Glossary of terms, definitions and major businesses

 
Glossary of terms, definitions and major businesses
“Africa” the rest of Africa, excluding South Africa;
“adjusted return on Group Equity Value” or “adjusted RoGEV the return on Group Equity Value, excluding the impact of investment market volatility. Adjusted RoGEV is based on the actuarial investment return assumptions at the beginning of the reporting period;
billion one thousand million;
capital adequacy capital adequacy implies the existence of a buffer against experience worse than that assumed under the FSB’s Statutory Valuation Method. The sufficiency of the buffer is measured by comparing excess of assets over liabilities for statutory reporting purposes with the statutory capital adequacy requirement. The main element in the calculation of the capital adequacy requirement is the determination of the effect of an assumed fall in asset values on the excess of assets over liabilities;
capital portfolio” or “balanced portfolio” the consolidated capital of the Group, excluding working capital held by Group businesses. The capital portfolio includes the required capital of covered business as well as discretionary and other capital;
core earnings a Sanlam core earnings figure is presented to provide an indication of ‘stable’ earnings. Core earnings comprise the net result from financial services and net investment income earned on the shareholders’ fund, but exclude abnormal and non-recurring items as well as investment surpluses. Net investment income includes dividends received from non-operating associated companies and joint ventures but excludes the equity-accounted retained earnings. Dividends received on equity investments that are in essence a proportionate return of the capital investment, are not treated as investment income, but offset against the related negative investment surpluses on the particular investment;
cost of capital cost of capital is calculated as the required capital at the valuation date less the discounted value, using a risk-adjusted discount rate, of the expected annual release of the capital over the life of the in-force business, allowing for the after-tax investment return on the expected level of capital held in each year;
“covered business” long-term insurance business written by Sanlam Personal Finance, Sanlam Developing Markets, Sanlam UK and Sanlam Employee Benefits;
“embedded value of covered business ” or “EV embedded value of covered business is an actuarially determined estimate of the value of covered business, excluding any value attributable to future new business. Embedded value of covered business consists of the required capital supporting the covered business, or adjusted net worth, plus the value of the in-force covered business less the cost of capital;
FSB the Financial Services Board, the regulator of insurance companies in South Africa;
life business the aggregate of life insurance business and life licence business;
life insurance business products provided by the Group’s long-term insurance businesses in terms of insurance and investment contracts included in the Group financial statements, but excluding life licence business;
life licence business investment products provided by Sanlam Investments, Sanlam Employee Benefits and Glacier by means of a life insurance policy where there is very little or no insurance risk;
linked policy a non-participating policy which is allotted units in an investment portfolio. The value of the policy at any stage is equal to the number of units multiplied by the unit price at that stage less the value of unrecouped expenses;
market-related policy” or “contract with discretionary participating feature a participating policy which participates in non-vesting investment growth. This growth reflects the volatility of the market value of the underlying assets of the policy;
new business margin VNB as a percentage of PVNBP;
“non-life business financial services and products provided by the Group, excluding life insurance business;
non-life linked business non-life linked business comprises investment products provided by Sanlam Personal Finance’s Glacier business, which is not written under a life licence;
non-participating annuity a non-participating annuity is a policy which provides, in consideration for a single premium, a series of guaranteed regular benefit payments for a defined period;
non-participating policy a policy which provides benefits that are fixed contractually, either in monetary terms or by linking them to the return of a particular investment portfolio, e.g. a linked or fixed-benefit policy;
“normalised headline earnings”
normalised headline earnings measure the Group’s earnings, exclusive of earnings of a capital nature and fund transfers relating to the policyholders’ fund’s investment in Sanlam shares and Group subsidiaries. For the Sanlam Group, the only differences between normalised attributable earnings and normalised headline earnings are: 
Profits and losses on the disposal of subsidiaries, associated companies and joint ventures; 
Impairment of investments, value of business acquired and goodwill; and
The Group’s share of associates’ and joint ventures’ non-headline earnings.
Normalised headline earnings exclude the above items that are of a capital nature. Given that the Group’s operations are of a financial nature, normalised headline earnings include investment surpluses earned on the investments held by the shareholders’ fund, resulting in volatility in normalised headline earnings; 
“participating annuity” a participating annuity is a policy which provides, in consideration for a single premium, a series of regular benefit payments for a defined period, the benefits of which are increased annually with bonuses declared;
“participating policy” a policy which provides guaranteed benefits as well as discretionary bonuses. The declaration of such bonuses will take into account the return of a particular investment portfolio. Reversionary bonus, stable bonus, market-related and participating annuity policies are participating policies;
“policy” unless the context indicates otherwise, a reference to a policy in this report means a long-term insurance or investment contract issued by the Group’s life insurance subsidiaries in accordance with the applicable legislation;
PVNBP present value of new business premiums from covered business;
required capital the required level of capital supporting the covered business, based on the minimum regulatory capital requirements, plus an internal assessment of adjustments required for market, operational and insurance risk, as well as economic and growth considerations;
“result from financial services” profit earned by the Group from operating activities and excludes investment return earned on the capital portfolio;
return on Group Equity Value” or “RoGEV” change in Group Equity Value, excluding dividends and changes in issued share capital, as a percentage of Group Equity Value at the beginning of the period;
reversionary bonus policy a conventional participating policy which participates in reversionary bonuses, i.e. bonuses of which the face amounts are only payable at maturity or on earlier death or disability. The present value of such bonuses is less than their face amounts;
stable bonus policy a participating policy under which bonuses tend to stabilise short-term volatility in investment performance;
Statutory Valuation Method” or “SVM valuation requirements as laid out in a Board Notice issued by the FSB, entitled “Prescribed requirements for the calculation of the value of the assets, liabilities and Capital Adequacy Requirement of long-term insurers” or the equivalent valuation requirements of the Financial Services Authority in the United Kingdom as applicable to Merchant Investors;
surrender value the surrender value of a policy is the cash value, if any, which is payable in respect of that policy upon cancellation by the policyholder;
“value of in-force covered business” or “VIF the value of in-force covered business is calculated as the discounted value, using a risk-adjusted discount rate, of the projected stream of future after-tax profits expected to be earned over the life of the in-force book;
value of new business”or “VNB” the value of new business is calculated as the discounted value, at point of sale, using a risk-adjusted discount rate, of the projected stream of after-tax profits for new covered business issued, net of the cost of capital over the life of this business;
white label white label products relate to business where the Group is principally providing administrative or life licence services to third party institutions.
 
Major businesses of the Group
“Channel Life” Channel Life Limited, a subsidiary of Sanlam Life conducting mainly life insurance business in South Africa; 
“Merchant Investors” Merchant Investors Assurance Company Limited, a wholly owned subsidiary of Sanlam Limited conducting mainly life insurance business in the United Kingdom; 
“Sanlam Life” Sanlam Life Insurance Limited, a wholly owned subsidiary of Sanlam Limited conducting mainly life insurance business
“Sanlam Limited” the holding company listed on the JSE Limited and the Namibian Stock Exchange;
“Sanlam”, “Sanlam Group” or “the Group”  Sanlam Limited and its subsidiaries, associates and joint ventures; 
“Sanlam Namibia” Sanlam Life Namibia, a wholly owned subsidiary of Sanlam Life conducting mainly life insurance business in Namibia. 
“SDM Limited” Sanlam Developing Markets Limited, a wholly owned subsidiary of Sanlam Life conducting mainly life insurance business in South Africa and through its subsidiaries in Africa;