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Metropolitan: Operational performance for the three months ended 31 March 2010

25 May 2010 Metropolitan

Group overview

Metropolitan/Momentum merger update
* The merger process has continued as detailed in the SENS announcements dated 31 March and 17 May 2010.
* The due diligence is being finalised, and we anticipate posting the circular to shareholders around the end of June, with a shareholders’ meeting scheduled for July.

Operational update

* Despite the merger deliberations, it remains business as usual on the operational front.
* All the markets in which we operate showed unexpected signs of recovery during the first quarter of 2010; however the sustainability of this recovery remains uncertain.
* Recurring premium new business, excluding the discontinued direct marketing channel, exceeded expectations in both the retail and international businesses.
*  Persistency experience remained broadly in line with the pricing basis; however, signs of stress in certain pockets of the retail operations are being actively managed as they appear.
* Recurring premium income increased in all three businesses, ending 6% up on the 2009 levels.
* Single premium new business was affected by the slow-down in the broker markets as well as the withdrawal of certain retail products sold through third party partners.
* Total claims paid to policyholders ended 13% below the levels paid out in 2009.
* Life insurance administration expenses were well controlled, with growth being restricted to below 1%.
* The healthcare administration business further increased the size of its business while maintaining exceptional levels of service, highlighting the sound underlying business model.
* The improved investment performance recorded by the asset managers continued over a one year rolling period.
* Overall, the group maintained its positive net cashflow; recording just over R1.4 billion in net inflows.
* Volatile local and global investment, financial and economic markets remain challenging.

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