1

2

Presentation toInvestment Analysts’

Society

3rd/4th March 2004

www.liberty.co.za

3

Operating climate

• Increasing compliance and regulatory requirements

• Low interest rate/low inflation environment

• Strengthening of the Rand• Volatile investment markets• Risk averse investors• Perception of industry

4

Operations

5

Liberty Personal Benefits -market share

• Strong Excelsior investment product sales• Property-backed products very popular• Risk product launched – Lifestyle Protector R120 million sales since launch

6

Liberty Personal Benefits –average recurring premiums

All officesLarge officesLiberty Personal BenefitsLPB as % of all officesLPB as % of large offices

30 Sept2003*

Rm

31 Dec2002Rm

%Change

2 1412 8436 796316,2

%238,1

%

2 2982 7546 443280,4

%234,0

%

(735

)

* Source: LOA statistics

7

Liberty Personal Benefits

• Represents 70% of total business based on value of liabilities (low percentage smoothed bonus business)

Focus on:• Integration of Healthcare operations• Restructuring of operations• Customer service and costs• Implementation of FAIS legislation• Partial commission uncapping• Further leveraging channel capabilities

8

Liberty Corporate Benefits

• 9% reduction in headcount• Building on packaged product model• Focusing on service delivery• Risk margins maintained (despite

HIV/AIDS)• Standard Bank opportunity• Small pension fund audit exemption

withdrawal

9

Liberty Corporate Benefits(continued)

• IEB purchase price: R130 million• Smooth integration to date• 2-3 years to rationalise fully• Efficiency opportunity• Current performance approximating

expectations

10

Consultancy

• Agency Division– Introduction of graduated managers from

the Academy– Additional branches created

• Franchise Division– Elimination of non-producing franchises– Productivity enhanced

11

Consultancy(continued)

• Broker Division– Expanded number of supporting brokers– Gauteng focus– Administration hubs provide a higher level

of service

• SBFC– Increased manpower – benefits in 2004– Consumer consultants strategy

12

Consultancy(continued)

• Legislation– FAIS implementation– Commission de-regulation– FICA implemented

13

Properties

Portfolio value (Rm)Comprising: Office buildings (%) Shopping malls (%) Hotels (%) Other (%)

2003 2002 %

Change

10 449,8

20 65 12

3100

9 601,8

22 64 11 3

100

9

5 year compound annual bonus rate to RA policy- holders of 11,6% vs headline CPI of 5,2%

14

Properties (continued)

• Property sales amounted to R150,1 million in 2003

• Liberty Midlands Mall completed in 2003 - valued at R325 million

• 50% of Greenacres Shopping Centre acquired for R150 million

• Vacancies at 31 December 2003: 13,9%(2002 : 12,1%)

15

STANLIBTotal assets under management

(excluding common assets)

Life fundsSegregated fundsUnit trustsStructured products and other

Money market as % of total

59554024

17814%

53482919

14911%

1215382619

2003Rbn

2002Rbn

%Chang

e

16

STANLIB(continued)

• Net inflows positive R12 billion• Investment performance mixed:

– Good fixed interest performance– Balanced portfolios underperformed median

by 1% to 2%– Returns generally acceptable in absolute

terms

• Normalised earnings up 4% to R136 million

17

STANLIB(continued)

• Integration costs and other once-off costs higher than expected

• Staff numbers reduced by 98 people (net)• Annualised cost saving of approximately

R30 million• STANLIB brand now well-established in

both retail and institutional markets• Looking for improved investment

performance

18

ErmitageAssets under management

Hedge fundsLong-only fundsMoney funds

Third party funds as % of total funds

1 292,71 059,5

600,32 952,5

41%

806,8791,6667,3

2 265,7

44%

6034

(1030

)

