Gensec Bank and Aquila Form Alliance to Bring Weather Derivatives in South Africia.

Business Editors

JOHANNESBURG, SOUTH AFRICA and KANSAS CITY, Mo.--(BUSINESS WIRE)--Feb. 28, 2002--Gensec Bank, a wholly owned subsidiary of the JSE listed financial services group Sanlam, and the U.S.-based Aquila subsidiary of UtiliCorp United (NYSE:UCU), one of the largest energy marketers and risk management companies in North America, announced the formation of a strategic alliance to be the first to begin marketing weather derivative products in South Africa. Aquila pioneered the risk management industry's first weather derivative product in 1996 and is a leader in developing the market in the United States, Europe, Canada, Japan and Australia.

The alliance provides South African companies the opportunity to offset adverse effects of weather volatility on corporate earnings. Weather derivatives have applications to a number of weather dependent South African industries, including agriculture, construction, energy, food & beverage, insurance, tourism and leisure.

"The weather affects the earnings of many companies in this country, and we believe weather structures will become an important part of every risk management portfolio for weather sensitive industries," said Gensec Bank's Executive Director Mark Murning.

"The bank has seen some real interest from SA corporates in the very early stages of introducing weather hedging programmes. The industries affected by weather and those on which we will initially focus include agriculture, construction, energy, food and beverage, insurance and leisure industries. We believe that this pioneering product will offer great added value to our clients and will complement other business areas in Gensec."

Unlike insurance, which pays on actual damages, weather derivative structures are based on the difference between negotiated strike price and actual weather observations as published by Weather SA.

A number of weather derivative pricing and analytical tools applicable to South Africa are available on Aquila's website at www.guaranteedweather.com and will be transferred to Gensec Bank's website at www.gensec.com. Users of the site will be able to price weather structures offered by Gensec and view historical data for weather stations throughout South Africa and Africa.

Aquila has similar strategic alliances with Macquarie Bank, Australia's leading investment bank, Mitsui Sumitomo, one of the largest insurance companies in Japan, and for several years has marketed weather derivatives in Europe through its U.S.-based organization and through an alliance with Hiscox, a Lloyds of London insurance underwriter.

"The weather derivative market is just at the beginning of its global growth curve," said Ed Mills, president and chief operating officer of Aquila.

"The partnership with Gensec allows us to combine their extensive skills in derivative structuring with our global weather portfolio and derivative trading skills."

Gensec Bank is a leading South African investment bank, specializing as a wholesale provider of derivative-based risk management products to the savings industry. It also is a prominent arranger of debt and equity finance for corporations and is a manager of private equity funds. Corporate action advice and transaction support is provided to listed and unlisted companies by the corporate finance advisory unit. Through its proprietary trading desk, the bank acts as a market maker in most South African financial instruments.

Gensec Bank is a subsidiary of Sanlam and is fully guaranteed by Gensec, which has a capital base of around R5-billion. Gensec Bank strives to be a leading international financial engineering and capital markets group. Its growth has been driven through innovations such as:

-- Being the leaders in the structured products industry in South Africa

-- Playing a leading role in securitisation through Kiwane

-- Pioneering credit derivatives in the local market

-- Pioneering the launch of the Satrix 40

-- Introducing new insurance products

-- Developing the market for index-linked warrants in South Africa

-- Visit our website - www.gensec.com.

The Kansas City-based Aquila is one of the world's leading market-makers of weather derivatives. Aquila is a leading wholesaler of natural gas, power and coal in North America and a provider of risk management services. Aquila also provides wholesale energy and risk manager services in the United Kingdom, Germany and Scandinavia. Aquila is wholly owned by Kansas City-based UtiliCorp United, an international energy company with 4 million customers across the U.S. and in Canada, the United Kingdom, New Zealand and Australia. Additional information is available at www.aquila.com.