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Sovereign Performs Strongly In Difficult Market

11 AUGUST 2004

Sovereign Performs Strongly In Difficult Market

Statement made by Simon Swanson, Managing Director, Sovereign

Healthy profit contributions from our three main areas of operation enabled financial services company Sovereign to lift after tax appraisal value profit by 71% to $124.9 million for the financial year ending 30 June 2004. Sovereign’s Margin on Services Profit increased by 20% to $59.9m.

The combined effect was to produce strong profit growth and market share increases in a year that was challenging for the life insurance and investment sectors.

During the 12 months we grew annual in-force premium by 5% to $550 million. This, combined with more effective claims management, improved our profitability.

We shared in the growth being experienced by all home mortgage lenders, and during the year set a new record by settling mortgages valued at $1.7 billion, an increase of 49%.

Home mortgage lending is now an integral part of the package of protection and savings solutions offered by brokers and advisers.

Along with the industry, our investment operations in the form of lump sum investments and managed funds, struggled against other investment options.

While our new lump sum investment income declined by 35% to $77 million, our funds under management held up well by market standards and showed a modest 3% increase to $3.3 billion.

At present, the regular premium investments sector in which we operate is out of favour with investors.

A major contributor to this is undoubtedly the indecision the community has as to the most effective way to provide for its retirement years.

Even though we are the market leader, our figures demonstrate that too few are prepared to commit to regular savings. Industry statistics demonstrate this all too clearly and we continue to make this point in our representations to decision makers.

While as a company we anticipate the current financial year to be another of steady growth, until there is a change of policy that actively encourages people to save for their retirement years, we do not anticipate the community at large moving to greater self-sufficiency.

ENDS

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