <1% -
page 26
DiversificationProduct mix
page 26
page 27
DiversificationA better balanced portfolio
SA Traditional98%
Namibia2%
SA Traditional98%
Namibia1%
Other international1%
SA Traditional54%
SA Entry-level23%
Namibia4%
Botswana9%
Rest of Africa7%
Other international3%
1H03R100m
1H15R655m
SA Traditional68%
SA Entry-level11%
Namibia4%
Botswana5%
Rest of Africa2%
Other international10%
Net VNB Net operating profit
17% average
growth rate p.a.
16% average
growth rate per
share p.a.
1H03R756m
1H15R3 622m
page 28
DiversificationContribution from businesses outside of South Africa
South Africa Other emerging markets
76%
18%
6%
79%
16%
5%
Net operating profit
77%
20%3%
76%
22%
2%
Net VNB
77%
16%
7%
76%
16%
8%
Group Equity Value
2014
2015
2014
2015
2014
2015
Other international
page 29
Largest exposure to ex-SA emerging markets of South African insurers
Diversified operations shield Group earnings from difficult operating environment in specific countries
Expanding SA entry-level footprint
Strengthening relationships in Africa
Shriram Capital – unique business model in India
Expansion into South-East Asia – synergies and organic growth
Competitive advantage
Diversification
sanlam group
financial performance – 1H2015
page 31
External operating environmentCommodity-based economies under pressure
Macro environment and electricity supply constraining capital investment and economic activity
Modest growth in employment and disposable income
Highly competitive market across all products
South Africa
Commodity prices impacting on growth and currencies
Increase in competition, including large internationals
Longer term growth potential remains intact, but challenges in the short term
Rest of Africa
Slower than expected improvement in Indian economic growth
Delays in roll out of infrastructure projects in India
Good GDP growth in Malaysia despite low oil prices
India / SE Asia
page 32
Internal operating environment6-months results impacted by internal challenges
Loss of PIC funds in 2014 impacting on SI performance fees; additional R10bn outflow in 2H15
SI admin costs elevated by projects and capacity building in Retail and Institutional units
South Africa
System implementation issues
More focus required on bedding down acquisitions
Improve balance sheet management
Rest of Africa
Credit granted in anticipation of infrastructure roll out
Delays in releasing state funding causing significant bad debts in equipment finance subsidiary
Book closely managed by STFC to limit further losses
India
page 33
Salient features
2015 2014 �
Group Equity Value* cps 4 753 4 684 1%
Annualised RoGEV per share % 13,0 18,5
CAR cover (Sanlam Life)* 4,8 4,5
Net operating profit R mil 3 622 3 461 5%
cps 177,0 169,2 5%
Normalised Headline earnings R mil 4 588 4 393 4%
cps 224,2 214,8 4%
New business volumes R mil 99 879 81 833 22%
Net fund flows R mil 6 769 19 222 -65%
New Life business EV (net) R mil 655 626 5%
New Life EV margin % 2,66 2,68
* Comparative information as at 31 December 2014
page 34
Business flows
Gross Net
R million 2015 2014 � 2015 2014
by business
Personal Finance 29 162 23 662 23% 10 188 8 087
Emerging Markets 5 395 4 030 34% (8 981) 1 762
Sanlam Investments 56 234 45 682 23% 2 260 6 362
Santam 9 088 8 459 7% 3 302 3 011
by licence
Life insurance 18 620 17 536 6% 5 822 6 137
Investment 71 359 55 251 29% (2 549) 9 926
General insurance 9 900 9 046 9% 3 496 3 159
Total 99 879 81 833 22% 6 769 19 222
page 35
Value of new covered business
Value of New Business Margin
R million 2015 2014 � 2015 2014
Personal Finance 482 437 10% 2,64% 2,73%
Emerging Markets 222 196 13% 6,17% 7,30%
Employee Benefits 16 42 -62% 0,76% 2,30%
Sanlam UK 10 22 -55% 0,53% 0,59%
Total 730 697 5% 2,82% 2,88%
Net of minorities 655 626 5% 2,66% 2,68%
Comparable economic basis 660 626 5% 2,68% 2,68%
page 36
Net operating profit
R million 2015 2014 �
Personal Finance 1 955 1 763 11%
Emerging Markets 562 624 -10%
Sanlam Investments 712 727 -2%
Santam 413 353 17%
Corporate & other (20) (6) ->100%
Total 3 622 3 461 5%
page 37
Income statement
R million 2015 2014 �
Net operating profit 3 622 3 461 5% Per share 177,0 169,2 5%
Net investment return 1 148 1 122 2%
Other (182) (190) 4%
Normalised headline earnings 4 588 4 393 4% Per share 224,2 214,8 4%
Fund transfers 138 54
Headline earnings 4 726 4 447 6% Per share 233,1 220,2 6%
page 38
Group Equity Value
Equity Value RoGEV
R million 2015 2014* Rm %
Group operations 90 932 87 739 6 165 7,0%
Personal Finance 39 312 38 453 3 129 8,1%
Emerging Markets 14 859 14 571 702 4,8%
Investments 22 135 20 122 1 975 9,8%
Santam 14 626 14 593 359 2,5%
Discretionary & Other 6 331 8 197 (263) -3,2%
TOTAL 97 263 95 936 5 902 6,2%
cps 4 753 4 684 294 6,3%
Adjusted return 7,5% Return target 5,9% * Comparative information as at 31 December 2014
