Old Mutual Ltd. · JSE:OMU
Old Mutual — Investor Day (November 2017)
150 slides from Old Mutual's investor day presentation, Nov 1, 2017
Slide 1: Old Mutual Limited Showcase
Old Mutual Limited Showcase 1 November 2017 INVESTMENT | SAVINGS | INSURANCE | BANKING
Slide 2: Disclaimer
DISCLAIMER This presentation may contain certain forward-looking statements with respect to certain of Old Mutual plc’s plans and its current goals and expectations relating to its future financial condition, performance and results and, in particular, estimates of future cash flows and costs. By th
Slide 3: Welcome
WELCOME Bruce Hemphill CEO, Old Mutual plc INVESTMENT | SAVINGS | INSURANCE | BANKING 3
Slide 4: Presentation Agenda
PRESENTATION AGENDA 09.30 Welcome and introduction Bruce Hemphill, CEO Old Mutual plc 09:40 Update on Managed Separation Rob Leith, Director of Managed Separation, OM plc CEO overview and introduction to the 09:50 Peter Moyo, CEO Designate OML business reviews 10:15 Nedbank Mike Brown & Raisibe Mora
Slide 5: Old Mutual Limited – Cash, Growth and Value
OLD MUTUAL LIMITED – CASH, GROWTH AND VALUE Old Mutual ▪ High-return and cash generative businesses in SA ▪ Integrated financial services focused on sub-Saharan Africa ▪ Strong brand positioning ▪ New management driving fundamental change ▪ Focus on ROE and cost efficiency Liberating the Managed bus
Slide 6: Update on Managed Separation
UPDATE ON MANAGED SEPARATION Rob Leith Director of Managed Separation, Old Mutual plc INVESTMENT | SAVINGS | INSURANCE | BANKING 6
Slide 7: Transactions as indicated previously
TRANSACTIONS AS INDICATED PREVIOUSLY Business Readiness key determinant of timing Phased reduction of OMAM stake – now independent Material completion Target completion end-2018 Creation of two separate entities, both listed in London and Johannesburg ▪ Old Mutual Wealth operations ▪ Creation of a n
Slide 8: On track with delivery of the Managed Separation
ON TRACK WITH DELIVERY OF THE MANAGED SEPARATION ▪ Material reduction in plc debt MS transactions ▪ Completion of Kotak sale ▪ 2nd tranche of OMAM shares to HNA expected in Q4 ▪ Perimeter concluded, subject to regulatory approval Business readiness ▪ Board and Management teams re-shaped ▪ Listed com
Slide 9: OML Perimeter
OML PERIMETER1,2 On listing Post Nedbank unbundling Old Mutual Limited Old Mutual Limited Primary listing: JSE, Secondary listings: LSE, NSX, ZSE, MSE Primary listing: JSE, Secondary listings: LSE, NSX, ZSE, MSE Old Mutual Nedbank (54%) Residual plc Nedbank Mass & Foundation Personal Finance minorit
Slide 10: Next Steps
NEXT STEPS 1 2 3 4 5 Regulatory & Listing Circular will outline On track for Distribution of stakeholder documentation for transaction material Nedbank shares approval processes OMW and OML timetable and completion by to follow ongoing published as soon shareholder end-2018 as practicable after meet
Slide 11: Managed Separation is the optimal strategy for delivering future value
MANAGED SEPARATION IS THE OPTIMAL STRATEGY FOR DELIVERING FUTURE VALUE FOR SHAREHOLDERS Release value trapped within the Group structure Wind-down the plc Head Office c.£95m run rate operational cost savings Unlock the conglomerate discount Conglomerate discount historically averaged 10 – 20% of mar
Slide 12: Introduction to OMEM
INTRODUCTION TO OMEM Peter Moyo CEO Designate, OML INVESTMENT | SAVINGS | INSURANCE | BANKING 12
Slide 13: A Premium African Financial Services Group
A PREMIUM AFRICAN FINANCIAL SERVICES GROUP Strong business with a great market position Sustained high cash generation Positioned for longer term sustainable growth Substantial business improvement and cost efficiency opportunities Creating value for shareholders by meeting customer needs 13
Slide 14: Well-positioned in our chosen markets
WELL-POSITIONED IN OUR CHOSEN MARKETS FUM1,2,3 South Africa5 ZA R1.2trn Customer # 6.1m FUM R928bn 6.1m cust. FY16 AOP R11.0bn4 6 3 1 2 NCCF1,2 R17.0bn Rest of Africa ZW NA KE NG Customer # 4.9m FUM R97bn 1.1m cust. 322k cust. 1.5m cust. (all EA) 1.4m cust. FY16 AOP R1.7bn4 10 8 AOP1,2,4 1 1 1 2 1 1
Slide 15: Growth prospects in our key focus regions
GROWTH PROSPECTS IN OUR KEY FOCUS REGIONS Majority of business currently from SA market… … with significant earnings opportunity across the continent 600 20 Largest insurance market Insurance Penetration rate (%) 500 on the African continent < 1% 2016 GDP (US$ billion) 15 400 Anchor of the Group, re
Slide 16: Extensive offering meeting all customer needs
EXTENSIVE OFFERING MEETING ALL CUSTOMER NEEDS Market size1 (m) Market mapping to our franchises OM Wealth & Corporate Investments OM Insure Wealth market 0.4 Employee Investments and Traditional Personal Finance benefits, Group asset mgmt. individual P&C risks, asset capabilities products Life and g
Slide 17: Largest multi-channel distribution network amongst traditional SA peers
LARGEST MULTI-CHANNEL DISTRIBUTION NETWORK AND REACH AMONGST TRADITIONAL SA PEERS1 Largest advisor network across SA2 Largest customer-facing owned branch footprint3 # Advisors # Branches 6.2% 5.0% 292 7,424 7,524 6,827 259 261 2014 2015 2016 2014 2015 2016 Total mass field force APE generated in wo
Slide 18: Strong track record of profitable growth in South Africa
STRONG TRACK RECORD OF PROFITABLE GROWTH IN SOUTH AFRICA1 Strong double-digit customer growth outside SA Sustained growth in FUM2 (m) (Rbn) 12.5% 9.1% 3.7% 10.9 9.4% 30.8% 1,086 886 14.8% 5.9 5.0 258 2016 2016 Gross sales3 Pre-tax AOP4 (Rbn) (Rbn) 12.8% 8.8% 12.7% 9.9% 12.7 213 11.0 155 12.9% 20.7%
Slide 19: Our battlegrounds: a clear strategy to deliver
OUR 8 BATTLEGROUNDS: A CLEAR STRATEGY TO DELIVER Consolidating and growing our 1 Defend SA share in Mass & Corporate leadership position 2 Defend and grow in SA Personal Finance market 3 Improve the competitiveness of the Wealth & Investments Cluster Improving key underperforming businesses 4 Contin
Slide 20: New and agile management team
NEW AND AGILE MANAGEMENT TEAM… OML CEO Designate Peter Moyo Delivering Old Mutual to our customers Mass & Foundation Cluster Personal Finance OM Corporate Clarence Nethengwe Karabo Morule Clement Chinaka Wealth & Investments Old Mutual Insure Rest of Africa LatAm & Asia Cluster Dave Macready Raimund