2003US$m

2002US$m

%Change

Operating profit up 117% in Pounds Sterling

19

The year in numbers

20

Features – 2003/2002

• Indexed new business– Individual– Corporate

• Value of new business• Net cash inflows from

insurance operations• New business margin

3 807,83 184,3

623,6608,9

4 497,020%

3 634,23 090,2

544,1604,6

4 501,320%

53

151

--

2003Rm

2002Rm

%Change

21

Features – 2003/2002(continued)

• Headline earnings per share (cents)

• Headline earnings per share pre AC 133 (cents)

• Final dividend per share• Embedded value per

share: (Rand)• Capital adequacy

requirement (times covered)

346,4

359,6

116,0

57,58

2,6

391,5

391,5

116,0

55,28

3,0

(11

(8-

4

2002%

Change2003

)

)

22

Headline earnings

Operating profit from insurance operations netof tax

Revenue earnings – shareholders’ funds

Preference dividendHeadline earningsHeadline earnings

pre-AC 133

2003Rm

2002Rm

%Change

)

)

719,5

324,8 (95,2949,1

985,5

889,1

261,6 (81,9

1 068,8 1

068,8

(19

24 16(11

(8

)

) )

23

Operating profit from insurance operations

Operating profit from insuranceoperationsBefore AC 133 adjustmentAC 133 adjustment

2003Rm

2002Rm

%Change

• 2002 includes releases from the life fund of approximately R350 million after tax• Improvement in weighted policyholder investment portfolio in 2003• Implementation of AC 133

719,5755,9(36,4

889,1889,1

(19(15

)

))

24

Investment returns(Weighted average of equity, managed

and foreign assets portfolios)

25

Expenses

Total group expensesSubsidiariesCompany expensesInsurance expensesIndividualCorporate Benefits

2003 2002 %

Change

1 860,9(381,8

1 479,11 281,8

935,1346,7

1 690,9(462,6

1 228,31 150,6

864,4286,2

10(1720118

21

) ))

*Includes IEB costs of R33 million

*

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Expenses – cost per policy

Renewal cost per policyincreased/(decreased) by

Acquisition cost per policyincreased/(decreased) by

2003%

2002%

Significant non-recurring expenses incurred in 2003

6,5

7,2

(1,6

(1,3

)

)

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Non-recurring expenses

• Non-recurring expenses of R111,3 million

in 2003– Retrenchment and discontinued salary costs– Previously incurred corporate activity costs– Pension fund provision– Post-retirement medical liability increase– Retention bonuses– Non-capitalised renovation costs– Impairments and other provisions

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Revenue earnings – shareholders’ funds

Financial services operationsListed investmentsOther

2003Rm

2002Rm

%Change

199,932,992,0

324,8

159,639,962,1

261,6

25(184824

)

• Electric Liberty investment portfolio trading profit of R47 million in 2003• Liberty Ermitage headline earnings of R43 million up 54%• Higher cash balances and preference shares increased other earnings

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Future earnings

• International Accounting Standards• Stochastic modelling of investment

guarantees• Investment returns impact 10%

entitlements

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Embedded value

Shareholders’ fundsNet value of life business

in-forceFair value adjustmentTotalEmbedded value per

share(Rand)

2003Rm

2002Rm

%Change

8 782,2

6 493,8540,9

15 816,9

57,58

8 588,1

5 700,4838,1

15 126,6

55,28

)

2

14(36

5

4

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Fair value adjustment

Liberty Group PropertiesLiberty Ermitage JerseySTANLIBCarrying value of in-force business acquired from Investec Employee Benefits

2003Rm

2002Rm

216,0140,0306,9

(122,0540,9

240,0190,4407,7

838,1

)

• Liberty Ermitage multiple reduced from 15 to 10• STANLIB valued at approximately R1,4 billion

32

New business – percentage increase

RecurringSingleTotal

Index

IndividualBusiness

%

CorporateBusiness*

%

Total

%

6(7(4

3

16347

15

633

5

))

*Excludes IEB business acquired

33

Market share individual business

(including Charter)

