Interim ResultsJune 2002

ContentsContents

1. Business environment

2. Interim results and operational performance

3. STANLIB

4. Capital adequacy and dividend cover

5. Scorecard – performance against goals

6. Key issues for second half 2002

7. Summary of achievements forfirst half 2002

1. Business environment

2. Interim results and operational performance

3. STANLIB

4. Capital adequacy and dividend cover

5. Scorecard – performance against goals

6. Key issues for second half 2002

7. Summary of achievements forfirst half 2002

Business environmentBusiness environment

• Market turmoil

• World equities down 22%

• JSE all share down 2%

• Volatile Rand up 14%

• CPIX up to 9,8%

• Prime rate up 1% to 16%

• Market turmoil

• World equities down 22%

• JSE all share down 2%

• Volatile Rand up 14%

• CPIX up to 9,8%

• Prime rate up 1% to 16%

Liberty performed well in testing markets

HighlightsHighlights

• Indexed new business• New business margin• Bancassurance new business• Headline earnings per share• Net cash inflow from insurance

operations: R1,6bn• Embedded value per share:

R56,68• Dividend cover amended:

reduced from 2,0 x to 1,5 x• Dividend per share of 162 cents

• Indexed new business• New business margin• Bancassurance new business• Headline earnings per share• Net cash inflow from insurance

operations: R1,6bn• Embedded value per share:

R56,68• Dividend cover amended:

reduced from 2,0 x to 1,5 x• Dividend per share of 162 cents

+22%18%

+81%-5%

+60%+5%

+27%

+22%18%

+81%-5%

+60%+5%

+27%

Significant gain in market share

Accounting policiesAccounting policies

• No changes to accounting policies

• In accordance with GAAP

• STANLIB equity accounted

• No changes to accounting policies

• In accordance with GAAP

• STANLIB equity accounted

Headline earnings –continuing operations

Headline earnings –continuing operations

Life fund operating surplus

Revenue earnings – shareholders’ funds

STC on ordinary dividends

Preference dividend

Headline earnings

Headline EPS (cents)

Dividend per share (cents)

Life fund operating surplus

Revenue earnings – shareholders’ funds

STC on ordinary dividends

Preference dividend

Headline earnings

Headline EPS (cents)

Dividend per share (cents)

563

171

(44

(28

662

242,5

162

563

171

(44

(28

662

242,5

162

)

)

)

)

594

120

(20

694

255,7

128

594

120

(20

694

255,7

128

)

)

(5

42

41

(5

(5

27

(5

42

41

(5

(5

27

)

)

)

)

)

)

30 June2002Rm

30 June2002Rm

30 June2001Rm

30 June2001Rm

Change

%

Change

%

Life fund earningsLife fund earnings

Reduced by 5,1% from R594 million to R563 million Geared to investment returns earned for policyholders’

portfolios

Reduced by 5,1% from R594 million to R563 million Geared to investment returns earned for policyholders’

portfolios

Significant reduction in this component of life fund earnings

Offset by benefits from expense management

Significant reduction in this component of life fund earnings

Offset by benefits from expense management

Portfolio weighted average

Mainly due to:Offshore portfolio

Portfolio weighted average

Mainly due to:Offshore portfolio

(0,4

(16,2

(0,4

(16,2

)

)

)

)

10,2

0,8

10,2

0,8

30 June2002

%

30 June2002

%

30 June 2001

%

30 June 2001

%

Local equity and bond portfolios outperformed benchmarks

Net cash inflows from insurance operations

Net cash inflows from insurance operations

Total premiums

Claims and policyholder benefits

Net cash flow

Total premiums

Claims and policyholder benefits

Net cash flow

7 552

(5 915

1 637

7 552

(5 915

1 637

))

6 782

(5 758

1 024

6 782

(5 758

1 024

)

)

11

3

60

11

3

60

30 June2002Rm

30 June2002Rm

30 June2001Rm

30 June2001Rm

Change

%

Change

%

Total net cash inflow from insurance operations

Total net cash inflow from insurance operations

102,5221,5

707,2

1024,3

1636,5

0

500,0

1 000,0

1 500,0

2 000,0

1998 1999 2000 2001 2002

Rm

Embedded valueEmbedded value

Shareholders’ funds

Value of life businessin-force

Financial services subsidiaries fair value adjustment

Total

Embedded value per share (Rand)

Shareholders’ funds

Value of life businessin-force

Financial services subsidiaries fair value adjustment

Total

Embedded value per share (Rand)