Slide 21: Enhancing customer focus and efficiency
…ENHANCING CUSTOMER FOCUS AND EFFICIENCY OML CEO Designate Peter Moyo Delivering Old Mutual to our customers Mass & Wealth & Personal OM Old Mutual Rest of LatAm Foundation Investments Insure Africa and Asia Finance Corporate Cluster Cluster Clarence Karabo Clement Dave Raimund Jonas David Nethengwe
Slide 22: Optimising for a listed environment
…OPTIMISING FOR A LISTED ENVIRONMENT Continuing Non-Executive Board members New Non-Executives ▪ Trevor Manuel (Chair) ▪ Itumeleng Kgaboesele ▪ Thys du Toit ▪ James Mwangi ▪ Bruce Hemphill ▪ Nombulelo Moholi ▪ John Lister ▪ Ignatius Sehoole ▪ Paul Baloyi ▪ Nosipho Molope ▪ Sizeka ▪ Stewart van Graan
Slide 23: A Premium African Financial Services Group
A PREMIUM AFRICAN FINANCIAL SERVICES GROUP Strong business with a great market position Sustained high cash generation Positioned for longer term sustainable growth Substantial business improvement and cost efficiency opportunities Creating value for shareholders by meeting customer needs 23
Slide 24: Nedbank
NEDBANK Mike Brown & Raisibe Morathi CEO & CFO, Nedbank INVESTMENT | SAVINGS | INSURANCE | BANKING 24
Slide 25: Old Mutual Limited Showcase – Nedbank
Old Mutual Limited Showcase 1 November 2017 Strong franchises, clear opportunities for improved financial metrics & attractive valuation
Slide 26: Agenda
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 26
Slide 27: Nedbank Group – an overview
Nedbank Group – an overview Access to the largest Total retail clients Old Mutual (SA) Market banking network in Africa 54% capitalisation 7.8m 39 Large corporate clients shareholding in R104bn Countries > 600 Nedbank Group (21.2% share in ETI) Advances Assets SA’s most Deposits 91% SA R966bn Transf
Slide 28: Nedbank Group – track record of delivering value to shareholders
Nedbank Group – track record of delivering value to shareholders NAV + Dividend growth (19% CAGR) > Nominal GDP (7% average) NAV per share1 (cents) ROE & cost of equity (%) Dividend per share (cents) 18.9 CAGR: +7.4% 18.4 CAGR: +11.8% 17.3 16.1 16.5 15.7 15.1 14.4 13.9 13.5 13.0 13.0 12 180 13 596 1
Slide 29: Rationale of the Nedbank – Old Mutual strategic relationship
Rationale of the Nedbank – Old Mutual strategic relationship ▪ Benefits of a strategic shareholder (Confirmation of strategic minority stake Improved free-float/ liquidity) ▪ Nedbank manufactures & distributes simple bancassurance products & works alongside Old Mutual as preferred product provider o
Slide 30: Nedbank Group – one of Africa's largest banks
Nedbank Group – one of Africa’s largest banks Largest banks in Africa1 (Tier 1 capital, USD$) SA advances market share2 (%) 9000 1% 5% 8% 25% 6000 19% 22% 20% 3000 Standard FirstRand Barclays Africa Nedbank SBK FSR NED BGA INL ETI CPI Investec Capitec 0 Other South African North African West African
Slide 31: Nedbank Group – a strong, diversified & growing financial services provider
Nedbank Group – a strong, diversified & growing financial services provider Corporate & Retail & Business Wealth Rest of Africa Investment Banking Banking Banking solutions to corporates, Banking solutions to individual retail Integrated insurance, asset & wealth Banking solutions to retail, small &
Slide 32: Nedbank CIB – a core strength & leadership in key markets
Nedbank CIB – a core strength & leadership in key markets ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators Partner 25 ▪ Strong franchise providing good returns network (ROE >20%) ▪ Market leadership in commercial-property & RMB SBK renewable-energy financing Return
Slide 33: Nedbank RBB – ROE expansion underpinned by quality book
Nedbank RBB – ROE expansion underpinned by quality book & gaining share of SA retail profit pool ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators 50 ▪ Investment delivering benefits as earnings grow & ROE continues to increase 40 ▪ Strengths in deposit taking (19% m
Slide 34: Nedbank Wealth – high quality, high ROE business
Nedbank Wealth – high quality, high ROE business with growth potential ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators 35 ▪ Integrated local & international high-net- worth franchise 30 − Rich heritage & strong client base − Market-leading digital innovations Retur
Slide 35: Rest of Africa – investing to create scale & unlock future growth
Rest of Africa – investing to create scale & unlock future growth ROE, efficiency ratio & headline earnings (H1 ‘17) Key strengths & differentiators 25 ▪ SADC (own operations) − Investment into technology & digital to SBK generate scale (Flexcube core banking & 20 mobile in 4 countries) Return on eq
Slide 36: Agenda
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 36
Slide 37: Our purpose, vision & strategic focus areas
Our purpose, vision & strategic focus areas for creating value & driving growth Purpose: To use our financial expertise to do good for individuals, families, businesses and society Vision: To be the most admired financial services provider in Africa by our staff, clients, shareholders, regulators an
Slide 38: Client experiences – managed evolution IT approach
Delivering innovative market-leading client experiences – underpinned by managed evolution IT approach & complemented with a Digital Fast Lane capability Managed evolution approach Core systems (#) “Big bang” Robust, Rationalise, flexible IT standardise & 211 landscape 194 simplify IT advancement 17
Slide 39: Enhancing client access through digital offerings
Delivering innovative market-leading client experiences – enhancing client access through digital offerings Nedbank Private Wealth App Homeloans online process NZone digital branch Rated one of the best HNW Apps globally Unique in market Leading in digital outlets Best in class client experience & f
Slide 40: Value for clients through unique CVPs
Delivering innovative market-leading client experiences – value for clients through unique CVPs Market EdgeTM Loyalty & rewards Solar rural branches Unique in market Unique in market Unique in market Leveraging Big Data Cash redemption capability Energy efficient e-banking services for client benefi
Slide 41: Improved decision making & operational efficiencies
