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OLD MUTUAL PLC - Old Mutual plc Interim Management Statement

Release Date: 15/05/2014 08:01
Code(s): OML     PDF:  
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Old Mutual plc Interim Management Statement

OLD MUTUAL PLC
ISIN CODE: GB00B77J0862
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSURE CODE: OLOML
Old Mutual plc

Ref 51/14

15 May 2014

Old Mutual plc Interim Management Statement

Operational performance remains strong in the first quarter
    •    Gross sales up 24%* to £6.2 billion (up 12% in reported currency)
    •    Funds under management up 2%* at £297.1 billion
    •    Group Net Client Cash Flow of £(0.5) billion (Q1 2013: £3.9 billion)
              o    Old Mutual Wealth NCCF of £1.1 billion (Q1 2013: £0.4 billion)
              o    USAM outflows in fixed income and equities
    •    Nedbank net interest income up 9% with significantly reduced credit loss ratio of 89 bps



Significant developments
    •    Old Mutual Wealth very well placed to benefit from proposed changes to UK’s retirement regime
    •    Continued strategic delivery:
              o    Announced intention to proceed with minority IPO of USAM in 2014, subject to market conditions
              o    Announced acquisition of Intrinsic and agreed to buy outstanding 50% of Cirilium, Intrinsic’s core
                   investment proposition
              o    Reached agreement to sell Skandia Germany and Skandia Austria, regulatory approval received for
                   the sale of Skandia Poland
              o    Completed Faulu acquisition in Kenya


Julian Roberts, Group Chief Executive, commented:

“Old Mutual Wealth and Emerging Markets both produced very strong sales in the quarter. We are very excited about the
opportunities for Old Mutual Wealth following the announced changes to the annuitisation rules and we are well
positioned to help customers in the UK meet their retirement needs. In Emerging Markets, I am delighted with the
excellent sales in South Africa despite the challenging environment for consumers and we are making good progress
towards our ambition to become Africa’s financial services champion.

“Nedbank has had an excellent start to the year and we are seeing progress in the restructuring of Mutual & Federal,
although there remains a significant amount of work to be done.

“Following very strong inflows throughout 2013, the first quarter saw outflows in USAM, primarily in the fixed income, US
and international equities asset classes. USAM has a strong management team and we continue to look for ways to
improve and grow the business.

“Given the recent regulatory changes in the UK, the long-term structural growth trends in Africa and the resilient South
African financial services market, Old Mutual remains well placed to maintain its strong operational performance,
notwithstanding the impact of the movement of the rand on our results as reported in sterling.”

* on a constant currency basis

Group highlights for the three months ended 31 March                                      Q1 2013     % change    Q1 2013     % change
2014 (£m)                                                                                 (constant   (constant      (as         (as
                                                                            Q1 2014       currency)   currency)   reported)   reported)
    Gross sales

    Emerging Markets                                                         2,300          1,944       18%        2,512        (8)%

    Old Mutual Wealth                                                        3,949          3,085       28%        3,085        28%

    Total gross sales                                                        6,249          5,029       24%        5,597        12%

    Covered sales (APE)

    Emerging Markets                                                          121            94         29%         121          -

    Old Mutual Wealth                                                         155           148          5%         148          5%

    Total covered sales (APE)                                                 276           242         14%         269          3%

    Non-covered sales ¹

    Emerging Markets                                                         1,636          1,370       19%        1,770        (8)%

    Old Mutual Wealth                                                        2,420          1,546       57%        1,546        57%

    Total non-covered sales                                                  4,056          2,916       39%        3,316        22%


Group highlights for the three months ended 31 March                                         % of                 Q1 2013     % change
2014 (£bn)                                                                                 opening                   (as         (as
                                                                            Q1 2014         FUM ²                 reported)   reported)
    Net client cash flow (NCCF)

    Emerging Markets                                                           0.2           2%                     0.4        (50)%

    Nedbank                                                                    0.3          10%                     0.5        (40)%

    Old Mutual Wealth                                                          1.1           6%                     0.4        175%

    US Asset Management                                                       (2.1)         (5)%                    2.6        (181)%

