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Investor presentation
Interim financial results
30 June 2001
Highlights
Business highlights
Creation of New Africa Capital
Dynamic new operating structure implemented
Empowerment credentials of the board enhanced
Increase of earnings from diversified sources
Financial highlights
Total assets under management: approximately R40 billion
Positive net cash flow in excess of R2 billion
Sustained strong growth in Employee Benefits business
Increased profits from Health business
Features of results
6 months to Annualised 15 months to
30/06/01 growth 31/12/00
Rm % Rm
Premium income 3 601 26.7 7 106
Total income 5 233 (5.2) 13 806
Administration expenses 377 11.5 845
Policyholders’ benefits paid 2 447 39.5 4 384
Total assets 31 473 13.4 29 492
Total assets under management 39 059 18.3 35 777
Earnings 247 10.7 558
Headline earnings 267 (4.5) 699
Earnings per share (cents) 34.02 8.3 78.56
Headline earnings per share (cents) 36.78 (6.6) 98.46
Dividend per share (cents) 15.50 0.6 38.50
•No June 2000 FSV valuation
•March 2000 not always comparable
Premium income
6 months to 6 months to %
30/06/01 30/06/00 Change
Rm Rm
Premium income 3 601 3 092 16.5
Recurring premiums 1 910 1 852 3.1
Individual life 1 412 1 369 3.1
Employee benefits 533 522 2.1
Re-insurance (35) (39) (10.3)
Single premiums 1 691 1 240 36.4
Individual life 560 215 160.5
Employee benefits 1 131 1 025 10.3
Recurring premiums
6 months to 6 months to %
30/06/01 30/06/00 Change
Rm Rm
Metropolitan Life 1 055 1 037 1.7
Metropolitan Employee Benefits 431 391 10.2
Odyssey 123 109 12.8
Namibia 104 85 22.4
Botswana 44 22 100.0
Recurring premiums excluding Commercial Union 1 757 1 644 6.9
Commercial Union Life 153 208 (26.4)
Recurring premiums 1 910 1 852 3.1
Single premiums
6 months to 6 months to
30/06/01 30/06/00 %
Rm Rm Change
Metropolitan Life 481 181 165.7
Metropolitan Employee Benefits 1 119 998 12.1
Odyssey 43 27 59.3
Namibia 38 7 442.9
Botswana - 1
Single premiums excluding Commercial Union 1 681 1 214 38.5
Commercial Union Life 10 26 (61.5)
Single premiums 1 691 1 240 36.4
Policyholders’ benefits paid
6 months to 6 months to %
30/06/01 30/06/00 Change
Rm Rm
Death and disability claims 456 412 10.7
Maturity claims 379 322 17.7
Annuities 186 156 19.2
Surrenders – individual policies 484 385 25.7
Scheme member withdrawals 263 142 85.2
Scheme terminations 703 281 150.2
Re-insurance recoveries (24) (29) (17.2)
2 447 1 669 46.6
Policyholders’ benefits paid
6 months to 6 months to %
30/06/01 30/06/00 Change
Rm Rm
Metropolitan Life 854 825 3.5
Metropolitan Employee Benefits 504 332 51.8
Odyssey 107 99 8.1
Namibia 78 46 69.6
Botswana 16 3 433.3
Benefits paid excluding Commercial Union 1 559 1 305 19.5
Commercial Union 888 364 144.0
Policyholders’ benefits paid 2 447 1 669 46.6
Benefit payments as a % of
premiums
6 months to 6 months to
30/06/01 30/06/00
% %
Death and disability claims 12.7 13.3
Maturity claims 10.5 10.4
Annuities 5.2 5.0
Surrenders – individual policies 13.4 12.5
Scheme member withdrawals 7.3 4.6
Scheme terminations 19.5 9.1
Administration expenses
– life insurance
Rm %
400 12
350
300 11.5
250
200 11
150
100 10.5
50
0 10
Mar-00 Jun-00 Jun-01
9.5
Metropolitan Life Limited CU Life Mar-00 Jun-00 01-Jun
Metropolitan Odyssey Metropolitan Namibia
Metropolitan Botswana Administration expenses as a % of premium income
Income from administration
business
Administration Administration
income expenses * Total
For the six months ended 30 June 2001
Rm Rm Rm
Asset Management 30 22 8
Properties 7 5 2
Health group 199 165 34
Unit trusts 8 8 -
Ovation 8 17 (9)
Policy administration (Life insurance) 8 - 8
260 217 43
Taxation - (3) 3
Income from administration business 260 214 46
* Taxation is included in administration expenses for the period under review.
