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OLD MUTUAL PLC - Old Mutual plc preliminary results for the year ended 31 December 2016 - Part I

Release Date: 09/03/2017 09:00
Code(s): OML     PDF:  
Wrap Text
Old Mutual plc preliminary results for the year ended 31 December 2016 - Part I

OLD MUTUAL PLC
ISIN CODE: GB00B77J0862
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSUER CODE: OLOML

NEWS RELEASE

Ref: 38/17

9 March 2017

Old Mutual plc preliminary results for the year ended 31 December 2016

Old Mutual plc, whose managed separation strategy aims to result in four strong independent businesses, today publishes its results for
the year to 31 December 2016.

Bruce Hemphill, Group Chief Executive, said:
"We are delivering on our promises: we sold down part of our stake in OM Asset Management, materially reduced our debt, cut head
office costs and made significant strides in preparing the businesses for independence. While the macroeconomic conditions have been
tough in 2016, our businesses have performed resiliently, with a stronger performance in the second half, demonstrating the underlying
strengths of the franchises. We expect 2017 to be a year characterised by the hard work required to get the businesses ready for
separation in 2018. We are confident that the managed separation will unlock and deliver long-term shareholder value."

Summary financial results:

     -    Adjusted Net Asset Value (NAV) at 228.6p per share (2015: 178.9p per share), due to favourable currency movements and
          an increase in the market value of Nedbank;
     -    Pre-tax adjusted operating profit (AOP) of GBP1.7 billion, broadly flat year-on-year in constant and reported currency;
     -    AOP earnings per share (EPS) of 19.4p broadly flat (2015: 19.3p) in constant and reported currency, basic EPS of 11.9p
          (2015: 12.7p);
     -    IFRS pre-tax profit of GBP1.2 billion (2015: GBP1.2 billion), including impairments of GBP160 million in 2016 in respect of Ecobank
          Transnational Incorporated (ETI), Old Mutual Southern and East Africa (OMSEA) and Old Mutual Wealth Italy;
     -    Second interim dividend of 3.39p; total dividend of 6.06p, representing a cover ratio of 3.2 times on AOP;
     -    FUM (excluding Rogge) at GBP394.9 billion up 30%; NCCF of GBP6.4 billion, excluding Rogge (2015: GBP6.6 billion).

Delivering the managed separation:

Managed separation aims to deliver value through the removal of plc central operational costs, by unlocking the conglomerate discount
and by delivering enhanced performance of the underlying businesses.

Removal of plc central operational costs:

     -    Plc net operational cost savings identified of circa GBP95 million by 2019 from a base of 2015. The one-off costs to unlock these
          net operational savings will be circa GBP130 million.

Unlocking the conglomerate discount:

    -    Progressing preparations for the transactions needed to execute the managed separation which we expect to occur in 2018;
    -    Reduced stake in OMAM to 51% raising net proceeds of GBP230 million;
    -    Sold Old Mutual Wealth (OMW) Italy for net proceeds of GBP210 million;
    -    Materially reduced holding company debt by GBP385 million, reducing annual finance costs by GBP21 million in 2017;
    -    Expected one-off transaction advisory and listing costs (excluding capital items) estimated to be at least GBP100 million.

Enhanced business performance:

    -    Old Mutual Emerging Markets' (OMEM) future focus will be on sub-Saharan Africa and, following a review of its business,
         OMEM will be implementing a new target operating model designed to deliver meaningful cost savings and build a foundation
         for cost discipline while delivering business growth;
    -    OMEM Board strengthened by the appointment of Trevor Manuel as Chairman;
    -    OMW's strategy has been re-articulated, the perimeter simplified and is now implementing a new target operating model to
         support the investment case by driving top line growth and increasing operating leverage;
    -    OMW executive and non-executive capabilities strengthened by the recruitment of functional and industry specialists including
         the appointment of Glyn Jones as Chairman of OMW along with 5 other new non-executive Directors (NEDs).

Old Mutual plc preliminary results for the year ended 31 December 2016

Enquiries

Investor Relations

Patrick Bowes                              UK                 +44 20 7002 7440
Dominic Lagan                              UK                 +44 20 7002 7190
Sizwe Ndlovu                               SA                 +27 11 217 1163

Media

William Baldwin-Charles                                       +44 20 7002 7133
                                                              +44 7834 524 833

Notes to the financial summary on the front page of 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.
-   Adjusted operating profit (AOP) is an Alternative Profit Measure used alongside basic IFRS profit to assess underlying business
    performance. It is a non-IFRS measure of profitability that reflects the Directors' view of the underlying long-term performance of the
    Group. The calculation of AOP adjusts basic IFRS profit for a number of items as detailed in note C1 in the financial
    statements. AOP excludes the results of non-core operations, Old Mutual Bermuda but includes the results of the discontinued
    operation, Institutional Asset Management.
    The adjusting items applied in calculating AOP seek to remove the impact of strategic activities; short-term valuation movements;
    IFRS accounting treatments that are not reflective of the operating activity; and non-operating items. Due to the long-term nature of
    the majority of the Group's business, management believes that AOP is an appropriate alternative basis by which to assess the
    underlying operating results of these businesses and the Group as a whole and that it enhances the comparability and
    understanding of the financial performance of the Group.
    In the current year the amendments made to the AOP policy were to include the results of core discontinued operations in AOP and
    to exclude the impairment of investments in associated undertakings from AOP.
    In 2017, the Group will continue to assess the appropriate AOP treatment of one-off costs related to the managed separation. There
    were no material costs which required such consideration in the current year.
    The directors have reviewed the policy of determining AOP and are of the opinion that it is broadly in line with that of the peer group
    and is an appropriate basis on which to analyse the operating performance of the businesses.
    In addition to IFRS profit, the Group uses a number of alternative performance measures to assess the results of the
    business. Some measures are applicable to the Group as a whole, such as Adjusted Operating Profit, Free Surplus Generation
    Return on IFRS Equity and Adjusted Return on Equity. Others are more specific to the business lines within the component
    businesses of the Group, for example Net Client Cash Flows and Covered Sales. Definitions of the principal alternative performance
    measures (APM) adopted by the Group and its businesses, explanations of why they are relevant, and details of where to find the
    basis for calculating each measure are included in pages 35 to 36.
-   MCEV information is subject to departures from MCEV Principles (Copyright© Stichting CFO Forum Foundation 2008) due to the
    use of the government bond yield curve in the majority of Emerging Markets.
-   Old Mutual plc ('the Company' or 'plc') is a company incorporated in England and Wales and is the ultimate Parent Company of the
    Group companies. Plc Head Office collectively refers to the plc Parent Company and the other centre companies of the Group,
    which typically own and manage the Group's interests.
-   The Group's reported segments are Old Mutual Emerging Markets, Nedbank, Old Mutual Wealth, Institutional Asset Management
    and plc Head Office, (which includes the plc Parent Company and the other centre companies of the Group, which typically own and
    manage the Group's interests).