    NCCF from core operations                                                 (0.5)         (1)%                    3.9        (113)%

                                                                                             31
                                                                                          December                    31
Group highlights at 31 March 2014 (£bn)                                                     2013      % change    December    % change
                                                                           31 March       (constant   (constant    2013 (as      (as
                                                                             2014         currency)   currency)   reported)   reported)
    Funds under management (FUM)

    Emerging Markets 3                                                        48.6          47.9         1%         48.3          -

    Nedbank                                                                   12.1          11.6         4%         11.7         3%

    Old Mutual Wealth                                                         80.2          78.5         2%         78.5         2%

    US Asset Management                                                      156.2         154.3         1%        155.3         1%

    FUM from core operations                                                 297.1         292.3         2%        293.8         1%

    Note: percentage movements in the above table are based on rounded sterling numbers


1    Non-covered sales include mutual funds, unit trust and other non-covered sales
2    Calculated using annualised NCCF
3    FUM at 31 December 2013 restated to include Property & Casualty FUM of £0.2 billion


Overview
External Environment
The first quarter of the year was characterised by macro-economic concerns in many emerging markets, although the
International Monetary Fund is forecasting that sub-Saharan Africa will see GDP growth of 5.4% in 2014, and 5.5% in
2015. In South Africa, the strikes in the mining sector coupled with inflationary pressure affected the economy and GDP
forecasts for the year were revised down from 2.8% to 2.3%. The UK and the US continued their recovery. The average
rand to sterling exchange rate depreciated by 29% relative to the first quarter of 2013. The JSE All Share and Russell
1000 Value both saw slight gains, ending the quarter up 3% and 2% respectively, with the JSE at all-time highs, while the
FTSE100 Index declined by 2%.

Group Overview

Gross sales on a constant currency basis were up 24% (12% as reported) to £6.2 billion. FUM at the quarter end grew by
2% in constant currency to £297.1 billion with positive market movements in South Africa and the US partially offset by
the US Asset Management (USAM) net outflows in the quarter. Excluding USAM, Group NCCF was £1.6 billion against
£1.3 billion in the first quarter of 2013.

Emerging Markets

Emerging Markets maintained its strong momentum in the first quarter, with gross sales up 18% to R41.3 billion. Retail
Affluent in South Africa performed well, with gross sales up 32% benefiting in particular from strong growth of the new
single premium product propositions introduced in 2013, and positive Retail Affluent net flows of R2.0 billion (Q1 2013:
R0.1 billion). Following the successful launch of Old Mutual Wealth in South Africa last year, it has continued to perform
strongly attracting R1.1 billion in net flows in the first three months of the year. In Mass Foundation, gross sales were up
14% and life APE sales up 10%, reflecting our increased focus on the quality of new business, particularly given the
pressure on disposable income faced by consumers in this market segment. Corporate regular premium sales were up
significantly benefiting from particularly good group assurance sales and umbrella schemes. OMIG secured a number of
large mandates with gross sales up 29%. Asia & Latin America regular premium life APE sales were up 133% partly due
to the first time inclusion of group business in India.

In Africa (excluding South Africa), we continue to build scale with gross sales up 27%. We have now completed the
acquisition of Faulu, the Kenyan micro-finance company, and are actively looking at other opportunities in both East and
West Africa, particularly in bancassurance. We have signed new distribution agreements with Mainstreet Bank in Nigeria
which has 220 branches and with Ecobank in Ghana which has approximately 80 branches. The integration of the
Ghanaian acquisition, Provident Life, is progressing well, and we are rolling out an Old Mutual brand-building campaign
in Nigeria.

We have decided to maintain our Long-Term Investment Return for Emerging Markets at 8.0% for 2014.

Property & Casualty

Gross written premiums grew by 14% in the quarter to R3.2 billion with continued growth in South Africa of 7% coupled
with strong growth in Africa of 114% due to the inclusion of Zimbabwe and Nigeria. Management continues to implement
its business turnaround programme and we are beginning to see signs of operational improvement, but this will take time
to be reflected in the financial results.

