Old Mutual Ltd. · JSE:OMU
Old Mutual — Bank of America 27th Annual Financials CEO Conference 2022
50 slides from Old Mutual's conference presentation, September 2022
Slide 1: Bank of America 27th Annual Financials CEO Conference
Bank of America 27th ANNUAL FINANCIALS CEO CONFERENCE LONDON, UK, SEPTEMBER 2022
Slide 2: Contents
CONTENTS Alessandro Bottega www.presentationists.com 2022 Interim Results Financial Review Appendix Analyst Coverage 2
Slide 3: Interim Results
OLDMUTUAL DO GREAT THINGS EVERY DAY siiiill
Slide 4: Agenda
AGENDA Alessandro Bottega www.presentationists.com Strategic review Financial review Looking ahead Q&A Iain Williamson Casper Troskie Iain Williamson OML Executive Group CEO Group CFO Group CEO Committee 4
Slide 5: Shifting Gears, Accelerating Growth
SHIFTING GEARS ACCELERATING GROWTH
Slide 6: Financial Highlights at June 2022
FINANCIAL HIGHLIGHTS AT 30 JUNE 2022 Strong performance from our core businesses Alessandro Bottega www.presentationists.com 15% Within target range 9% 300bps Life APE Value of new Gross written Group Solvency sales business margin premiums Ratio R6.2bn 2.2% R10.9bn 187% (7%) 87% 120bps¹ 25%¹ Funds
Slide 7: Our Strategic Framework
OUR STRATEGIC FRAMEWORK Alessandro Bottega www.presentationists.com TO BE OUR CUSTOMERS’ 1ST CHOICE TO SUSTAIN, GROW AND PROTECT THEIR PROSPERITY 1 Growing and protecting the core AMPLIFY 2 Unlocking new growth engines 7
Slide 8: Shared Value and Sustainable Transformation
SHARED VALUE AND SUSTAINABLE TRANSFORMATION Remain integrated into the business Alessandro Bottega www.presentationists.com RESPONSIBLE INVESTMENTS SOCIO-ECONOMIC TRANSFORMATION CLIMATE CHANGE REPORTING Asset Owners Alliance Net Zero Asset Managers Initiative DIVERSITY AND INCLUSION COMMUNITY PARTNE
Slide 9: Update on Commitments to Investors
UPDATE ON COMMITMENTS TO INVESTORS Accelerating delivery Alessandro Bottega www.presentationists.com Change the trajectory of the customer experience Additional digital claims channels Build an entirely new financial services business Old Mutual Rewards - 1.5 million members with higher average
Slide 10: Operating Environment
OPERATING ENVIRONMENT
Slide 11: Macro Environment in Our Markets Remains Challenging
MACRO ENVIRONMENT IN OUR MARKETS REMAINS CHALLENGING Increased pressure on the consumer Alessandro Bottega www.presentationists.com South Africa headline CPI YoY Headline CPI trending up in other markets (%) (%) Global macro risks at play Namibia Uganda Kenya China 7.4 6.5 7.9 5.7 5.7 5.9 5.9 Infl
Slide 12: Equity Markets Likely to Remain Volatile
EQUITY MARKETS LIKELY TO REMAIN VOLATILE Alessandro Bottega www.presentationists.com JSE SWIX All Share (absolute levels) 2020 2021 2022* COVID-19 outbreaks limit growth Higher JSE average market levels Global inflation and rising interest rates Jan Jun Dec International political volatility
Slide 13: Segmental Reviews
SEGMENTAL REVIEWS
Slide 14: Mass and Foundation Cluster
MASS AND FOUNDATION CLUSTER Growth trajectory remains sustainable Alessandro Bottega www.presentationists.com Risk Sales Savings Life APE sales Sales momentum holding (Rm) +9% 1 917 1 806 1 656 Risk sales above 2019 1 366 821 694 647 641 1 096 1 009 1 112 Embedded the non-advice funeral product
Slide 15: Personal Finance and Wealth Management
PERSONAL FINANCE AND WEALTH MANAGEMENT Improved profitability on reduced mortality claims Alessandro Bottega www.presentationists.com Life APE sales Risk Savings Annuities Delivered R2 billion in Net client cash flows (Rm) (1%) 2 024 2 001 1 771 1 539 314 246 Resilient Life APE sales above 2019 le
