RAND MERCHANT INVESTMENT HOLDINGS LIMITED - Transition of RMI to Outsurance Group Limited

Transition of RMI to Outsurance Group Limited

Rand Merchant Investment Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2010/005770/06)
ISIN: ZAE000210688
Share code: RMI
(RMI or the Company)

TRANSITION OF RMI TO OUTSURANCE GROUP LIMITED

1. Introduction

The RMI board of directors (RMI Board) took the decision in 2014 to re-activate the portfolio
management and investment focus of the business. Most recently this has resulted in RMI unlocking
significant value for the shareholders of RMI (Shareholders) in the form of:

    (i)     the distribution in specie of its listed shares in each of Discovery Limited and Momentum
            Metropolitan Holdings Limited (Momentum Metropolitan) to Shareholders (the Unbundling);

    (ii)    the sale of RMI’s indirectly held interest of 30% of the issued shares in Hastings Group
            (Consolidated) Limited to its co-shareholder in the business, Sampo plc (the Hastings
            Sale). The Hastings Sale resulted in a profit of R8.6 billion (including dividends) over the
            four years of the investment; and

    (iii)   the payment of a special dividend, as declared on 16 March 2022 (the Special Dividend).

Collectively, the Unbundling, Hastings Sale, and Special Dividend represent c.R36 billion of value
distribution to the Shareholders.

The period from 1 April 2014 to the last practicable date of this announcement being Tuesday, 20
September 2022 has resulted in total returns to Shareholders (in the form of capital appreciation and
dividends and adjusted for the Unbundling) of c.R47.9 billion or 118.7% (assuming reinvestment of
dividends), in comparison to the return of the JSE Financial 15 Index of 5.6% over the same period.

This announcement marks the end of an era for RMI as an active investor in a portfolio of financial
services businesses, with the final step being the process of transitioning and rebranding from RMI to
“OUTsurance Group Limited” (the OUTsurance Listing).

2. Rationale

The OUTsurance Listing gives Shareholders access to an efficient and appropriately capitalised
corporate structure almost solely representing OUTsurance Holdings Limited (OUTsurance)
(approximately 95.4% of the assets of RMI as at 30 June 2022), which in its own right, is a growing,
short-term insurance group operating across multiple geographies. Specifically, the OUTsurance Listing
is intended to result in the following key benefits for Shareholders: (i) a simpler operational structure
offering a single access point to OUTsurance; (ii) a more focused OUTsurance management team with
direct accountability to Shareholders; (iii) a higher dividend pay-out ratio; and (iv) a phased reduction
of the holding company and personnel costs at RMI.

RMI will retain its shareholder register including its trading history and will remain listed in the Diversified
Financial Services sector of the JSE but will, subject to Shareholder approval for the OUTsurance
Listing being obtained, be renamed “OUTsurance Group Limited”. The structure and mechanism of the
OUTsurance Listing is an expedient, cost-efficient, non-disruptive mechanism to achieve a structural
alignment of RMI whilst retaining and leveraging the operational, empowerment, governance and
regulatory compliance capabilities embedded within the RMI group.

Further details of the OUTsurance Listing will be set out in a circular to be distributed to Shareholders
on or about Tuesday, 11 October 2022 (Circular).

3. RMI Internal Restructure (prior to the OUTsurance Listing)

Shareholders are advised that to further simplify its group structure, RMI has implemented an internal
restructure comprising primarily the following:

         i.    As RMI’s interest in OUTsurance was held by Firness International Proprietary Limited
               (Firness) (a wholly owned subsidiary of RMI), Firness has distributed 100% of the shares
               that it held in OUTsurance to RMI in terms of an "unbundling transaction" pursuant to
               section 46 of the Income Tax Act 58 of 1962, as amended (ITA), such that RMI holds its
               interest in OUTsurance directly; and

         ii.   RMI has transferred its shares in Firness, RMI Investment Holdings Proprietary Limited
               (comprising the “AlphaCode” business) and RMI Investment Managers Group Proprietary
               Limited (comprising the “RMI Investment Managers” business) to RMI Treasury Holding
               Company Proprietary Limited, a wholly owned subsidiary of RMI (RMI TreasuryCo), in
               exchange for which RMI TreasuryCo issued additional ordinary shares to RMI pursuant to
               section 42 of the ITA, where applicable,

         (collectively, the RMI Internal Restructure).