Individual recurring Individual singles

30 Sept2003

%

31 Dec2002

%

23,522,4

23,620,2

• Sales force productivity• Independent broker support• Investment performance• Property portfolio• Lifestyle protector

Source: LOA statsplus Charter Life

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Value of new business

Value of new business (Rm)New business margin (%)Individual (%)Corporate (%)

2003 2002

608,92022

8

604,6202211

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Net fund inflows

Total premiums and inflowsunder investment contracts

Claims, policyholder benefits andpayments under investmentcontracts

Net fund inflows

2003Rm

2002Rm

%Change

18 121,8

13 624,8

4 497,0

16 415,1

11 913,84 501,3

10

14-

• Two investment only funds to STANLIB of approximately R700 million

36

Capital adequacy cover

Capital adequacy requirement (Rm)Times covered

3 402,7

2,6

2 856,6

3,0

2003 2002

Charter Life investment guarantees

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Dividend

2003cents per

share

2002cents per

share

162

116

278

162

116

278

Interim

Final

38

When we last spoke…

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Focus areas for second half 2003

• Improve service levels• Emphasis on cost reduction• Domestic operations/other market

segments and Africa• Renewed emphasis on people• Address capital situation

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Since we last spoke…

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Improve service levels

• Appointed MD Group Customer Service

– Alan Woolfson

• Appointed internal ombudsman• Launching staff initiative• Tracking system for complaints

42

Cost reduction

• Cost reduction initiated – second half 2003• Cost savings of approximately R75 million

for Liberty• Reduced net headcount

– Liberty: 135– STANLIB: 98

• General staff incentive scheme introduced based on cost reduction targets

• No real cost growth budgeted for 2004

43

Domestic operations/other market segments and Africa

• Some internal issues – – LPB restructure– IT centralised (again)– Finalised Healthcare integration into LPB

• Charter explores new opportunities (see next slide)

• Namibia life license• Stanbic Africa footprint offers future

opportunity• Canned future offshore expansion for now• Western Cape?

44

Businessas usual

New businessinitiatives

Charter Life2004

Customerservice

Cost management

Right people- right jobs

- Grow CC’s aggressively- Continue IFA’s, networking and Liberty Agency/Franchise

(Long-term repositioningstrategy)- LSM 5-8- Products - Administration- Marketing- Distribution

Charter Life – eventually doing something

45

People

• Four new board appointments• Appointed MD Charter Life – Bobby

Malabie• Appointed CEO STANLIB – Bruce Hemphill• Looking for marketing head• IEB staff integrated well• Employment equity remains an issue• Restructured STANLIB

46

Capital management

• More proactive capital management• Capital committee formed• Sold 2 million Edcon and 1 million GoldFields• Restructured and cleaned up portfolios• Overcapitalised – but

– BEE contingency– stochastic modeling– be patient!

47

In addition…

• Market uptick – thank heavens! • Financial Sector Charter signed

– Dedicated Exco member heading initiative– Implementation committee set up

• STANLIB BEE deal finalised• AC 133 implemented• Life product launched

48

Liberty Foundation – focus on education

• Mindset Network began broadcasting• Pilot programme initiated for Health

Channel and we continued with –– Liberty Learning Channel on SABC– Learn.co.za website– Liberty/Sunday Times ReadRight project

• Working closely with Standard Bank

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Focus areas for next six months – nothing complicated

Continue -• to improve service levels• emphasis on cost reduction• focus on domestic operations/other

market segments and Africa• emphasis on people

50

Focus areas for next six months – nothing complicated

Continue –• monitoring capital position• Financial Sector Charter implementation

and in addition we will –• reposition brand• focus on product development

51

Focus areas for next six months – nothing complicated

Everything we do mustfocus on adding value forour customer

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Panel

Myles Ruck Chief Executive

Andrew Lonmon-Davis Statutory Actuary

Deon de Klerk Chief Financial Officer

53