Slide 16: Old Mutual Investments
OLD MUTUAL INVESTMENTS Higher average markets driving top line and profitability, despite market volatilityAlessandro Bottega www.presentationists.com Revenue Annuity Non-annuity Annuity revenue 9% higher as markets rise (Rm) +10% 1 299 1 395 1 541 593 Non-annuity revenue up 21% on higher perfor
Slide 17: Old Mutual Corporate
OLD MUTUAL CORPORATE Responsibly improved sales, margins and flows Alessandro Bottega www.presentationists.com Life APE sales Resilient results (Rm) +2% 1 793 1 262 GAP underwriting result driven by good retention and repricing 1 009 1 029 Higher GAP sales quote activity H1 2019 H1 2020 H1 2021
Slide 18: Old Mutual Insure
OLD MUTUAL INSURE Resilient underwriting result in challenging conditions Alessandro Bottega www.presentationists.com Gross written premiums +5% iWYZE delivered double digit premium growth (Rm) 8 186 7 761 KZN floods' net impact of R135 million 7 198 7 199 CGIC excellent underwriting result H1 2
Slide 19: Old Mutual Africa Regions
OLD MUTUAL AFRICA REGIONS Remediation translating into improved sales and profitability Alessandro Bottega www.presentationists.com Life APE sales +28% Strong financial delivery across the portfolio (Rm) 665 506 520 Robust top-line growth 451 Pivot to corporate bearing fruit H1 2019 H1 2020 H1 2
Slide 20: Unlocking New Growth Engines
UNLOCKING NEW GROWTH ENGINES Promising momentum in the portfolio Alessandro Bottega www.presentationists.com Building adjacent East Africa Progressed challenger businesses for growth transactional West Africa capability build R300 million in committed capital China 20
Slide 21: Financial Review
FINANCIAL REVIEW
Slide 22: Strong Growth from the Core
STRONG GROWTH FROM THE CORE Alessandro Bottega www.presentationists.com EARNINGS CAPITAL EFFICIENCY VALUE Results from operations Return on net asset value Value of new business (Rbn) (%) (Rm) +87% 120bps¹ (4%) 4.1 740 708 9.0 9.6 2.2 8.4 0.6 H1 2021 H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 Adjusted
Slide 23: Pandemic Provisions at June 2022
PANDEMIC PROVISIONS AT 30 JUNE 2022 No additional provisions raised Alessandro Bottega www.presentationists.com Mass and Foundation Personal Old Mutual Africa Rm Cluster Finance Corporate Regions Total Pandemic provisions at 31 December 2021 353 1 761 372 378 2 864 Release of COVID-19 provisions - (
Slide 24: Results from Operations
RESULTS FROM OPERATIONS COVID-19 experience better than expectation Alessandro Bottega www.presentationists.com Rm +87% 4 097 +26% >100% 2 190 1 583 +9% +59% 1 254 1 259 (20%) >100% 727 (>100%) 517 566 457 265 213 212 22 (116) (209) (463) Mass and Personal Finance Old Mutual Old Mutual Old Mutual In
Slide 25: Adjusted Headline Earnings 19% Up
ADJUSTED HEADLINE EARNINGS 19% UP Performance of the core business coming through post Nedbank unbundling Alessandro Bottega www.presentationists.com Rm +19% 87% (64%) (24%) 2 899 (738) (64) (25%) 0 2 691 (389) 2 253 (278) (646) 1 907 Adjusted Distributed Adjusted Results from Shareholder Finance In
Slide 26: Adjusted Headline Earnings to IFRS Profit Reconciliation
ADJUSTED HEADLINE EARNINGS TO IFRS PROFIT RECONCILIATION Zimbabwe main driver of the difference Alessandro Bottega www.presentationists.com Rm H1 2022 H1 2021 % change Adjusted Headline Earnings (excluding Nedbank) 2 691 2 253 19% Distributed stake in Nedbank - 646 (100%) Adjusted Headline Earnings
