Old Mutual Ltd. · JSE:OMU
Old Mutual — Investor Presentation (June 2008)
136 slides from Old Mutual's investor presentation, Jun 25, 2008
Slide 1: US Showcase
US SHOWCASE 25 June 2008 Slide 1
Slide 2: Our Vision / What We Have To Do
OUR VISION To be a premier international savings and wealth management group WHAT WE HAVE TO DO Provide excellent investment returns to clients Slide 2
Slide 3: Each Region Has a Complementary Role to Play
EACH REGION HAS A COMPLEMENTARY ROLE TO PLAY High Share Markets High Growth Markets High Potential Markets South Africa USA Asia Pacific Nordic UK Latin America Europe Slide 3
Slide 4: Organisational Structure
ORGANISATIONAL STRUCTURE Jim Sutcliffe OMplc Tom Turpin Interim US CEO John Grady Tom Turpin Bruce Parker Linda Gibson Kathy Horgan Jim Mikolaichik Richard Hoskins Strategy and US Asset Mgt US Life Legal/Corp. Human Risk Finance Corporate CEO CEO Secretary Resources Management Development Slide 4
Slide 5: Current Trading Conditions
CURRENT TRADING CONDITIONS Asset Management: – NCCF still positive – not as high as last year – IFRS AOP about 10% less than FY 07 rate – No exceptional items, just lower markets Life – Sales at the same rate as FY 07; margins comparable – H1 08 IFRS AOP in range around 75% of FY 07 rate – Highe
Slide 6: US Showcase
US SHOWCASE 25 June 2008 Slide 6
Slide 7: Old Mutual US Analyst Showcase
Old Mutual US Analyst Showcase June 25, 2008 1
Slide 8: Old Mutual US Analyst Showcase
Old Mutual US Analyst Showcase PRESENTED BY: Tom Turpin, Interim CEO, Old Mutual June 25, 2008 US 2
Slide 9: Agenda
Agenda 12:45 – 2:15 The US Business Old Mutual US Life 2:15 – 2:35 Q&A 2:35 – 3:00 Refreshment Break 3:00 – 3:20 The US Brand 3:20 – 4:00 Old Mutual US Asset Management 4:00 – 4:30 Q&A 4:30 – 4:45 Closing Comments 4:45 – 7:00 Cocktail Reception 3
Slide 10: The US Business
The US Business The US Opportunity US Business Overview Results Summary 4
Slide 11: The US Opportunity
The US Opportunity • Worldwide Wealth - US household financial assets are approximately 45 - 50% of worldwide household wealth • Population Growth - US is expected to have significant population growth during the next 20 years • Retail Assets - US is expected to grow slightly faster than the rest of
Slide 12: Purchasing Power Parity
Purchasing Power Parity 2005 Canada Japan Ireland UK U.S. Russia South Scandinavia Korea China Benelux Mexico France Germany East Taiwan Europe Caribbean Central Hong America Spain India Kong Brazil Italy Thailand Iran Portugal Singapore Chile Israel Indonesia Philippines Argentina Greece North Afri
Slide 13: Purchasing Power Parity
Purchasing Power Parity 2005 2020 Canada Canada Japan Japan Ireland UK UK U.S. U.S. Russia Russia South Scandinavia Scandinavia Korea Benelux China Germany China Benelux East Europe France Mexico France Germany East Taiwan South Europe Caribbean Korea Central Hong America Mexico Italy Spain India Ko
Slide 14: Assets Under Management Mix
Assets Under Management Mix Global Industry AUM Mix Old Mutual US AUM Mix 41% 71% 23% 59% 6% Retail Institutional Subadvisory ______________________________________________ Source: Cerulli Global Markets report 2007, Cap Gemini/ Merrill Lynch Wealth and Asset Management Opportunity, Boston Consultin
Slide 15: Investable Assets are in the US
Investable Assets are in the US There will be comparable growth in both retail and institutional assets over the next 5 years with nearly 50% of investable assets in the US Institutional Retail 20 Investable Assets 35 Investable Assets 18 Assets in Trillions Assets in Trillions 30 16 14 25 12 20 10
Slide 16: Can't Overlook Non-US Investable Assets
Can’t Overlook Non-US Investable Assets Non-US assets represent over 50% of worldwide investable assets Institutional Retail 20 Investable Assets 35 Investable Assets 18 Assets in Trillions Assets in Trillions 30 16 14 25 12 20 10 8 15 6 10 4 5 2 0 0 * US UK Europe Australia Japan Asia Ex- Middle La
Slide 17: US Retirement Market Overview
US Retirement Market Overview Retirement Assets by Segment - 2006 CAGR 2001-06 ($ trillions) 16.4 Overall 8% Gov’t Pensions 6% 11.2 DB Plans 5% 7.8 DC Plans 9% Annuities 10% IRAs 10% ______________________________________________ Source: Investment Company Institute, Federal Reserve Board, National
