Old Mutual Ltd. · JSE:OMU

Old Mutual — Merrill Lynch Banking & Insurance Conference 2005

21 slides from Old Mutual's conference presentation, Oct 5, 2005

  1. Slide 1: Building an International Financial Services Group

    Merrill Lynch Banking & Insurance Conference Building an International Financial Services Group Jim Sutcliffe, CEO 5 October 2005

  2. Slide 2: Old Mutual strategy

    Old Mutual strategy „ Using a strong SA base to build an international financial services group „ Providing high quality investment skills to build and protect client assets „ Ready and capable to act on market opportunities for the benefit of customers and shareholders Life APE(1) European Embedded

  3. Slide 3: Our approach is simple

    Our approach is simple ● Investment ● Growth AND performance ● South Africa, cash generation US, Europe ● Growing Value Creation Imperatives Complementary Regions distribution Operational Strategy ● High RoE, ROA & RoEV (OMLAC(SA), ● Balancing USAM, Selestia, markets and India) currencies ● Decentra

  4. Slide 4: The platform is delivering strong results: H1 2005 highlights

    The platform is delivering strong results H1 2005 highlights „ Adjusted EPS 8.4p, up 22% „ FUM £158bn, up 13% (£140bn 31/12/04) „ Adjusted operating profits £554 million, up 29% (£428 million) „ ROEV 15.4% (15.3%) „ ROE 17.8% (18.7%) „ $20bn net cash flows in the US ($5bn) „ Interim dividend 1.85p (

  5. Slide 5: South African fundamentals are strong

    South African fundamentals are strong SA – macro- economic forecasts „ Steady GDP growth 03 04 05E „ Falling interest rates GDP 2.8% 3.7% 4.0% CPIX yoy (ave.) 6.8% 4.3% 4.1% „ Inflation within target of 3% – 6% FX trend 19 „ Stable currency 18 17 16 Rand/£ 15 „ Improving ratings 14 13 12 „ Infrastru

  6. Slide 6: Dominant South African financial services franchise

    Dominant South African financial services franchise Life and asset management Banking P&C „ Market leader with „ 51% holding in „ 77% holding in 25% share of Nedbank Mutual & Federal industry assets „ Top 4 bank with „ 2nd largest insurer „ Powerful profit ~20% market share with 21% market engine sh

  7. Slide 7: South African sales growth

    South African sales growth Rm H1 2005 H1 2004 Change Life new business* (APE) 1,900 1,685 13% Individual 1,339 1,212 10% Group 561 473 19% Unit trust sales (gross sales) 3,666 2,027 81% Life new business margins 15% 19% Individual 12% 17% Group 20% 22% *Including OMI Positioned to benefit from chang

  8. Slide 8: Nedbank is meeting milestones

    Nedbank is meeting milestones Headline earnings* ROE* Rm H1 2005 H1 2004 H1 2005 H1 2004 Capital 447 355 28.2% 23.5% Corporate 927 812 19.1% 17.7% Retail 439 214 18.3% 9.2% Imperial Bank 56 47 10.3% 14.2% Operating divisions 1,869 1,428 Shared Services (94) (128) Capital Management and (377) (498) C

  9. Slide 9: Our fast growing US Life business will be cash generative in 2007

    Our fast growing US Life business will be cash generative in 2007 22 19.8 20-25 H1 2005 sales $m (APE) 20 17.3 Fixed Other 18 15.3 7 annuities 7 Immediate 13.3 annuities 16 OM Bermuda 33 12.5 36 14 10.5 FUM $'bn 12 8.8 10 6.5 8 Life 6 73 4 Equity indexed annuities 120 et 02 03 04 01 02 03 04 05 rg 2

  10. Slide 10: Multi-boutique asset management model

    Multi-boutique asset management model… * 75% of assets outperforming 3yr benchmarks 9

