Alexander Forbes Group Holdings Limited · JSE:AFH
Alexander Forbes — Investor Presentation (June 2002)
79 slides from Alexander Forbes's investor presentation, June 2002
Slide 1: Alexander Forbes
Alexander Forbes
Slide 2: Company Structure
COMPANY STRUCTURE Alexander Forbes Limited 60% Investment Alexander Forbes Alexander Forbes Solutions UK PLC Africa Holdings • Investment • Financial Services • Financial Services Multimanagement LCP (60%) • Risk Services • Scrip Lending (51%) • Direct Marketing Retail Broking MIS (80%) Reinsurance
Slide 3: Management Structure
MANAGEMENT STRUCTURE GROUP UNITED KINGDOM CEO Graeme Kerrigan Financial Services Dick Wood Deputy CEO’s Direct Marketing Rod Redding • Africa Rael Gordon Risk Services • UK, Asia & Latin • Wholesale Broking Alistair Bell America John Percy-Davis • Retail Broking John Percy- FD Mike Ilsley Davis Acqu
Slide 4: Revenue from Operations
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
Slide 5: Trading Profit
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%
Slide 6: Financial Services UK
ys Alexander Forbes FINANCIAL SERVICES UK
Slide 7: Overview
OVERVIEW • Business leader - Dick Wood • 735 personnel in 12 offices throughout UK and Channel Islands
Slide 8: Overview (Continued)
OVERVIEW (Continued) COMPANY AF FINANCIAL LANE CLARK & AF CHANNEL AF TRUSTEE SERVICES PEACOCK CTC ISLANDS SERVICES BUSINESS Tony Mason LEADER Tim Morgan Tony Cunningham Nigel Chambers Trevor Gray Tim Culverstone PERSONNEL 270 300 100 50 15 OFFICES Croydon London Croydon Jersey Nottingham London Winc
Slide 9: Business Activities
BUSINESS ACTIVITIES 1.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 standar
Slide 10: Business Activities (Continued)
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 P
Slide 11: Business Activities (Continued)
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. I
Slide 12: AF Financial Services and Lane Clark & Peacock
AF FINANCIAL SERVICES AND LANE CLARK & PEACOCK AF FINANCIAL SERVICES LANE, CLARK & PEACOCK 1. Description Independent Financial Actuarial Consultancy Adviser 2. Main business activity - Set up and ongoing Yes Yes management of company pension schemes - Advice to individuals Yes No 3. Main product Bu
Slide 13: AF Financial Services and Lane Clark & Peacock
AF FINANCIAL SERVICES AND LANE CLARK & PEACOCK AF FINANCIAL SERVICES LANE, CLARK & PEACOCK 6. Sales process Aggressive Tender process - Telesales - 300 to 400 “first” meetings per month - Worksite marketing 7. Market leader - Stakeholder - DB - “Best Pension IFA” - Asset liability modelling - DB to
Slide 14: Clients and Market Position
CLIENTS AND MARKET POSITION Client Revenue Market Segment • Large corporates • Mainly fees • Compete with Mercers, Watson Wyatt and Bacon & Woodrow • SMEs/individuals • Mainly commission • Compete with IFAs and Pension Consultancies • Pension Providers • Fees • Compete with software providers
Slide 15: Developments and Growth Drivers
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”
Slide 16: Developments and Growth Drivers (Continued)
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
Slide 17: Developments and Growth Drivers (Continued)
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
Slide 18: Review of LCP
Lane Clark & Peacock Review of LCP Tony Mason 13th June 2002 LANE CLARK & PEACOCK
Slide 19: Direct Marketing
DIRECT MARKETING • MEDIA INSURANCE SERVICES (MIS) • ALEXANDER FORBES UK DIRECT (AFD)
Slide 20: Overview
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
Slide 21: Outsourcing
OUTSOURCING Policy fulfillment Telephone response Coupon response & enquirer fulfillment Printing/Mailpack distribution Creative Advert placement
Slide 22: Business Activities
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 − Acc
Slide 23: Business Activities (Continued)
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 Media (Readership) The Sun (9 100 000) Sunday Mirror (5 283 000) News of the World (10 237 000) Look Magazine
Slide 24: Clients and Market Position
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 mar
Slide 25: Developments and Growth Drivers
DEVELOPMENTS AND GROWTH DRIVERS Changes in UK Financial Services and Data Protection Acts Possible development: −Expansion within UK −Europe (France and Germany) −Brazil
Slide 26: Risk Services UK
ys Alexander Forbes RISK SERVICES UK
Slide 27: Overview
OVERVIEW • Business leader - John Percy-Davis • 960 personnel in 12 offices throughout UK • Competitors - Marsh, AON, Willis & JLT
Slide 28: Overview (Continued)
OVERVIEW (Continued) COMPANY RETAIL WHOLESALE PROFESSIONS/ BROKING BROKING SPECIALITY BUSINESS John Alistair Bell John Northridge LEADER Percy-Davis PERSONNEL 350 160 240 OFFICES Belfast London London London Birmingham Manchester Brighton Newcastle Dublin Nottingham Glasgow Southampton Harrow Spaldi
Slide 29: Retail Broking
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
Slide 30: Retail Broking (Continued)
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 Britan
Slide 31: Wholesale Broking
WHOLESALE BROKING • Solutions provider to insurance companies/intermediaries • Structure Class of business Geographic • 100% London based • Revenue structure 30% fees 70% commission (% of premium)
Slide 32: Wholesale Broking (Continued)
WHOLESALE BROKING (Continued) • Developments and growth drivers New specialities • Energy • Reinsurance Shortage of capacity • Local markets Retention of key people Entrepreneurial culture Team hires
Slide 33: Professions/Speciality
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)
Slide 34: Professions/Speciality (Continued)
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 Britann
Slide 35: EOS RISQ
EOS RISQ • Strategic European Alliance Partners Country Employees DIOT France 350 J. van Breda & Co Belgium 500 GrECo Austria 280 Assiteca Italy 200 • Client servicing • Product distribution • 73 offices in 21 European countries
Slide 36: National Britannia
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
Slide 37: Asia
iN Alexander Forbes
Slide 38: Overview
