Presentation to Investment Analysts
Society of Southern Africa
6 March 2002
Roy Andersen
Group Chief Executive
Content
Roy Andersen
2001 achievements
The future
 STANLIB and
bancassurance




International operations
Human capital
Goals for 2002
Conclusion
Mike Jackson
Building value in Financial
Services Operations
Financial highlights 2001
Financial services environment
in 2001

Good demand for
 Offshore products
 Guaranteed products
 Bancassurance products
Volatile investment markets

Implementation of policyholder protection rules

Implementation of CGT

Environment anticipated and
addressed well by Liberty
Highlights








Embedded value per share + 23%
Headline ROE continuing operations 25%
Return on embedded value 26%
Headline earnings per share – continuing
operations + 14%
Indexed new business premiums + 11%
Recurring new business premiums + 17%
Value of new business + 16%
New business margin 18%
Headline earnings on
continuing operations
2001
Rm
2000
Rm
%
Change
1 320
1 153
14
Revenue earnings on
shareholders’ funds
222
202
10
Preference dividend in
subsidiary
(43 )
(40)
7
Life fund operating surplus
Headline earnings
Headline earnings per share
Headline ROE
1 499
1 315
14
551
485
14
25%
16% *
* Total operations
Investment return (Managed portfolio)
Consistent first and second halves
Return
30%
25,3%
25%
20%
14,4%
15%
10,6%
10%
7,2%
5%
0%
First half
Actuarial expectation
Second half
Actual
Bonus stabilisation reserves boosted
New business 2001
(excluding natural increases)
Single premiums
Corporate Benefits
Individual business
Recurring premiums
Corporate Benefits
Individual business
Total on balance sheet
New business index
Value of new business
2001
Rm
2000
Rm
%
Change
1 225
6 415
2 167
5 589
(43 )
15
225
1 475
9 340
2 465
455
190
1 251
9 197
2 217
391
18
18
2
11
16
Unit trust sales
Rm
6000
+61%
5000
4000
+120%
+91%
3000
2000
+142%
+99%
+25%
1000
0
1999
Money market
2000
Other
2001
Total
Three Raging Bull awards
Net insurance cash flow
Rm
4000
3 378
3500
2 930
3000
2500
2000
1 622
1500
1000
500
102
0
-500
-633
-1000
1997
1998
1999
2000
Claims and benefits up 10%
2001
Embedded value
2001
Rm
2000
Rm
%
Change
Shareholders’ funds
8 346
6 123
36
Net value of life business in
force
5 112
4 822
6
Financial services subsidiaries
fair value adjustment
1 310
996
32
Total embedded value
14 768
11 941
24
Embedded value per share
R54,21
R43,95
23
Return on embedded value
26,4%
11,3%
Capital adequacy cover
20
18,6
16
12,2
12
7,3
8
3,6
4
3,5
0
1997
1998
1999
2000
2001
Overweight deployment of capital in SAB
significantly reduced
Dividend
Final
Continuing operations
In respect of capital
reduction
Interim
2001
cents per
share
2000
cents per
share
150
131
150
128
278
19
150
133 *
283
* Pre capital reduction
Cover 2x earnings
%
Change
+ 15
Headline return on equity
30%
25%
25%
20%
16%
15%
13%
13%
1997
1998
11%
10%
5%
0%
1999
2000
2001
Scorecard
Goals set for 2001 financial year
1. Redeploy shareholder investments
into financial services
2. Individual business – leverage the
strong position in the upper income
market
3. Implement customer value
management
½
Scorecard
Goals set for 2001 financial year
4. Expand Liberty Corporate Benefits’
business
5. Drive continued growth in
bancassurance
6. Provide private banking services to
clients
Scorecard
Goals set for 2001 financial year
7. Achieve further synergies with Stanbic
8. Establish an empowerment partnership
9. Leverage Liberty Ermitage for
international expansion
The future
a new Wealth Management Group
and an enhanced Bancassurance
Structure
Standard
Bank
STANLIB
Organisational structure
Stanbic
CEO-Jacko Maree
50%
Liberty
CEO - Roy Andersen
50%
STANLIB
Limited
Executive Chairman
Roy Andersen
100%
100%
STANLIB
Asset Management
Alan Miller
STANLIB
Wealth Management
John Liackman
“The factory”
“Product / marketing /
distribution arm”
Asset management
components introduced
STANLIB Asset
Management
Libam
SCMBAM
Best investment processes retained
STANLIB wealth management
components introduced
STANLIB Wealth
Management
100%
100%
Unit Trusts
Lisps
Liberty
Collective
Investments
Liberty
Specialised
Investments
Standard
Bank
Unit Trusts
Standard
Bank
Investment
Services
100%
Lodestone
52%
Simeka
Summary of the benefits