Slide 27: Adjusted Headline Earnings to IFRS Profit Reconciliation
ADJUSTED HEADLINE EARNINGS TO IFRS PROFIT RECONCILIATION Zimbabwe main driver of the difference Alessandro Bottega www.presentationists.com Rm H1 2022 H1 2021 % change Adjusted Headline Earnings (excluding Nedbank) 2 691 2 253 19% Distributed stake in Nedbank - 646 (100%) Adjusted Headline Earnings
Slide 28: Adjusted Headline Earnings to IFRS Profit Reconciliation
ADJUSTED HEADLINE EARNINGS TO IFRS PROFIT RECONCILIATION Zimbabwe main driver of the difference Alessandro Bottega www.presentationists.com Rm H1 2022 H1 2021 % change Adjusted Headline Earnings (excluding Nedbank) 2 691 2 253 19% Distributed stake in Nedbank - 646 (100%) Adjusted Headline Earnings
Slide 29: Disciplined Capital Management
DISCIPLINED CAPITAL MANAGEMENT Alessandro Bottega www.presentationists.com Group Solvency ratio Improvement in Group Solvency ratio mainly driven by (%) +300bps Target range 170% - 200% Higher OMLACSA solvency ratio 177 184 187 Higher average solvency ratios for non-regulated entities due to the
Slide 30: Value of New Business
VALUE OF NEW BUSINESS Robust result with work to be done in Personal Finance Alessandro Bottega www.presentationists.com VNB VNB margin H1 2021 (Rm) (%) H1 2022 (4%) +100bps 740 708 7.7 6.7 +35% 478 (83%) +60bps 355 (10bps) 268 (140bps) 2.9 +53% +40bps 2.3 2.3 2.2 +62% 1.7 94 90 1.1 46 58 59 0.7 0.3
Slide 31: Group Equity Value
GROUP EQUITY VALUE Resilient despite market volatility Alessandro Bottega www.presentationists.com Rbn +1% 2.6 (0.1) 92.7 (1.2) 91.9 (0.5) (2.3) (0.7) 87.4 (2.3) GEV Net increase in Net decrease Net decrease in Other Sub-total Economic FX Dividends GEV FY 2021 Life EV excl. in Asset Property and inc
Slide 32: Group Equity Value
GROUP EQUITY VALUE Share price trading at a significant discount to GEV Alessandro Bottega www.presentationists.com Rbn 91.8 87.4 9.6 Subordinated 2.9 Other debt 18.0 Non-Covered 51.9 Eligible Own Funds 82.2 (excluding subordinated 66.5 Covered debt) Market Capitalisation Group Equity Value Eligible
Slide 33: Performance Against Medium-Term Targets
PERFORMANCE AGAINST MEDIUM-TERM TARGETS Alessandro Bottega www.presentationists.com KPI Target H1 2022 outcome Returns Growth Results from operations Deliver 2019 result plus 5% to 10% by 2023 R4 097 million Return on net asset Between Cost of Equity1 +2% and value Cost of Equity1 +4% 9.6% Cost effi
Slide 34: Looking Ahead
LOOKING AHEAD
Slide 35: Medium-Term Targets
MEDIUM-TERM TARGETS Good progress in H1, FY 2023 targets remain in place Alessandro Bottega www.presentationists.com KPI Target H1 2022 outcome Outlook Returns Growth Results from operations Deliver 2019 result plus 5% to 10% by 2023 R4 097 million Challenging due to worsening economic trends Return
Slide 36: Looking Ahead – Excited by the Prospects Before Us
LOOKING AHEAD – EXCITED BY THE PROSPECTS THAT ARE BEFORE US We will grow and protect the core, as we unlock new growth engines at pace Alessandro Bottega www.presentationists.com We are focused on creating We are delivering on Highly attractive meaningful the commitments to investors financial metri
Slide 37: Conclusion
CONCLUSION
Slide 38: Interim Results
ol e INTERIM:. RESULTS
Slide 39: Appendix
APPENDIX
Slide 40: Board of Directors
BOARD OF DIRECTORS With sub-committee memberships as at June 2022 Alessandro Bottega www.presentationists.com Trevor Manuel (SA) (65) Brian Armstrong (SA) (60) Albert Essien (Ghana) (66) Olufunke Ighodaro Chairman BSc (Electrical Engineering) BA (Hons), EDP (INSEAD) (UK, Nigeria) (58) INDEPENDENT NO