Cautionary statement

This announcement may contain certain forward-looking statements with respect to certain of Old Mutual plc's plans and its current
goals and expectations relating to its future financial condition, performance and results and in particular estimates of future cash flows
and costs. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and
circumstances which are beyond Old Mutual plc's control including amongst other things, international and global economic and
business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory
authorities, the impact of competition, inflation, deflation, the timing and impact of other uncertainties of future acquisitions or
combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in
which Old Mutual plc and 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 forth in Old Mutual plc's forward looking statements.

Old Mutual plc undertakes no obligation to update the forward-looking statements contained in this presentation or any other forward-
looking statements it may make.

Notes to editors

A webcast of the presentation on the preliminary results and Q&A will be broadcast live at 11:00 am UK time (1.00 pm South African
time) today on the Company's website www.oldmutualplc.com. Analysts and investors who wish to participate in the call should dial the
following numbers and quote the pass-code 39483558#:

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

Playback (available for 30 days from 9 March 2017), using pass-code 682764#:

UK/International                                +44 20 3426 2807

Copies of these results, together with high-resolution images and biographical details of the directors of Old Mutual plc, are available in
electronic format to download from the Company's website at www.oldmutual.com.

The following documents, containing financial data for 2016 and 2015, are also available from the Company's website.

     -      Presentation slides
     -      Appendix slides
     -      Financial Disclosure Supplement
     -      OMEM MCEV Supplementary information

Sterling exchange rates
                                                                                                     Appreciation / (depreciation) of
                                                                      2016                 2015       local currency against sterling
South African Rand                        Average Rate               19.93                19.52                      (2%)
                                          Closing Rate               16.96                22.82                       26%
US Dollar                                 Average Rate                1.36                 1.53                       11%
                                          Closing Rate                1.23                 1.47                       16%

Group Executive Review
                                                                                                  2015
Group highlights(1)                                                                          (constant                      2015 (as
                                                                                      2016   currency)       change        reported)        change
IFRS profit pre-tax (GBPm)(2)                                                        1,216                                     1,201             1%
IFRS profit post-tax attributable to equity holders of the parent (GBPm)(2)            570                                       614           (7%)
Adjusted operating profit (pre-tax, GBPm)                                            1,667       1,653           1%            1,663              -
Adjusted operating earnings per share (pence)                                        19.4p       19.3p           1%            19.3p             1%
Adjusted return on equity(3)                                                         13.3%                                     14.2%       (90 bps)
Adjusted net asset value per share (pence)(4)                                        228.6      221.5p           3%           178.9p            28%
Gross sales (GBPbn)                                                                   31.7        30.9           3%             31.2             2%
Total customer numbers (millions)                                                     19.4                                      18.9             3%
Total dividend for the year (pence)                                                   6.06                                     8.90p          (32%)

(1) The figures in the table are in respect of core and non-core continuing operations only, unless otherwise stated
(2) A full reconciliation of IFRS profit to AOP is shown later in Part 2 of this announcement
(3) ROE is calculated as AOP (post-tax and NCI) divided by average ordinary shareholders' equity (i.e. excluding the perpetual preferred callable securities).
(4) The adjusted Plc NAV per ordinary share uses an MCEV valuation basis for Old Mutual Emerging Markets covered business and the UK Heritage
    business in OMW as well as the market value of listed subsidiaries. Other businesses and other assets are included at IFRS NAV

Group Review

A resilient performance in the face of a challenging and uncertain external environment in our key markets

The external environment proved testing throughout 2016 with significant currency volatility, lower average equity markets and
political uncertainty and shocks. The average value of the rand was down 2% against sterling for the full year while the average
value of the US dollar was 11% higher. The average of the FTSE-100 for the year was 2% lower than 2015; the average of the
JSE SWIX was 1% lower; and in the US, the average of the S&P 500 index was 2% up. AOP pre-tax was GBP1.7 billion, broadly
flat in both constant and reported currencies. IFRS pre-tax profit was up 1% to GBP1.2 billion (2015: GBP1.2 billion). However, the
IFRS post-tax profit attributable to equity holders of the parent was down 7% to GBP570 million for the year (2015: GBP614 million),
largely due to impairments at ETI, OMSEA and OMW Italy and higher policyholder tax charges.

This is a resilient performance, and a much improved second half, given the overall flat markets and the external challenges the
businesses had to face in our main markets. In the UK, investors remained cautious following the result of the "Brexit" vote
although we experienced more normalised flows in the fourth quarter and also changes in regulation with regard to pension exit
fees. In South Africa, the consumer remained under pressure due to weak economic growth, but this was mitigated by strict
expense management, higher asset based fee income as well as assumption and basis changes. South Africa is our largest
single market and the outlook for economic growth is improving but remains weak compared to previous periods.

Managed Separation

In March 2016, we announced a new strategy for Old Mutual to unlock and create significant long-term value for our
shareholders which is currently trapped within the Group structure. We believe the current structure inhibits efficient funding of
future growth plans for the individual businesses, restricting them from reaching their full potential. The four underlying
businesses - OMEM, Nedbank, OMW and OMAM - have benefitted from significant investment and each has strong growth
prospects in sizeable markets, with good competitive positions and strong balance sheets. We intend to unlock value through
the separation of the four underlying businesses from each other, so that each business:

   -   Can deliver enhanced performance relative to its peers and allow the market to value it appropriately;
   -   Is accountable directly to its shareholders for its level of returns and cash generation from capital employed;
   -   Has direct access to its natural shareholder base, and its local regulator is its lead regulator.

We intend to conduct this managed separation in a manner that creates maximum value for shareholders over time and intend
for it to be materially complete by the end of 2018. As previously stated, implementation will require a balance to be struck
between value, cost, time and risk relative to our broad stakeholder interests. The managed separation is complex to execute
and negotiating the macro-environment in South Africa requires careful management.

Since announcing the strategy, Old Mutual plc has had three fundamental areas of focus to give effect to the managed
separation. These are: ensuring the businesses are ready for their independent futures; executing a number of transactions,
including material reduction of holding company debt; and winding down the plc Head Office and related balance sheet
contingencies.

Ensuring business readiness for separation

We have previously highlighted that the timing of our delivery of the managed separation will be driven by the readiness of the
underlying businesses for independence and, during 2017 we will be taking further steps to that end. In relation to the two
unlisted businesses OMEM and OMW, which require the most preparation, we are: clarifying and tightening their strategies;
reviewing their portfolios; setting stretch targets; implementing new operating models; strengthening their Boards and
governance arrangements; while maintaining a rigorous focus on operational performance. While this is a complex task, we are
progressing well.

At OMEM:

-    We have concluded that the future focus of the business will be sub-Saharan Africa, with potential portfolio optimisation
     opportunities covering approximately R3.4 billion of the OMEM NAV;
-    OMEM will be implementing a new target operating model which will deliver meaningful cost savings and build a
     foundation for cost discipline while delivering business growth;
-    We have strengthened the Board of OMEM with the appointment of Trevor Manuel as Chairman;
-    We have made good progress in the search for a new OMEM CEO.