Slide 18: Insurance Marketplace Overview
Insurance Marketplace Overview In the US, Annuity Sales, particularly Variable Annuities are projected to lead sales growth and volumes Variable Annuities Permanent Life Fixed Annuities Term Life ______________________________________________ Source: Q1’08 LIMRA Sales and Assets Survey 12
Slide 19: The US Business
The US Business The US Opportunity US Business Overview Results Summary 13
Slide 20: Our Vision
Our Vision Leverage existing strengths of our asset management and life insurance businesses to become a premier savings and wealth management group serving institutional investors and the middle and affluent individual markets to build and protect client assets, grow profitably and deliver exceptio
Slide 21: Our Strategy
Our Strategy • Maintain high quality investment performance • Provide innovative and packaged solutions • Expand our retail capability • Attract and retain talent • Ensure a balanced portfolio of Affiliates 15
Slide 22: Executed Through Two Businesses
Executed Through Two Businesses… • $317bn asset management group in a multi-boutique model • 20 Affiliates covering all major asset classes, operating autonomously yet with interests aligned to Old Mutual Old Mutual Asset • Supported by value-added center Management • Disciplined business strategy c
Slide 23: Playing in Two Markets
…Playing in Two Markets • Targeting defined benefit, large corporations, endowments and foundations • Delivering top quality alpha generating asset management Institutional products • Focused distribution at each Affiliate with leverage from the center OMAM US Life • Targeting the middle market, His
Slide 24: Enterprise Risk Management Framework
Enterprise Risk Management Framework A disciplined approach aligning company strategy, people, process and information with the purpose of evaluating and managing opportunities, threats and uncertainties the enterprise faces as it creates value. • Framework for an efficient and focused evaluation of
Slide 25: Enterprise Risk Management Framework
Enterprise Risk Management Framework Enterprise Risk Management Environment Identify and Measure and Monitor and Culture Manage Risk Communicate Monitor risk profile Strengthen the culture of risk Use risk management Monitor and escalate and adjust as required to management through framework and too
Slide 26: Reporting and Communication Model
Reporting and Communication Model Quarterly OM plc OM plc Audit Semi-annual Business Management Committee Letter of Representation Review (e.g., Risk Committee Function) Escalation Criteria Quarterly OMUS Risk Risk Appetite Management Economic Capital Report OM(US)H Board and Monthly Audit Executive
Slide 27: The US Business
The US Business The US Opportunity US Business Overview Results Summary 21
Slide 28: 2007 Accomplishments
2007 Accomplishments 1. Delivered outstanding investment performance 2. Generated record net client cash flows 3. Produced record earnings growth 22
Slide 29: Investment Performance vs Benchmark
Investment Performance vs Benchmark Asset Weighted Outperformance of Benchmark (As of 31 March 2008) % of Assets1 % of Strategies2 Total Products 109 92 109 92 __________________________________________________ Source: Old Mutual (US) Holdings, Inc. 1. Represents asset weighted percentage of Old Mut
Slide 30: Assets Under Management
Assets Under Management 2004 – 2007 CAGR 22% __________________________________________________ Note: OMAM(UK) has been included from 2006 forward 24
Slide 31: Adjusted Operating Profit
Adjusted Operating Profit 2004 – 2007 CAGR 15% __________________________________________________ Note: 2005 – 2007 Life results exclude amortization of the present value of acquired in-force business OMAM(UK) has been included from 2006 forward 2007 Life profits impacted by $60m pretax actuarial re
Slide 32: A x M – E = P
AxM–E=P 2007 2006 US AM US Life US AM US Life Average Assets $277.4 $23.1 $228.5 $21.2 ($bn) Revenue 43.8 219.0 41.5 181.5 (bps) Acquisition Costs (bps) (0.7) (88.1) (0.7) (30.3) Admin Costs (31.4) (46.6) (29.5) (42.5) (bps) Adjusted Op. Profit $324 $195 $259 $230 ($m) Net Margin 11.7 84.3 11.3 108.