Nedbank

Nedbank has made good progress in its strategic focus areas. Net interest income growth was solid, increasing by 9% to
R5.6 billion, with the net interest margin at the same level as full year 2013 at 3.57% (Q1 2013: 3.62%). Although non-
interest revenue in total only grew 3% to R4.5 billion, commission and fees were up 6%. The improvement in the credit
loss ratio to 0.89% from 1.22% in the comparative period is a result of the risk management actions undertaken.

The full text of Nedbank’s Q1 2014 trading update, released on 13 May 2014 and also announced by Old Mutual on the
same day, can be accessed on Nedbank’s website at: http://www.nedbankgroup.co.za/quarterlytradingupdates.asp

Old Mutual Wealth

Old Mutual Wealth has had a very good quarter, with NCCF of £1.1 billion, up from £0.4 billion in Q1 2013 when we
experienced some disruption following the introduction of regulatory changes. In the UK, gross sales were £1.3 billion on
the Platform, with 28% of new business sales going to Old Mutual Global Investors (OMGI) (Q1 2013: 14%). FUM on the
Platform now stands at £28.1 billion with total FUM increasing by 2% to £80.2 billion. Overall OMGI gross sales of £2.5
billion were up 66% on Q1 2013, with the Alternatives and Equities asset classes performing particularly well. OMGI
were ranked the number one fund manager by net retail sales in the Pridham Report for the first quarter. In International,
gross sales of £427 million were down 5%, due to slower sales in Hong Kong, Singapore and Latin America, although
European, South African and UK sales performed well. We have seen £19 million of Nordic outflows in the quarter and
expect a further £180 million of these before year end.

External factors also moved in our favour during the period with the 2014 Budget statement signalling radical changes to
the UK pension system. Old Mutual Wealth does not write annuities but is one of the leading providers of pension
income drawdown products in the UK. We offer our customers flexibility via our pension platform as well as providing
investment solutions in OMGI’s Generation funds that enable them to manage their retirement income options.

In February 2014 we had agreed to buy Intrinsic, one of the UK’s largest financial adviser networks, as we believe the
provision of financial advice is of fundamental and growing importance in retail financial services. Should the UK
Government’s proposal for Defined Contribution pension schemes to provide impartial advice to members approaching
retirement be adopted, this could lead to significant opportunities for Intrinsic. We have also reached agreement with
Henderson Global Investors to acquire its 50% stake in the Intrinsic Cirilium Investment Company Limited (“Cirilium”).
Cirilium is the core investment proposition for Intrinsic’s restricted financial advisers and consists of five multi-manager
portfolios, each tailored to a different risk / reward investment profile.

In March 2014 we announced that we had agreed to sell Skandia Germany and Skandia Austria for a consideration of
€220 million in cash, plus interest to completion. We expect the sale of Skandia Poland to complete shortly now that we
have received regulatory approval.

US Asset Management

USAM saw its FUM increase by $3.2 billion to $260.6 billion due to strong market movements which were partially offset
by net outflows of $3.6 billion. Outflows were largely from global fixed income strategies as well as US domestic and
international equities.

The industry is experiencing a period of heightened volatility in NCCF. Recent strong equity market performance, as well
as the impact on bond markets of continued low interest rates, is resulting in asset reallocation decisions by trustees and
changes in recommendations by their investment consultants. Likewise, as is normal in a period of management
transition, such as the one currently occurring at Rogge, there is a higher probability of volatility in inflows and outflows.

Cash and liquidity

At 31 March 2014, the Group holding company had £1.4 billion of available liquidity headroom, including £0.6 billion of
liquid assets. Available liquid assets improved by £0.1 billion from 31 December 2013 as a result of cash inflows from the
business units, partially offset by corporate expenses and payment of debt interest.

Financial Groups Directive (FGD)

The Group’s regulatory capital surplus, calculated under the EU Financial Groups Directive, was £1.8 billion at 31 March
2014 (31 December 2013: £2.1 billion) and this represents a statutory cover of 158%. The decrease in surplus and
coverage ratio follows the recommendation of our 2013 final dividend of £294 million and a decrease in Nedbank’s
contribution to FGD as a result of an increase in its capital requirement, the redemption of part of Nedbank’s
subordinated debt in line with its capital planning and the reduction of qualifying additional tier 1 capital instruments
issued by Nedbank prior to 2013 as part of its ongoing transition to Basel lll capital levels. Nedbank issued Basel III
compliant tier 2 debt instruments in April which will result in a positive impact on FGD of approximately £0.1 billion.