At OMW:

-    We believe OMW has a strong strategic position in an attractive market; OMW's strategy has been re-articulated, the
     perimeter simplified and a new target operating model agreed to support the investment case by driving top line growth
     and increasing operating leverage;
-    Target Net Client Cash Flow (NCCF) of above 5% of opening FUM (excluding Heritage business);
-    Continuing with UK Platform transformation, but facing raised project pressure which could potentially increase timescales
     and cost;
-    OMW executive and non-executive capabilities have been strengthened by the recruitment of functional and industry
     specialists including the appointment of Glyn Jones as Chairman of OMW Board along with 5 other new NEDs.

Executing transactions to effect the managed separation

We indicated at our AGM on 28 June 2016 that our current plan for the managed separation envisages one or more
transactions which will ultimately deliver two separate entities, listed on both the London and Johannesburg stock exchanges,
into the hands of Old Mutual's shareholders. One will consist principally of the OMW operations, with the primary means of
achieving this being through a demerger, and the other will consist principally of the OMEM operations through the creation of a
new South African holding company. We anticipate these transactions taking place in 2018.

Following the listing of the new South African holding company, we intend to distribute, in an orderly manner, a significant
proportion of our shareholding in Nedbank to the shareholders on the register of the new holding company at that time. The
new holding company will retain an appropriate strategic minority stake in Nedbank, with the exact level still to be determined
with Nedbank.

We have previously indicated that our strategy for OMAM is to continue our phased reduction of plc's stake. On 20 December
2016 we announced that, via a public offering and a private share repurchase by OMAM, plc's holding in OMAM had reduced
to 51% from 66% with the transactions realising net proceeds of GBP230 million. On 9 August 2016, we announced that we had
agreed to sell OMW Italy for net proceeds of GBP210 million. The transaction completed on 9 January 2017 and represents the
final part of the divestment of OMW's continental European businesses, allowing it to focus on its core UK and cross-border markets.

We have materially reduced holding company debt by GBP385 million, GBP112 million of debt in October 2016 and GBP273 million in
February 2017.

We continue to review our levels of capital, debt and liquidity requirements during the managed separation process given
the legal construct of Old Mutual plc and its associated risks and constraints.

With respect to the use of proceeds from disposals, we intend to use the full flexibility afforded by our capital management
policy for the purposes for which it was designed, in particular but not exclusively, to fund the costs of the managed separation,
to provide for continuing investments and capacitation of our business for independence.

Changing intra-group arrangements allowed us to accelerate the monetisation of plc Head Office seed investments and the
DTA asset to be received over 2017 to 2018 up to a potential GBP240 million.

Wind down of the plc Head Office

A key part of the managed separation is the eventual closure of the current London plc head office, which we expect to occur in
2018. Since announcing the strategy, we have made good progress in transitioning the capabilities needed by listed companies
from plc to OMEM and OMW. We have reduced the London head office headcount by circa 50%, resulting in run rate
operational savings in excess of GBP10 million per annum from 2017.

We expect further incremental reductions in head office employee numbers as we progress with the managed separation.
Costs for winding down the head office and its activities are expected to be in the upper end of our guided range of GBP50 million
and GBP65 million. We will continue to take steps to manage down the residual balance sheet exposures and legacy
contingencies with potential cash outflow to crystallise these of circa GBP130 million.

Managed separation and business standalone costs update

At our Capital Markets Day in October 2016, we committed to providing updates on the costs of the managed separation and
business standalone costs, as well as the associated cost savings. These cost estimates are subject to revision as the
managed separation process continues and further updates will be given in due course.

Through the winding down of the plc Head Office, we will save circa GBP95 million of central costs. The one-off costs to achieve
these savings are expected to be in the region of GBP130 million. This includes the costs associated with closing the head office
and also the costs to OMEM and OMW as they take on the full costs of certain activities previously done at a group level, as
well as building capabilities the businesses will need as listed entities. Operational costs of circa GBP30 million previously incurred
by the plc, of which only GBP19 million was recharged in 2016, will now be borne directly by OMEM and OMW. They will also incur
combined incremental costs of GBP20 million per annum as a result of being standalone businesses.

We believe there will be significant further shareholder value benefits in both removing the conglomerate discount and through
enhanced business performance leading to a more appropriate valuation once the businesses are placed in the hands of
shareholders who are best placed to own and value those businesses. We expect the Group wide advisory costs of managed
separation to be at least GBP100 million. Transaction specific costs relating to capital items will be incurred and deducted from
proceeds where possible as is our usual practice.

The one-off costs in 2016 for plc and the underlying businesses to execute the managed separation transactions, for
standalone business readiness and the wind down of the plc Head Office amounted to GBP31 million.

Business review

Old Mutual Emerging Markets

OMEM has a strong franchise, particularly in South Africa, and it is focused on providing a wide offering to a diverse customer
base in markets that have significant financial services opportunities.

OMEM delivered a robust set of results amidst challenging operating conditions. AOP of R12.3 billion was up 3% on 2015, after
improved results were achieved in the second half of 2016. IFRS profit of R10.7 billion was 3% lower than 2015 largely due to a
R1.3 billion impairment of goodwill in OMSEA, part of our Rest of Africa operations, given economic and operational
developments in Zimbabwe and East Africa. The growth in AOP was supported by the Life & Savings operations in South
Africa, which delivered a strong improvement in Return on Embedded Value from 13.6% in 2015 to 15.7% in 2016.

Higher asset based fee income, lower expenses and the net positive impact of assumption changes were partly offset by less
favourable risk underwriting experience and higher new business strain. Net positive assumption changes in South Africa of
R1.3 billion (2015: R0.8 billion) included the positive impact of transferring classes of the existing risk business into a new fifth
tax fund following the change in tax legislation on risk businesses. The other lines of business in South Africa delivered lower
profits as a result of the tougher macroeconomic environment. In the Rest of Africa profits were 18% higher at R1.7 billion due
to the full year inclusion of UAP and positive currency movements in Zimbabwe. Excluding UAP, profits were 12% ahead of the
prior year.

NCCF was positive at R17.0 billion, with solid growth in covered sales in all regions and large inflows into Old Mutual
Investment Group's (OMIG) Liability Driven Investment boutique in the second half of the year. Outflows were under pressure
due to higher partial disinvestments from savings solutions by mainly retail customers as well as an increase in disability claims
in both the retail and corporate segments.

Despite the tough environment we maintained a strong Present Value of New Business Premiums (PVNBP) margin of 3.2% in
2016 marginally below the prior year mainly due to the strengthening of operating and methodology assumption changes in
South Africa. Sales volumes contributed positively to the new business margin through improved distribution efficiencies in the
Mass Foundation Cluster (MFC) and Corporate, partly offset by higher distribution costs in Retail Affluent.

