Old Mutual Ltd. · JSE:OMU
Old Mutual — UBS Conference 2008 Cape Town
16 slides from Old Mutual's conference presentation, Oct 14, 2008
Slide 1: Old Mutual South Africa: Managing risk
Old Mutual South Africa Managing risk 14 October 2008 Mike Harper Managing Director - Retail Old Mutual South Africa
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. By their nature, all forward looking statements involve risk and u
Slide 3: OMSA's Strategic Objectives
OMSA’s Strategic Objectives Transform from a traditional life insurer to become the leading provider of investment and savings solutions to each and every South African Become a consistently top performing asset manager over time through our range of investment boutiques Build a leading investment b
Slide 4: Turbulent times - the big 5!
Turbulent times - the big 5 ! GDP Growth slowdown now more pronounced Credit squeeze affecting small business and consumers in middle and high income markets Market turmoil affecting most asset classes Financial services regulation has increased, and more still to come Leadership change in SA govern
Slide 5: In summary, the environment has greater downside risk
In summary, the environment has greater downside risk Cost Sales Profit Cashflow Risk Increased inflation Increasing interest rates Highly volatile markets Slower economic growth Increasing regulation Retirement Fund Reform Commission Regulation Unsettled political environment 5
Slide 6: OMSA Profits driven by: Assets X Margin – Expenses
OMSA Profits driven by : Assets X Margin – Expenses ASSETS – Boutique quality and diversity – Product and market segment mix and competitive positioning MARGINS – Sustainability – Switch from traditional life to new era investment – Quality EXPENSES – LEAN principles – Growing slower than inflation
Slide 7: Our range of boutiques covers the asset management spectrum
Our range of boutiques covers the asset management spectrum Old Mutual Investment Group 7
Slide 8: Offering investment style and product/fund choices that will aid sales and retention
Offering investment style and product/fund choices that will aid sales and retention 8
Slide 9: Some market segments will come under pressure
Some market segments will come under pressure OMSA Total 2008 H2 and beyond 2007 FY 2007 H1 2008 H1 Retail Retail Rm Rm Rm Corporate OMIGSA Affluent Mass Life recurring APE 3 185 1 519 1 566 N/a Life single APE 1 514 629 845 N/a N/a Marginally Or Non-life Sales Good Good lower than N/a 2007 H1 9
Slide 10: Margins reviewed - will remain tight
Margins reviewed - will remain tight Mortality assumptions were strengthened (annuitants and life assureds) Life and disability persistency trends (pricing changes 2007) Strengthened guarantee reserves in place (2007/ H1 ‘08) Increased surrenders driven by increased Surrender Values (Comm. Regs) S14
Slide 11: Expenses driven down - A LEAN approach
Expenses driven down - A LEAN approach Manufacturing principles, more efficient process drives down costs and increases effectiveness and morale Design a better process, get better results with the same people Step change then continuous improvement Maintenance Cost per policy down in real terms; ov
Slide 12: OMSA capital remains strong, and defensively invested
OMSA capital remains strong, and defensively invested Allocated capital plus excess assets Defensive investment strategy Reduced equity exposure and increased fixed interest allocation Hedging strategy on equities Delivered exceptional return on shareholder funds in 1H 2008 12
Slide 13: Maintaining a high ROC through the shift to less capital-intensive products
Maintaining a high ROC through the shift to less capital-intensive products Average Average FUM Year allocated capital Capital/FUM ROC Rbn Rbn 2002 24.1 278.0 9% 22% 2003 21.6 274.8 8% 22% 2004 18.0 305.8 6% 25% 2005 17.9 355.7 5% 27% 2006 18.2 415.3 4% 23% 2007 17.3 468.8 4% 24% 2008 capital is R17
Slide 14: Summarising then with Profits = Assets X Margin – Expenses
Summarising then with Profits = Assets X Margin – Expenses Assets driven mainly by markets - expect lower average assets through 2009 Revenue growth driven substantially off AUM growth Margins impacted by mix of business - drive to savings products Expenses continue to be managed tightly Capital gro
Slide 15: Looking ahead …
Looking ahead … Strategy remains intact Continued emphasis on financial risk management Strong capital position maintained OMSA will continue to deliver high ROC High quality of earnings With room for growth by investing into growth markets 15
Slide 16: Questions?
Questions ?