COMPANY STRUCTURE

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(No Transcript)
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COMPANY STRUCTURE
Alexander Forbes Limited
60
Investment Solutions
Alexander Forbes Africa Holdings
Alexander Forbes UK PLC

• Investment Multimanagement
• Scrip Lending (51)

• Financial Services
• Risk Services Retail Broking Reinsurance
  Broking
• Insurance Facilities
• Personal Services
• Thebe Risk Benefits (49)
• Medscheme (19)

• Financial Services
• LCP (60)
• Direct Marketing MIS (80) ADB (36)
• Risk Services
• Wholesale Broking Retail Broking
  Specialist Broking
• Asia Various holdings in Subsidiaries
  and Associates
• Latin America

• Note All group entities are wholly owned unless
  stated otherwise

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MANAGEMENT STRUCTURE
UNITED KINGDOM
GROUP

• Financial Services Dick Wood
• Direct Marketing Rod Redding
• Risk Services
• Wholesale Broking Alistair Bell
• Retail Broking John Percy-Davis
• Specialist Broking John Northridge

• CEO Graeme Kerrigan
• Deputy CEOs
• Africa Rael Gordon
• UK, Asia Latin
• America John Percy-Davis
• FD Mike Ilsley
• Acquisitions Quintin Heaney

AFRICA
ASIA LATIN AMERICA
Country heads in each territory reporting into
Guy Jameson (Asia) and Alistair Bell (Latin
America)

• Financial Services Howard Walker
• Risk Services George Bishop
• Retail Broking Theo Pauw
• Reinsurance Broking Chris Fimpel
• Insurance Facilities Volker von Widdern
• Personal Services Rob Thomson

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REVENUE FROM OPERATIONS

• 2002 2001 Increase Rm Rm
• Africa
• Financial Services 739 682 8
• Investment Solutions 400 311 29
• Risk Services 651 538 21
• UK/Europe
• Financial Services 475 313 52
• Direct Marketing 380 337 13
• Risk Services 1,275 654 95
• Asia 94 63 49
• Latin America 225 172 31
• Total 4,239 3,070 38

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TRADING PROFIT

• 2002 2001 Increase Rm Rm
• Africa
• Financial Services 181 150 21
• Investment Solutions 143 97 47
• Risk Services 138 81 70
• UK/Europe
• Financial Services 61 17 259
• Direct Marketing 120 111 8
• Risk Services 239 122 96
• Asia 20 8 150
• Latin America (18) 18 (200)
• Total 884 604 46

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FINANCIAL SERVICES UK
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OVERVIEW

• Business leader - Dick Wood
• 735 personnel in 12 offices throughout UK and
  Channel Islands

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OVERVIEW
(Continued)
AF TRUSTEE SERVICES
CTC
COMPANY
AF CHANNELISLANDS
AF FINANCIAL SERVICES
LANE CLARK PEACOCK
Tim Morgan 270 CroydonLondonSouthamptonBri
stolBirminghamManchesterBelfastEdinburgh
Tony MasonTony Cunningham 300 London Winchest
er
Nigel Chambers 100 Croydon Bristol
Trevor Gray 50 Jersey Guernsey
Tim Culverstone 15 Nottingham
BUSINESS LEADER PERSONNEL OFFICES
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BUSINESS ACTIVITIES

• Advisory services to company pension schemes
• To Pension Scheme Trustees
• Actuarial
• Investments
• Design
• Communication
• Management of other providers
• To companies
• Set up of scheme
• Ongoing advice
• Financial management
• Appropriateness of existing scheme
• Accounting standards (UK and International)
• Corporate restructure

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BUSINESS ACTIVITIES
(Continued)

• 2. Advice/management of other employee benefits
  for companies
• Life cover for groups of employees- Insured-
  Self-insured
• Disability income replacement cover
• Private medical insurance
• 3. Financial advice to high net worth and
  employees of corporate clients
• Pension/annuity
• Investment
• Protection

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BUSINESS ACTIVITIES
(Continued)

• 4. Software development and sales for the pension
  industry
• Transfer value analysis
• Pension illustration
• Phased retirement and income drawdown
• Pension scheme administration
• Pension review
• 5. Third party administration services
• Pension schemes
• Pension review
• 6. Independent trustee services
• Pension schemes of insolvent employers

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AF FINANCIAL SERVICES AND LANE CLARK PEACOCK
AF FINANCIAL SERVICES
LANE, CLARK PEACOCK
Actuarial Consultancy Yes No Unbundled/non-
insured pension scheme Fees Multinational/large
corporate
Independent Financial Adviser Yes Yes Bundle
d/insured pension scheme Commission SME