Slide 33: The US Business
The US Business The US Opportunity US Business Overview Results Summary 27
Slide 34: Benefits of Working with Old Mutual US
Benefits of Working with Old Mutual US Passion for Investment Quality Leverage from the Center Provider of Interests Aligned Innovative with Clients Solutions 28
Slide 35: Old Mutual US… Positioned for the Future
Old Mutual US… Positioned for the Future • We offer both the insurance products and asset management services needed for our distributors and partners to serve their client’s needs • Our asset management companies focus on alpha generation which leads to asset accumulation… …while our life company f
Slide 36: Old Mutual US Analyst Showcase
Old Mutual US Analyst Showcase June 25, 2008 30
Slide 37: The US Life Insurance Business
The US Life Insurance Business PRESENTED BY: Bruce Parker, CEO USLife 31
Slide 38: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 32
Slide 39: Life Insurance Marketplace Trends
Life Insurance Marketplace Trends • Buyers seeking stability and guarantees • Critical need to provide income solutions with guarantee features • As baby boomers live longer, long-term care solutions will be critical • Regulatory pressures on suitability becoming more pronounced and restricted • The
Slide 40: Insurance Marketplace Historical Product Sales Trend
Insurance Marketplace Historical Product Sales Trend In the US, Annuity Sales, particularly Variable Annuities are projected to lead sales growth and volumes Variable Annuities Permanent Life Fixed Annuities Term Life ______________________________________________ Source: Q1’08 LIMRA Sales and Asset
Slide 41: The US Hispanic Market: Population Growth
The US Hispanic Market Population Growth Hispanics are the largest and fastest growing minority in the US • The Hispanic population represents over 12 million US households • The median age for Hispanics is 25.9 vs. 35.3 years for the general US population • Over 40% of Hispanic households consist o
Slide 42: The US Hispanic Market: Purchasing Power
The US Hispanic Market Purchasing Power • Hispanic buying power projected to reach $1.2 trillion by 2011 • 37% of the US Hispanic households have annual incomes ≥$50,000 36
Slide 43: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 37
Slide 44: Old Mutual US Life
Old Mutual US Life • Long track record of ownership (> 6 years) • Demonstrated group support through $1bn+ investment • Robust standalone profile supported by appropriate capitalization and strong market position • Increasing contribution and significance to group performance • Increasing integratio
Slide 45: Retail Strategy
Retail Strategy The Mass ROP Term Affluent – “The GMAB LTC Trillion Dollar Baby” Indexed GMWB UL The Boomer Hispanics in the Years – in US – The next retirement wave Fixed Variable Indexed Annuities Annuities SPIA 39
Slide 46: The Opportunity is not a single product… it's packaged solutions
The Opportunity is not a single product… it’s packaged solutions Pre-retirement Retirement/Post-Retirement Income/ Protection Accumulation Care Deaccumulation Age Group 65+ Age Group 25-65 Age Group 25-75 Age Group 65+ (75+ Accelerated) Wealth Accumulation Period Wealth Transfer/Preservation Period
Slide 47: Our Response to the Trends
Our Response to the Trends Multi-channel distribution OMFN OMFN OMFN OMFN OMB Fixed Life Immediate Variable Offshore Annuity Annuities Annuity VA Centers Demographic Planning, Product Development and Retirement Solutions Centers of of Excellence Excellence Markets / Distribution Reach IFA MGA MGA MG
Slide 48: Critical Success Factors
Critical Success Factors US Life success will depend on our ability to deliver on: • New structure inserted to deliver clear accountability for the business • Life and annuity product innovation to meet the evolving financial and security needs of the “boomer” generation • Mutual fund investment per
Slide 49: OMUS Life Risks
OMUS Life Risks • Political uncertainty • Credit markets • Market risk • Regulatory barriers to entry • Systems connectivity • Performance of hedges • Ability to support additional currencies 43