Capital and Risk Management

In conjunction with regulatory developments in Europe (Solvency II) and South Africa (Solvency Assessment and
Management), Old Mutual has been developing its own economic capital model in order to monitor and manage its risk
profile. At 31 December 2013, Old Mutual reported an economic capital surplus of £4.8 billion, which implies an
economic capital cover ratio of 216%. This assumes that there are no restrictions on the transfer of surplus between
group companies. The economic capital position is resilient to changes in various economic factors after modelling a
series of standard market sensitivities.

These results are derived from our own economic capital model which has not, and will not, be reviewed and approved
by the Prudential Regulation Authority and therefore no inference should be drawn as to our eventual Solvency II
position. In addition, the economic capital position is not an assessment of distributable capital or cash. Any local
regulatory approvals, including exchange controls, constrain the deployment of surplus capital. The results have not
been subject to external independent review.

A separate announcement on economic capital has been made today.

Material events and transactions
There were no material events or transactions in the period up to the date of this announcement, save for those already
disclosed in this Interim Management Statement.

Annual General Meeting and Report and Accounts

At Old Mutual’s 2014 Annual General Meeting to be held today at 11am (UK time), Group Chief Executive Julian Roberts
will make a presentation to shareholders, which will be available on the Group website. In his presentation, Mr Roberts
will provide an update on the value created through the acquisition of Skandia in 2006. The reported value uplift resulting
from the Skandia acquisition is £2.0 billion.

In our 2013 Annual Report and Accounts the Group announced a target pre-tax value of synergies of circa R1 billion to
be met by 2016 across OMSA, Nedbank and Mutual & Federal on a run rate basis.

Market Consistent Embedded Value (MCEV)

Further to the February 2014 preliminary results announcement, given the changes in the operational make-up and scale
of Old Mutual Wealth, we will no longer be reporting MCEV information for this business.

As Old Mutual Wealth develops into a more vertically integrated wealth management business, we will seek to provide
shareholders with information which reflects the key features of this business.

To assist with continuity of reported information, we will provide a reconciliation of IFRS Net Asset Value (and tangible
IFRS Net Asset Value) to an estimated MCEV position for Old Mutual Wealth for 2014 interim and preliminary results
reporting. MCEV disclosure for Emerging Markets will continue and will be presented in rand, being the functional
currency of this business.

Outlook

Given the recent regulatory changes in the UK, the long-term structural growth trends in Africa and the resilient South
African financial services market, Old Mutual remains well placed to maintain its strong operational performance,
notwithstanding the impact of the movement of the rand on our results as reported in sterling.


Enquiries
Investor Relations
Patrick Bowes                                 UK                 +44 20 7002 7440
Dominic Lagan                                 UK                 +44 20 7002 7190
Media
William Baldwin-Charles                                          +44 20 7002 7133
                                                                 +44 7834 524 833

Notes to this announcement
•    All figures refer to core continuing operations. Core continuing operations exclude the results of the Bermuda business, which is
     classified as non-core.
•    Constant currency figures are calculated by translating local currency prior period figures at the prevailing exchange rates for the
     period under review.
•    Life assurance APE sales are calculated as the sum of (annualised) new regular premiums and 10% of the new single premiums
     written in an annual reporting period.

Cautionary statement
This announcement contains forward-looking statements relating to certain of Old Mutual plc’s plans and its current goals and
expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk
and uncertainty because they relate to future events and circumstances that are beyond Old Mutual plc’s control, including, among other
things, global, UK and South African domestic, economic and business conditions, market-related risks such as fluctuations in interest
rates and exchange rates, policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing and
impact of other uncertainties, future acquisitions or combinations within relevant industries, as well as the impact of tax and other
legislation and regulations in territories where Old Mutual plc or its affiliates operate.
As a result, Old Mutual plc’s actual future financial condition, performance and results may differ materially from the plans, goals and
expectations set out in its forward-looking statements. Old Mutual plc undertakes no obligation to update any forward-looking
statements contained in this announcement or any other forward-looking statements that it may make.