OVERVIEW • Business leaders - Guy Jameson (Regional CEO) - Country heads in each territory • 500 personnel (includes Associates) • Countries Subsidiaries Associates China / Hong Kong Malaysia Singapore Philippines Thailand Indonesia South Korea
Slide 39: Business Activities
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 insu
Slide 40: Business Activities (Continued)
BUSINESS ACTIVITIES (Continued) • Financial Services Healthcare consulting - based mainly in indemnity products Group Life, Personal Accident, Disability, Medical and Dental products
Slide 41: Development and Growth Drivers
DEVELOPMENT AND GROWTH DRIVERS • Premium rate rising • Predominantly brokerage book • Joint venture Sime Darby • Trade Credit & Political Risks expansion • Financial Services expansion
Slide 42: Latin America
/ @=< Alexander Forbes LATIN AMERICA
Slide 43: Overview
OVERVIEW • Business leader Alistair Bell (Regional CEO) Country heads in each territory COUNTRY PERSONNEL COUNTRY HEAD Argentina/Uruguay 200 Diego Grimaux Brazil 45 Marcos d’ Agostini Mexico 153 Alberto Espinosa Venezuela 7 Jose Betancourt
Slide 44: Argentina/Uruguay
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 sca
Slide 45: Brazil
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
Slide 46: Mexico
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
Slide 47: Mexico (Continued)
MEXICO (Continued) • Developments and growth drivers: organic growth in Retail Broking and Actuarial Consulting cross selling opportunities new branch offices
Slide 48: Venezuela
VENEZUELA • Reinsurance office • Large corporate accounts dependency • Generates wholesale earnings for London
Slide 49: Financial Services Africa
i/ a Alexander Forbes FINANCIAL SERVICES AFRICA
Slide 50: Overview
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
Slide 51: Business Activities
BUSINESS ACTIVITIES 1.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 val
Slide 52: Business Activities (Continued)
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 wit
Slide 53: Business Activities (Continued)
BUSINESS ACTIVITIES (Continued) 3. Provide products and services to members of retirement funds and Trustees •Home loans secured by the member’s resignation benefit (HomePlan) •Unsecured loans (CashPlan) •Trust services to safeguard the benefits of minors •Umbrella retirement funds on a standardised
Slide 54: Business Activities (Continued)
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
Slide 55: Business Activities (Continued)
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
Slide 56: Business Activities (Continued)
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 clai
Slide 57: Business Activities (Continued)
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
Slide 58: Business Activities (Continued)
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-ben
Slide 59: Clients and Market Position
CLIENTS AND MARKET POSITION Client Revenue Market Share Segment Medium, large Mainly retainer fees, Market Leaders corporates & also hourly fees & Retirement Funds commission Unions, Government & Mainly retainer fees < 5% Parastatals Medium, large Mainly commission Market leaders but < corporates fo
Slide 60: Clients and Market Position (Continued)
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 opport
Slide 61: Competitors
COMPETITORS Consulting - NMG - 5th Quadrant - Momentum - NBC - AON Administration - Old Mutual - Sanlam - NBC
Slide 62: Developments and Growth Drivers
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 i
Slide 63: Developments and Growth Drivers (Continued)
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 focu
Slide 64: Risk Services Africa
WY oe” #- Alexander Forbes RISK SERVICES AFRICA
Slide 65: Overview - AF Risk Services
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
Slide 66: Overview - AF Insurance Facilities
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 Interna
Slide 67: Overview - AF Personal Services
OVERVIEW – AF PERSONAL SERVICES • Business leader – Rob Thomson • 295 personnel in 19 offices spread throughout South Africa • Personal Lines Insurance broker
Slide 68: Business Activities
BUSINESS ACTIVITIES 1.Identify, assess and quantify risk •risk surveys •risk profiling •risk evaluation to provide clients with risk advice and solutions tailored to their needs
Slide 69: Business Activities (Continued)
BUSINESS ACTIVITIES (Continued) 2. Develop and implement risk management programmes •risk reporting •review and analysis of loss trends •loss prevention and control to reduce frequency and severity of loss incidence
Slide 70: Business Activities (Continued)
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
Slide 71: Business Activities (Continued)
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 sett
Slide 72: Business Activities (Continued)
BUSINESS ACTIVITIES (Continued) 6. Provide specialist advice and solutions for industry sectors Clothing and textile Industrial Retail Services, leisure and Construction Local government entertainment Education and Metals and Technology and religion minerals media Financial institutions Petrochemica
Slide 73: Business Activities (Continued)
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 - La
Slide 74: Business Activities (Continued)
BUSINESS ACTIVITIES (Continued) 8. Manage and facilitate settlement of workmen’s compensation and road accident claims (Alexander Forbes Compensation Technologies)
Slide 75: Clients and Market Position
CLIENTS AND MARKET POSITION Client segment Revenue Market share Multinationals and Mainly fees Market leaders large corporates Fees, % premium & Market leaders Cell captive facilities assets SMMES Mainly commissions < 10% Individuals (personal Commissions < 3% lines) and profit share •More than 60 %
Slide 76: Competitors
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
Slide 77: Developments and Growth Drivers
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) - cu
Slide 78: Developments and Growth Drivers (Continued)
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 c
Slide 79: Thank You
WY oe” #- Alexander Forbes THANK YOU