Delivering innovative market-leading client experiences – improved decision making & operational efficiencies Executive EySightTM Robotics & Artificial Intelligence Core systems Cross sell & client First implementations servicing benefits delivering benefits Implementations to date Client Intelligen
Slide 42: Ongoing new primary client wins in CIB
Growing our transactional banking franchise faster than the market – ongoing new primary client wins in CIB Primary transactional account wins Net primary client gains (#) 120 104 16 39 65 21 44 22 22 22 2013 2014 2015 2016 2017 YTD *2017 YTD as at end Sep 2017 42
Slide 43: Growing client base with greater cross-sell in RBB
Growing our transactional banking franchise faster than the market – growing client base with opportunities for greater cross-sell & deeper share of wallet in RBB Retail clients (m, CAGR %) Growing our share Growing our share Main-banked of retail clients (1market est. to of transactional clients &
Slide 44: Operationally excellent – significant investment in the franchise
Being operationally excellent in all we do – significant investment in the franchise, while extracting efficiencies Expense growth H1 2013 – H1 2017 (CAGR %) Nedbank investments (H1 2013 – H1 2017) ▪ ATMs +686 (+22%) ▪ Intelligent depositors +720 9.9% ▪ New format branches +303 7.5% ▪ Annual IT cash
Slide 45: Optimising footprint through digital enhancements
Being operationally excellent in all we do – focus on optimising our footprint through digital enhancements & reduced floor space Total & new-image outlets Floor space saved Outlets format mix (#) (thousand m2) (#) Target > 30k m2 by 2020 763 764 708 763 764 33 695 708 695 171 627 627 24.8 190 193 1
Slide 46: Shifting to digital products & processes
Being operationally excellent in all we do – shifting to digital products & processes Digital clients1 (000s) Deposit volumes (000s) Change in 2017 Jun 15 Jun 16 Jun 17 Traditional Deposits Self Service Deposits Devices +5% ▪ Intelligent Depositors (ID) 38% 14 691 14 793 ▪ ATMs (3%) 13 460 ▪ Video b
Slide 47: Selective market share growth for sustained economic profit
Managing scarce resources to optimise economic outcomes – selective market share growth for sustained economic profit delivery BA 900 market share (%) Advances Share¹ Trends Deposits Share¹ Trends Home loans 14.5 Household 19.0 Vehicle finance 27.6 Term 21.2 Personal loans 10.9 Commercial 17.1 Card
Slide 48: Access to best financial services network in Africa – two pronged strategy
Providing our clients access to the best financial services network in Africa – two pronged strategy Seamless banking experience across 39 countries Central & West Africa SADC & East Africa – – alliance approach to own, manage & control access new markets banks (6 countries & (c20% strategic 2 repre
Slide 49: Investing & building scale in SADC
Providing our clients access to the best financial services network in Africa – investing & building scale in SADC Core system & product rollout Branches (#) ATMs (#) Rolled out to date +16% CAGR +16% CAGR Flexcube/Core banking system Mobile 89 192 Card 20 30 69 162 50 108 H1 13 H1 17 H1 13 H1 17 Ma
Slide 50: ETI an important strategic investment
Providing our clients access to the best financial services network in Africa – ETI an important strategic investment Strategic rationale Benefits from strategic relationship ▪ Nedbank wholesale client access to key markets & 84 transactional banking with ETI ▪ Commercial relationship – opportunity
Slide 51: People 2020 – transforming leadership, culture & talent
People 2020 – transforming our leadership, culture & talent capability to deliver our strategy ▪ Purpose-led LEADERSHIP that inspires & enables individuals & teams to thrive in the Nedbank of the future ▪ Client-driven, agile, innovative, people centred CULTURE ▪ Multi-skilled & mobile TALENT that a
Slide 52: Agenda
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 52
Slide 53: A strong base to weather a challenging environment
A strong base to weather a challenging environment Headline earnings (Rm) Loan growth (CAGR %) Global financial 20.1 CAGR 16.3 crisis 6.3 15.1% 4.8 06–08 13–H1 17 Wholesale Retail (28%) Endowment benefit for 1% change in interest rates (12-months) (Rbn) 1.4 0.6 10 831 11 465 0.5 5 921 5 765 4 277 05
Slide 54: A strong base to weather a challenging environment
A strong base to weather a challenging environment Number of clients (m) NIR income contribution (%) Defaulted advances (%) 86% 5.9 7.8 4.2% 46.4% (53%) 3.9 4.4 4.2 42.2% 2.8 39.8% 08 09 H1 17 08 09 H1 17 08 09 H1 17 CET1 ratio (%) Funding tenor (%) Coverage (%) 0.65 Portfolio 24% 0.45 0.47 12.3 9.9
Slide 55: The environment over the next 3 years
The environment over the next 3 years Macro-economic outlook1 (%) Anticipated developments 2017 2018 2019 2020 ▪ Political events impact short term confidence GDP SA 0.8% 1.2% 1.9% 2.3% ▪ Credit growth to improve off a low base GDP SSA 2.6% 3.5% 3.6% 3.7% ▪ Interest rates reduce in 2018 before incre
Slide 56: Key drivers to meet medium to long-term targets
The key drivers1 to meet our key medium to long-term targets 18 19 20 NII June MLT Future Metric 2017 target trajectory AIEA times ROE (excl 15.1% 5% goodwill) above COE Net interest margin (3.7%) Diluted HEPS ≥ CPI + GDP +5,9% growth +5% less excl ETI Credit loss ratio Efficiency 59.3% 50 – 53% Rat
Slide 57: Net interest income – driven by improving advances growth
Net interest income – driven by improving advances growth, endowment, asset pricing & funding costs Industry credit growth (%) Net interest margin drivers 40 2017 2018 2019 2020 Endowment Companies 30 2017: 4.8% Asset mix 2018: 6.7% 20 2019: 8.4% Asset pricing 2020: 12.7% 10 Liability mix Households
Slide 58: Credit loss ratio – underpinned by a quality portfolio
Credit loss ratio – underpinned by a quality portfolio across all clusters Group CLR1 (bps) Cluster CLR (bps) 131 180 83 114 77 67 60 -100 80 30 37 28 47 9 (3) 13 14 15 16 17 Outlook CIB RBB Wealth RoA range H1 H1 2013 H1 2017 Banking 1 Nedbank through-the-cycle target range: 60–100 bps. 48.7% 44.2%
Slide 59: CLR – good asset quality & low risk retail book