Slide 50: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 44
Slide 51: Our Products
Our Products Mortgage Fixed Fixed Index Immediate Universal Variable Term Life Annuities Annuities Annuities Life Annuity Insurance Accumulation Income Protection 45
Slide 52: Product Development Process
Product Development Process Innovate Best Practices Research Governance Integrate Implementation and Product Concept Feasibility Assessment Post Implementation Product Feasibility Implementation Development Team Team Team Monthly/Quarterly Bi-Weekly/Monthly Weekly • Sales • Product Champion • Invest
Slide 53: Product Features: Fixed Annuities
Product Features Fixed Fixed Index Immediate Mortgage Term Universal Life Variable Annuity Annuities Annuities Annuities Life Insurance Traditional – Fixed Annuities • #4 ranking in total fixed annuities (brokerage/MGA) • 1,3,5 year initial interest guarantee, with 1 year guaranteed renewals • Surre
Slide 54: Product Features: MYGA
Product Features Fixed Fixed Index Immediate Mortgage Term Universal Life Variable Annuity Annuities Annuities Annuities Life Insurance MYGA – Multi-Year Guarantee Annuity • Similar to traditional annuities, except: • 3, 5, 7, 10 year initial interest guarantees are followed by renewal same as initi
Slide 55: Product Features: Fixed Indexed Annuities
Product Features Fixed Index Immediate Mortgage Term Fixed Annuities Universal Life Variable Annuity Annuities Annuities Life Insurance Fixed Indexed Annuities • #5 in fixed index annuity • Interest tied to equity index = upside potential, with downside protection – minimum guarantee provided • Inte
Slide 56: Product Features: Immediate Annuities
Product Features Fixed Index Immediate Mortgage Term Fixed Annuities Universal Life Variable Annuity Annuities Annuities Life Insurance Immediate Annuities • #8 in fixed immediate annuity • Addresses income needs of consumers • Lifetime guarantees, fixed period payouts, or both • Medicaid planning n
Slide 57: Product Features: Mortgage Term Life
Product Features Mortgage Fixed Index Immediate Fixed Annuities Annuities Annuities Term Life Universal Life Variable Annuity Insurance Mortgage Term Life • #1 in mortgage term life • Specialized lead generation distribution • Guaranteed death benefit for 10, 15, 20, 25 or 30 years • Simplified unde
Slide 58: Product Features: Universal Life
Product Features Fixed Index Immediate Mortgage Term Universal Fixed Annuities Variable Annuity Annuities Annuities Life Insurance Life Universal Life and Indexed Universal Life • Top 20 in universal life and #5 in indexed universal life • Flexible premium • Interest crediting – UL = fixed interest
Slide 59: Product Features: Variable Annuities
Product Features Fixed Annuities Fixed Index Immediate Mortgage Term Universal Life Variable Annuities Annuities Life Insurance Annuity Variable Annuities - Beacon Navigator and Beacon Advisor • Initially launched January 2007 • Second launch to Registered Investment Advisor (RIA) channel in Q1 2008
Slide 60: Pricing Approach
Pricing Approach Mortgage Fixed Fixed Index Immediate Universal Variable Term Life Annuities Annuities Annuities Life Annuity Insurance • Products priced to meet multiple constraints (>12% IRR, new business margin in mid-teens and capital usage) • Assumptions set based on best estimate with some mar
Slide 61: Distribution: Fixed Products
Distribution Fixed Products Mortgage Fixed Fixed Index Immediate Universal Term Life Variable Annuity Annuities Annuities Annuities Life Insurance Fixed Products • Master General Agent (MGA) • Hierarchical • Highly leveraged structure • Outsources agent recruiting, training and marketing • CEO Counc
Slide 62: Distribution: Variable Products
Distribution Variable Products Fixed Annuities Fixed Index Immediate Mortgage Term Universal Life Variable Annuities Annuities Life Insurance Annuity Onshore Variable Annuity • Explore leveraging Old Mutual Bermuda US bank relationships • Leverage MGA relationships • Independent Broker/Dealers • Reg
Slide 63: Q1 2008 Market Share