The RMI Internal Restructure was approved by the RMI Board and subsequently implemented by 7
September 2022.

Pursuant to the RMI Internal Restructure and OUTsurance Listing, OUTsurance Group Limited will hold
the following two subsidiaries:

         i.    OUTsurance, held 89.3% by “OUTsurance Group Limited” and 10.7% by OUTsurance
               management trusts and management minority shareholders. It is intended that the minority
               interest held in OUTsurance Holdings will be exchanged for shares in OUTsurance Group
               Limited once the monetisation of assets held in RMI Treasury Co is substantially completed.
               OUTsurance will hold the various existing underlying operational businesses of OUTsurance
               (the OUTsurance Group); and

         ii.   RMI TreasuryCo, including the assets and liabilities remaining on the balance sheet of RMI
               (prior to the OUTsurance Listing) as well as its interests in each of AlphaCode and RMI
               Investment Managers Group Proprietary Limited (RMI Investment Managers) (collectively, the
               RMI Unlisted Assets).

Detailed group structure diagrams of RMI currently and post the RMI Internal Restructure and the
OUTsurance Listing will be depicted in the Circular.

4. Overview of OUTsurance

The OUTsurance Group underwrites short-term insurance products in South Africa, Australia and
Namibia. OUTsurance Group offers car, home, business and pet insurance products to the South
African market. OUTsurance Life Insurance Company Limited and OUTvest Proprietary Limited offer
life, funeral and investment products to the South African market, respectively. Youi Holdings
Proprietary Limited (Youi) offers car, home, business and compulsory third-party insurance (CTP)
products to the Australian market.

The OUTsurance Group’s investment in new business initiatives comprise OUTsurance Brokers (tied
agency channel), Youi’s underwriting partnership with BlueZebra Insurance (Youi BZI), OUTsurance
Life Funeral (Direct and Shoprite Partnership), OUTsurance Life and OUTvest’s collective Financial
Advisor expansion (tied agency channel) and Youi’s CTP product.

In its most recent financial results, OUTsurance Group achieved gross written premium of c. R23.5
billion, operating profit and normalised earnings of R2.9 billion and R2.3 billion, respectively. The
reduction in profitability relative to the prior year is driven by significantly larger natural weather losses
incurred in Australia and South Africa, coupled with the large investments made in growth initiatives.
The OUTsurance Group reported a combined ratio of 86.7% and an insurance cost-to-income ratio of
30.4%.

The OUTsurance Group’s core purpose is to offer its customers value-for-money products backed by
leading and trusted customer service. This purpose is enabled by a focus on operational excellence,
technology and a unique entrepreneurial business culture.

The business of the OUTsurance Group will not change pursuant to the OUTsurance Listing. Rather,
the OUTsurance Listing will see the existing strategy of OUTsurance becoming the strategy of
“OUTsurance Group Limited”. The core strategic objective of the OUTsurance Group is to unlock
additional runway for growth and improve diversification via the activation of a wider set of insurance
products sold across a wider set of distribution channels.

Further detail on the business segments of the OUTsurance Group, as well as the outlook and
prospects for the business will be contained in the Circular.

5. Reconfigured board of directors of OUTsurance Group

As part of effecting the OUTsurance Listing, the intention is for the current RMI and OUTsurance board
of directors to be reconfigured and combined to ensure that the combined board of directors of
“OUTsurance Group Limited" will post-implementation of the OUTsurance Listing (i) retain the expertise
it has as the board of a listed entity; and (ii) be augmented by the additional expertise the OUTsurance
board has as a specialist insurer board.

Shareholders will be provided with further information regarding the proposed members to be elected
to the reconfigured board of directors of “OUTsurance Group Limited”, subject to Shareholder approval
being obtained, at RMI’s annual general meeting to be held on Tuesday, 8 November 2022 (2022 AGM).