CLR – good asset quality & low risk retail book HL new business – low-risk clients proportion1 (%) Vehicle finance 3- months+ arrears benchmarking3 80% 6.00 6% 5% 70% 4.00 4% 60% 3% 50% 2.00 2% 1% 40% 0.00 0% 09 10 11 12 13 14 15 16 17 11 12 13 14 15 16 17 HL new business – low-risk properties propo
Slide 60: NIR – solid commission & fee income growth
NIR – solid commission & fee income growth & strong trading performance NIR & key growth drivers (Rm) NIR-to-expenses ratio (%) Outlook: Total 11 730 CAGR Increase to Insurance penetration 776 (5%) >85% opportunity 9 535 86.4 Insurance 2 006 +12% 84.6 income1 950 Benefits from integrated CIB model T
Slide 61: NIR – Retail NIR growth underpinned by client gains
NIR – Retail NIR growth underpinned by ongoing client gains & deepening share of wallet Total retail client base (000s) Retail NIR1 (Rm) CAGR CAGR +5% 5 151 +5% 7 531 Total 4 203 Total 6 164 2 702 Main- 3 370 Transactional banked 2 237 +5% incl card issuing 2 620 +6% Retail excl 4 829 main- 3 927 Ot
Slide 62: NIR – CIB integrated model continues to drive revenue growth
NIR – CIB integrated model continues to drive revenue growth CIB NIR (Rm) CIB NIR-to-average advances ratio CAGR Leverage strong +7% 3 371 lending position 158 Total >2.0% 2 557 1.8% 1 310 Other 361 +6% Comm & 1 023 Fees 1 903 Trading +13% 1 173 13 17 H1 17 Target H1 62
Slide 63: Expenses – opportunities to improve efficiency ratios
Expenses – opportunities to improve efficiency ratios in RBB & ROA as we progress towards our target of 50-53% Efficiency ratio vs peers¹ (%) Performance targets linked to LTIs Digital, scale & cost Strategic targets set for 31 Dec 2019: optimisation opportunities → R1bn pre-tax Target Operating Mod
Slide 64: Expenses – cost optimisation in variable & fixed expense base
Expenses – cost optimisation in the variable & fixed expense base Variable expenses – Flexibility of expense Fixed & variable expenses – can be delayed or reduced base (%) structural optimisation planned ▪ ~10% staff attrition per ▪ Target operating model annum synergies of R1bn pre-tax by 2019 ▪ ST
Slide 65: Expenses – RBB a key contributor to R1bn synergies
Expenses – RBB a key contributor to the R1bn pre- tax Target Operating Model synergies Target operating model R1bn pretax synergies ▪ Removing duplication across ▪ Marketing spend Shared services shared services functions (eg optimisation cost finance, HR, risk, compliance) ▪ RoA head office cost op
Slide 66: Associate income – ETI performance
Associate income – ETI performance reflective of tough but improving environment, particularly in Nigeria Associate income from ETI1 (Rm) 870 (125) (745) 148 278 292 152 230 171 150 142 152 164 ETI medium-to-long term guidance2 ETI H1 2017 results ▪ ROTE target: COE + audited 5% (H1 2017: 15.3%) ▪ E
Slide 67: ETI – Nigerian market showing signs of recovery
ETI – Nigerian market showing signs of recovery & ETI successfully secured $400m of convertible funding. While short-term outlook remains uncertain, the longer-term potential remains ETI share price vs Nigerian bank index Carrying value & market value (Rbn) 5.2 500 450 460 4.1 17.0 400 350 3.1 274 3
Slide 68: Dividend – strong capital generation underpins dividend cover
Dividend – strong capital generation underpins dividend cover within target range Dividend cover (x times) Basel III capital ratios (%) 15.7 2.18 2.16 2.10 Total 14.8 2.5 Tier 2 1.8 1.99 Tier 1 1.2 0.9 CET1 range: 1.80 10.5–12.5% Board-approved target range: CET1 11.8 1.75–2.25x 12.3 SARB min CET1:
Slide 69: Agenda
Agenda Market overview Mike Brown & positioning Strategic focus areas that Mike Brown underpin growth & create value Strong franchise with clear pathway to meeting our Raisibe Morathi medium to long term targets Conclusion Mike Brown 69
Slide 70: Old Mutual Managed Separation
Old Mutual Managed Separation ▪ Listing of a new South African holding company – ‘Old Mutual Limited’ (OML) − At the earliest opportunity in 2018, following OM plc’s 2017 full-year results announcement − Subsequent distribution of a significant proportion of the shareholding in Nedbank from OML − OM
Slide 71: Good governance & a good corporate citizen
Good governance & a good corporate citizen – underpinning our strategic journey Thomson Reuters Diversity & Inclusion Index – Executive leadership Nedbank the only African company in the top 20 most diverse & inclusive organisations ▪ Highly rated management team ▪ Depth of bench strength & successi
Slide 72: Nedbank Group – strong domestic foundation with attractive growth prospects
Nedbank Group – a strong domestic foundation with attractive growth prospects both in SA & in rest of Africa Short-term political uncertainties & muted SA economic outlook Competitive franchises Exciting growth drivers ▪ CIB – strong franchise with growth ▪ Delivering innovative market-leading clien
Slide 73: Q&A
Q&A INVESTMENT | SAVINGS | INSURANCE | BANKING 73
Slide 74: Break
BREAK INVESTMENT | SAVINGS | INSURANCE | BANKING 74
Slide 75: Deep Dive into Business Units
DEEP DIVE INTO BUSINESS UNITS INVESTMENT | SAVINGS | INSURANCE | BANKING 75
Slide 76: Deep Dive Agenda
DEEP DIVE AGENDA 11:30 Deep Dive into Business Units 11:30 Mass & Foundation Cluster (MFC) Clarence Nethengwe, MD Mass & Foundation Cluster 11:50 Personal Finance (PF) Karabo Morule, MD Personal Finance 12:10 Wealth & Investments Cluster Dave Macready, MD Old Mutual Wealth & Investments 12:40 Q&A Se
Slide 77: Mass & Foundation Cluster
MASS & FOUNDATION CLUSTER Key stats 2016 AOP contribution 24.0% 2016 AOP R3.1bn Customers 3.2m Clarence Nethengwe MD, Mass & Foundation Cluster INVESTMENT | SAVINGS | INSURANCE | BANKING 77
Slide 78: Meeting Mass & Foundation customer needs
MEETING MASS & FOUNDATION CUSTOMER NEEDS PF, 5.9m1 policies ▪ Strong relationships in Wealth 3.2m2 unique customers communities, with a strong & HNW presence in the public sector R20k+ pm Lending and transactional – Money Account, unsecured lending 0.2 ▪ Long-term insurance business is the anchor of
Slide 79: Unique positioning with customers
UNIQUE POSITIONING WITH CUSTOMERS ▪ Increasing product flexibility for savings products SA market shares1 Risk and Savings ▪ Large branch network for service and sales Share of APE written by SA listed insurers2 58% ▪ c.4,000 strong tied agency force Risk ▪ Staff performance management tied to persi
