Slide 1: 2019 Results
2019 RESULTS
Slide 2: Agenda
AGENDA 1 2019 OVERVIEW Group Interim CEO 2 FINANCIAL REVIEW Group CFO 3 CONCLUDING REMARKS Group Interim CEO 4 Q&A 2
Slide 3: 2019 Overview
2019 OVERVIEW Resilient financial Operational efficiency Optimisation of Distributions to delivery balance sheet shareholders • AHE up 5% - strong • Achieved R1.2 • New debt of R2 • Final dividend of investment returns in billion cost savings, billion at improved 75 cents per SA, up 7% on a per exce
Slide 4: Impact of the South African macro environment
IMPACT OF THE SOUTH AFRICAN MACRO ENVIRONMENT Equity market levels - SWIX 13,500 2019 Impact on our business 13,000 2018 SA equity up 5.7% in 2019 12,500 Average market levels below 2018 12,000 for most of 2019 11,500 2020 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Real GDP growth
Slide 5: Overview of the Rest of Africa macro environment
OVERVIEW OF THE REST OF AFRICA MACRO ENVIRONMENT Zimbabwe Kenya Real GDP 2019 Real GDP growth and inflation2,3(%) Equity market levels 1 Inflation 2018 900 800 5.7% 6.0% 5.6% 5.6% 5.3% 5.1% 700 4.4% 600 3.8% 500 400 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 2019 Q2 2019 Q3 2019 FY 2020F I
Slide 6: Delivery against our strategic pillars
DELIVERY AGAINST OUR 5 STRATEGIC PILLARS • Enhanced our MyOMInsure platform 1 Always present first • Launched the new MyOldMutual website • Partnered with Amazon Web Services to modernise 2 Rewarding digital technology Our role is to engagement • More than 500 000 Old Mutual Rewards members with mor
Slide 7: Segment delivery
SEGMENT DELIVERY Rm FY 2019 FY 2018 % change Segment contribution to Results from Operations Mass and Foundation Cluster 3,527 3,129 13% Personal Finance 1,730 2,021 (14%) 6% -3% 3% Wealth and Investments 1,447 1,611 (10%) Old Mutual Corporate 1,816 1,703 7% 39% 20% Old Mutual Insure 233 670 (65%) R
Slide 8: Basis changes in 2019
BASIS CHANGES IN 2019 FY 2019 FY 2018 Mass and Foundation Personal Old Mutual Rest of Rm Group Cluster Finance Corporate Africa Group 1 Non-economic basis changes (81) 1,330 (1,447) 74 (38) 43 2 Economic basis changes 1,013 - 772 217 24 (1) Total basis changes 932 1,330 (675) 291 (14) 42 1 Net non
Slide 9: Defend and grow SA market share in mass market
DEFEND AND GROW SA MARKET SHARE IN MASS MARKET -4% +12% Sales growth impacted by tough macro environment 4 348 4 191 18 491 16 518 Life APE sales down 4% due to lower productivity and deliberate actions to improve quality of group funeral H1 2018 FY 2018 business and lower credit life sales H1 201
Slide 10: Defend and grow SA market share in corporate market
DEFEND AND GROW SA MARKET SHARE IN CORPORATE MARKET +16% Robust performance of umbrella offering drives -8.4 growth 3 636 2,0 3 133 Life APE sales up 16% with strong growth in recurring premiums driven by umbrella fund FY 2018 FY 2019 sales. VNB increase of 14% driven by positive basis changes and
Slide 11: Defend and grow in SA personal finance market
DEFEND AND GROW IN SA PERSONAL FINANCE MARKET +1% -0.3 Flat sales and negative basis changes impact RFO 2 556 2 580 Customer acquisition contracts in a difficult economic environment FY 2018 RFO decrease due to negative basis changes FY 2019 as mortality experience remained weak in 2019 -3,6 Lif
Slide 12: Improve the competitiveness of Wealth and Investments
IMPROVE THE COMPETITIVENESS OF WEALTH AND INVESTMENTS -9% -7.3 Pressure on flows in tough macro environment and 89,2 10,8 81,4 investors remain cautious Gross flows down 9% due to lower inflows FY 2018 following a decline in short term investment FY 2019 3,5 performance Lower levels of non-annui
Slide 13: Continued turnaround of Old Mutual Insure
CONTINUED TURNAROUND OF OLD MUTUAL INSURE +11% -65% Reported Good GWP growth, high claims and cost of reinsurance adversely impact RFO 14 699 670 13 218 Strategic partnerships continue to contribute +21% to GWP growth 140 CATS Gross loss ratio continues to improve due to FY 2018 lower large loss
Slide 14: Turnaround in East Africa and improve returns across ROA