Further details on the proposed board of directors of “OUTsurance Group Limited”, including the
background and expertise of the proposed directors, and each of their curriculum vitae, will be contained
in the Circular and the notice convening the 2022 AGM, which notice is expected to be distributed by
RMI to Shareholders on or about Tuesday, 11 October 2022 (2022 AGM Notice).

6. Information on the RMI Unlisted Assets

RMI has a portfolio with a net asset value of R1.9 billion (representing c.4.6% of the assets of RMI as
at 30 June 2022) comprising the RMI Unlisted Assets.

The RMI Unlisted Assets have been transferred to RMI TreasuryCo to allow these businesses to
continue their current growth trajectories and strategies.

6.1 AlphaCode (fintech portfolio)

The investments underlying the AlphaCode portfolio companies will be retained within RMI TreasuryCo.
RMI TreasuryCo remains committed to these businesses and its co-shareholders and management
partners and will continue to support, drive scale, profitability, and liquidity of these businesses.

RMI TreasuryCo will enter into an arms-length services agreement with certain current employees
(excluding the CEO) of RMI in relation to the future management of the AlphaCode portfolio companies.

6.2 RMI Investment Managers (affiliate investment management business)

RMI is currently in advanced stage confidential discussions with its co-shareholders, Momentum
Metropolitan and Royal Bafokeng Investment Holding Company Proprietary Limited (RBIH), about
Momentum Metropolitan’s interest to acquire RMI’s interest in RMI Investment Managers (excluding
RMI Investment Managers Affiliates 1 (Pty) Limited, being Polar Star Management Proprietary Limited
and Polar Star Management SEZC Limited, which will be retained within RMI TreasuryCo).

This proposed transaction would solidify the existing empowerment, distribution and financial ambitions
of RMI Investment Managers whilst retaining the independence and unique boutique characteristics of
the affiliate model. RBIH has given its in principle support to the proposed transaction and remains a
committed and aligned partner. This proposed transaction is subject to requisite governance and
regulatory approvals, agreement of the final terms, confirmation of the structure, and other conditions
typical of a transaction of this nature.

7. Regulatory approval

The Prudential Authority has provided a letter of no objection to OUTsurance remaining the licensed
controlling company of the OUTsurance Group and has not raised any concerns regarding the scoping
of the insurance group at an OUTsurance level thereby confirming that RMI TreasuryCo and the RMI
Unlisted Assets will not be scoped into the OUTsurance Group, subject to ongoing supervision of the
OUTsurance risk profile in the ordinary course.

8. Approvals required and OUTsurance Listing timeline

Implementation of the OUTsurance Listing will be subject to obtaining the necessary regulatory
approvals (including from the Prudential Authority and the Companies and Intellectual Property
Commission) and the resolutions required to be adopted by Shareholders in connection with the
OUTsurance Listing (as will be set out in the 2022 AGM Notice) being adopted by the requisite majority
of Shareholders at the 2022 AGM (the OUTsurance Listing Resolutions).

The Circular is expected to accompany the 2022 AGM Notice and will include information intended to
enable Shareholders to make an informed decision in relation to the approval of the OUTsurance Listing
Resolutions.

Subject to the approval of the OUTsurance Listing Resolutions and the necessary regulatory approvals
being obtained, it is expected that RMI will commence trading under the new name “OUTsurance Group
Limited” on or about Wednesday, 7 December 2022. Shareholders will be advised of any changes to
the effective date, subject to the requisite regulatory approvals being obtained at an earlier date to that
indicated.

A finalisation announcement in respect of the OUTsurance Listing is expected to be released on SENS
on Monday, 28 November 2022 which will confirm the date of the termination of trading under the name
of "Rand Merchant Investment Holdings Limited" and commencement of trading under the new name
and the JSE share code OUT, abbreviated name “OUTsure” and new ISIN ZAE000314084.

9. Investor presentation and results for the financial year ended 30 June 2022

RMI's results presentation is expected to take place at 10:00 SAST on Thursday, 22 September 2022
(hybrid event) and can be accessed by qualified investors via the following link:

https://register.gotowebinar.com/register/6560467449452069389 or via an invitation on RMI's website
at: www.rmih.co.za.