Q1 2008 Market Share • 1st in mortgage term life • 4th in total fixed annuity (brokerage / MGA) • 5th in fixed indexed annuity • 8th in fixed immediate annuity • 5th in indexed universal life annual premiums • 8th in term life periodic premiums (brokerage / MGA) • 18th in total life policy count ___
Slide 64: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 58
Slide 65: Old Mutual Bermuda
Old Mutual Bermuda • Partner with large financial international banks and brokerages to build products for the private banking platforms • The ability to customize the product for the institution including private labeling if they choose • 70+ global distributors including HSBC, Chase, Wachovia, Sta
Slide 66: Product Features: Offshore Variable Annuity
Product Features Fixed Annuities Fixed Index Immediate Mortgage Term Universal Life Variable Annuities Annuities Life Insurance Annuity Offshore Variable Annuity • Offers variable annuity style products to international customers through international banks • OMB offers “generic” (our own brand), pr
Slide 67: Pricing Approach
Pricing Approach Fixed Annuities Fixed Index Immediate Mortgage Term Universal Life Variable Annuities Annuities Life Insurance Annuity • Products priced to meet multiple constraints (>20% IRR, new business margin in the mid-20s and capital usage) • Assumptions set based on best estimate with some m
Slide 68: Distribution
Distribution Fixed Annuities Fixed Index Immediate Mortgage Term Universal Life Variable Annuities Annuities Life Insurance Annuity Our business is built around developing proprietary investment-type products for large international financial institutions. Our mission is to offer state-of-the-art in
Slide 69: Old Mutual Bermuda's Clients
Old Mutual Bermuda’s Clients Switzerland and Luxembourg: Clariden Leu HSBC Leumi Investments Asia: American Express HSBC Standard Chartered North, Central and South America: Banco do Brasil Banco Popular BBVA Chase Middle East and Commerce Bank Africa: EFG Capital HSBC ABN Amro Itau Securities Barcl
Slide 70: Current Initiatives
Current Initiatives • Shariah product launch - Middle East and Malaysia • Pension product development • Private banking product • Multi-Currency product launch – € denominated products • Expanded website – Enhance global connectivity 64
Slide 71: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 65
Slide 72: Investment Mandate
Investment Mandate • The investment portfolio is managed to maximize yield while maintaining a close match to the duration of the liabilities and limiting credit and other risk concentrations • Investment strategies and portfolio constraints are established internally and managed closely – Duration
Slide 73: Investment Portfolio
Investment Portfolio • 96% of the portfolio is comprised of investment grade fixed income investments • Credit is the major risk in the portfolio but it is very closely monitored • Performance has held up in a challenging credit environment due to limited exposure to troubled sectors and remains in
Slide 74: Investment Portfolio Risks
Investment Portfolio Risks • Monoline exposure is also small (3.0% of portfolio) and predominantly indirect rather than direct monoline credit exposures – 89% of this is holdings of bonds wrapped by monolines. These have performed well based on the credit strength of the underlying issues, maintaini
Slide 75: Limited Exposure to Current Market Credit Issues
Limited Exposure to Current Market Credit Issues $m 31-May-08 31-Mar-08 31-Dec-07 30-Sep-07 30-Jun-07 Total mortgage backed securities exposure Residential 2,432 2,390 2,478 2,376 2,314 Commercial 2,032 2,031 2,019 2,061 2,079 Percentage of total portfolio 22.4% 22.3% 22.4% 21.9% 21.7% Subprime expo
Slide 76: Hedging
Hedging • Hedging process – Hedges are purchased and periodically rebalanced to match the market risk exposures of index- and fund-linked guarantees – Hedging strategies are established internally and executed by Milliman, the premier provider of hedging services for fixed indexed and variable annui
Slide 77: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 71
Slide 78: Operations: Strategic Approach