Slide 80: Largest advisor force with superior productivity
LARGEST ADVISOR FORCE WITH SUPERIOR PRODUCTIVITY1 Field advisor force advantage Market-leading advisor productivity4 Branch and field advisor productivity 9.7% ▪ Over 4,0002 advisors 6.5 6.2 Market-leading productivity 5.4 ▪ Strong worksite advantage with presence in more than 45,0003 worksites 2014
Slide 81: Unsecured lending continues to play key strategic role
UNSECURED LENDING CONTINUES TO PLAY KEY STRATEGIC ROLE OM Finance loans and advances2 ▪ Increased levels of customer intimacy (Rbn) R350m ▪ Distribution via fast growing branch infrastructure R411m (c.30 per year) 11.2 10.0 Income statement impairments ▪ 50% of new branches targeted towards middle a
Slide 82: Strong financial track record
STRONG FINANCIAL TRACK RECORD VNB1 and VNB margin Pre-tax AOP2 (Rm) (% of PVNBP) (Rm) 7.9% 1 400 12.00% 2,993 3,058 2,629 11.50% 1 200 1,204 1.0% 11.00% 1,477 1,376 1 000 1,035 1,055 2014 2015 2016 1H2016 1H2017 10.50% 10.3% Pre-tax AOP contribution to the Group (2016)3 10.00% 800 10.2% 9.9% 9.50% 9
Slide 83: Defending our mass market leadership position
DEFENDING OUR MASS MARKET LEADERSHIP POSITION ▪ Explore participation in full funeral value chain, in addition to pure Strengthen core value proposition underwriting ▪ Explore complementary products Expand lending and transactional ▪ Continue to build out lending product suite and Money Account solu
Slide 84: Large, profitable business well-positioned for sustainable growth
LARGE, PROFITABLE BUSINESS WELL-POSITIONED FOR SUSTAINABLE GROWTH ▪ Trusted brand which is embedded in the communities ▪ We recruit from the community for the community ▪ Market leader in the mass & foundation segment with a unique and highly efficient sales platform ▪ Simple and accessible offering
Slide 85: Personal Finance (PF)
PERSONAL FINANCE (PF) Key stats 2016 AOP contribution 26.9% 2016 AOP R3.4bn Customers 2.0m Karabo Morule MD, Personal Finance INVESTMENT | SAVINGS | INSURANCE | BANKING 85
Slide 86: Established South African risk and savings business
ESTABLISHED SOUTH AFRICAN RISK AND SAVINGS BUSINESS ▪ We provide holistic financial advice and long-term savings, investment, income and risk protection solutions for middle PF life APE (2016) by line of business (Rm) income customers in South Africa (earning R20k – 80k pm) 447 17% 756 ▪ We aim to b
Slide 87: Well developed insurance market with BMI opportunities
WELL DEVELOPED INSURANCE MARKET WITH BMI OPPORTUNITIES Growth in SA middle market customers (‘000)2 ▪ Historic preference for face-to-face advice remains, CAGR but younger customers prefer digital 17% 21% – PF’s large advisor force and growing digital 3,338 3,537 8% 3,160 channel provides balance to
Slide 88: Multiple customer access points driving relationships and sales
MULTIPLE CUSTOMER ACCESS POINTS DRIVING RELATIONSHIPS AND SALES – FURTHER OPPORTUNITIES IN HIGH INCOME REGIONS Upside from advisor alignment to target income segment1,2, 3 Channel Number1 PF APE (%) – R3.4bn1 Employed tied c.3,000 55% Tied advisors 26% 21% 24% 29% IFA / broker c.7,000 28% PF APE 29%
Slide 89: Leveraging MFC and Corporate platforms
LEVERAGING MFC AND CORPORATE PLATFORMS APE generated from public sector (Rm) ▪ Customer migration opportunities as customer incomes grow 134 Mass & ▪ Worksite cross-sell using On The 125 Foundation Cluster Money financial education platform 2016 1H2017 ▪ Money Account (annualised) Worksite performan
Slide 90: Contribution to the broader OMEM business
CONTRIBUTION TO THE BROADER OMEM BUSINESS ▪ R3.2bn in APE for Old Mutual Wealth Wealth & Investments ▪ 70% of the FUM generated is managed by OMIG (excl Absolute Guarantee Product - 5%) Cluster ▪ 5% of the FUM generated is managed by OM multi-manager ▪ R185m in APE in the form of SuperFund schemes,
Slide 91: Strong, cash generative business
STRONG, CASH GENERATIVE BUSINESS VNB and VNB margin Pre-tax AOP1 Pre-tax AOP contribution to the Group (2016)2 600 (Rm) (% of PVNBP) 4.5% (Rm) 9.5% 4.0% 500 2.8% 3.5% 3,421 2.5% 400 3.0% 3,073 2,854 Personal 1.7% 2.5% 300 1.4% 2.0% Finance 200 1.1% 1.5% 26.9% 1.0% 1,501 1,395 100 389 500 272 112 87
Slide 92: Robust, profitable business with unique pockets of opportunity
ROBUST, PROFITABLE BUSINESS WITH UNIQUE POCKETS OF OPPORTUNITY ▪ Substantial market position with opportunity to grow market share ▪ Opportunity in the BMI customer demographic to help drive improvement in market share ▪ Industry-leading margins and profit contribution from the legacy book generate
Slide 93: Old Mutual Wealth & Investments
OLD MUTUAL WEALTH & INVESTMENTS Key stats 2016 AOP contribution 12.1% 2016 AOP R1.5bn 1H2017 FUM R695bn Dave Macready MD, Old Mutual Wealth & Investments INVESTMENT | SAVINGS | INSURANCE | BANKING 93
Slide 94: Key industry drivers
KEY INDUSTRY DRIVERS ▪ Retail market growth greater than institutional (5Y CAGR 15% vs. 8%)1 ▪ Retail flows dominated by Independent Financial Advisor market (c.80%)1 ▪ Retirement reform driving transfers from standalone funds into umbrellas Industry ▪ Growth in alternatives driven by infrastructure
Slide 95: Significant player with integrated proposition
SIGNIFICANT PLAYER WITH INTEGRATED PROPOSITION ▪ One of the largest private wealth and investment managers in Retail assets managed1,7 Institutional assets managed1,8 Africa – R695bn FUM1 ▪ Recognised leader in Responsible Investment and ESG2 Asset management: 5.7% 9.6% ▪ 8 independent boutiques – R
Slide 96: Segment overview
SEGMENT OVERVIEW ▪ Advice-led, vertically integrated retail business ▪ Target high net worth clients, investment ▪ Eight boutique investment businesses Independent Financial Advisors and tied ▪ Listed – local and global asset classes WHO ARE WE? distribution ▪ Future-fit lifestyle advice process and
Slide 97: Segment overview (cont'd)
SEGMENT OVERVIEW (CONT’D) ▪ Market risk and asset liability management to ▪ Local and international private equity support guaranteed products and CPI linked Annuity products ▪ Infrastructure and renewables WHO ARE WE? ▪ Alpha capability for proprietary assets ▪ Impact investments ▪ Multiple asset c
Slide 98: Sources and figures as at 30 June 2017