• 1. Description
• 2. Main business activity - Set up and ongoing
  management of company pension schemes
• - Advice to individuals
• 3. Main product
• 4. Revenue
• 5. Clients

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AF FINANCIAL SERVICES AND LANE CLARK PEACOCK
AF FINANCIAL SERVICES
LANE, CLARK PEACOCK

• Tender process
• DB- Asset liability modelling- Accounting
  standards- Corporate restructure
• - General insurance consulting- Investment
  consulting

• Aggressive- Telesales- 300 to 400 first
  meetings per month
• Worksite marketing
• - Stakeholder
• - Best Pension IFA
• DB to DC
• - Financial advice to individuals-
  Healthcare

6. Sales process 7. Market leader 8.
Other services
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CLIENTS AND MARKET POSITION
Market
Revenue
Client Segment

• Compete with Mercers, Watson Wyatt and Bacon
  Woodrow
• Compete withIFAs and Pension Consultancies
• Compete with software providers

• Mainly fees
• Mainly commission
• Fees

• Large corporates
• SMEs/individuals
• Pension Providers

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DEVELOPMENTS AND GROWTH DRIVERS

• 1. Industry reviews
• FSA review of polarisation depolarisation
• Treasury review of long term savings
• Both of above may impact adviser
  status/commission
• Opportunities
• Change
• Less regulation/simpler sales process
• Relaxation of indirect benefit rules?
• Stronger ties with select providers

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DEVELOPMENTS AND GROWTH DRIVERS
(Continued)

• 2. DB to DC
• Latest driver is FRS17 accounting standard
• LCP DC services
• New clients
• 3. Growth of our FPS for individuals
• 4. Development of DC service offering in
  conjunction with Investment Solutions

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DEVELOPMENTS AND GROWTH DRIVERS
(Continued)
5. Development of appropriate investment for
closed final salary (DB) pension schemes with
Investment Solutions 6. Expand regional
operations 7. Further improve profitability of
existing clients
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LANE CLARK PEACOCK
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• DIRECT MARKETING
• MEDIA INSURANCE SERVICES (MIS)
• ALEXANDER FORBES UK DIRECT (AFD)

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OVERVIEW

• Business leaders - Roderick Redding Glenn Hare
• Personnel - 9 staff (includes 2 consultants)
• Offices
• Cranleigh, Surrey, UK
• London (Head Office support)
• Policies - Approx. 300,000

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OUTSOURCING

• Policy fulfillment
• Telephone response
• Coupon response enquirer fulfillment
• Printing/Mailpack distribution
• Creative
• Advert placement

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BUSINESS ACTIVITIES

• The promotion of Savings, Life and Personal
  Accident Insurance products through direct mail,
  advertisements in UK national newspapers,
  magazines, television and internet
• Products
• 15 year Savings Plan
• 15 year CashBack Term Life
• Funeral expenses
• Over 50 Whole Life
• Accidental Death Benefit

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BUSINESS ACTIVITIES
(Continued)

• MIS placed over 1,400 full page advertisements
  in the national media and distributed over 30
  000 000 doordrop packs throughout the UK over
  the last 2 years
• The Sun (9 100 000) Sunday Mirror (5 283 000)
• News of the World (10 237 000) Look Magazine (5
  441 000)
• Daily Mail (5 845 000) Sunday Magazine (10 237
  000)
• Mirror (5 569 000) Whats on TV (4 627 000)

Media (Readership)
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CLIENTS AND MARKET POSITION

• MIS markets to the UK population and targets from
  the lower to the upper middle income groups
• MIS is an appointed representative of AXA Sun
  Life Direct and has a leading position in the
  Insurance Direct Marketing industry. AXA Sun
  Life Direct is the largest direct marketing
  insurer in the UK and MIS makes a significant
  contribution to the AXA Sun Life Direct annual
  new business
• Competitors include the UK direct insurers (most
  insurers promote limited direct marketing
  campaigns)

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DEVELOPMENTS AND GROWTH DRIVERS

• Changes in UK Financial Services and Data
  Protection Acts
• Possible development
• Expansion within UK
• Europe (France and Germany)
• Brazil

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RISK SERVICES UK
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OVERVIEW

• Business leader - John Percy-Davis
• 960 personnel in 12 offices throughout UK
• Competitors - Marsh, AON, Willis JLT

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OVERVIEW
(Continued)
WHOLESALEBROKING
COMPANY
PROFESSIONS/SPECIALITY
RETAIL BROKING
Alistair Bell 160 London
BUSINESS LEADER PERSONNEL OFFICES
John Northridge 240 London
John Percy-Davis 350 Belfast London Birmingha
m Manchester Brighton Newcastle Dublin Nottingham
Glasgow Southampton Harrow Spalding
Note plus 210 personnel in Service Solutions
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RETAIL BROKING