Operations Strategic Approach • Focus internally on the differentiator, outsource the commodity • Select the best of breed, multiple outsourcing partners • Provide the flexibility to add new outsource partners and OM US Life companies to the architecture • Provide predictable pricing, service levels
Slide 79: Operations: Business Initiatives
Operations Business Initiatives Outsourcing • Two additional underwriting partners added to reduce concentration risk and add capacity • New Chief Underwriter position filled in 2007 to provide consistency of process and quality of service • McCamish contracted to administer domestic VA product rang
Slide 80: Operations
Operations Continued focus on service efficiencies and reducing unit costs 2004 2005 2006 2007 New business applications 209,392 313,130 290,018 223,867 New business annual costs $32.9m $47.3m $39.9m $27.4m New business unit cost per application $157 $151 $137 $122 New business annual saving $1.8m $
Slide 81: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 75
Slide 82: APE Sales Trend
@ OLD MUTUAL APE Sales Trend APE Sales (%) 2003 2004 2005 2006 2007 = Fixed Annuities Fixed Indexed Annuities = Immediate Annuities = Variable Annuities = Life m Other (Corporate) 76
Slide 83: Adjusted Operating Profit
Adjusted Operating Profit ______________________________________________ Note: 2007 Life profits impacted by $60m pretax actuarial review related charge 2005 – 2007 Life results exclude amortization of the present value of acquired in-force business 77
Slide 84: Assets Under Management
Assets Under Management Source: Old Mutual (US) Holdings Inc. 78
Slide 85: Agenda
Agenda Marketplace Strategy Old Mutual Financial Network Old Mutual Bermuda Investment Process Operations Financials Summary 79
Slide 86: Summary
Summary • The US retail opportunity is significant • The current US Life business is well-positioned with: – Solid product offerings – In the growing markets for baby-boomers, Hispanics and the international high-net worth investor – A leader in providing solutions-based funds to insurance agents an
Slide 87: Questions
G2) OLD MUTUAL Questions
Slide 88: Tea Break
G2) OLD MUTUAL Tea Break
Slide 89: Old Mutual US Analyst Showcase
Old Mutual US Analyst Showcase June 25, 2008 82
Slide 90: The US Brand
The US Brand PRESENTED BY: Bruce Parker, CEO USLife 83
Slide 91: Our Retail Brand in the US
Our Retail Brand in the US Current landscape is cluttered – “a sea of sameness” Principal Prudential AIG Allianz AXA MetLife Financial Group Financial Old Mutual is distinguishing itself from the pack: “Green is the new blue” 84
Slide 92: The Process of Building a Brand
The Process of Building a Brand We are in the very early stages of a 5-step process… Familiarity Brand Image Category Awareness and Usage and Interest Preference Experience …and just beginning to build name awareness 85
Slide 93: Current Goals of Awareness
Current Goals of Awareness Familiarity and Brand Image Category Awareness Usage and Preference Interest Experience • Increase awareness of Old Mutual among intermediaries and consumers • Unify insurance and investments under a single brand strategy • Niche focused down to consumer level, not broad b
Slide 94: Building Awareness on the Street
Building Awareness on the Street 87
Slide 95: Building Awareness On the Street
Building Awareness On the Street
Slide 96: Building Awareness On Television
Building Awareness On Television 88
Slide 97: Building Awareness on Television
Building Awareness on Television 89
Slide 98: Building Awareness On Television
Building Awareness On Television
Slide 99: Building Awareness In the Print
Building Awareness In the Print 90
Slide 100: Building Awareness Through a Winner
Building Awareness Through a Winner 91
Slide 101: Building Awareness Through a Winner
Building Awareness Through a Winner
Slide 102: Building Awareness: The Results
Building Awareness The Results Increase in Aided Awareness $m In our consumer study tracking awareness following the first 10 weeks of the campaign, Old Mutual was the only company to witness positive trend in awareness while spending SIGNIFICANTLY less. increase in aided awareness: (NA) (-3.1) (+0.