The balance sheet remains strong, well-diversified and resilient. It is expected to be able to withstand a number of shocks,
including a possible South African sovereign credit rating downgrade.

Free surplus generated by operations rose 12% to R6.3 billion, representing 73% of post-tax AOP, of which R4.7 billion 
(2015: R3.7 billion), was remitted to plc.

Nedbank

Nedbank is a strong business with good risk adjusted returns. It has a particularly strong corporate and commercial business
and has a great opportunity in retail as well as an attractive pan-African opportunity via ETI.

Nedbank Group's managed operations produced an excellent performance for the year ended 31 December 2016, driven by
net interest income (NII) and non-interest revenue (NIR) growth, while historic loan origination practices and focused credit risk
management enabled the credit loss ratio (CLR) to remain below the midpoint of the through-the-cycle target range.

Headline earnings grew 5.9% to R11.5 billion and, excluding the impact of ETI, its managed operations grew headline earnings
by 16.2% to R11.8 billion. IFRS profit before tax was down 1% to R14.6 billion with operational growth being more than offset
by the R1.0 billion impairment provision of ETI. Diluted headline earnings per share (DHEPS) increased 4.8% to 2,350 cents
(2015: 2,242 cents) and headline earnings per share (HEPS) grew by 5.1% to 2,400 cents (2015: 2,284 cents). Excluding ETI,
DHEPS was up 15.1%.

Return on average ordinary shareholders' equity (ROE), excluding goodwill, of 16.5% (2015: 17.0%) and ROE of 15.3% (2015:
15.7%) reflect a slightly lower return on assets of 1.23% (2015: 1.25%), mostly resulting from the loss in equity-accounted
earnings from ETI. The carrying value of Nedbank Group's strategic investment in ETI decreased from R7.8 billion to R4.0
billion during the year, due to a combination of foreign currency translation losses arising from naira devaluation and therefore
ETI's balance sheet decreasing in US dollars, the rand strengthening against the US dollar, our share of losses incurred by ETI
during the 12 months to 30 September 2016 as well as an impairment provision of R1.0 billion.

Economic profit (EP) decreased to R1.6 billion (2015: R2.5 billion) due to the impact of ETI and a higher cost of equity (COE) of
14.2% (2015: 13.0%). Its Tier 1 capital ratio of 13.0% (December 2015: 12.0%) and average liquidity coverage ratio (LCR) for
the fourth quarter of 109.3% (December 2015 quarterly average: 88.5%) are both well above regulatory requirements of
8.375% and 70.0%, respectively. On a pro forma basis its net stable funding ratio (NSFR) was above 100%.

The balance sheet remains strong, well-diversified and resilient. It is expected to be able to withstand a number of shocks,
including a possible South African sovereign credit rating downgrade.

On an IFRS basis Old Mutual plc, via OMEM, received R3.0 billion (2015: R2.9 billion) of dividends, in respect of its 55%
ownership of Nedbank.

Old Mutual Wealth

OMW is a developing business with a unique franchise. It has the right strategic model and compelling growth opportunities in
the large UK wealth management market. Old Mutual will continue to invest in OMW throughout the managed separation process.

Pre-tax AOP of GBP260 million for 2016 was 15% lower than prior year (2015: GBP307 million). Managed separation and standalone
costs and expenses associated with strengthening the executive management team were GBP12 million and profits in the Heritage
closed book of business were reduced by GBP26 million following the restructuring of Heritage fees, including the move to 1% exit
fees on certain products, and legal and other costs. IFRS post-tax loss was GBP4 million, compared to a profit of GBP42 million in
2015. Adjusting items between AOP and IFRS profit include UK Platform transformation costs of GBP102 million (2015: GBP97
million) and the GBP46 million goodwill impairment as a result of the sale of the Italian business. We saw increased revenues from
higher funds under management in our asset management business partially offset by modest revenue margin pressure in UK
Platform, Quilter Cheviot and International. Higher overall costs in the period were incurred following investment in growth
initiatives such as OMGI desk builds and distribution, the effect of a full year of ownership of Quilter Cheviot as well as from
higher operating costs directly associated with the increase in FUM based revenues.

NCCF performance was robust at GBP5.2 billion. This was 25% lower than prior year (2015: GBP6.9 billion) but a strong performance
given the challenging market context where UK net retail sales for the whole of the industry amounted to GBP4.7 billion. Integrated
net inflows were GBP1.8 billion, an increase of 6% from 2015 (GBP1.7 billion). Investors have remained cautious on the global
economic and political developments - particularly relevant for our UK client base was the Brexit vote. We experienced more
normalised levels of flows following the US presidential election result as markets began to stabilise in the short-term, with Q4
2016 net inflows of GBP1.1 billion. Net flows are 6% of opening funds under management, excluding the closed book,
demonstrating robust growth in a difficult environment.

Funds under management were GBP123.5 billion, up 18% from the end of 2015 driven by positive NCCF of GBP5.2 billion in the
period and positive market performance of GBP13.9 billion. Average funds under management were 11% ahead of the prior year,
as the market rallied notably in the second half of the year.

We are continuing with our UK platform transformation. We gave guidance at the October 2016 Capital Markets Day as to
timing and cost. Costs to 31 December 2016 amount to GBP279 million, which have been expensed and which reflect the benefit
of a GBP30 million receivable from our suppliers. Whilst progress continues to be made, this remains a complex project, and there
are certain pressures which, potentially, could increase timescales and costs. We are in active negotiations on these areas to
reduce delivery and cost risk and to ensure we achieve the best outcome for the business. At this point, because of commercial
confidentiality and the ongoing negotiations, it would be inappropriate to disclose further details on these areas. We expect to
be able to update the market by the time of the Old Mutual plc AGM in May 2017.

A robust platform that meets customer needs is vital for our future and we continue to invest in the existing platform to maintain
high levels of service and resilience.

OM Asset Management

OMAM has high quality investment Affiliates and we are delighted with the acquisition of Landmark Partners. We remain fully
supportive of OMAM's strategy while continuing the phased reduction of our stake.

OMAM had a strong finish to 2016, notwithstanding a challenging equity market environment in the first half of the year. AOP of
$195 million was down 15% compared to 2015, largely on lower performance fees. IFRS profit before tax was 16% lower at
$176 million. The difference from the AOP result includes the impact of adjustments made for long-term incentive plans for
senior Affiliate employees.

OMAM's FUM ended the period at $240.4 billion, up $28.0 billion, or 13%, from 2015 (31 December 2015: $212.4 billion) due to
improving markets in H2 2016 and the acquisition of Landmark Partners ($8.8 billion of FUM) in the third quarter. While net
client cash flows for the year were $(1.6) billion, a favourable mix shift resulted in positive annualised revenue flows of $11.0
million, representing 1.5% of beginning of period run rate management fee revenue, with inflows in higher fee non-US,
emerging markets, and alternative products offsetting losses in lower fee US sub-advisory assets.