• Client segment
• Large corporate
• UK corporate
• Commercial
• Revenue structure
• 25 fees
• 75 commission ( of premium)
• 85 annually renewable
• Principal lines
• Short term insurance
• Risk management
• Risk engineering

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RETAIL BROKING
(Continued)

• Developments and growth drivers
• Organic growth - premium rates increasing
• New Construction and Commercial Property division
• Reengineering of commercial segment
• Targeted sales initiative
• Cross selling - Professional Indemnity, Financial
  Services, National Britannia

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WHOLESALE BROKING

• Solutions provider to insurance
  companies/intermediaries
• Structure
• Class of business
• Geographic
• 100 London based
• Revenue structure
• 30 fees
• 70 commission ( of premium)

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WHOLESALE BROKING
(Continued)

• Developments and growth drivers
• New specialities
• Energy
• Reinsurance
• Shortage of capacity
• Local markets
• Retention of key people
• Entrepreneurial culture
• Team hires

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PROFESSIONS/SPECIALITY

• Insurance and risk advice for professional bodies
• High market share of UK solicitors
• Wide spectrum of other professionals
• Speciality businesses
• Insolvency
• Event Insurance
• Specialised motor
• Revenue Structure
• 35 fees
• 65 commission ( of premium)

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PROFESSIONS/SPECIALITY
(Continued)

• Developments and growth drivers
• Capitalise on market leadership positions
• Regional office distribution
• Larger professions practices
• Increase demand for PI Insurance
• Premium rates increasing
• Cross-selling - Retail, Financial Services
  National Britannia

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EOS RISQ

• Strategic European Alliance

• Client servicing
• Product distribution
• 73 offices in 21 European countries

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NATIONAL BRITANNIA(20 shareholding with option
over additional 12)

• Risk management specialist
• Additional offering for Alexander Forbes to
  existing/prospective client base
• Increasing co-operation with underwriter market
• Rapid growth in sales
• Performing on plan for year to October 2002

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ASIA
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OVERVIEW

• Business leaders - Guy Jameson (Regional
  CEO) - Country heads in each territory
• 500 personnel (includes Associates)
• Countries

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BUSINESS ACTIVITIES

• Risk Services
• Placement of insurance cover in both the local
  and international markets
• Establish optimum insurance programme structure
  using both risk finance and risk engineering
• Perform claims management services
• Professional Indemnity
• Political and credit risk insurance
• About 2m London wholesale earnings sourced from
  this region

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BUSINESS ACTIVITIES
(Continued)

• Financial Services
• Healthcare consulting - based mainly in indemnity
  products
• Group Life, Personal Accident, Disability,
  Medical and Dental products

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DEVELOPMENT AND GROWTH DRIVERS

• Premium rate rising
• Predominantly brokerage book
• Joint venture Sime Darby
• Trade Credit Political Risks expansion
• Financial Services expansion

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LATIN AMERICA
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OVERVIEW

• Business leader
• Alistair Bell (Regional CEO)
• Country heads in each territory

COUNTRY HEAD
PERSONNEL
COUNTRY
Diego Grimaux Marcos d Agostini Alberto
Espinosa Jose Betancourt
200 45 153 7
Argentina/Uruguay Brazil Mexico Venezuela
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ARGENTINA/URUGUAY

• Principal activity
• telesales/personnel outsourcing for Citibank
• revenue now 100 fee based
• Other activities
• retail and reinsurance broking
• revenue mainly commission based ( of premium)
• Developments and growth drivers
• restructured on cost plus basis
• reduced scale/risk

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BRAZIL

• Business activities
• retail broking
• small/medium corporate clients
• political and credit risk insurance
• Joint ventures
• Accor/Ticketseg
• Rodobens Seguros
• Developments and growth drivers
• product sales to Accor client base
• transportation, product distribution through
  Rodobens
• expansion into Financial Services

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MEXICO

• Business activities
• medium/large corporate clients
• bonds and surety business
• personal lines business
• employee benefits
• Acquisition of Bufete
• leading actuarial consulting business with blue
  chip client base
• part of MGAC network
• cross selling opportunities with Risk Services
• Reinsurance operations downsized

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MEXICO
(Continued)

• Developments and growth drivers
• organic growth in Retail Broking and Actuarial
  Consulting
• cross selling opportunities
• new branch offices

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VENEZUELA

• Reinsurance office
• Large corporate accounts dependency
• Generates wholesale earnings for London