  11. Slide 11: ...in its 5th year of net fund inflows

    …in its 5th year of net fund inflows H1 2005 2003 2004 H1 2005 Change AUM as at period end ($bn) 154 185 209 22% Operating margin 23.6% 24.3% 26.4% Net Cash Flow ($ billions) 30 20.1 20 12.3 10 4.4 5.1 4.7 -21.1 -15.1 0 (10) 1999 2000 2001 2002 2003 2004 H1 2005 (20) (30) 10

  12. Slide 12: Delivering growth momentum

    Delivering growth momentum „ ROE 17.8% „ RoEV 15.4% „ Strong cash inflows „ Nedbank recovery on track „ Underlying EV profits up strongly 11

  13. Slide 13: Skandia update

    Skandia update „ Talks became public 13 May „ Due diligence May - August „ Details of offer announced 2 September „ Over 60% of equity holders September canvassed – vast majority supportive „ Prospectus Mid October „ EGM Mid November „ Tender acceptances Late November 12

  14. Slide 14: A compelling business profile

    A compelling business profile Enlarged Group pro forma Old Mutual APE(1) Skandia APE(1) APE(1) Sweden UK & RoW 2% Sweden 16% UK 59% 9% Rest of UK US Europe 15% 33% + 46% South Africa 52% Rest of US Europe 25% 20% South Africa 23% Old Mutual EV(2) Skandia EV(2) Enlarged Group pro forma EV(2) Sweden (

  15. Slide 15: Significant growth opportunities...

    Significant growth opportunities… Industry Growth High growth Long-term Cash generative 2005 –2007 growth „ Cash generative – SA – Nedbank Top 4 „ India „ SA – No 1 life insurer, bank, recovery on track 24% ROC at H1 2005 – USAM – $209bn AUM at „ UK H1 2005, strong growth prospects – OMAM moving „ S

  16. Slide 16: ...and leadership in open architecture, the favoured segment

    …and leadership in open architecture, the favoured segment European population split by age group 800 700 600 Population (m) 500 Over 65 Favourable „ Baby boomers start Age 20-65 400 reaching retirement demographics 300 Under 20 200 100 0 1960 1975 1990 2005 2020 2035 2050 Source: United Nations Pop

  17. Slide 17: The 8th largest European assurer

    The 8th largest European assurer Embedded value (2005)(1) AUM (2004) ING Allianz Allianz AXA Generali ING AXA Aviva AEGON Generali Aviva AEGON Prudential Old Mutual/Skandia Old Mutual/Skandia (2) Prudential AGF Legal & General Old Mutual (3) Old Mutual Legal & General Friends Provident RAS AGF Allea

  18. Slide 18: Stable, committed ownership will deliver value

    Stable, committed ownership will deliver value „ Stabilise and regain market share Sweden „ Earn customer trust „ Exploit open architecture opportunity UK „ Reduce cost to improve margins „ Maintain growth Rest of Europe „ Support plans to minimise duplicative administration „ 10% increase in Skandi

  19. Slide 19: A significant value creation opportunity

    A significant value creation opportunity „ Expected IRR exceeds Old Mutual’s 12% hurdle rate on an EV basis „ RoEV for new share capital in excess of RoEV on existing capital „ CoC lower – more cheaper capital - widened spread on RoEV over CoC „ Cost synergies exceed premium paid „ EV earnings accre

  20. Slide 20: Old Mutual strongly positioned for future growth

    Old Mutual strongly positioned for future growth Adjusted EV post-debt £5.3bn /148p(1) per share £2.6bn OMSA „ (2)Growing AUM, EV and earnings; renewed sales efforts £1.4bn Nedbank „ (3)Meeting recovery milestones and driving towards 20% ROE £0.4bn M&F „ (3)Continuing underwriting surplus, managing

  21. Slide 21: Building an International Financial Services Group

    Merrill Lynch Banking & Insurance Conference Building an International Financial Services Group Jim Sutcliffe, CEO 5 October 2005

Old Mutual — Merrill Lynch Banking & Insurance Conference 2005 on 6ix