OMAM's Affiliates have produced competitive long-term investment performance. While OMAM's value-oriented strategies
faced headwinds through much of 2016, the Affiliates continued to generate long-term track records of relative outperformance.
OMAM's aggregate investment performance is reported as weighted by the revenue generated by its products. As of 31
December 2016, assets representing 49%, 55%, and 73% of revenue were outperforming benchmarks on a one-, three- and
five-year basis, respectively.

Old Mutual plc received $25.4 million (2015: $25.3 million) of dividends in respect to its shareholding in OMAM and an
additional payment of $41.4 million in respect of the Deferred Tax Asset Agreement previously entered into.

Capital management policy

We announced a new capital management policy in March 2016 in respect of returns to shareholders for the period of the
managed separation. The aim is to provide flexibility, recognising the need to balance complex considerations, including costs
and cash demands associated with the managed separation, continuing to invest in the businesses to drive enhanced
performance and further increasing their capital strength. Given this, we previously indicated taking a conservative approach to
the full year dividend.

We have today announced the second interim dividend for 2016 under the new policy which is 3.39p, the rand equivalent is
53.55 cents. This will be paid on 28 April 2017.

We had previously indicated that in 2015 and in the first half of 2016, that plc Head Office cash contributed to paying dividends
to shareholders and that dividends going forwards will reflect the capacity for distributions from the underlying businesses. This
will continue to apply for dividends in respect of 2017 and we maintain our target of dividend cover of 2.5-3.5 times AOP for the
full year. The expected cover for the 2017 first Interim dividend is 3.0 times AOP earnings for that interim period. For 2017,
dividends paid in currencies other than sterling will be converted at the average effective exchange rate after taking into
account hedging activities and timing of remittances for the relevant period.

We will be reviewing our rolling hedging of non-sterling remittances from the underlying businesses in light of the uncertainties
of managed separation.

Adjusted plc NAV per ordinary share

Adjusted plc NAV per ordinary share was 228.6p as at 31 December 2016 compared to 178.9p at 31 December 2015. The
increase is largely due to rand and US dollar currency translation gains on the capital value of the businesses of 42.6p and net
gains due to the changes in the market value of Nedbank and OMAM of 14.2p and other net underlying movements of 2.0p,
less 9.1p due to dividend payments.

Board changes

Further to the announcement made on 15 September 2015, Paul Hanratty stepped down from the Board of Old Mutual plc on
12 March 2016. On 1 January 2016, Trevor Manuel joined the Board of Old Mutual plc and became a member of the Board
Risk Committee.

Outlook

All of our businesses have seen a reasonable start to the year and we continue to move quickly to execute the managed
separation from a position of strength. 2017 will be a year of continued preparation for the independence of the businesses, for
the future closure of the plc Head Office in 2018 and, if appropriate and in part dependent on stakeholders and markets, for the
settlement of certain residual liabilities and contingencies. OMEM and OMW are likely to incur increased recurring and one-off
costs as part of their specific readiness preparations, and taking on in full costs which have previously been borne by plc Head
Office as well as the direct one-off costs of managed separation.

While the macroeconomic and political environment remains uncertain in our three largest markets of South Africa, the UK and
the US, our businesses are well positioned to navigate these challenges and have the following outlook:

  -    OMEM sees the economic outlook as improving but expects consumers to remain under pressure. However the
       business is strong with a wide offering to a diverse customer base and expects further progress this year.
  -    Nedbank expects to see diluted headline earnings growth in excess of nominal GDP in 2017;
  -    OMW anticipates continued equity market and currency uncertainty, with the geo-political landscape increasing in
       complexity and as the impact of the UK's exit from the EU is progressed in 2017 and 2018. OMW's investment in
       distribution and building asset management capabilities will continue. Investments will be primarily organic but minor
       "in-fill" acquisitions may also be considered if these fit into the core business, are readily integrated, enable good
       customer outcomes and are demonstrably incremental to shareholder value. OMW targets NCCF above 5% of
       opening FUM (excluding Heritage business) and anticipates continued sales growth from its UK Platform products
       and the Cirilium fund range from its own advisers in 2017 as it expands its distribution network. Taking all of this into
       account, it expects 2017 to be another year of transition with our costs increasing as it separates the business from
       Old Mutual plc. Consequently, it anticipates operating leverage benefits emerging in later years with an improving
       operating margin in the medium term as it transitions and grow its business while absorbing the additional costs that
       will be incurred.
  -    OMAM remains committed to working closely with Affiliates to enhance and expand their businesses, and to
       accessing specialised and non-U.S. markets on their behalf through its Global Distribution initiative. In addition, the
       company will continue to identify and develop relationships with at-scale asset management boutiques with strong
       investment and executive talent and a vision to enhance and expand their business by partnering with OMAM.

Plc's wind down activities to close the head office includes on one hand the realisation of assets while meeting plc Head Office
obligations. The associated value outcome will be partially market and third party-dependent.

REVIEW OF FINANCIAL PERFORMANCE

Analysis of performance for the period ended 31 December 2016

In addition to IFRS profit, the Group uses a number of Alternative Performance Measures (APMs) to assess the performance of the
business. Some measures are applicable to the Group as a whole, such as Adjusted Operating Profit, Free Surplus Generation, Return
on IFRS Equity and Return on Adjusted Equity. Others are more specific to the business lines within the component business, for
example Net Client Cash Flows and Covered APE Sales. Definitions of the principal APMs, explanations of why they are relevant, and
details of the basis for calculating each measure are included in pages 35 to 36.

The Group Finance Director (GFD) review includes a reconciliation between Adjusted Operating Profit and IFRS profit in order that the
performance of the businesses that is subsequently described in terms of AOP can be understood in the context of the IFRS result.
Financial results in the Group Finance Director Review are as reported unless otherwise stated.

2016 Results

The tables below summarise the AOP results of the Group and IFRS profit in 2016:

AOP analysis by business unit (GBPm)
                                                                                                           2016     2015    % change
Old Mutual Emerging Markets                                                                                 619      615          1%
Nedbank                                                                                                     799      754          6%
Old Mutual Wealth                                                                                           260      307       (15%)
Institutional Asset Management                                                                              141      149        (5%)
                                                                                                          1,819    1,825           -
Old Mutual plc finance costs                                                                               (88)     (83)        (6%)
Long-term investment return on excess assets                                                                 20       21        (5%)
Corporate costs (net of recharges)                                                                         (60)     (57)        (5%)
Other net shareholder income/(expenses) (OSIE)                                                             (24)     (43)         44%
Adjusted operating profit before tax                                                                      1,667    1,663           -
Tax on adjusted operating profit                                                                          (398)    (403)          1%
Adjusted operating profit after tax                                                                       1,269    1,260          1%
Non-controlling interests - ordinary shares                                                               (319)    (310)        (3%)
Non-controlling interests - preferred securities                                                           (22)     (19)       (16%)
Adjusted operating profit after tax attributable to ordinary equity holders of the
parent                                                                                                      928      931           -
Adjusted weighted average number of shares (millions)                                                     4,773    4,813        (1%)
Adjusted operating earnings per share (pence)                                                              19.4     19.3          1%

AOP pre-tax for the period of GBP1,667 million is in line with the prior year (2015: GBP1,663 million). AOP earnings per share increased from
19.3p to 19.4p following a decline in AOP after-tax and non-controlling interests by GBP3 million to GBP928 million and a reduction in the
number of shares applied in the calculation of AOP earnings per share following the maturity of certain Black Economic Empowerment
schemes in South Africa during 2015.