Slide 103: The Process Going Forward
The Process Going Forward Successful so far… Familiarity Brand Image Category Awareness and Usage and Interest Preference Experience …but a long way to go to full awareness 93
Slide 104: Old Mutual US Analyst Showcase
Old Mutual US Analyst Showcase June 25, 2008 94
Slide 105: The US Asset Management Business
The US Asset Management Business PRESENTED BY: Tom Turpin, CEO, Old Mutual Asset Management 95
Slide 106: US Asset Management
US Asset Management Overview Results Summary 96
Slide 107: The Old Mutual Advantage
The Old Mutual Advantage Old Mutual Asset Management is a multi-boutique partnership built on investment independence • Multi-boutique model • Investment independence • Adding value from the center Diversity coupled with agility to meet market opportunities 97
Slide 108: Diverse Group of High Quality Affiliates
Diverse Group of High Quality Affiliates 98
Slide 109: Equity Plans
Equity Plans Goals: • Align the long-term value creation goals of Affiliates and Old Mutual • Provide stability within the Affiliates by ensuring orderly management succession • Provide management with a meaningful incentive to grow the business and attract top-quality talent • Designed in a way tha
Slide 110: Alignment of Interests
Alignment of Interests • All Affiliates operate under a profit sharing arrangement – Typically have a 30% bonus pool • 14 Affiliates now own equity in their own firm – Interests vary between 4% and 40% – Affiliates at the lower end of the range will reach ~25% over time 100
Slide 111: Offering Clients and Partners the Best of Both Worlds
Offering Clients and Partners the Best of Both Worlds Conglomerate/ Boutique/ Generalist Specialist • Wide product range • Uncorrelated alpha sources • Deep resources • Investment focus and autonomy • Economic efficiencies • Distribution leverage + • High-quality investment talent • Unique, entrepre
Slide 112: Powerful Partnerships
Powerful Partnerships Product/Packaging Expertise Product Development Asset Allocation Funds Alternative Investments Alpha-generating Capability Retail Distribution Institutional Distribution • Managed accounts • Consultant relations • Closed-end funds • Sub-advisory sales • Mutual funds • Firm spec
Slide 113: Leverage from the Center
Leverage from the Center Distribution Risk Management and Marketing Centers of Technology Excellence Legal Shared Strategy Services Human Finance Resources Trust Company 103
Slide 114: Managing the Portfolio
Managing the Portfolio Market Opportunities Emerging Themes Globalization Alpha Seeking Income Generating Investments Uncorrelated Alpha Sources Passive vs Active Strategy Liability Driven Investments Service Delivery and Distribution Specialized Investment Packaging Talent Channels Innovative Solut
Slide 115: Strategic Initiatives
Strategic Initiatives Continued investment in manufacturing capabilities to address changing market demands and capacity issues remains critical to success in the US Asset Management business. Specialized investment talent • Managing the portfolio • International equity • Alternatives Service delive
Slide 116: Multi-Boutique Model
Multi-Boutique Model Strategic Analysis: Continuous portfolio analysis against market opportunities Invest Manage Revitalize • Sourcing • Corporate governance • Market analysis • Analysis structure • Turn-around management • Access to capital • Common standards/ • Assess market opportunity • Negotia
Slide 117: Managing the Portfolio Action Plans
Managing the Portfolio Action Plans We continually assess our market opportunities across all stages of the portfolio process and remain focused on catalysts required to unlock boutique value Invest: • Firm investment strategy • Incubate manufacturing capabilities and/or purchasing capabilities; ana
Slide 118: Managing the Portfolio Action Plans
Managing the Portfolio Action Plans Manage/Monitor: • Product development and performance analytics • Common management information system • Strategic plans – working with the Affiliates to develop 3-5 year business plans • Management actions linked to the US strategy • Long-term equity plans – fina
