OLD MUTUAL LIMITED - Old Mutual voluntary operating update for the period ended 31 May 2021

Old Mutual voluntary operating update for the period ended 31 May 2021

Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
LSE Share Code: OMU
NSX Share Code: OMM
MSE Share Code: OMU
ZSE Share Code: OMU
("Old Mutual" or “Company” or “Group”)


Ref 15/21
23 June 2021

OLD MUTUAL VOLUNTARY OPERATING UPDATE FOR THE PERIOD ENDED 31 MAY 2021

The global economy continues to slowly recover and vaccination rates are
progressing well in many of the advanced economies. The rebound in global economic
activity has positively impacted SA equity market levels through strong commodity
prices as demand picks up which has contributed to the strengthening of the rand.
The pace of economic recovery in South Africa could be delayed given the energy
supply shortfall, the slow vaccination drive and high third wave infections.


Vaccination rollouts across Africa have been slow and according to Bloomberg
data, only eight countries have vaccinated more than 5% of their populations to
date. COVID-19 infection rates are rising as the third wave continues to gain
momentum in South Africa. The country has enforced adjusted level 3 lockdown
restrictions in an effort to curb the spread of the virus. Uganda and Namibia
have also re-imposed strict lockdown measures to curb the surge in COVID-19
cases.


Productivity levels in our South African retail segments, Mass and Foundation
Cluster and Personal Finance have improved. Issued sales in Personal Finance
improved materially in May to above the  prior year and 2019 levels. The
improvement was on both single and recurring premiums which will be reflected as
reported life sales for the first half of 2021. Issued sales in Mass and
Foundation Cluster were above the prior year due to the significant impact that
the lockdown had on issued sales in 2020 but are still below 2019 levels due to
the tough economic environment. Sales remain subdued and market conditions remain
challenging in Old Mutual Corporate with SuperFund quote activity improving by
44% relative to 2020 but still 20% lower than 2019.
Financial performance for the period ended 31 May 2021


The table below sets out certain key performance indicators for the period ended
31 May 2021.

Key Performance Indicators                    31 May 2021        31 May 2020    % change
(R    millions     unless      otherwise
indicated)
Results from Operations                        2 680              1 768         52%
Life APE Sales                                 4 293              4 069         6%
VNB                                            531                36            Greater than
                                                                                100%
Gross Flows                                    80 413             77 985        3%
Net Client Cash Flow (Rbn)                     (0,5)              5,2           Greater than
                                                                                (100%)
Funds Under Management(1) (FUM) (Rbn)          1 164,1            1 104,6       5%
Loans and    Advances(1)                       18 750             20 320        (8%)
Gross Written Premiums                         8 437              7 984         6%
(1)Comparative   amounts represent FY2020 balance sheet amounts.


Profitability for the year to date has improved compared to the same period in
the prior year as a result of higher asset based fees due to an increase of 13%
in average FUM, closing FUM at the end of May was 17% above May 2020 levels.
Improved credit experience due to a deliberate focus on tightening of credit
criteria and more selective offers to customers in Old Mutual Finance in South
Africa, the non-repeat of the negative mark to market losses in Old Mutual
Investments and significant level of COVID-19 business interruption and rescue
claims in Old Mutual Insure in the prior year positively impacted profits for
year to date. We remain on track to deliver our cost-savings target of R750
million at the end of 2022.


Life APE sales are 6% ahead of the prior year due to the positive recovery of
productivity levels as observed in issued sales volumes. Personal Finance
delivered significant growth in single-premium annuity sales which were above
2019 levels and strong risk sales. Our Wealth Management business delivered
significant fixed bond sales and higher risk sales were recorded in China. These
were partially offset by lower umbrella and risk sales in Old Mutual Corporate
despite the improvement in quote activity relative to the levels at the end of
2020. The significant growth in VNB was largely driven by increased sales volumes
of high margin products coupled with lower initial expenses and better channel
losses, with a VNB margin of 2.1% being well within our medium-term target range
of 1.5% - 3.0%.


Gross flows increased when compared to the same period in the prior year as a
result of sales on the retail platform of our Wealth Management business and
strong inflows in our Liability Driven Investment (LDI) capability and Marriott
in Old Mutual Investments coupled with strong single premiums annuity sales from
Personal Finance. These were partially offset by a non-repeat of significant
inflows into our Asset Management businesses in East Africa and Southern Africa.


Negative NCCF was largely due to significant volumes of mortality claims in our
South African life businesses for year to date. Lower inflows in Rest of Africa,
higher terminations and benefits payout in Old Mutual Corporate as well as an
increase in annuity payments and disinvestments in Personal Finance contributed
to the increased outflows. These were partially offset by strong inflows in Old
Mutual Investments. FUM increased largely due to strong equity markets, despite
negative NCCF.


The decrease in Loans and Advances continue to be a function of a decline in
disbursements due to footfall in retail branches in South Africa and Rest of
Africa, which has not yet fully recovered to pre-COVID-19 levels, and the further
tightening of credit criteria in Old Mutual Finance as we manage our risk appetite
in the current environment. Good customer retention and pleasing acquisition
rates in Rest of Africa as well as growth across most lines in Old Mutual Insure
has driven the increase in Gross Written Premiums compared to the prior year.


Operating update


We continue to closely monitor the impact of COVID-19 on our claims experience.
Our claims experience is in line with expected claims levels assumed in the
December 2020 pandemic reserve, set up for the anticipated impacts of COVID-19
in 2021. At this stage, it is too early to determine whether additional provisions
will be required at the end of H1 2021. The reserve will be assessed at 30 June
2021, taking into account the possibility of further waves and other developments
relating to the pandemic.


Investor engagement


As previously communicated in the Q1 2021 operating update, we will be hosting
a Capital Markets Day on Thursday, 24 June 2021 from 13:00 – 17:00 CAT. The
agenda will focus on the Group’s strategy, capital position relative to targets
and other relevant business updates.   Investors and Media are invited to attend
and register on the following link:
http://www.overendstudio.co.za/events/OldMutual/2021/CapitalMarketsDay/rsvp.php

The financial information in this voluntary operating update is the
responsibility of the Old Mutual Board of Directors and has not been reviewed or
reported on by the Group’s external auditors.




Sandton

Sponsors

JSE                              Merrill Lynch South Africa (Pty) Limited t/a BofA
                                 Securities
Namibia                          PSG   Wealth    Management   (Namibia)    (Proprietary)
                                 Limited
Zimbabwe                         Imara Capital Zimbabwe plc
Malawi                           Stockbrokers Malawi Limited


Enquiries
Investor Relations
Sizwe Ndlovu                     T: +27 (0)11 217 1163
Head of Investor Relations       M: +27 (83) 500 8019
                                 E: tndlovu6@oldmutual.com

Communications
Tabby Tsengiwe                   T: +27 (11) 217 1953
General Manager of Public        M: +27 (0)60 547 4947
Affairs and Communications       E: ttsengiwe@oldmutual.com




Notes to Editors

About Old Mutual Limited

Old Mutual is a premium African financial services group that offers a broad
spectrum of financial solutions to retail and corporate customers across key
market segments in 14 countries. Old Mutual's primary operations are in South
Africa and the Rest of Africa and it has a niche business in Asia. With over 176
years of heritage across sub-Saharan Africa, Old Mutual is a crucial part of the
communities they serve and the broader society on the continent.


For further information on Old Mutual and its underlying businesses, please visit
the corporate website at www.oldmutual.com.

Date: 23-06-2021 07:05:00
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