IFRS profit (GBPm)                                                                                        2016     2015     % change
IFRS profit before tax                                                                                   1,216    1,201           1%
Income tax expense                                                                                       (475)    (347)        (37%)
IFRS profit from continuing operations                                                                     741      854        (13%)
IFRS profit from discontinued operations after tax                                                         104       70          49%
IFRS profit after tax                                                                                      845      924         (9%)
Non-controlling interests                                                                                (275)    (310)          11%
IFRS profit attributable to equity holders of the parent                                                   570      614         (7%)

The 2016 IFRS profit before tax was GBP1,216 million compared to GBP1,201 million in 2015. IFRS profit post-tax attributable to equity
holders of the parent reduced by 7% from GBP614 million in 2015 to GBP570 million in 2016.

The adverse impact on sterling earnings of a marginally weaker average rand rate of 19.93 (2015: 19.52) was offset by the positive
impact of stronger average US dollar rates (up 11% against sterling). Although financial markets ended the year significantly higher than
2015, on average major market indices in the UK and SA were down 2% and 1% respectively while the US was up 2%.

Detailed financial reviews of each of Old Mutual plc's businesses are set out later in this document, the highlights are summarised below.

Old Mutual Emerging Markets

OMEM delivered a solid operational performance against a difficult operating environment, with pre-tax AOP of GBP619 million for the year
ended 31 December 2016, which was 1% higher than in 2015 (GBP615 million). The South African businesses contributed 82% of the total
OMEM result. In South Africa, Life & Savings profits were 8% higher in 2016 than in 2015, largely due to higher planned margins and
the net positive impact of assumption changes, including the effect of transferring certain tranches of existing protection business to the
new fifth tax fund in South Africa. This was partly offset by weaker underwriting results in Corporate and Retail Affluent. Property &
Casualty showed improvement in the second half of 2016 turning an underwriting loss of R44 million in H1 2016 into a profit of R80
million for the full year, although this was significantly down on the prior year underwriting profit of R273 million. Outside of South Africa,
strong results in Rest of Africa, being 18% higher than in 2016, followed increased underwriting earnings in East Africa following the
UAP acquisition and Latin America was 29% higher due to improved investment results and good expense control. This was offset by
lower profitability in Asia (24% lower) due to lower investment income and the impact of tax regulation changes in China.

Nedbank

Nedbank's pre-tax AOP of GBP799 million was 6% up on 2015 (GBP754 million). The local currency pre-tax AOP outcome of R15,925 million
(2015: R14,729 million) was due to strong operational performance in Nedbank's Managed Operations, offset by the poor performance
of ETI in Q4 2015, which is reported in Nedbank's results one quarter in arrears during Q1 2016. Excluding the impact of ETI,
Nedbank's headline earnings were 16% up on 2015. NII growth of 11% was supported by an improvement in the net interest margin
from the higher average prime interest rate, as well as 7% growth in average interest earning banking assets. NIR increased by 8%
largely due to higher commissions and fees (7% higher) and trading income (19% higher). NIR was however negatively impacted by
lower insurance income arising from risk mitigating loan reduction measures in prior years (6% lower). Impairments decreased by 5%
due to lower charges in Nedbank Corporate & Investment Banking of 8%. The credit loss ratio, at 0.68% as at 31 December 2016, is at
the bottom end of Nedbank's target range (0.60% to 1.00%), broadly in line with H1 2016 (0.67%) and has improved against 
December 2015 (0.77%).

Old Mutual Wealth

Old Mutual Wealth pre-tax AOP outcome of GBP260 million for the year ended 31 December 2016 was 15% lower than 2015 (GBP307
million). GBP26 million of the GBP47 million decrease in AOP is attributed to the one-off effect of revising charging structures applied in the UK
Heritage business to ensure better customer outcomes by capping certain exit fees at 1% on certain products and restructuring of other
fees. There were also LTIP payments of GBP10 million in Intrinsic, in line with the original acquisition terms, and GBP6m of costs related to the
first full year of running Old Mutual Wealth Private Client Advisors. Costs of a further GBP5 million were incurred in respect of reshaping the
executive committee and enhancing governance functions in readiness for standalone operations. Underlying performance of the 'Invest
and Grow' business was satisfactory, up 2% to GBP210 million benefitting from the inclusion of Quilter Cheviot for the full year and positive
revenue momentum following the significant ongoing investment in growing the business since 2013.

Institutional Asset Management

Although sterling reported earnings of the Institutional Asset Management business benefitted from US dollar appreciation, the business
reported a 5% reduction in 2016 pre-tax AOP, down from GBP149 million in 2015 to GBP141 million. This was mainly due to exceptional
performance fees in 2015 of $19 million that did not recur in 2016. Normal course of business performance fees were also reduced
given market volatilities and a challenging investing environment, while increased management fees were offset by additional expenses
due to investment in a number of growth initiatives.

Finance costs

Finance costs increased by GBP5 million in 2016 to GBP88 million due to the re-financing activity completed in November 2015. The interest
costs of the GBP450 million Tier 2 instrument paying a coupon of 7.875% are greater than the interest costs saved following the redemption
of the EUR374 million Tier 2 bond which paid a coupon of 5%. Repayment of GBP112 million of senior debt in October 2016, and the GBP273
million perpetual preferred callable securities in February 2017 are expected to reduce finance costs by GBP21 million in 2017.

Long-Term Investment Return on excess assets

Long-term Investment Returns of GBP20 million in 2016 were earned on shareholder funds held and managed by OMEM in excess of
statutory capital requirements. Long-term Investment Return rate assumptions were unchanged in 2016. The decrease of GBP1 million
compared with GBP21 million in 2015 was partly due to the weaker rand and a decrease in the average asset base, which mainly
comprises of cash and deposits.

Corporate costs

The table below summarises the composition of Old Mutual plc corporate costs in 2016:

plc cost summary (GBPm)                                                                                                  2016   2015
UK employment costs                                                                                                        42     41
SA employment costs                                                                                                         2      2
External audit and share register fees                                                                                      4      3
IT and office costs                                                                                                        18     21
Group corporate insurance                                                                                                   6      5
Rent                                                                                                                        7      8
Total gross plc corporate costs                                                                                            79     80
Recharges                                                                                                                (19)   (23)
Reported plc corporate costs                                                                                               60     57

Gross corporate costs in 2016 of GBP79 million (2015: GBP80 million) are stated before recharges to businesses of GBP19 million (2015: GBP23
million). The GBP1 million decrease in 2016 gross corporate costs compared to 2015 is not fully reflective of the progress made in
reshaping and repurposing of the plc Head Office during 2016. This activity will result in a reduction in FTE's of approximately 50% by
March 2017 compared with January 2016, which is in line with the commitment given when the Group announced the interim 2016
results. UK and South African gross employment costs increased by GBP1 million to GBP44 million in 2016 (2015: GBP43 million). During H1
2016 the recruitment of additional plc Head Office staff with the skills required to support the managed separation increased
employment costs.