9 136

5 507

835

15 478

56,68

9 136

5 507

835

15 478

56,68

8 346

5 112

1 309

14 767

54,21

8 346

5 112

1 309

14 767

54,21

9

8

(36

5

5

9

8

(36

5

5

)

)

30 June2002Rm

30 June2002Rm

30 June2001Rm

30 June2001Rm

Change

%

Change

%

Liberty Personal BenefitsLiberty Personal Benefits

Number of policies

• New business up 18%

• Surrenders down 22%

• Lapses down 3%

Number of policies

• New business up 18%

• Surrenders down 22%

• Lapses down 3%

Better than assumed cost per policy produced expense benefits

New business – percentage increaseNew business – percentage increase

Recurring

Single

Total

Index

Recurring

Single

Total

Index

26

30

29

27

26

30

29

27

10

(24

(18

(2

10

(24

(18

(2

23

17

18

22

23

17

18

22

)

)

)

)

)

)

Personal

Benefits

%

Personal

Benefits

%

Corporate

Benefits

%

Corporate

Benefits

%

Total

%

Total

%

Driven by:• Bancassurance sales up 81,3%• Growth and productivity of sales

force• Investment performance• Product innovation• Adequate off-shore capacity

Value of new business (VONB)Value of new business (VONB)

Current period margin = 18% on index (Dec 2001 : 19%)

Margin sustained in Personal Benefits and Charter Liberty Corporate Benefits VONB reduced as a result

of lower volumes Higher level of bancassurance sales reduces

calculated margin

Current period margin = 18% on index (Dec 2001 : 19%)

Margin sustained in Personal Benefits and Charter Liberty Corporate Benefits VONB reduced as a result

of lower volumes Higher level of bancassurance sales reduces

calculated margin

Value of new businessValue of new business 248248 225225 1010

30 June2002Rm

30 June2002Rm

30 June2001Rm

30 June2001Rm

Change

%

Change

%

Market share(Full year ended 31 December 2001)

Market share(Full year ended 31 December 2001)

New recurring individualBrokersAgents

Individual single premiums

BrokersAgents

New recurring individualBrokersAgents

Individual single premiums

BrokersAgents

15,7214,1117,68

11,499,46

17,00

15,7214,1117,68

11,499,46

17,00

17,8616,9618,94

14,7613,2514,95

17,8616,9618,94

14,7613,2514,95

2000%

2000%

2001%

2001%

Average recurring premiums(Full year ended 31 December 2001)

Average recurring premiums(Full year ended 31 December 2001)

Liberty average premiums

Industry average

Liberty % average

Liberty average premiums

Industry average

Liberty % average

5 705

2 649

215

5 705

2 649

215

6 086

2 519

241

6 086

2 519

241

2000Rm

per annum

2000Rm

per annum

2001Rmper

annum

2001Rmper

annum6,7

(4,9

6,7

(4,9

Change

%

Change

%

)

)

BancassuranceBancassurance

SBFC (Stanfin)• Now managed by Liberty• Total sales up 18%Charter• Total new business up 32%• Funeral products sales up 35%

(410 000 policies in-force)

SBFC (Stanfin)• Now managed by Liberty• Total sales up 18%Charter• Total new business up 32%• Funeral products sales up 35%

(410 000 policies in-force)

Franchise performanceFranchise performance

• New franchise principal remuneration focusing on quality of business

• Results year-to-date:

* Single premiums up 48,8%

* Recurring premiums up 43,3%

* Case count up 18,1%

• New franchise principal remuneration focusing on quality of business

• Results year-to-date:

* Single premiums up 48,8%

* Recurring premiums up 43,3%

* Case count up 18,1%

New products – Excelsior Investments Series

New products – Excelsior Investments Series

• Segmented offering (savers and wealth creators)

• World class local and international asset management

• Risk profiled and sector specific funds• Risk analysis and investment tools• Investment switching at no cost• Tax benefit and flexibility of an endowment• Transparency and dynamic reporting on-

line

• Segmented offering (savers and wealth creators)