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FINANCIAL SERVICES AFRICA
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OVERVIEW

• Business Leader - Howard Walker
• 1 500 personnel in 8 offices throughout South
  Africa
• 35 Actuaries
• 122 personnel in 3 countries in Southern Africa
• Botswana
• Namibia
• Swaziland

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BUSINESS ACTIVITIES

• Provide consulting and actuarial
  services to corporates and Trustees of
  retirement funds
• Benefit design and pricing
• Drafting of Fund Rules
• Advice regarding legislation
• Investment advice, including assessment of
  Investment Managers and performance surveys
• Actuarial valuation of assets and liabilities of
  funds
• Preparation of agendas and secretarial services
  for Trustee meetings
• Trustee training
• to enable the provision of well run and
• soundly financed retirement funds

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BUSINESS ACTIVITIES
(Continued)

• 2. Administration of retirement funds
• Keep member records
• Collect and record monthly contributions and
  pay these to fund managers
• Update member records with contributions
  received and investment performance
• Communicate with the members
• Pay tax to SARS
• Liaise with the FSB and SARS
• to ensure members are paid the correct amount
  when benefits fall due

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BUSINESS ACTIVITIES
(Continued)

• 3. Provide products and services to members of
  retirement funds and Trustees
• Home loans secured by the members resignation
  benefit (HomePlan)
• Unsecured loans (CashPlan)
• Trust services to safeguard the benefits of
  minors
• Umbrella retirement funds on a standardised outso
  urced basis
• as a one-stop shop to meet their needs

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BUSINESS ACTIVITIES
(Continued)

• 4. Place insurance cover
• Establish appropriate split between insurance
  and self-insurance
• Seek the best terms from insurers
• Administer any claims that arise
• accessing the local insurance market and
  international pooling arrangement

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BUSINESS ACTIVITIES
(Continued)

• 5. Provide personal financial planning advice to
  individuals
• Investment advice
• Estate planning and trusts
• Life and disability cover
• to grow their wealth and protect their assets

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BUSINESS ACTIVITIES
(Continued)

• 6. Provide advice to corporates regarding
  medical aid arrangements for their employees
• Critically evaluate and select the most
  appropriate medical schemes
• Communicate the options to the members
• Place the schemes on Risk
• Assist with problematic claims
• Analyse claims experience
• to ensure corporates offer their employees the
  most cost-effective scheme within their
  budgetary constraints

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BUSINESS ACTIVITIES
(Continued)

• 7. Provide actuarial advice to medical schemes
  and corporates
• Benefit design and pricing
• Claims analysis
• Evaluate managed care initiatives
• Assess the need for reinsurance and find the
  cover
• Calculate post-retirement medical aid liabilities

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BUSINESS ACTIVITIES
(Continued)

• 8. Provide disability and other health management
  interventions to corporates and retirement funds
• Independent assessment of disability claims and
  liaison with insurers
• Administration of disability claims
• Rehabilitation and out-placement of disabled
  people
• Pre-benefit health assessments
• Sick leave analysis and management
• HIV/AIDS strategies, treatment, protocols and
  funding mechanisms
• to maximise employee productivity, and minimise
  the cost of risk benefits

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CLIENTS AND MARKET POSITION
Market Share
Revenue
Client Segment
Mainly retainer fees, also hourly fees
commission Mainly retainer fees Mainly
commission Fees and commissions Fees ( of
assets)
Medium, large corporates Retirement
Funds Unions, Government Parastatals Medium,
large corporates for medical schemes SMMES Indi
vidual
Market Leaders lt 5 Market leaders but lt
15 lt 5 lt 3
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CLIENTS AND MARKET POSITION
(Continued)

• Dominate the market for actuarial and consulting
  services to medium, large corporates in
  Retirement and Health Care consulting
• One of the four largest Retirement Fund
  Administrators
• Holistic range of services provides a one-stop
  shop
• Significant opportunities exist in the
  Government, Parastatal and Trade Union sectors
  and in SMME and individual market

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COMPETITORS

• Consulting
• - NMG
• - 5th Quadrant
• - Momentum
• - NBC
• - AON
• Administration
• - Old Mutual - Sanlam - NBC

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DEVELOPMENTS AND GROWTH DRIVERS

• Surplus legislation
• - major administration and consulting exercise
• Pending changes to regulation 28
• - governing final asset allocations
• Increasing outsourcing of administration
• Outsourcing of Trusteeship
• - increased use of umbrella funds
• Trend to offer members investment choice
• - consulting opportunities for FPC
• - administration systems and capabilities come
  to the fore