Nothing in this news release shall constitute an offer to sell or the solicitation of an offer to buy securities.
Sterling exchange rates
                                                                                      Appreciation /                            Appreciation /
                                                                                  (depreciation) of local                   (depreciation) of local
                                                 Q1 2014*         Q1 2013*              currency             FY 2013              currency
                           Average Rate           17.95            13.90                  (29)%               15.10                 (19)%
Rand
                           Closing Rate              17.55         14.01                  (25)%                17.43                  (1)%
                           Average Rate              1.66           1.55                   (7)%                1.57                   (6)%
USD
                           Closing Rate              1.67           1.52                  (10)%                1.66                   (1)%
* Average rate is for the three months to 31 March

Notes to editors
This Interim Management Statement has been prepared in accordance with section 4.3 of the Disclosure and Transparency Rules
(DTR) and covers the period 1 January 2014 to 15 May 2014. A Financial Disclosure Supplement relating to the Company’s results can
be found on our website. This contains key financial data for the three months ended 31 March 2014 and twelve months ended 31
December 2013.

Management will host a conference call for investors and analysts at 08.30am BST (09.30am CET and 09:30am South African time) on
15 May 2014.

Investors and analysts who wish to participate in the conference call should dial the following numbers quoting conference pin code
23815172#:

UK/International                                      +44 20 3139 4830
US                                                    +1 718 873 9077
South Africa                                          +27 21 672 4008

A replay facility will be available until midnight on 29 May 2014 on the following number, quoting pin code 647639#:

UK/International                                      +44 20 3426 2807

Copies of this Interim Management Statement, together with biographical details of the executive directors of Old Mutual plc, are
available in electronic format to download from the Company’s website at www.oldmutual.com.



Emerging Markets data tables (Rand)


Gross sales and funds under management ¹
                                                                                                                                               Rbn

                                                                                                                        Market and
                                                   FUM                                                                       other            FUM
                                               1-Jan-14         Gross sales ²      Redemptions         Net flows       movements ?        31-Mar-14
Retail Affluent                                      150.3                 15.9             (13.9)          2.0                5.4            157.7
Mass Foundation ³                                           -               2.1              (1.0)          1.1               (1.1)              -
Corporate                                              1.4                  3.7              (5.3)          (1.6)              1.7              1.5
OMIG ³                                               506.9                  8.0              (6.7)          1.3                2.1            510.3
Property & Casualty 5                                  2.9                    -                   -             -             (0.7)             2.2
Total South Africa                                   661.5                 29.7             (26.9)          2.8                7.4            671.7
Africa (ex. SA) 5                                     53.9                  3.3              (3.4)          (0.1)              1.2             55.0
Asia & Latin America                                 125.4                  8.3              (7.2)          1.1               (1.7)           124.8
Total Emerging Markets 6                             840.8                 41.3             (37.5)          3.8                6.9            851.5


                                                                                                                                               Rbn

                                                                                                                        Market and
                                                   FUM                                                                       other             FUM
                                               1-Jan-13         Gross sales ²      Redemptions         Net flows       movements 4        31-Mar-13
Retail Affluent                                      121.2                 12.1             (12.0)          0.1                6.3           127.6
Mass Foundation ³                                           -               1.8              (0.8)          1.0               (1.0)              -
Corporate                                              1.3                  3.5              (4.4)          (0.9)              0.9             1.3
OMIG ³                                               463.3                  6.2              (5.4)          0.8                6.4           470.5
Property & Casualty                                    2.9                    -                   -             -                -             2.9
Total South Africa                                  588.7                23.6                (22.6)           1.0             12.6           602.3
Africa (ex. SA)                                      38.4                  2.6                (1.5)           1.1              3.7            43.2
Asia & Latin America                                100.4                  8.7                (5.1)           3.6             18.7           122.7
Total Emerging Markets 6                            727.5                34.9                (29.2)           5.7             35.0           768.2

¹ FUM shown on an end manager basis

² Gross sales are cash inflows for the period and thus include prior period recurring premium flows

³ Mass Foundation gross sales are recorded by segment but all FUM is managed by OMIG

4 Includes the foreign exchange impact of translating FUM managed outside of South Africa

5 From Q1 2014 Property & Casualty FUM has been allocated by geographic location (R0.7 billion reclassification of P&C Africa FUM included in ‘Market
and other movements’). Comparatives have not been restated.