98 Sources: African Infrastructure Investment Managers (AIIM); Futuregrowth Asset Management; Old Mutual Investment Group; Old Mutual Alternative Investments; Old Mutual Specialised Finance | Figures as at 30 June 2017
Slide 99: Key strategic focus
KEY STRATEGIC FOCUS Alternative Specialised Credit opportunities CAPITALISE ON FOCUS OF LEADER IN DIFFERENTIATED SKILL IN BOUTIQUE MODEL CAPABILITIES LDI Passive | Smart Beta REFOCUS ON RETAIL GROW WEALTH SEGMENT IFA MARKET BUILD AFRICAN ACCELERATE GLOBAL ALTERNATIVES MEGA-MANAGER CAPABILITIES & MAR
Slide 100: Opportunity to unlock value
OPPORTUNITY TO UNLOCK VALUE FUM1 NCCF Pre-tax AOP2 (Rbn) (Rbn) (Rm) (2.9%) 6.5% 24.7 65.3% 695 1,639 1,663 613 630 641 1,546 555 16.4 815 772 6.0 6.6 1.8 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 Total annuity revenue Total non-annuity revenue Pre-tax AOP
Slide 101: Strong investment performance momentum
STRONG INVESTMENT PERFORMANCE MOMENTUM % Core funds above median1 ▪ Robust investment performance from core funds1 88% 78% ▪ 72% of core funds above median2 72% 69% 71% 67% 72% 73% 63% 65% 53% 50% ▪ Multi-asset performance strong with majority3 of multi-asset funds top quartile over one year and abo
Slide 102: Positioned to improve competitiveness and drive returns
POSITIONED TO IMPROVE COMPETITIVENESS AND DRIVE RETURNS ▪ Deep experience and proven track record across listed and unlisted asset classes ▪ Robust investment performance allows traction with Independent Financial Advisor networks ▪ Future-fit asset manager with significant scale, experience and inv
Slide 103: Q&A
Q&A INVESTMENT | SAVINGS | INSURANCE | BANKING 103
Slide 104: Lunch
LUNCH INVESTMENT | SAVINGS | INSURANCE | BANKING 104
Slide 105: Old Mutual Corporate (OMC)
OLD MUTUAL CORPORATE (OMC) Key stats 2016 AOP contribution 11.0% 2016 AOP R1.4bn 1H2017 FUM R252bn Clement Chinaka MD, Old Mutual Corporate INVESTMENT | SAVINGS | INSURANCE | BANKING 105
Slide 106: A market leader in the corporate segment
A MARKET LEADER IN THE CORPORATE SEGMENT ▪ Old Mutual Corporate serves employer-sponsored Our share of operating profits in the market3 (%) retirement funds in South Africa, across the following products: Investments Annuities Group risk Consulting 41% R152bn FUM1 R53bn FUM1 R4.1bn gross Benefit, 39
Slide 107: Well-positioned in a changing industry
WELL-POSITIONED IN A CHANGING INDUSTRY ▪ Shift from standalone funds to umbrella funds ▪ Retirement Fund Reform (RFR): – Opportunities exist in default preservation and ▪ OMC’s SuperFund is the largest commercial umbrella annuitisation but pressure to reduce costs fund in SA – Non-traditional player
Slide 108: Delivering value to Old Mutual and other business units
DELIVERING VALUE TO OLD MUTUAL AND OTHER BUSINESS UNITS… ▪ OMC is a major contributor of cash to the Group OMC a major cash contributor to Group free cash generation (Rbn) – Net capital release driven by: 1.9 − changes in product mix 0.8 1.1 1.2 − improvements in capital methodology 0.2 0.2 – Free c
Slide 109: Delivering a steady financial performance
…WHILST DELIVERING A STEADY FINANCIAL PERFORMANCE FUM1 Net risk sales Pre-tax AOP contribution to the Group (2016)2 (Rbn) (Rm) 5.8% 9.5% 252 245 245 4.8 4.0 4.3 233 Corporate 2.4 2.4 11.0% 219 Segment 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 15.3% OM LTIR net of central R12.7bn expe
Slide 110: Defending the franchise and driving future growth
DEFENDING THE FRANCHISE AND DRIVING FUTURE GROWTH ▪ Win standalone to umbrella ▪ Digitise the business to conversions improve customer ▪ Diversify and refine product experience and drive ▪ Restore profitability in process efficiency Group Risk Drive Step ▪ Become preferred Maintain Current Change in
Slide 111: Strong position to grow in mature market
STRONG POSITION TO GROW IN MATURE MARKET ▪ Leading market share supported by breadth of offering, broad distribution reach, strong relationships and brand ▪ Unrivalled competence in higher margin product sets ▪ SuperFund well-positioned to capture growth in the umbrella market ▪ Cash conversion is c
Slide 112: Old Mutual Insure
OLD MUTUAL INSURE Key stats 2016 Net insurance result R223m GWP R12.1bn Raimund Snyders MD, OM Insure INVESTMENT | SAVINGS | INSURANCE | BANKING 112
Slide 113: Trusted brand with significant scale
TRUSTED BRAND WITH SIGNIFICANT SCALE Total short-term P&C market GWP1 ▪ Large competitive market growing in line with GDP (Rbn) 8.4% ▪ Underwriting margins favourable vs other mature markets CAGR ▪ Increased claims volatility 2016 2011 R118bn1 ▪ Focus on cost of claims given inflation drivers R79bn
Slide 114: Profile of GWP by retail vs commercial
PROFILE OF GWP BY RETAIL VS COMMERCIAL Personal lines: motor, household insurance and Retail turnaround accident and health cover iWyze4 GWP and u/w result per year ▪ Intermediated distribution via 39 branches1, (Rm) centralised processes 24 Retail ▪ Target middle income individuals with advice and
Slide 115: Continued turnaround of OM Insure
CONTINUED TURNAROUND OF OM INSURE Remediation Risk Claims Diversification Collaboration Selection Management Restore profitability Grow direct and specialty lines Leverage OM brand ✓ Acquisition of underwriting skills ✓ iWyze achieved profitability ✓ Specific targeting of PF client segment ✓ Re-unde
Slide 116: Progress towards 4%–6% underwriting margin target
PROGRESS TOWARDS 4% – 6% U/W MARGIN TARGET Underwriting result and margin 258 (Rm) 3.1% n.m 6.1% 273 Gross written premium (GWP) 0.9% 0.9% 2.3% (Rm) 79 80 96 5.9% (44) (1.0%) 11,686 12,082 2014 2015 2016 1H2016 1H2017 10,774 Net insurance result1 6,000 6,098 (Rm) 423 n.m 2014 2015 2016 1H2016 1H2017
Slide 117: Significant upside as underwriting margins improve
SIGNIFICANT UPSIDE AS UNDERWRITING MARGINS IMPROVE ▪ Established market position across multiple product lines ▪ Sustained turnaround of Personal & Commercial Lines intermediated business ▪ Direct, Specialty and CGIC are key growth opportunities ▪ Access to Old Mutual’s unrivalled customer base acro
Slide 118: Rest of Africa
REST OF AFRICA Key stats 2016 AOP contribution 6.3% 2016 AOP R0.8bn Customers 4.9m Jonas Mushosho MD, Rest of Africa INVESTMENT | SAVINGS | INSURANCE | BANKING 118
Slide 119: Why do we invest in the Rest of Africa?