Slide 41: Board Tenure and Composition
BOARD TENURE AND COMPOSITION Alessandro Bottega www.presentationists.com WHAT IS THE COMPOSITION AND TENURE OF THE BOARD? WHAT KNOWLEDGE, SKILLS AND EXPERIENCE DOES THE BOARD Our Board consists of fifteen members with the necessary qualifications, collective skills and expertise HAVE? required to gu
Slide 42: Executive Committee
EXECUTIVE COMMITTEE Alessandro Bottega www.presentationists.com Iain Williamson Casper Troskie Zureida Ebrahim Clarence Nethengwe Chief Executive Officer Chief Financial Officer Chief Operating Officer MD: Mass ad Foundation Cluster Kerrin Land Khaya Gobodo Garth Napier Prabashini Moodley Clement Ch
Slide 43: The Core of Who We Are
THE CORE OF WHO WE ARE 177 years old – an incredible milestone that we take pride in Alessandro Bottega www.presentationists.com OUR PURPOSE: CHAMPIONING MUTUALLY POSITIVE FUTURES EVERY DAY THIS IS HOW W E FULFILL OUR PURPOSE • 1845*: Our group was established in Cape • Support and advocate for our
Slide 44: Overview of Our Business
OVERVIEW OF OUR BUSINESS SOUTH AFRICA South Africa Tied Advisers 9,053 Africa and Asia – markets offering varying opportunities Alessandro Bottega Employees www.presentationists.com 21,362 Customers 6.2m INVESTORS* Operating in 14 countries 2021 2022 SOUTHERN AFRICA Namibia Tied Advisers 1.1% 1.29%
Slide 45: Meeting Our Customers' Needs
MEETING OUR CUSTOMERS’ NEEDS Our foremost strategic focus area continues to be ensuring that we become our Alessandro customers’ Bottega first choice to sustain, grow and protect their prosperity. Kenya: Amboseli National Park 2.6527° S, 37.2606° E www.presentationists.com OUR DISTRIBUTION CHANNELS
Slide 46: Old Mutual at the Core
OLD MUTUAL AT THE CORE Alessandro Bottega www.presentationists.com OUR VALUES OLD MUTUAL DOING GREAT THINGS WHY PARTNER WITH EVERY DAY OLD MUTUAL? Our values define our culture and guide us in our daily 1. Purpose led technology We are for Africa business interactions with • 1.1 million active digit
Slide 47: Our Sustainability Commitments
OUR SUSTAINABILITY COMMITMENTS We recognise the interconnectivity between the economic, social, and environmental systems we operate in, and this determines our approach Alessandro Bottega to sustainability. This interconnectivity also highlights the global urgency to transform our collective growth
Slide 48: Material One-Off Items – for FY21
MATERIAL ONE-OFF ITEMS – FOR FY21 Alessandro Bottega www.presentationists.com Actions taken to mitigate COVID-19 impacts included review of premium rates and release of discretionary margins Continued optimisation of our risk product hedging strategies 784 9 103 211 288 653 844 7 683 5 503 4 384 Rm
Slide 49: Analysts
07 Andrew Sinclair, Bank of America, London Kevin Harding, Investec Bank, Johannesburg Michael Christelis, UBS, Johannesburg Baron Nkomo, JPMorgan, Johannesburg ANALYSTS Larissa van Deventer, Barclays, London Warwick Bam, Avior Capital, Cape Town
Slide 50: Disclaimer
DISCLAIMER Alessandro Bottega www.presentationists.com This presentation may contain certain forward-looking statements with respect to certain of Old Mutual Limited’s plans and its current goals and expectations relating to its future financial condition, performance and results and, in particular,
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