6 Opening FUM at 1 January 2013 restated to include Property & Casualty FUM of R2.9 billion




Gross sales ¹
                                                                                                                                                        Rm
                                                                                                           Q1 2014           Q1 2013               % change
Retail Affluent                                                                                            15,939             12,106                   32%
Mass Foundation                                                                                             2,059              1,812                   14%
Corporate                                                                                                   3,690              3,524                    5%
OMIG                                                                                                        8,046              6,227                   29%
Total South Africa                                                                                         29,734             23,669                   26%

Africa (ex. SA)                                                                                             3,268              2,574                   27%
Asia & Latin America                                                                                        8,292              8,656                  (4)%
Total Emerging Markets                                                                                     41,294             34,899                   18%

¹ Gross sales are cash inflows for the period and thus include prior period recurring premium flows




Covered sales (APE)
                                                                                                                                                        Rm
                                             Single premium APE                     Regular premium APE                             Total APE
                                                                                                                                                         %
By cluster:                                   Q1            Q1          %             Q1           Q1          %             Q1           Q1        change
                                            2014           2013      change          2014          2013      change         2014         2013             
Retail Affluent                              333            231        44%            311           348       (11)%          644          579          11%
Mass Foundation ¹                              1             1           -            634           575         10%          635          576          10%
Corporate                                    107            122      (12)%            298            43        593%          405          165         145%

Total South Africa                           441            354        25%          1,243           966         29%        1,684        1,320          28%
Africa (ex. SA) ²                             32             48      (33)%            137           128          7%          169          176         (4)%

Asia & Latin America ³                        97             89         9%            233           100         133%         330          189          75%
Total Emerging Markets                       570            491        16%          1,613         1,194          35%       2,183        1,685          30%



                                                                                                                                                        Rm
                                             Single premium APE                     Regular premium APE                             Total APE
                                                                                                                                                         %
By product:                                   Q1            Q1          %             Q1           Q1          %           Q1                         change
                                             2014          2013      change          2014         2013      change        2014        Q1 2013              
Savings                                      509            385         32%           771          609         27%       1,280           994            29%
Protection ¹                                   -              -           -           842          585         44%         842           585            44%
Annuity                                       61            106       (42)%             -            -          -           61           106          (42)%
Total Emerging Markets                       570            491         16%         1,613        1,194         35%       2,183         1,685            30%

¹ OMF credit life sales are included within Mass Foundation protection sales (R49 million in Q1 2014 and R48 million in Q1 2013)
² For FY 2013, Africa (ex. SA) life APE sales are reported net of minority interest whereas previously these were reported gross of minority interest with
the full impact for FY 2013 being booked in Q4 2013. From Q1 2014 Africa (ex. SA) excludes renewal sales (FY 2013: R55 million). Comparatives have
not been restated. Africa (ex. SA) life APE sales restated for Q1 2013 (net of minority interest and excluding renewals) would be R142 million
³ Asia & Latin America represents Mexico and a proportional share of India and China. India group business sales are reported from 1 January 2014 (Q1
2014: R54 million). Comparatives have not been restated



Non-covered sales
                                                                                                                                                     Rm
                                            Unit trust / mutual fund
                                                                                  Other non-covered sales                Total non-covered sales
                                                     sales
                                                                                                                                                     %
                                              Q1           Q1          %             Q1           Q1          %             Q1            Q1      change
                                            2014         2013      change          2014         2013      change          2014          2013          
South Africa ¹                            7,975         6,454         24%       12,389         9,219          34%       20,364       15,673         30%
Africa (ex. SA)                           1,594         1,110         44%           590          659        (10)%        2,184        1,769         23%
Asia & Latin America ²                    6,828        7,148          (4)%           -             -            -        6,828        7,148        (4)%
Total Emerging Markets                   16,397       14,712          11%       12,979         9,878          31%       29,376       24,590         19%