WHY DO WE INVEST IN THE REST OF AFRICA? East and West Africa present high Large untapped markets outside SADC2… growth markets1 Population (2016 and 2025, m) Forecast GDP growth rate (2020, %) 2016 2025 38.7 Botswana 4.3% West Africa 218 170 535m 268 424m 214 SADC Malawi 5.5% Namibia 3.9% East Afric
Slide 120: Rest of Africa platform positioned for growth
REST OF AFRICA PLATFORM POSITIONED FOR GROWTH1,2 ▪ 4.9m customers Nigeria East Africa Kenya Uganda – P&C (incl. Health), Life, Property Life3 #18 South Sudan – P&C , Life and Property Life #8 ▪ Platform for growth in 7 large, P&C3 #20 Tanzania – P&C AM #4 Microfinance #2 underpenetrated markets of C
Slide 121: Flagship business in Zimbabwe remains resilient
FLAGSHIP BUSINESS IN ZIMBABWE REMAINS RESILIENT Strong Zimbabwean operating profit growth (Rm)1 28.4% At Independence the 1980 - 1990 exchange rate was US$ 1 848 to ZW 0.68 708 548 403 329 243 Economic Structural Adjustment Program 1991 - 1997 2011 2012 2013 2014 2015 2016 (ESAP) Old Mutual Zimbabwe
Slide 122: East Africa: progress on turnaround
EAST AFRICA: PROGRESS ON TURNAROUND Improving loss ratio but scope for further progress ▪ Fast growing economies with large populations. UAPHL Loss ratio Insurance underdeveloped/penetrated (%) ▪ Progress made since acquisition: – Loss ratios improving 71.7% – Operational improvements 66.2% 63.8% –
Slide 123: West Africa: solid platform for capital light growth
WEST AFRICA: SOLID PLATFORM FOR CAPITAL LIGHT GROWTH ▪ Distribution primarily Bancassurance Nigeria1 (P&C via broker) ▪ 1.4m customers ▪ Large populations with potential catalysts for ▪ 0.3% penetration growth ▪ 512 Ecobank branches ▪ Insurance industry relatively underdeveloped and ▪ Population: 18
Slide 124: ROA key financials
ROA KEY FINANCIALS: EAST AFRICA TURNAROUND VISIBLE IN BOTTOM LINE FUM1 NCCF Pre-tax AOP contribution to the Group (2016)2 (Rbn) (Rbn) 11.5% 31.0% 96.7 4.4 89.0 89.6 89.8 72.1 3.2 6.3% 2.2 1.9 1.6 15.3% 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 R12.7bn AOP split by region - % contribu
Slide 125: Profitable, mature SADC business with opportunity in East & West Africa
PROFITABLE, MATURE SADC BUSINESS WITH OPPORTUNITY IN EAST & WEST AFRICA ▪ Old Mutual has strong market presence spanning over 100 years (outside of SA) with an increasingly solid operational base from which to grow ▪ SADC is a mature and highly cash generative business with an established market pos
Slide 126: LatAm & Asia
LATAM & ASIA Key stats 2016 AOP contribution 3.7% 2016 AOP R0.5bn Customers 0.6m David Buenfil MD, LatAm and Asia INVESTMENT | SAVINGS | INSURANCE | BANKING 126
Slide 127: LatAm: exposure to attractive macro and demographic trends
LATAM: EXPOSURE TO ATTRACTIVE MACRO AND DEMOGRAPHIC TRENDS Colombia ▪ Shift from banking deposits to investments and long-term savings $282bn 4 largest economy by GDP th ▪ Increasing appetite for alternative investment classes like Real Estate and Infrastructure 5.5% Solid GDP growth over next 3 yea
Slide 128: Long-standing presence in key LatAm markets
LONG-STANDING PRESENCE IN KEY LATAM MARKETS1 Skandia Skandia launches OM acquires a OM acquires Colombia life business in majority stake remaining Mexico established Mexico in AIVA AIVA stake ▪ Life 1953 2002 2012 2016 ▪ Asset Management 1994 2006 2014 AIVA OM Skandia established acquires rebranded
Slide 129: Niche market player, focused on more attractive customer segments
NICHE MARKET PLAYER, FOCUSED ON MORE ATTRACTIVE CUSTOMER SEGMENTS Colombia Mexico AIVA ▪ Highest FUM per customer in ▪ 33% share of # corporate private ▪ 22 years experience building market pension plans (DC, Hybrid, Mixed)2 distribution networks in LatAm ▪ Fast growing business targeted at affluent
Slide 130: Strong customer cash flows with robust operating profit
STRONG CUSTOMER CASH FLOWS WITH ROBUST OPERATING PROFIT FUM1 NCCF Pre-tax AOP contribution to the Group (2016)2 (Rbn) (Rbn) 31.7% 3.7% 3.2% 127 126 10.3 10.4 120 118 7.3 6.0 15.3% 111 2.9 2014 2015 2016 1H2016 1H2017 2014 2015 2016 1H2016 1H2017 R12.7bn VNB and VNB margin Pre-tax AOP3 (Rm) (% of PVN
Slide 131: China: 10-year presence in fast growing, underpenetrated life industry
CHINA: 10-YEAR PRESENCE IN FAST GROWING, UNDERPENETRATED LIFE INDUSTRY Market overview Our business Telemarketing productivity5 (RMB ‘000) ▪ 3rd largest life market globally1 ▪ 50% stake in JV with Guodian – $263bn GWP in 2016 Group, since 2004 74 – 20% CAGR 2013 – 16 ▪ Target market is affluent and
Slide 132: Niche market player exposed to strong fundamentals
NICHE MARKET PLAYER EXPOSED TO STRONG FUNDAMENTALS ▪ Regional franchise in Latin America with a self-funded scalable platform for future growth – Well-positioned in markets with strong macro and demographic fundamentals – Exposure to more resilient affluent and high net worth customer segments – Uni
Slide 133: Q&A
Q&A INVESTMENT | SAVINGS | INSURANCE | BANKING 133
Slide 134: Moving from Business Units to Shareholder Value