Statement of actuarial values of
assets and liabilities
30/06/01 31/12/00
Rm Rm
Total assets per balance sheet 31 473 29 492
Current liabilities per balance sheet (1 324) (1 332)
Outside shareholders’ interest per balance
sheet (68) (62)
Actuarial liabilities under unmatured policies (23 937) (22 181)
Excess of assets over liabilities 6 144 5 917
Total surplus arising during period 110 1 569
FSV profit 267 705
Operating profit 180 408
Investment income on group excess 87 297
Effect of change in basis (46) -
Capital appreciation on group excess (111) 864
Analysis of headline earnings
6 months to 15 months to
30/06/01 31/12/00 %
Rm Rm Change
Metropolitan Life 119 291
Metropolitan Employee Benefits 52 97
Odyssey 7 7
Commercial Union Life 20 62
Namibia (10) 3
Botswana (1) 4
Health 29 13
Asset Management 8 11
Unit trusts 1 -
Ovation (4) (22)
CGU - 36
Other subsidiaries (1) (1)
220 501 9.8
Investment income 47 198 (40.7)
Headline earnings 267 699 (4.5)
Goodwill (20) (46)
Adjustment for minorities and 90:10 rule 20 52
FSV profit 267 705 (5.3)
Embedded value
30/06/01 31/12/00
Rm Rm
Adjusted net asset value 5 357 4 987
Net value of in-force business 2 393 2 260
Individual life 1 939 1 898
Gross value of in-force 2 039 2 038
Less: Cost of capital (100) (140)
Employee benefits 454 362
Gross value of in-force 522 480
Less: Cost of capital (68) (118)
Embedded value 7 750 7 247
Embedded value per share (cents) 1 066 1 018
Net value of new business for period 37 122
No adjustment has been mad for CGT. The estimated reduction would be R153 million or 2%.
Embedded value by company
30/06/01 31/12/00
Rm Rm
Commercial Union Life 341 321
Odyssey 212 190
Namibia 176 189
Botswana 61 53
Asset Management 197 180
Health group 456 343
Goodwill (165) (175)
Metropolitan SA 6 472 6 146
Value of in-force business 2 066 1 951
Residual net asset value 4 403 4 195
7 750 7 247
Embedded value profit
6 months to 15 months to
30/06/01 31/12/00
Rm Rm
Profit from new business 178 197
Point of sale 174 179
Expected return to end of period 4 18
Profit from existing business 105 503
Expected return 214 464
Experience variance (109) 39
Embedded value profit from operations 283 700
Investment return on net worth (72) 941
Transitional tax - (95)
Changes in assumptions 175 182
Total embedded value profit 386 1 728
Plus: Capital raised 117 97
Less: Dividend - (296)
Increase in embedded value 503 1 529
Return on embedded value (%) 10.7 24.2
Value of new business
6 months to 15 months to
30/06/01 31/12/00
Rm Rm
Value of life insurance new business
Individual life (4) 44
Gross value of new business 0 71
Less: Cost of capital (4) (27)
Employee benefits 41 78
Gross value of new business 44 92
Less: Cost of capital (3) (14)
37 122
Value of non-life new business
Metropolitan Health 109 49
Metropolitan Asset Managers 29 8
The comparative period figures have been reallocated to reflect the group’s internal restructuring.
Value of new business per
company
6 months to 30/06/01 15 months to 31/12/00
Gross Cost of Net Gross Cost of Net
capital capital
Rm Rm Rm Rm Rm Rm
Metropolitan 47 (6) 42 163 (39) 124
Individual life (1) (3) (4) 77 (26) 51
Employee benefits 48 (2) 46 86 (13) 73
Commercial Union Life - - - - -
Odyssey (3) (1) (3) (8) - (8)
Namibia (2) (1) (3) 2 (1) 1
Botswana 1 - 1 6 (1) 5
43 (7) 37 163 (41) 122
New business premiums
6 months to 15 months to
30/06/01 31/12/00
Rm Rm
Recurring premiums
Individual life 252 705
Employee benefits 71 241
Total 323 946
Single premiums
Individual life 560 453
Employee benefits 1 131 1 715
Total 1 691 2 168
Assets under management
30/06/01 31/12/00 %
Rm Rm Change
Investment assets 29 339 27 598 12.6
Strategic assets 64 64 -
Goodwill 396 410 (6.8)
Equipment and intangibles 183 179 4.4
Current assets and deferred tax 1 491 1 241 40.2
Total on-balance sheet assets 31 473 29 492 13.4
Unit trusts 1 898 1 740 18.2
Health group 1 300 1 159 24.4
Ovation 872 741 35.4
Asset Management 3 516 2 645 65.8
Total assets under management 39 059 35 777 18.3
Assets backing shareholders’
funds
30/06/01 31/12/00
% %
Equities 46 48
Foreign investments 18 18
Properties 9 10
Fixed interest - -
Money market 2 2
Group companies 25 22
100 100
Assets backing shareholders’ funds for Metropolitan Life Limited.
Excess capital in Metropolitan
Life Limited
30/06/01 31/12/00
Rm Rm
Company excess 5 058 4 739
Less: Transfer to New Africa Capital (1 838) (1 838)
2 x CAR (eg) (2 240) (1 544)
Interim dividend and STC (113) -
867 1 357
Capital management strategy
New structure will enhance capital management ability
Identify use of and return on capital
Manage capital adequacy requirement
Utilise capital effectively
• Business growth
• Strategic acquisitions
• Share bay-back
• Dividend policy
Focus areas
Investment performance
New business volumes
Expense levels
Return on shareholders’ value
Focus areas
Capital management Creation of NAC
Empowerment credentials Board appointments
Surrender and lapse rates Agreement with PolicyLink
New business levels Creation of MARS
Increase presence in Gauteng Project Goldrush
Financial disclosure Group actuary appointed
Market segmentation Research completed
Corporate successes
Cost Embedded Embedded
value value
30/06/01 31/12/00
Rm Rm Rm
Commercial Union Life 149 341 321
Odyssey 200 212 190
Namibia 40 176 189
Botswana 19 61 53
Asset Management - 197 180
Health group 241 456 343