TURNAROUND IN EAST AFRICA AND IMPROVE RETURNS ACROSS ROA +5% +14% Solid performance, continued focus to drive value 3 080 3 235 4 193 Southern Africa (Ex Zim) – solid profit growth in 3 666 Banking and Lending business with higher net FY 2018 lending margin driven by lower credit losses. FY 2019 G
Slide 15: Financial Review
FINANCIAL REVIEW Casper Troskie
Slide 16: Financial delivery in 2019
FINANCIAL DELIVERY IN 2019 AHE RoNAV Free surplus Group solvency RoEV R9,856 15.2% R6,794 161% 12.7% million million Up 5% due to Above COE of Strong levels Remains well Improved higher 13.4% of cash within target following shareholder generated range positive basis investment changes returns in SA,
Slide 17: Adjusted headline earnings
ADJUSTED HEADLINE EARNINGS Rm FY 2019 FY 2018 % change 1 Full run rate of standalone cost base, Operating segments 9,249 9,564 (3%) offset by interest income on net cash 1 Net expenses from central functions (277) (425) 35% held during the year Results from Operations 8,972 9,139 (2%) 2 Driven by st
Slide 18: Exceeded R1 billion cost savings target
R1 BILLION COST SAVINGS TARGET EXCEEDED Cost Efficiency Leadership Cost savings by type (Rm) 7% 647 7% 19,165 1 236 157 279 7% 370 1 230 48% 17,935 13% 1 988 16,960 18% 2017 Inflation FX Inflation FX Once-off Incremental 2019 Total 2019 People and operating model underlying excluding movements Zimba
Slide 19: Sources of earnings
SOURCES OF EARNINGS RFO by line of business (Rm) Life and Savings RFO (Rm) 7,173 7,212 -515 FY 2018 1,222 6 756 1 095 208 778 724 723 518 -1 133 FY 2019 6 654 92 -215 1 906 -277 -425 FY 2018 FY 2019 Life and Savings Property and Casualty New business strain Asset Management Central expenses Expected
Slide 20: IFRS profit impacted by distribution of Quilter and Nedbank
IFRS PROFIT IMPACTED BY DISTRIBUTION OF QUILTER AND NEDBANK (Rm) 36 566 Distribution of Quilter and 8 516 Nedbank 23 175 +34% 9 386 7 007 2 725 1 675 1,492 163 2 132 IFRS profit FY 2018 Profit after tax Profit on Nedbank basis OML perimeter Decrease in Reduction in Decrease in Other IFRS profit from
Slide 21: Group solvency position
GROUP SOLVENCY POSITION Rm FY 2019 FY 20181 % change 1 Driven by: Inclusion of policyholder OMLACSA participations at tangible net Eligible own funds 79,168 76,080 4% asset value Solvency capital requirement 36,685 33,362 10% Higher prescribed equity shocks combined with basis changes 1 Solvency
Slide 22: Analysis of embedded value
ANALYSIS OF EMBEDDED VALUE 523 844 285 72,297 1 023 124 5,573 222 1 865 64,146 A B C D E F G Opening EV New business Existing business Experience Development Assumption and Economic Non operating Closing Closing EV value contributions variances cost variances model changes variances variance adjustm
Slide 23: Group equity value
GROUP EQUITY VALUE R116.5 R24.74 per share Multiple on VNB Valuation AHE R19.66 Category technique (Rm) per share Covered Embedded value 6,285 business 92,6 +41.7 Non covered Fair value 1,253 -17.8 Nedbank Higher of carrying 2,518 72,3 value and market 74.8 value Residual plc Economic NAV n/a Zimbab
Slide 24: Concluding Remarks
CONCLUDING REMARKS Iain Williamson
Slide 25: Outlook for 2020
OUTLOOK FOR 2020 Significant market volatility and subdued growth Diversified business model and stable balance sheet outlook for South Africa in times of crisis SWIX 2020 YTD 12,500 12,000 Resilient solvency capital and liquidity 11,500 levels in modelled ‘perfect storm’ stress 11,000 scenarios 1
Slide 26: Outlook on our medium term targets
OUTLOOK ON OUR MEDIUM TERM TARGETS Performance 2020 KPI Target 2019 Outlook RETURNS RoNAV Average COE + 4% 15.2% Challenging Results from GROWTH CAGR of Nominal GDP + 2% Down 2% Challenging operations R1.2 billion of cost Cost Expense growth in R1 billion by end 2019 pre-tax run rate cost savings sa
Slide 27: Q&A
Q&A
Slide 28: Thank you
THANK YOU
Slide 29: Disclaimer
DISCLAIMER 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, estimates of future cash flows and costs. B