Plays to each company’s undisputed strengths
Powerful and far reaching distribution = client
convenience
Leverages the power of two blue chip brands
Combines asset management, banking and
actuarial skills for product development
Pools and leverages intellectual capital
Economies of scale achieved
New Stanfin and bancassurance contract
attractive
Building value in
Financial Services
Operations
Mike Jackson
Executive Director: FSO
Building distribution
Intermediaries
1 935
2100
1 663
1800
1500
1200
900
1 135
1 310
994
1 197
970
187
420
668
783
715
642
669
738
1997
1998
1999
2000
End Feb
2002
600
300
0
Agency
Franchise
Consultancy new business up 18%
Growing bancassurance production
Rm
1800
1 556
1600
1 661
1400
1 155
1200
1000
800
600
680
757
400
200
0
1997
1998
Complex
1999
Simple
2000
2001
Liberty Healthcare
Approaching critical mass
Principal members
Total lives
February
December
2002
2000
36 343
86 500
18 870
45 161
• R12,7 million loss in 2001
Focusing on quality growth and profitability
Liberty Corporate Benefits
Enhancing new business profitability
2001
Rm
2000
Rm
%
Change
Single premiums
26
38
(32)
Recurring premiums
21
4
425
Total
47
42
12
674
588
15
Embedded value of in-force
Focusing on expense control and margins
Liberty Personal Benefits
New business – average policy size
Recurring premiums
RAs
Risk and investment
Single premiums
Liberty
Full year
2001
Industry
(Values for
first half 2001)
R
R
5 650
6 179
4 043
2 429
40
154
136 104
56 699
140
Focused on the profitable segment
%
Difference
Liberty Personal Benefits
Building market share –
New recurring individual
20%
17,7%
16%
16,2%
15,5%
14,9%
18,2%
17,2%
15,7%
16,4%
14,1%
12%
8%
June 2000
December 2000
All offices
Brokers
June 2001
Agents
Liberty Personal Benefits
Building market share –
New single individual
20%
17,0%
16%
16,7%
14,8%
13,4%
12%
13,3%
11,5%
10,7%
9,1%
9,5%
June 2000
December 2000
8%
All offices
Brokers
June 2001
Agents
Liberty Personal Benefits
Policyholder returns
Portfolio
Fund returns
(after tax)
%
Liberty Managed
Variable
20,0
20,2
Equity Performance
Global Managed
21,0
35,8
Liberty Personal Benefits
Liberty Ermitage returns in Rand
Dollar Money
Alpha Class
Asset Selection
Global Equity
North American Equity
Pan European Equity
Asia Pacific Equity
Fund returns
(after tax)
%
51,5
50,8
53,0
47,4
52,2
46,4
31,7
Runner-up to Goldman Sachs –
Global Investor Award for Excellence 2001
Liberty Personal Benefits
Leveraging existing clients




Cross-selling and retention are key objectives
Intermediary productivity tools implemented
successfully
Client data mart, data analysis tools and
campaign management capabilities established
Enterprise data warehouse infrastructure
implementation due April 2002
Liberty Personal Benefits
Individual surrenders and maturities
Rm
1800
16%
1600
15%
1400
14%
1200
1000
13%
800
600
12%
400
200
0
11%
% of in-force
book
1997
1998
1999
2000
2001
Higher retention of in-force book
10%
Product innovation

Investment products launched 2001
 Global bond – UK Properties
 Guaranteed Hedge Fund 100
 Liberty CPI Plus Investment
 Liberty Secured RA
 Guaranteed Global Equity Index
 Sandton Properties
 Liberty Ermitage portfolio range
 LSI Symphony wrap funds
Product development

Risk products launched 2001
 Optimum/Optimum Plus
 LivAbility, FemAbility, CareAbility,EnAbility
 Procure
An exciting future


Reaping benefits of an expanding distribution
force
Bancassurance – growing SBFC (Stanfin)
sales

Ongoing market share growth

Full pipeline of products for 2002

Managing and leveraging in-force business
Goals for 2002
Roy Andersen
Group Chief Executive
Liberty Properties
Developing value through property



Portfolio continually upgraded
Disciplined programme of improvements
Revaluations
 Continued conservatism
 5,3% uplift of R466 million to R9,2 billion
 Disposals of R141 million confirmed valuations
The Earth Summit will boost Sandton
International growth

Liberty Ermitage

AUM up 69% in Rands

Hedge funds doubled – sales force doubled

Capital uplift in 2001 + R146 million


Effect on earnings of depreciated Rand to
be felt in 2002
Offshore acquisition

Discerning approach
Human capital
Creating value through people
B3 Vision
“The best people,
doing the best things,
best!”
Human capital
Creating value through people

The best people

Attitude towards the client – key

Energy and enthusiasm – a requirement

Correct cultural diversity – on track

Measure progress through growth in Human
Capital Index
Liberty a top ten employer for the second year
Human capital
Creating value through people

The best things

Clear and open strategies

A wide understanding of what drives value

Incentivisation aligned with value creation
Top 200 people on incentive scheme linked to
growth in appraisal value
Human capital
Creating value through people

Best

Use of international benchmarks

Integrity, trust and honesty core values
Goals for 2002
1. Launch and grow STANLIB Limited
2. Develop SBFC (Stanfin) and increase
bancassurance sales
3. Reposition Charter in mass and niche markets
4. Focus on profitability in Employee Benefits
Goals for 2002
5. Leverage CVM initiative for new business
and retention
6. Grow Liberty Ermitage sales
7. Focus on productivity of Agency and Franchise
Conclusion