Old Mutual Ltd. · JSE:OMU
Old Mutual — Investor Day (May 2003)
21 slides from Old Mutual's investor day presentation, May 28, 2003
Slide 1: Julian Roberts, Group Finance Director
Julian Roberts Group Finance Director Old Mutual plc
Slide 2: Purpose of the day
Purpose of the day Overview of Old Mutual Group in South Africa • Outline of our strategy • Opportunities for growth, synergies and group value-add • To address the challenges facing the region including: - The economic outlook in South Africa - Life, banking and general insurance industry dynamics
Slide 3: Customer focused, regional management strategy built around gathering and managing assets
Customer focused, regional management strategy built around gathering and managing assets UK USA South Africa Complementary Regional Platforms
Slide 4: 2003 Trading Update
2003 Trading Update • Trading: - 1st four month’s trading followed patterns of last quarter of 2002 • Markets: - Equity markets have lowered, particularly in SA - Rand has strengthened with mixed implications • Capital: - Group capital position remains strong - Successful issue of $750 million Guara
Slide 5: 2003 Trading Update – South Africa
2003 Trading Update – South Africa • Market dropped 19% in 1st 4 months but is recovering • Life new business sales flat, margins lower overall due to mix • Nedcor’s operating results adversely impacted by translation losses and lower investment banking profits • BoE integration on track • Mutual &
Slide 6: 2003 Trading Update – USA
2003 Trading Update – USA • Continued positive net fund inflows at US asset management • US life sales controlled, but still more than double pre-acquisition levels • Margins lower than 2002
Slide 7: 2003 Trading Update – UK
2003 Trading Update – UK • Break-even results at Gerrard despite tough markets • Good investment performance at OMAM(UK) • Selestia continuing to grow steadily • GNI FM relaunched as Bright Capital
Slide 8: 2003 Trading Update – Outlook
2003 Trading Update – Outlook • Solid start • Markets have risen in May • Margins being affected in in SA & USA by business mix
Slide 9: Old Mutual's capital and solvency position
Old Mutual’s capital and solvency position • Gearing reduced to under 20% after $750m preferred security issue • Solvency at 31 December 2002 - OMLAC(SA) • Capitalised at 2.2x SCAR – at 30 April 2.0 x SCAR • Moody’s financial strength rating Aa3 - F&G Life • Capitalised at 3.2x SCAR, 2.5x RBC • A.M.
Slide 10: Moody's credit downgrades since Dec 2001
Moody’s credit downgrades since 31 Dec 2001 Friends Provident Source: Moody’s Legal & General Scottish Mutual / Merrill Lynch Standard Life Insurance Old Mutual Swiss Re Aegon Scor ZFS Axa 0 -1 Notches lost -2 -3 -4 “…A2 rating reflects the Group’s diversified earnings with significant recurring cas
Slide 11: Old Mutual South Africa
Old Mutual South Africa OMSA – Life and Asset Nedcor – Banking Management M&F – General Insurance The number one financial services group in South Africa
Slide 12: South Africa – financial context
South Africa – financial context Life new business (APE) Embedded value (pre-debt) 4% 8% 42% 35% 54% 57% Funds under management Operating profit 22% 19% 7% 22% 71% 59% UK & rest South Africa USA
Slide 13: Strategy for South Africa
Strategy for South Africa • Remain number 1 for financial services - Leverage our strong brands - Provide customer orientated products - Set standards by world competition not local competition • Transformation agenda - Endorse black economic empowerment • Criteria businesses measured by: - ROE, ROE
Slide 14: Strategy for South Africa – financial targets
Strategy for South Africa – financial targets • Financial targets are set appropriate for South Africa: - Profits growth 2 -3x real GDP i.e. 15 2-3x -20% 15-20% - 20% -25% ROE 20%-25% STG / ZAR 20 18 •Trendline depreciation 16 from Dec 1992 8.9%pa. 14 12 10 8 6 4 2 0 Dec-92 Dec-93 Dec-94 Dec-95 Dec-
Slide 15: Strategy for South Africa – group synergies
Strategy for South Africa –group synergies • Products, distribution & marketing: - Offering our US and UK asset management products to clients - Bancassurance between Old Mutual SA and Nedcor - Bringing Nedcor private banking to Gerrard’s customers • Leveraging South African cost advantage globally:
Slide 16: Financial Services Regulation
Financial Services Regulation • The Financial Services Board is responsible for overseeing regulation of the JSE and non-banking financial institutions • Banks are directly regulated by the South African Reserve Bank • All JSE companies must comply with IAS for years commencing on or after 1 January
Slide 17: AC133 in South Africa
AC133 in South Africa • Fundamental shift in accounting for financial instruments – based on IAS39/FAS133 • Effective from 1 January 2003 • IAS39 currently under review • Comparability difficulties • Impact on capital requirements, other regulatory issues and taxation not yet fully clarified by auth
Slide 18: AC133 for Insurance activities
AC133 for Insurance activities • IFRS for insurance activities not expected before 2005, but AC133 has an impact • Proposed two phase approach - Phase I: Interim solution for 2005 - Phase II: Full IFRS for insurance • Many “insurance” products captured by AC133 • Onerous disclosure requirements incl
Slide 19: BEE - government scorecard
BEE - government scorecard • The government has now published a balanced scorecard against which it will assess businesses • Any company rated over 65% will be seen as a “good contributor” • It is now inviting industries to “populate” reasonable measures as a part of a charter process • The financia
Slide 20: BEE – we aim to be a “good” contributor
BEE – we aim to be a “good” contributor • We aim to have a set of principles and a measurable plan for plc as a whole and for each of the three businesses • Most elements will run across the businesses (employment equity, management, skills development) • Some have business specific focus - Nedcor -
Slide 21: Agenda for the day
Agenda for the day 09:30 Dennis Dykes – Background to South Africa 10:00 OMSA: Roddy Sparks, Tim Cumming, Peter de Beyer 11:00 Q&A session 11:30 OMSA: Peter Moyo, Peter Golesworthy, Gary Palser 12:30 Q&A session 12:45 Lunch – room 501 14:00 Nedcor: Richard Laubscher 15:00 Q&A session 15:30 M&F: Bruc