page 39
Group Equity Value earnings
1 820
608
655
408 28
3 629 211
-1 443 -14
2 428
3 519
7 148
5 902
0
1000
2000
3000
4000
5000
6000
7000
8000
Expe
cte
d r
etu
rno
n V
IF
Expe
cte
d r
etu
rno
n A
NW
Expe
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d L
ife
ea
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gs VN
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ge
xp
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en
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s
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ssu
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juste
d L
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rnin
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juste
d N
on
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retu
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d R
oG
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Inv v
aria
nce
s
Econ
om
ica
ssu
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tio
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Go
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will
RoG
EV
15.8%13%
page 40
Return on Group Equity ValueOut perform growth target of long-bond rate + 400bp
13.4 12.4 12.210.8
12.2 12.1 12.2
4.8
3.3
9.8
6.2
6.3
0.9
5.2
0
5
10
15
20
25
2010 2011 2012 2013 2014 1H15 Avg
Target Out performance
2.4% from markets
sanlam group
cluster results – 1H2015
sanlam personal
finance
page 43
Sanlam Personal Finance
R million 2015 2014 �
New business volumes 29 162 23 662 23%
Sanlam Sky 546 474 15%
Individual Life 6 048 5 821 4%
Glacier 22 568 17 367 30%
Net flows 10 188 8 087
Sanlam Sky 1 373 1 307
Individual Life (1 513) (859)
Glacier 10 328 7 639
page 44
Sanlam Personal Finance
R million 2015 2014 �
Value of new life business 482 437 10%
Sanlam Sky 149 135 10%
Individual Life 234 228 3%
Glacier 99 74 34%
Comparable economic basis 486 437 11%
New business margin 2,64% 2,73%
Sanlam Sky 7,67% 7,62%
Individual Life 2,54% 2,59%
Glacier 1,39% 1,37%
Comparable economic basis 2,66% 2,73%
page 45
Sanlam Personal Finance
R million 2015 2014 �
Gross operating profit 2 718 2 439 11%
Sanlam Sky 569 518 10%
Individual Life life and investments 1 733 1 571 10%
Glacier 209 171 22%
Personal loans 176 148 19%
Other 31 31 -
Net operating profit 1 955 1 763 11%
Group Equity Value* 39 312 38 453
RoGEV (6 months) 8,1% 8,7%
label* Comparative information as at 31 December 2014
sanlam emerging
markets
page 47
Sanlam Emerging Markets
R million 2015 2014 �
New business volumes 5 395 4 030 34%
Namibia 1 286 1 541 -17%
Botswana 2 449 1 137 115%
Rest of Africa 885 827 7%
India/Malaysia 775 525 48%
Net fund flows (8 981) 1 762
Namibia (41) 343
Botswana (9 983) 478
Rest of Africa 799 814
India/Malaysia 244 127
Value of new life business 222 196 13%
Margin 6,17% 7,30%
page 48
Sanlam Emerging Markets
R million 2015 2014 �
Gross operating profit 1 117 1 129 -1%
Namibia 257 254 1%
Botswana 411 348 18%
Rest of Africa 123 108 14%
India/Malaysia 327 432 -24%
Corporate (1) (13) 92%
Net operating profit 562 624 -10%
Group equity value* 14 859 14 571
RoGEV (6 months) 4,8% 12,3%
* Comparative information as at 31 December 2014
sanlam investments
page 50
Sanlam Investments
R million 2015 2014 �
Net investment business flows 2 585 4 871
Investment management SA 4 203 3 883
Wealth management 2 446 (457)
International (4 061) 1 346
Capital management (3) 99
New insurance business 2 988 4 389 -32%
Employee benefits 1 182 952 24%
Sanlam UK 1 806 3 437 -47%
Net life business (325) 1 491
Value of new life business 26 64 -59%
Margin 0,65% 1,16%
page 51
Sanlam Investments
R million 2015 2014 �
Gross operating profit 933 982 -5%
Investment management 592 612 -3%
Employee benefits 206 216 -5%
Capital management 135 154 -12%
Net operating profit 712 727 -2%
Group Equity Value* 22 135 20 122
Covered business 7 841 7 833
Other 14 294 12 289
RoGEV (6 months) 9,8% 11,2%
* Comparative information as at 31 December 2014
santam
page 53
Santam
R million 2015 2014 �
Net earned premiums 9 088 8 459 7%
Gross operating profit 1 055 871 21%
Underwriting surplus 808 626 29%
Working capital & other 247 245 1%
Net operating profit 413 353 17%
Underwriting margin 8,9% 7,4%
Group Equity Value* 14 626 14 593
RoGEV (6 months) 2,5% 7,0%
* Comparative information as at 31 December 2014
page 54
Ticker symbol: SLLDY
CUSIP: 80104Q208
Ratio: 1 ADR : 5 Ordinary Shares
Depositary bank: Deutsche Bank Trust Company Americas
Depositary bank contact: Stanley Jones
ADR broker helpline: +1 212 250 9100 (New York)+44 207 547 6500 (London)
e-mail: [email protected]
ADR website: www.adr.db.com
Depositary bank’s local custodian: Computershare South Africa
Sponsored level 1 ADR
Sanlam ADR programme