¹ Within South African Retail Affluent, Old Mutual Investment Services recognises LISP sales on which it earns fees irrespective of where the underlying
funds are managed. Where these funds are managed by Old Mutual Unit Trusts (“OMUT”), OMUT also recognises a sale. These intra-segment sales for
Q1 2014 amount to R2,590 million (Q1 2013: R2,470 million)

² Represents Colombia and Mexico
Old Mutual Wealth data tables (Sterling)

Gross sales and funds under management
                                                                                                                                                    £bn

                                                                                                                               Market and
                                                       FUM                                                                          other          FUM
                                                   1-Jan-14        Gross sales        Redemptions           Net flows          movements       31-Mar-14
Invest & Grow markets
UK Platform ¹                                             27.3               1.3                 (0.8)             0.5               0.3           28.1
UK Other ²                                                 5.6               0.2                 (0.2)               -              (0.1)           5.5
International                                             15.0               0.4                 (0.3)             0.1                 -           15.1
Old Mutual Global Investors ³ 4                           16.0               2.5                 (1.4)             1.1               0.3           17.4
Total Invest & Grow                                       63.9               4.4                 (2.7)             1.7               0.5           66.1
Manage for Value markets
Europe - open book 5                                       6.6               0.3                 (0.2)             0.1                 -            6.7
Heritage business 6                                       15.4               0.2                 (0.5)            (0.3)              0.3           15.4
Total Manage for Value                                    22.0               0.5                 (0.7)            (0.2)              0.3           22.1
Elimination of intra-Group assets 4 7                     (7.4)             (1.0)                 0.6             (0.4)             (0.2)         (8.0)

Total Old Mutual Wealth                                   78.5               3.9                 (2.8)             1.1               0.6           80.2



                                                                                                                                                    £bn

                                                                                                                               Market and
                                                       FUM                                                                          other          FUM
                                                   1-Jan-13        Gross sales        Redemptions           Net flows          movements       31-Mar-13

Invest & Grow markets
UK Platform ¹                                             22.6               1.0                 (0.5)             0.5               1.6           24.7
UK Other ²                                                 4.7               0.2                 (0.2)                -              0.2            4.9
International                                             13.9               0.4                 (0.2)             0.2               0.7           14.8
Old Mutual Global Investors ³ 4                           13.8               1.5                 (1.4)             0.1               1.1           15.0

Total Invest & Grow                                       55.0               3.1                 (2.3)             0.8               3.6           59.4

Manage for Value markets
Europe - open book 5                                       5.9               0.4                 (0.2)             0.2               0.3            6.4
Heritage business 6                                       14.3               0.2                 (0.5)            (0.3)              1.1           15.1

Total Manage for Value                                    20.2               0.6                 (0.7)            (0.1)              1.4           21.5

Elimination of intra-Group assets 4 7                     (6.0)             (0.6)                 0.3             (0.3)              (0.1)          (6.4)

Total Old Mutual Wealth                                   69.2               3.1                 (2.7)             0.4               4.9           74.5

¹ UK Platform FUM excludes intra-Group assets from our International business of £1.5 billion at 31 March 2014 (31 March 2013: £1.5 billion)

² Includes Protection, Series 6 pensions and UK Institutional business

³ OMGI redemptions include Nordic sale-related net outflow of £19 million in Q1 2014 (Q1 2013: £225 million)

4 OMGI and intra-Group eliminations include gross inflows from the Heritage business of £0.3 billion (Q1 2013: £0.4 billion)