Cost reductions were not achieved until H2 2016 when the majority of staff retrenchments occurred. Retrenchment costs are included in
other net shareholder expenses. The H2 2016 retrenchment activity is expected to deliver annual savings in gross corporate costs in
excess of the GBP10 million indicated at the time of the 2016 interim results.

IT and office costs reduced by GBP3 million to GBP18 million in 2016 (2015: GBP21 million), largely reflecting IT savings following the cancellation
both of non-essential IT upgrades and development in respect of IT capabilities that will not be required following managed separation.
Further reductions in gross corporate costs during 2017 will depend on the pace and sequencing of the managed separation.

Recharges reduced by GBP4 million in 2016 due to changes in the operating model whereby past support provided to the businesses from
the plc Head Office has been scaled back as the businesses have developed their own capability.

From 2017 we intend to state the plc Head Office corporate costs gross of recharges. This will more clearly reflect the savings being
achieved as the phased reduction of the plc Head Office continues and facilitates clearer understanding of the standalone cost base of
each business. Although the recharges will be removed from the operating costs of the businesses this will be offset by increases in
their own direct operating costs as they implement the structures and develop the capabilities required to support independent listed
businesses. Further analysis of the anticipated changes in operating costs is set out on page 17.

Other net shareholder income / (expenses)

The table below sets out other net shareholder expenses in 2016 and 2015:

Other net shareholder expenses (GBPm)                                                                                    2016   2015
Managed separation costs                                                                                                 (22)      -
Brand North costs                                                                                                         (8)    (8)
Solvency II costs and other projects                                                                                      (5)   (18)
Share based payment charges                                                                                              (10)    (6)
South Africa governance                                                                                                   (3)      -
CEO succession costs                                                                                                        -    (6)
Other net expenses                                                                                                        (4)    (9)
Other net shareholder expenses, excluding seed capital and FX                                                            (52)   (47)
FX gains / (losses)                                                                                                        20      5
Seed capital gains / (losses)                                                                                               8    (1)
Total other net shareholder expenses                                                                                     (24)   (43)

Other net shareholder expenses of GBP24 million in 2016 have reduced by GBP19 million compared with GBP43 million in 2015. This
improvement is attributable to unrealised foreign exchange gains and fair value gains on largely US dollar denominated cash and seed
investments totalling GBP28 million in 2016 (2015: GBP4 million). This was largely due to the weakening of sterling versus the US dollar and
Euro immediately after the outcome of the EU referendum in the UK.

Excluding seed capital and foreign exchange items, the main variances related to the Solvency II and other project spend which
reduced by GBP13 million and CEO succession costs of GBP6 million in 2015 did not reoccur. Set against these and other items were one-off
costs of managed separation of GBP22 million, comprising plc Head Office retrenchment and re-organisation costs of GBP8 million, and
transaction advisory costs of GBP14 million. The plc Head Office also incurred advisory costs of GBP3 million on behalf of Old Mutual Group
Holdings (OMGH), in respect of the preparation for implementation of Twin Peaks legislation that is expected to be effective in South
Africa in 2018.

Tax

The AOP effective tax rate (ETR) for the Group remains at 24% during 2016. The IFRS ETR is more volatile due to the inclusion of
policyholder tax, and one-off items which are typically not taxed at the statutory rate. Analysis of the ETR in relation to AOP therefore
gives a more consistent means of understanding the Group tax charge over the longer term.

As the majority of the Group's profits arise in OMEM and Nedbank, the tax borne by these businesses has a significant impact on the
Group ETR. The OMEM AOP ETR has decreased from 28% in 2015 to 27%. The reduction is due mainly to profit mix, partially offset by
the increase in the CGT rate in South Africa. Nedbank's ETR on AOP has increased from 24% in 2015 to 25% in 2016, largely due to
the effect of associate income.

The ETR for the Old Mutual Wealth business is generally lower than in the Africa businesses given lower headline corporate tax rates in
the UK and other markets, in which its business operates. Interest payments and corporate costs incurred by plc Head Office in the UK
are available to be offset against profits in the Old Mutual Wealth business.

Non-controlling interests

Profit attributable to non-controlling interests increased from GBP329 million to GBP341 million and the proportion of group profit attributable to
non-controlling interests increased from 26% in 2015 to 27% in 2016 reflecting the increased proportion of Group earnings attributable
to Nedbank and the reduction in the Group's interest in the OMAM business following a reduction in the Group shareholding from 78.8%
to 65.8% through a secondary offering in June 2015. A further secondary offering which reduced the Group shareholding in OMAM from
65.8% to 51.1% was completed on 20 December 2016 and therefore had limited impact on profit attributed to non-controlling interests
during 2016.

Operating costs of the businesses and plc Head Office on an adjusted basis

The analysis below adjusts the 2015 and 2016 pre-tax AOP of the Group's businesses for corporate activity, one-off 2016 MS costs,
and recharges that are more appropriate to the services provided by the plc Head Office to OMEM and OMW. This better illustrates the
underlying cost base and pre-tax AOP of the businesses:

2016 AOP (GBPm)                                                    Old Mutual                Old  Institutional
                                                                     Emerging             Mutual          Asset    plc Head
                                                                      Markets   Nedbank   Wealth     Management      Office    Total
AOP pre-tax (reported)                                                    619       799      260            141       (152)    1,667
Quilter Cheviot                                                             -         -        -              -           -        -
Divested businesses                                                         -         -     (24)              -           -     (24)
SA branches transferred from OMW to OMEM                                   10         -     (10)              -           -        -
One-off managed separation items                                            2         -        7              -          22       31
AOP pre-tax adjusted for corporate activity, and one-
off items                                                                 631       799      233            141       (130)    1,674
Revised plc cost allocations
 Remove current plc recharges                                               7         1        9              1        (19)      (1)
 Revised allocation basis                                                 (7)         -     (22)              -          29        -
   Property & insurance direct to the business                            (3)         -      (7)              -          10        -
   Cost of listing                                                        (4)         -      (7)              -          11        -
   Brand costs                                                              -         -      (8)                          8        -
Reallocation of LTIR on excess assets                                      20         -        -              -        (20)        -
AOP pre-tax adjusted for corporate activity, and one-
off items and cost allocations                                            651       800      220            142       (140)    1,673
                                                  