An investor presentation on the OUTsurance Listing, the results for the financial year ended 30 June
2022 and a recording of the presentation will also be made available on RMI’s website at
www.rmih.co.za. The results of OUTsurance for the financial year ended 30 June 2022 will be made
available on the OUTsurance website at www.outsurance.co.za/group on Thursday, 22 September
2022.

The financial information contained in this announcement has not been reviewed or reported on by
RMI's auditors or reporting accountants.

22 September 2022

Sponsor:
Rand Merchant Bank (a division of FirstRand Bank Limited)

Legal adviser:
Webber Wentzel

Disclaimers

This announcement is for information purposes only and is not, and should not be construed as to
constitute, an offer to sell or the solicitation of an offer to buy securities and neither this document nor
anything herein nor any copy thereof may be taken into or distributed, directly or indirectly, in or into
any jurisdiction in which to do so would be prohibited by applicable law.

The information contained in this announcement constitutes factual information as contemplated in
Section 1(3)(a) of the Financial Advisory and Intermediary Services Act, 37 of 2002, as amended ("FAIS
Act") and should not be construed as an express or implied recommendation, guide or proposal that
any particular transaction in respect of the RMI shares or in relation to the business or future
investments of RMI, is appropriate to the particular investment objectives, financial situations or needs
of a prospective investor, and nothing contained in this announcement should be construed as
constituting the canvassing for, or marketing or advertising of, financial services in South Africa. RMI is
not a financial services provider licensed as such under the FAIS Act.

Nothing contained in this announcement constitutes, or is intended to constitute, investment, tax, legal,
accounting, or other professional advice.

Forward-looking statements

This announcement contains statements about the RMI and the RMI group of companies (the "Group")
that are, or may be, forward-looking statements. All statements (other than statements of historical fact)
are, or may be deemed to be, forward-looking statements, including, without limitation, those
concerning: strategy; the economic outlook for the industries in which RMI and the Group operates or
invests as well as markets generally; production; cash costs and other operating results; growth
prospects and outlook for operations and/or investments, individually or in the aggregate; liquidity,
capital resources and expenditure, statements in relation to the RMI Internal Restructure, its
implementation and the benefits of the RMI Internal Restructure. These forward-looking statements are
not based on historical facts, but rather reflect current expectations concerning future results and events
and generally may be identified by the use of forward-looking words or phrases such as "believe", "aim",
"expect", "anticipate", "intend", "foresee", "forecast", "likely", "should", "planned", "may", "estimated",
"potential" or similar words and phrases. Examples of forward-looking statements include statements
regarding a future financial position. By their nature, forward-looking statements involve known and
unknown risks and uncertainties because they relate to events and depend on circumstances that may
or may not occur in the future. The Company cautions that forward-looking statements are not
guarantees of future performance. Actual results, financial and operating conditions, returns and the
developments within the industries and markets in which the Company and/or the Group operates
and/or invests may differ materially from those made in, or suggested by, the forward-looking
statements contained in this announcement. All these forward-looking statements are based on
estimates, predictions and assumptions, as regards the Company and the Group, all of which estimates,
predictions and assumptions, although the Company believes them to be reasonable, are inherently
uncertain and may not eventuate or eventuate in the manner the Company expects. Factors which may
cause the actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied in those statements or assumptions include matters
not yet known to the Company or not currently considered material by the Company.

Investors should keep in mind that any forward-looking statement made in this announcement or
elsewhere is applicable only at the date on which such forward-looking statement is made. New factors
that could cause the business of the Company and the Group not to develop as expected may emerge
from time to time and it is not possible to predict all of them. Further, the extent to which any factor or
combination of factors may cause actual results, performance, or achievement to differ materially from
those contained in any forward-looking statement is not known. The Company has no duty to, and does
not intend to, update, or revise the forward-looking statements contained in this announcement or any
other information herein, except as may be required by law. Any forward-looking statement has not
been reviewed nor reported on by the Company's external auditor or any other expert.

Date: 22-09-2022 08:05:00
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