Sanlam Limited - Third Quarter Trading Update

Sanlam Limited - Third Quarter Trading Update                                   
Sanlam Limited                                                                  
(Incorporated in the Republic of South Africa)                                  
(Registration number 1959/001562/06)                                            
(Share code:  SLM   ISIN:  ZAE000028262)                                        
("Sanlam")                                                                      
THIRD QUARTER TRADING UPDATE                                                    
Introduction                                                                    
WITH THE RELEASE OF ITS FIRST INTERIM TRADING STATEMENT IN JUNE THIS YEAR, THE  
SANLAM BOARD ENVISAGED, IN THE INTEREST OF IMPROVED STAKEHOLDER DISCLOSURE,     
ISSUING SUCH AN UPDATE TO THE INVESTMENT PUBLIC AFTER FUTURE ANNUAL GENERAL     
MEETINGS.  AT ITS MEETING ON 4 DECEMBER 2002, THE BOARD DECIDED TO ISSUE SUCH   
COMMUNICATION BETWEEN FORMAL COMMUNICATION DATES.                               
SANLAM`S RESULTS FOR THE YEAR ENDED 31 DECEMBER 2002 WILL BE ANNOUNCED ON       
THURSDAY, 6 MARCH 2003 AND THE BOARD ISSUES THE FOLLOWING OVERVIEW ON ITS       
EXPECTATIONS AND THE GROUP`S PERFORMANCE.                                       
Business environment                                                            
THE DIFFICULT TRADING CONDITIONS EXPERIENCED IN THE FIRST HALF OF 2002 CONTINUED
THROUGHOUT THE THIRD QUARTER.  RELATIVELY HIGH INTEREST RATES ARE ERODING       
CLIENTS` DISPOSABLE INCOME, AND COUPLED WITH THE SUSTAINED VOLATILITY IN EQUITY 
AND CURRENCY MARKETS, IMPACT NEGATIVELY ON GENERAL INVESTMENT AND INSURANCE     
APPETITE.  THIS IS EVIDENT IN OUR RETAIL MARKETS AND ALSO IN THE LIMITED LEVEL  
OF DEAL FLOW EXPERIENCED IN GENSEC BANK`S BUSINESS AREAS.                       
Operating results                                                               
GROWTH IN NEW LIFE BUSINESS INFLOWS REMAINED FAIRLY FLAT, AS HIGHER RISK AND    
GUARANTEED TYPE BUSINESS WERE OFFSET BY A REDUCTION IN INVESTMENT RELATED       
BUSINESS.  THE CONTAINMENT OF BENEFIT PAYMENTS AND A REDUCTION IN POLICY        
SURRENDERS SHOULD RESULT IN A SECOND HALF IMPROVEMENT IN LIFE BUSINESS NET CASH 
FLOWS.  A WELCOME IMPROVEMENT IN SANLAM UNIT TRUST INVESTMENT PERFORMANCE IS    
CONFIRMED BY AN INCREASE IN NEW UNIT TRUST INFLOWS.  SOME SUCCESS IS ALSO BEING 
ACHIEVED IN ATTRACTING NEW SEGREGATED FUND MANAGEMENT BUSINESS.  HOWEVER, A     
RELATIVELY HIGH LEVEL OF FUND WITHDRAWALS CONTINUED IN THE SECOND HALF OF 2002  
AND WILL RESULT IN A DETERIORATION IN THE NET OUTFLOW IN FUNDS FOR THE YEAR.    
In our announcement of the first half results we set a target to achieve real   
growth in gross operating profit for the year, but stated that it would be      
difficult to achieve given the prevailing business environment.  The latter     
statement has, unfortunately, been confirmed by the second half performance to  
date.  Given the current performance of our operations, only a modest operating 
profit growth can be expected for the year.  An improved second half performance
by Gensec is being substantially offset by increased expenditure, in particular 
at our international operations while they are building capacity for future     
growth, and an increase in underwriting claims.  Fee income earned on assets    
under management remained under pressure due to the cash outflow and market     
value impact on the asset base.  In the absence of any material adverse events  
for the remainder of the year, and excluding the effect of the once off tax     
reversal in 2001, headline earnings should be approximately in line with those  
reported in 2001.                                                               
PROGRESS ON IMPLEMENTATION OF BANKING STRATEGY                                  
Sanlam`s vision, namely to be the leader in wealth creation, is underpinned by  
the three themes of superior client relationships, domestic and international   
growth.  We have indicated in the past that several options to add banking      
products to our product offering were being evaluated and that we intended to   
provide some clarity on the preferred route by the end of this year.            
Sanlam`s strategic interest in ABSA provides a logical starting point for the   
implementation of our banking strategy.  One alternative in this regard, an     
outright merger of the two entities, has been the subject of an in-depth        
analysis over the past few months.  After due consideration, the Sanlam Board   
concluded that currently such a transaction is not viable nor in the best       
interest of Sanlam shareholders.                                                
The alternative of a formal co-operation model is now being pursued.  This may  
entail agreements on distribution, joint ventures and the rationalisation and   
integration of overlapping businesses.  It is our intention to maintain our     
current shareholding in ABSA pending the outcome of the co-operation            
deliberations.                                                                  
Lead Sponsor: JPMorgan                                                          
Joint Sponsor: Gensec                                                           
5 December 2002                                                                 
Date: 05/12/2002 07:00:03 AM Supplied by www.sharenet.co.za                     
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