Slide 119: Industry Product Development Opportunities
Industry Product Development Opportunities 25-30% of leading firm’s earnings five years from now will come from products that do not exist today ______________________________________________ Source: Casey Quirk Associates, Merrill Lynch 109
Slide 120: Old Mutual Product Development Focus
Old Mutual Product Development Focus Marketing Product Development Near Term Opportunities Seed or Acquire Capacity 130/30 (-) Growth Rate (+) Market Hedge Global Neutral Funds Equity LDI Real Estate Core+ Int’l Mid Fixed Equity GTAA Cap Income Equity Core Small Fixed Large Large Cap Income Cap Cap
Slide 121: Our Portfolio
Our Portfolio Asset Class and Style Coverage 111
Slide 122: International Equity – Action Plans
International Equity – Action Plans Continuing to press our advantage across our existing product set Analytic Extend 130/30 strategies to international Barrow Add global capability, recently seeded international Hanley Clay Finlay Explore expanding international offering into small cap Dwight Seede
Slide 123: Alternatives – Action Plans
Alternatives – Action Plans Continuing to press our advantage across our existing product set Acadian Market neutral and hedge funds Analytic Market neutral, GTAA, and hedge funds Campbell Explore opportunities for retail or private placements Group Heitman Support private real estate and infrastruc
Slide 124: Non-US Distribution Action Plans
Non-US Distribution Action Plans Focusing on our non-US distribution strategy • Formulate and execute non-US distribution strategy – Old Mutual Task Force • Deploy distribution resources to Asia in a disciplined and focused manner • Hire additional non-US distribution resources 114
Slide 125: US Asset Management
US Asset Management Overview Results Summary 115
Slide 126: Investment Performance vs Benchmark
Investment Performance vs Benchmark Asset Weighted Outperformance of Benchmark (As of 31 March 2008) % of Assets1 % of Strategies2 Total Products 109 92 109 92 __________________________________________________ Source: Old Mutual (US) Holdings, Inc. 1. Represents asset weighted percentage of Old Mut
Slide 127: Investment Performance
Investment Performance Percentage of OMAM Assets Outperforming Benchmark 100 95 95 94 92 95 92 92 92 92 93 95 93 95 90 87 88 86 87 88 90 84 82 93 90 88 91 90 89 % of Assets Outperformed 80 86 88 83 85 84 81 84 83 80 78 76 70 76 75 72 60 63 50 40 Three Years 30 Five Years 20 10 0 Se 7 Se 5 Se 6 Se 3
Slide 128: High Growth Areas Outperforming
High Growth Areas Outperforming Old Mutual has more than 60 Non-US Equity, Hedge Fund, and other Alternative type Approaches* • Strong performance across most asset classes • OMAM has 26 Market Neutral and L/S Extension approaches * Universe includes: Specialized US Equity, Non-US Equity, Global Equ
Slide 129: Net Client Cash Flows
Net Client Cash Flows __________________________________________________ Note: 2006 restated to include OMAM (UK) and exclude fund flows related to eSecLending 119
Slide 130: Competitor Comparison: Net Client Cash Flow
Competitor Comparison Net Client Cash Flow 2007 NCCF as a Percentage of Beginning of Period AUM 120
Slide 131: Assets Under Management
Assets Under Management 2004 – 2007 CAGR 22% __________________________________________________ Note: results restated to include OMAM(UK) from 2006 forward 121
Slide 132: Adjusted Operating Profit
Adjusted Operating Profit 2004 – 2007 CAGR 27% __________________________________________________ Note: results restated to include OMAM(UK) from 2006 122
Slide 133: US Asset Management
US Asset Management Overview Results Summary 123
Slide 134: Summary
Summary Old Mutual Asset Management • Proven model for successful delivery of profit and asset growth • Diverse group of Affiliates operating in a multi-boutique model • Leveraging value-added services from the center • High-quality investment management, creative product development and specialized
Slide 135: Questions
G2) OLD MUTUAL Questions
Slide 136: Old Mutual US Analyst Showcase
Old Mutual US Analyst Showcase June 25, 2008 126