• World class local and international asset management

• Risk profiled and sector specific funds• Risk analysis and investment tools• Investment switching at no cost• Tax benefit and flexibility of an endowment• Transparency and dynamic reporting on-

line

MedschemeMedscheme

• Transfer effective 1 August 2002

• ± 38 000 members

• Liberty to continue marketing interface

• Liberty retains reinsurance of scheme

• Insurance JV with Charter to mine ± 1,2 million members

• Transfer effective 1 August 2002

• ± 38 000 members

• Liberty to continue marketing interface

• Liberty retains reinsurance of scheme

• Insurance JV with Charter to mine ± 1,2 million members

Liberty ErmitageLiberty Ermitage

• Assets under management increased from US$2 152 million to US$2 258 million

• Investment marketing sales force now in place

• Strong support from Standard Bank and STANLIB evident

• Assets under management increased from US$2 152 million to US$2 258 million

• Investment marketing sales force now in place

• Strong support from Standard Bank and STANLIB evident

Liberty ErmitageLiberty Ermitage

• Hedge funds stood up well to turmoil in world markets:* Alpha –0,03% in US dollars* Asset Selection +0,94% in US

dollars

• Hedge funds stood up well to turmoil in world markets:* Alpha –0,03% in US dollars* Asset Selection +0,94% in US

dollars

Three out of four equity funds achieved Micropal

4-Star ratings placing them in the top 30% of their

categories in the world over three years

STANLIBSTANLIB

• Assets under management• Assets under management

Life fund

Segregated funds

Unit trusts

Africa

Total

Life fund

Segregated funds

Unit trusts

Africa

Total

30 June

2002

Rm

30 June

2002

Rm

31 December

2001

Rm

31 December

2001

Rm

Increase

%

Increase

%54 807

53 392

25 191

1 737

135 127

54 807

53 392

25 191

1 737

135 127

53 996

52 551

21 174

1 677

129 398

53 996

52 551

21 174

1 677

129 398

1,5

1,6

19,0

3,6

4,4

1,5

1,6

19,0

3,6

4,4

STANLIBSTANLIB

• Strong relative investment performance

• Headcount down 79 people

• Products being rationalised – best of breed to be retained

• Systems integration commenced

• Office move early December

• Strong relative investment performance

• Headcount down 79 people

• Products being rationalised – best of breed to be retained

• Systems integration commenced

• Office move early December

Ahead of plan – merger costs in second half

CAR cover multipleCAR cover multiple

14,4

10,6

6,25,6

3,8 3,43,5

7,38,9

0

2

4

6

8

10

12

14

16

Jun 98

Dec 98

Jun 99

Dec 99

Jun 00

Dec 00

Jun 01

Dec 01

Jun 02

Capital managementCapital management

• Ongoing review of capital management• European insurers capital adequacy being

tested• Expected regulatory increase in local CAR

requirement

Dividend cover:* Dividend cover reduced from 2,0 x to 1,5 x* Retain 33,3% of headline earnings vs 50%* Dividend per share increased by 27%

• Ongoing review of capital management• European insurers capital adequacy being

tested• Expected regulatory increase in local CAR

requirement

Dividend cover:* Dividend cover reduced from 2,0 x to 1,5 x* Retain 33,3% of headline earnings vs 50%* Dividend per share increased by 27%

Well positioned in volatile markets

ScorecardScorecard

Goals set for 20021. Launch and grow

STANLIB2. Develop SBFC and

bancassurance sales3. Reposition Charter in

mass and niche markets4. Focus on profitability of

Liberty Corporate Benefits

Goals set for 20021. Launch and grow

STANLIB2. Develop SBFC and

bancassurance sales3. Reposition Charter in

mass and niche markets4. Focus on profitability of

Liberty Corporate Benefits

½½

ScorecardScorecard

Goals set for 2002

5. Leverage CVM initiative for new business and retention

6. Grow Liberty Ermitage sales

7. Focus on productivity of agency and franchise

Goals set for 2002

5. Leverage CVM initiative for new business and retention

6. Grow Liberty Ermitage sales

7. Focus on productivity of agency and franchise

By half year 5½ out of 7 achieved

Key issues for second half 2002Key issues for second half 2002

• Investment market performance

• Higher STC on higher dividend

• Merger costs – STANLIB

• Re-positioning of Charter

• Corporate Benefits – sales and margins

• Investment market performance

• Higher STC on higher dividend

• Merger costs – STANLIB

• Re-positioning of Charter

• Corporate Benefits – sales and margins

Summary of achievements for first half 2002

Summary of achievements for first half 2002

Achievements• New business and margin• Market share• Franchise productivity• Bancassurance and SBFC• Management of in-force business • Expense control• Healthcare administration outsourced• STANLIB launch

Achievements• New business and margin• Market share• Franchise productivity• Bancassurance and SBFC• Management of in-force business • Expense control• Healthcare administration outsourced• STANLIB launch