5 Includes business written in France, Italy and Poland

6 Includes UK Heritage and Europe Heritage (Germany, Austria, Switzerland and Liechtenstein)

7 Assets and flows managed by OMGI on behalf of other Old Mutual Wealth businesses



Gross sales

                                                                                                                                             £m
                                                                                                      Q1 2014           Q1 2013         % change
Invest & Grow markets 
UK Platform                                                                                             1,253             949                32%
UK Other ¹                                                                                               202              219               (8)%
International                                                                                            427              449               (5)%
Old Mutual Global Investors                                                                             2,476            1,492               66%
Total Invest & Grow                                                                                     4,358            3,109               40%
Manage for Value markets
Europe - open book ²                                                                                     356              400              (11)%
Heritage business ³                                                                                      177              195               (9)%
Total Manage for Value                                                                                   533              595              (10)%
Elimination of intra-Group sales 4                                                                       (942)           (619)             (52)%
Total Old Mutual Wealth                                                                                 3,949            3,085               28%

¹ Includes Protection, Series 6 pensions and UK Institutional business

² Includes business written in France, Italy and Poland

³ Includes UK Heritage and Europe Heritage (Germany, Austria, Switzerland and Liechtenstein)

4 Assets and flows managed by OMGI on behalf of other Old Mutual Wealth businesses




Covered sales
                                                                                                                                             £m
                                              Gross single premium                APE regular premium                     Total APE
                                                Q1           Q1         %          Q1            Q1       %         Q1             Q1         %
                                              2014         2013     change       2014          2013   change      2014           2013     change
Invest & Grow markets
UK Platform                                   542          433         25%         7             6       17%        61             49        24%
UK Other ¹                                    18            20       (10)%         4             5     (20)%        6               8      (25)%
International                                 379          399        (5)%         8             7       14%        46             47       (2)%
Total Invest & Grow                           939          852         10%        19            18        6%       113            104         9%
Manage for Value markets
Europe - open book ²                          278          359       (23)%         8             3      167%        36             39       (8)%
Heritage business ³                           10            11        (9)%         5             5         -         6              5        20%

Total Manage for Value                        288          370       (22)%        13             8       63%        42             44       (5)%
Total Old Mutual Wealth                    1,227          1,222          -        32            26       23%       155            148         5%

¹ Includes Protection and Series 6 pensions

² Includes business written in France, Italy and Poland

³ Includes UK Heritage and Europe Heritage (Germany, Austria, Switzerland and Liechtenstein)




Non-covered sales
                                                                                                                                             £m
                                                                                                      Q1 2014         Q1 2013           % change
Invest & Grow markets
UK Platform                                                                                              680              489               39%
UK Other ¹                                                                                               153              166              (8)%
Old Mutual Global Investors                                                                            2,476             1,492              66%
Total Invest & Grow                                                                                    3,309             2,147              54%
Manage for Value markets
Europe - open book ²                                                                                      52               16               225%
Heritage business ³                                                                                        1                2              (50)%
Total Manage for Value                                                                                    53               18               194%

Elimination of intra-Group sales 4                                                                       (942)           (619)             (52)%
Total Old Mutual Wealth                                                                                 2,420            1,546               57%

¹ Includes UK Institutional business

² Includes business written in France, Italy and Poland

³ Includes UK Heritage and Europe Heritage (Germany, Austria, Switzerland and Liechtenstein)

4 Assets and flows managed by OMGI on behalf of other Old Mutual Wealth businesses




Bermuda surrender development

The development of the Bermuda policyholder account values is shown below:

                                                                                                                             $m
                                                                            31-Mar-14            31-Dec-13             % change
Account Value: GMAB                                                               956                  1,031               (7)%

Account Value: Non-GMAB                                                           377                   407                (7)%

Total Account Value                                                             1,333                  1,438               (7)%




Bermuda reserve development

The movement in guarantee reserves over the last year is shown below. Note that all fifth anniversary payments were met by
the end of August 2013:

                                                                                                                             $m
                                                                             31-Mar-14            31-Dec-13             31-Mar-13
Guarantee reserves: UGO GMAB ¹                                                      81                   79                 153

Guarantee reserves: CGO GMAB ²                                                       5                    5                   9

Total                                                                               86                   84                 162

¹ Universal Guaranteed Option (UGO) Guaranteed Minimum Accumulation Benefit (GMAB)

² Capital Guarantee Option (CGO) Guaranteed Minimum Accumulation Benefit (GMAB)


Lead Sponsor:
Merrill Lynch South Africa (Pty) Limited

Joint Sponsor:
Nedbank Capital

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