MOVING FROM BUSINESS UNITS TO SHAREHOLDER VALUE INVESTMENT | SAVINGS | INSURANCE | BANKING 134
Slide 135: Group Financial Highlights
GROUP FINANCIAL HIGHLIGHTS Iain Williamson COO, OMEM INVESTMENT | SAVINGS | INSURANCE | BANKING 135
Slide 136: Historic financial performance
HISTORIC FINANCIAL PERFORMANCE Pre-Tax AOP1 (Rbn) 12.0 12.7 11.0 6.0 6.0 2014 2015 2016 1H2016 1H2017 Free surplus generation2 (Rbn) 82% 69% 70% % of AOP 72% 86% post tax 6.0 6.3 5.6 and NCI3 3.0 3.6 2014 2015 2016 1H2016 1H2017 1. FY 2016 results restated to include LTIR on assets in excess of regu
Slide 137: Breakdown of earnings
BREAKDOWN OF EARNINGS Pre-tax AOP 2014 20163 Personal Finance Personal Finance 26% 27% R2.9bn R3.4bn 13% 15% Mass & 5% 4% Mass & Foundation Cluster 24% 1.4 1.9 24% Foundation Cluster R2.6bn R3.1bn 0.5 5% 6% 0.5 OM Insure 0.6 OM Insure 1% 0.8 1% R0.1bn R11.0bn R12.7bn R0.1bn Corporate Corporate 12% 1
Slide 138: Key sources of earnings
KEY SOURCES OF EARNINGS Policyholder liabilities (IFRS)1 FUM2 2.3% 6.5% (Rbn) (Rbn) 569 1,128 526 905 2014 1H2017 2014 1H2017 Banking assets 7.6% 2016 pre-tax AOP by line of business3 (Rbn) (Rbn) 0.9 22.1 1.4 7% Life & Savings 11% Asset Management 1.1 9% R12.7bn Banking & Lending 17.1 Property & Cas
Slide 139: Focus on driving ROE
FOCUS ON DRIVING ROE THE KEY MEASURE OF SHAREHOLDER VALUE CREATION “The best way to measure company performance” Harvard Business Review, March 04, 2010 Shareholder Adjusted Business Unit investment Return = Headline Earnings1 result from operations - return – - Taxation and NCI Finance costs Subord
Slide 140: Focus on driving ROE
FOCUS ON DRIVING ROE Return on historical allocated capital by geography (2014 – 2016)1 Group 23% 28.3% 23% 27.5% 22% 26.0% return 15.0% 12.0% 10.9% 11.9% 10.4% 9.6% 2014 2015 2016 Capital allocation (2014 – 2016) 75.8% 67.9% 66.1% 24.3% 25.1% 16.4% 7.8% 7.8% 8.8% 2014 2015 2016 South Africa LatAm &
Slide 141: Driving our efficiencies
DRIVING OUR EFFICIENCIES Summary income statement bridge as at 31 December 2016 (Rbn) Premium income 68.0 Investment return 36.6 Underwriting discipline Net claims and benefits (65.5) Control leakage of back book Change in investment (10.9) contract liabilities Fee and commission income 11.7 Banking
Slide 142: Capital allocation – a virtuous cycle
CAPITAL ALLOCATION – A VIRTUOUS CYCLE Business Unit allocated capital Group allocated capital Group Free Surplus Business Unit Free Incentivised to distribute Surplus Allocate to high Higher long term BU Allocated sustainable ROE Free surplus Capital Capital conversion held in Capital opportunities
Slide 143: Risk & Capital
RISK & CAPITAL Richard Treagus CRO, OMEM INVESTMENT | SAVINGS | INSURANCE | BANKING 143
Slide 144: Risk management strengthened further
RISK MANAGEMENT STRENGTHENED FURTHER Priorities Outcomes Growth ▪ Strengthening link between targets ▪ Better protection of brand and return, risk and capital reputation Growth ▪ Consistent approach across aspirations ▪ Better “risk based” decision businesses and geographies making ▪ Internal centre
Slide 145: We prioritise risks that generate strong returns
WE PRIORITISE RISKS THAT GENERATE STRONG RETURNS AND FOR WHICH WE HAVE A COMPETITIVE ADVANTAGE Factors influencing Risk preference Risk types our risk preferences ▪ Life mortality and disability risk High ▪ P&C risk Supports business strategy ▪ Market risk (asset based fees) ▪ Life longevity risk ▪
Slide 146: Solvency assessment and management
SOLVENCY ASSESSMENT AND MANAGEMENT ▪ SAM is the new supervisory regime that Old Mutual Limited will replace the Statutory Valuation OM Group Holdings Method, effective July 2018 ▪ Market-consistent, risk-based Regulated insurance Banks/credit inst. Asset Other approach for quantification managers sh
Slide 147: Strong and resilient group to meet stakeholder expectations
STRONG AND RESILIENT GROUP TO MEET STAKEHOLDER EXPECTATIONS Earnings at risk exposure (undiversified)1 (%) ▪ Brand promise means that we have a conservative appetite for solvency risk, and Other target a very strong capital position Capital strength 1% ▪ This means that we can withstand very severe
Slide 148: ROE, earnings and cash focus
ROE, EARNINGS AND CASH FOCUS Business units behaviour driven ▪ Remuneration packages by ROE ▪ Capital Allocation and Capital Management policy ▪ Balance sheet of OML at listing Updates to be provided in ▪ Alternative profit measure Pre-Listing Statement ▪ Dividend policy ▪ ROE targets and efficiency
Slide 149: Wrap Up
WRAP UP Peter Moyo CEO Designate, OML INVESTMENT | SAVINGS | INSURANCE | BANKING 149
Slide 150: A Premium African Financial Services Group
A PREMIUM AFRICAN FINANCIAL SERVICES GROUP Strong business with a great market position Sustained high cash generation Positioned for longer term sustainable growth Substantial business improvement and cost efficiency opportunities Creating value for shareholders by meeting customer needs 150