Metropolitan's 3rd quarter trading update

11 November 2009 Metropolitan

Group overview

* During the course of the past twelve months South Africa has experienced periods of extreme investment market reduction and volatility. Metropolitan has managed to navigate its way through the turmoil successfully, with its healthy capital position intact.

* During this time of economic downturn, the persistency of the group’s policyholder base has remained surprisingly resilient and overall the number of lives under administration on the active insurance books has continued to grow.

* Expense management has remained top-of-mind, with a balance being sought between investing in the future (staff and systems) and continuing to manage the overall expense base.

* The various sub-sets of the South African and African economies have experienced the economic downturn differently. Clients in the emerging sectors have remained resilient while those exposed to the stock markets, interest-rate leverage and higher levels of variable income have been under severe pressure. Metropolitan remains focused on servicing and assisting its traditional emerging markets, which are expected to continue growing over time. The current extent of job losses remains a concern.

*  Management is confident that the group’s stated market positioning, together with its diversified income streams and sound business processes, will enable it to continue generating good operating results for the foreseeable future.

Operational highlights

* Recurring premium income for the nine-month period increased by 5% in extremely difficult operating conditions.

* The 2% increase in the group’s recurring premium new insurance business over the period reflects both the product line changes made within the businesses and the state of the underlying economy.

*  The insurance businesses are taking the opportunity of the downturn to focus on the quality of new business as opposed to the quantity.

* The new business persistency levels within the retail business continued at satisfactory levels while expenses remained under control, which was particularly satisfying.

*  The corporate business secured a number of profitable risk and administration contracts through innovative solutions and its new umbrella fund product.

* Metropolitan International continued to make good progress in its African operations.

|* Metropolitan Health Group (MHG) further increased its number of members under administration while maintaining service levels above the contracted levels. The managed care business, Qualsa, was successful in tendering for another Government Employees Medical Scheme (GEMS) contract.

* The group’s capital management activities are ongoing, with an overall strengthening on all capital measurements.

*  Net cash received from clients to date was R3.3 billion and we expect to end the year in a positive position.

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