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DEVELOPMENTS AND GROWTH DRIVERS
(Continued)

• AC116 valuation consulting opportunities
• Opportunity to provide additional services
• to individuals
• Continued upheaval in medical scheme industry
• Increase in industry funds
• Privatisation of Government and Parastatal
  funds
• Increased corporate focus on HIV/AIDS

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RISK SERVICES AFRICA
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OVERVIEW - AF RISK SERVICES

• Business Leaders - George Bishop Theo Pauw
• 850 personnel in 24 offices throughout South
  Africa
• 300 personnel on the ground in 9 countries in
  sub-Saharan Africa

- Botswana - Mocambique - Mauritius -
Kenya - Namibia - Zambia - Malawi -
Swaziland - Zimbabwe
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OVERVIEW AF INSURANCE FACILITIES

• Business leader Volker von Widdern
• 57 personnel in South Africa
• 3 personnel in Mauritius
• Includes
• Guardrisk Insurance (short term insurance cell
  captive)
• Guardrisk Life (life insurance cell captive)
• Aidsguard (aids cell captive)
• Guardrisk International (Mauritius)
• Alexander Forbes Insurance (short term personal
  lines insurer with small risk retention)

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OVERVIEW AF PERSONAL SERVICES

• Business leader Rob Thomson
• 295 personnel in 19 offices spread throughout
  South Africa
• Personal Lines Insurance broker

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BUSINESS ACTIVITIES

• Identify, assess and quantify risk
• risk surveys
• risk profiling
• risk evaluation
• to provide clients with risk advice
• and solutions tailored to their needs

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BUSINESS ACTIVITIES
(Continued)

• 2. Develop and implement riskmanagement
  programmes
• risk reporting
• review and analysis of loss trends
• loss prevention and control
• to reduce frequency and severity of loss
  incidence

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BUSINESS ACTIVITIES
(Continued)

• 3. Alternative risk finance - structure
  programmes that combine varying levels of risk
  retention and risk transfer
• risk retention capacity analysis and advice
• large deductible programmes (expected losses
  retained while catastrophe losses insured)
• risk financing products
• captive insurance services
• - captive consulting and formation
• - captive management
• - cell captives (property/casualty and life)
• - rent-a-captives
• - group / single-parent captives risk
• to suit customer needs

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BUSINESS ACTIVITIES
(Continued)

• 4. Place insurance cover
• Establish appropriate levels of insurance
  coverage
• Design and negotiate placement terms
• placing in local and international insurance and
  reinsurance markets for financial capacity
• 5. Perform claims management services to
  negotiate and settle claims

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BUSINESS ACTIVITIES
(Continued)
6. Provide specialist advice and solutions for
industry sectors
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BUSINESS ACTIVITIES
(Continued)

• 7. Provide best advice products and services
• car and household insurance for individuals
• premium financing
• risk management advice and insurance broking
  services for small and medium-size clients
• risk purchasing groups and affinity schemes
• - AmaSureSure
• - Latitude
• - Terisa
• - Municipal
• - AURA
• - Envoy
• - Various specialist products

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BUSINESS ACTIVITIES
(Continued)
8. Manage and facilitate settlement of workmens
compensation and road accident claims
(Alexander Forbes Compensation Technologies)
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CLIENTS AND MARKET POSITION

• More than 60 of Top 100 SA Companies are
• Alexander Forbes clients
• Intellectual know-how is our competitive edge
• Opportunities exist to leverage fees from
  corporate clients
• and increase market share of SMMEs and
  individuals
• Focus on cross-selling services and products

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COMPETITORS

• Main competitors
• - Glenrand MIB
• - Marsh
• - Aon
• - Willis
• - Specialist brokers
• - Banks and Insurers (Personal Insurance)
• All have operated in SA market for a number of
  years

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DEVELOPMENTS AND GROWTH DRIVERS

• Hardening of insurance market
• - develop new sources of insurance capacity
• - opportunity to demonstrate added value to
  clients
• - favourable for fee, commission and interest
  income
• Legislative change
• - deregulation of commission (preferred supplier
  relationships)
• - customer protection (onerous for small
  personal lines brokers)
• Privatization and investment in Africa
• Leverage revenues from corporate clients and
• new products and services
• King II (enterprise wide risk management)

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DEVELOPMENTS AND GROWTH DRIVERS
(Continued)

• Expansion of customer base into Central/East
  Africa
• Broadening of skills base and specialisation
• Continuous focus on fee negotiation, costs
• and cash management
• Broadening our menu of services and products
• Utilisation of low-cost skills base for hard
• currency earnings
• New distribution channels for products
• Increase Personal Lines market share

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THANK YOU