Sanlam Limited - Sanlam acquires a majority interest in Channel Life

Sanlam Limited - Sanlam acquires a majority interest in Channel Life            
Sanlam Limited                                                                  
(Registration Number 1959/001562/06)                                            
JSE share code: SLM                                                             
ISIN number: ZAE000028262                                                       
NSX share code: SLA                                                             
SANLAM ACQUIRES A MAJORITY INTEREST IN CHANNEL LIFE                             
Sanlam announced today that it has concluded an agreement to acquire a majority 
interest (50% plus one share) in Channel Life (Channel), a niche life insurance 
business focused on the entry-level market (ELM) in South Africa. Sanlam will   
purchase its majority stake from current majority shareholder PSG Group and     
empowerment partner, Arch Equity. PSG will retain 35% of Channel and Arch Equity
will remain an indirect shareholder in Channel Life via its shareholding in the 
PSG Group.                                                                      
 The remainder of the shares are held by management and other minorities.  A    
value of R230 million has been put on Channel for purposes of the transaction.  
Sanlam will fund its investment of about R116,5 million by means of cash and in 
two tranches. The first tranche of R106,2 million, will be paid on finalisation 
of the transaction and the second tranche, R10,3 million, after 31 July 2006,   
subject to the value of new business generated by Channel Life for the period 1 
August 2005 to 31 July 2006 being above certain agreed thresholds.              
The agreement is subject to the fulfilment of certain suspensive conditions that
relate mainly to obtaining regulatory approvals by 31 October 2005 as well as   
the approval of the SRP.                                                        
Sanlam has identified Channel as a rapidly growing player in the life insurance 
field, with a strong focus on the ELM. Channel offers Sanlam complementary ELM  
distribution through its direct marketing methods and skills, a strong and      
experienced management team and access to an enhanced product range such as     
credit life insurance.                                                          
In terms of the proposed transaction:                                           
*Channel will retain its own brand, market positioning and operational          
independence.                                                                   
*Sanlam will reverse its 55% interest in Safrican into Channel. CEO of Safrican,
Nthabiseng Mmatli, will remain in that position.                                
*Channel products will be sold through the Sanlam distribution network.         
Commenting on the transaction, Dr Johan van Zyl, Group Chief Executive of Sanlam
said:                                                                           
"Sanlam has identified the entry-level life insurance market as an important    
component of its growth strategy. This transaction complements our acquisition  
of African Life through the addition of direct marketing skills and credit life 
insurance products.                                                             
"Our majority interest in Channel provides Sanlam with a meaningful presence    
from which to accelerate our existing offering in this segment. Sanlam plans to 
follow a multiple client-facing and branding strategy within the ELM insurance  
business in order to grow more rapidly, specifically in direct marketing        
channels, credit life offerings and bancassurance arrangements.                 
"Safrican will be reversed into Channel to provide Safrican with improved access
to ELM distribution opportunities and excellent management. Channel"s business  
has the potential to generate good results in new business growth and recurring 
premiums."                                                                      
Mr Jannie Mouton, Chairman of the PSG Group says that the transaction comes at a
right time for all parties.                                                     
"Channel Life has reached the stage where it requires a shareholder of          
reference, able to continue funding its growth and unlocking further synergies. 
We are looking forward to working with Sanlam as our new partner, and retaining 
a significant interest in Channel."                                             
Mr Rene Otto, CEO of Channel Life, said:                                        
"Channel has (through its efforts to "Africanise" the entry level of the South  
African insurance market) secured a successful niche for itself and is offering 
affordable and appropriate products to the ELM. Channel"s direct marketing      
methods and skills are complementary to Sanlam"s and we envisage an effective   
mutual utilisation of distribution methodologies in the future. Channel"s focus 
on growth is aimed at expanding its retail recurring premiums through a multi-  
channel distribution strategy including inbound and outbound telesales, setting 
up a national broker distribution arm and creating a referral marketing         
division.                                                                       
"I am looking forward to working with Nthabiseng Mmatli of Safrican and will    
rely on her in the implementation of our new initiatives.                       
"In addition, Sanlam"s majority shareholding will lend further credibility to   
our business and we expect Channel to continue to benefit from PSG"s            
entrepreneurial influence. The plan to list Channel on the JSE by the end of    
2007 is set to continue, unless one of the shareholders buy out the others      
before then," Otto said.                                                        
Channel"s recently announced private trading of shares "over the counter" will  
continue, although it is expected that stock may become difficult to accumulate 
following the transaction with Sanlam.                                          
Notes:                                                                          
More details on the suspensive conditions are available in the joint SENS       
announcement of PSG Group and Arch Equity Limited.                              
About Channel Life                                                              
Channel is a non-listed public company. Its main business is underwriting life  
insurance products with a focus on the entry-level market sector of the South   
African population. It also markets niche investment-related products to the    
affluent market and group-based products to the corporate market.               
At 28 February 2005 it had an asset base of R2 096 million and generated        
headline earning of R39,0 million for the financial year then ended.            
Channel"s key objectives leading up to 2007 are to:                             
*be regarded as a top six life office measured by total assets;                 
*grow total assets to over R10 billion;                                         
*double its 2004 embedded value (`EV") to R300 million;                         
*achieve headline earnings of R50 million, and                                  
*list on the JSE by the end of 2007                                             
Following this announcement, Channel"s shareholders will be Sanlam (50% plus one
share), PSG Group  (35%) and the remainder shares held by management and other  
investors                                                                       
About Safrican                                                                  
Sanlam Life acquired 55% of Safrican, Thebe"s life insurance company focusing on
life, funeral and credit life insurance, in 2004.                               
Safrican is one of the oldest, most established brands in the entry-level market
segment, with over R240 million annual premiums, almost two million insured     
members and 600 brokers. Safrican also has a distribution agreement with the    
South African Post Bank until the end of 2006.                                  
11 August 2005                                                                  
Sponsor:                                                                        
JP Morgan Equities Limited                                                      
Date: 11/08/2005 04:04:06 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department