2015 AOP (GBPm)                                                  Old Mutual                Old   Institutional
                                                                   Emerging             Mutual           Asset     plc Head
                                                                    Markets   Nedbank   Wealth      Management       Office    Total
AOP pre-tax (reported)                                                  615       754      307             149        (162)    1,663
Quilter Cheviot                                                           -         -        7               -            -        7
Divested businesses                                                       -         -     (33)               -            -     (33)
SA branches transferred from OMW to OMEM                                  6         -      (6)               -            -        -
AOP pre-tax adjusted for corporate activity, and one-
off items                                                               621       754      275             149        (162)    1,637
Revised plc cost allocations
 Remove current plc recharges                                             8         1       11               1         (23)      (2)
 Revised allocation basis                                               (7)         -     (22)               -           29        -
   Property & insurance direct to the business                          (3)         -      (7)               -           10        -
   Cost of listing                                                      (4)         -      (7)               -           11        -
   Brand costs                                                            -         -      (8)               -            8        -
Reallocation of LTIR on excess assets                                    21         -        -               -         (21)        -
AOP pre-tax adjusted for corporate activity, and one-
off items and cost allocations                                          643       755      264            150         (177)    1,635

OMEM AOP pre-tax adjusted for corporate activity, one-off items and revised cost allocations increased by GBP32 million to GBP651 million in
2016 (2015: GBP28 million to GBP643 million) and OMW pre-tax AOP decreases by GBP40 million in 2016 to GBP220 million (2015: GBP43 million
decline to GBP264 million). The results of Nedbank and OMAM are not significantly affected.

The OMEM outcome increases by GBP12 million in 2016 reflecting the recognition of SA branch profits and removal of 2016 one-off MS
costs (2015: GBP6 million). The allocation of Long-term Investment Returns recognised by the plc Head Office of GBP20 million in 2016 (2015:
GBP21 million) further increases OMEM pre-tax AOP. From 2017 OMEM will include these LTIR returns in the AOP result.

The OMW standalone pre-tax AOP reduces by GBP27 million (2015: GBP32 million), largely due to the removal of profits of GBP24 million from
the divested European businesses in 2016 (2015: GBP33 million), and net of other items.

Revised OMEM and OMW cost allocations

Past plc Head Office business recharges have largely related to OMEM and OMW, due to the fact that Nedbank and OMAM are already
listed businesses with their own listed company capability. As a result if the recharge is restated OMEM and OMW are most affected.
Analysis suggests that a revised cost allocation of GBP29 million in total (GBP22 million to OMW, GBP7 million to OMEM) are more appropriate.

On this basis existing plc Head Office business recharges of GBP19 million in 2016 (2015: GBP23 million) represent a reasonable
approximation of standalone costs for OMEM, but they do not fully reflect the appropriate cost allocation by OMW. In fact the revised
OMW cost allocation is GBP13 million higher at GBP22 million in 2016 (2015: GBP11 million higher, at GBP22 million).

2017 plc Head Office cost expectations

We expect annual savings in plc Head Office gross corporate costs in excess of GBP10 million in 2017, compared with 2016, and during
the period of managed separation we will continue to seek opportunities to further optimise plc Head Office operations. However, until
the managed separation is substantially complete in 2018, the ability to realise the full operational costs savings is limited by the need to
oversee the delivery of enhanced business performance, guide the managed separation process and meet governance, regulatory and
capital management obligations. Based on the reshaped plc Head Office, approximately 41% of 2017 plc Head Office costs will relate to
supporting the UK listing, 36% to execution of managed separation and business oversight and 23% on governance and control.

The Group will incur one-off costs related to the implementation of managed separation, which are further explained below. Although
one-off managed separation costs were recognised within AOP during 2016, we expect these costs to become more significant in 2017.
Therefore we are amending the AOP policy in 2017 such that all one-off costs related to managed separation that would ordinarily be
included in the IFRS income statement will be excluded from AOP in 2017.

The redemption of GBP112 million senior debt in October 2016 had only a marginal impact on 2016 finance costs. However the Group will
recognise the benefit of this redemption and the recent tier 1 bond repayment during 2017, when finance costs are expected to reduce
by GBP21 million.

Delivering value from the managed separation

The plc Head Office operational costs include corporate costs and other shareholder expenses, and totalled GBP123 million in 2015 (2016:
GBP103 million). Following the completion of managed separation in 2019 the plc Head Office will close and these operational costs will
decrease to zero, creating a saving of GBP123 million compared with 2015.

Assuming revised cost allocations of GBP29 million, set out above, are reflective of the incremental recurring standalone cost of closing the
plc Head Office to each business the net operational cost saving will be GBP94 million compared with 2015.

Analysis of OMEM cost allocations suggests that the cost of recurring listed company activity will be GBP4 million and the cost of insurance
that OMEM will need to arrange directly is GBP3 million. This is, in aggregate, of a similar quantum to the GBP8 and GBP7 million recharged by
the plc Head Office in 2015 and 2016. A recurring listing cost of GBP4 million would be below the guidance of GBP5 million to GBP10 million that
was given at the Capital Markets Day in October 2016.

Analysis of OMW cost allocations suggests that in addition to property and insurance costs of GBP7 million already reflected in the OMW
recharge, listed company costs in the region of GBP7 million are appropriate to the OMW business. Furthermore there are GBP8 million of
brand costs previously incurred by plc Head Office that the business will need to meet in future. A recurring listing cost of GBP7 million is
within the guidance of GBP5 million to GBP10 million that was given at the Capital Markets Day in October 2016.

We anticipate the one-off costs of unlocking the GBP94 million of operational cost savings by 2019 to be in the region of GBP130 million,
during the period of managed separation. This includes GBP50 million to GBP65 million to be incurred by the plc Head Office, the balance will
be incurred by OMEM and OMW.

We expect one-off transaction advisory costs of at least GBP100 million during the period of implementing managed separation. This
estimate is based on the current base case and is subject to stakeholder and market dependencies. These costs will contribute to
unlocking the current conglomerate discount to the Group's value by setting the businesses free from the constraints of the existing
Group structure.

Reconciliation of Group IFRS to AOP results

The analysis below summarises the reconciling items between the IFRS and the AOP result for the year ended 31 December 2016 and
the year ended 31 December 2015:

                                                                                   2016                           2015
IFRS to AOP reconciliation                                                              Earnings per                    Earnings per
                                                                        Profit GBPm    share (pence)    Profit GBPm    share (pence)
IFRS profit attributable to ordinary equity holders of the parent(1)            570             12.2            614             13.2
Profit from discontinued operations (net of tax)                               (72)            (1.6)           (45)            (0.9)
IFRS profit attributable to equity holders of the parent from
continuing operations                                                           498             10.6            569             12.3
AOP weighted average number of shares                                             -            (0.2)              -            (0.5)
Non-core operations - Bermuda                                                     5              0.1             31              0.7
IFRS profit attributable to equity holders of the parent excluding
non-core operations                                                             503             10.5            600             12.5
Adjustments to IFRS to determine AOP                                            457              9.5            344              7.0
Goodwill, intangible and associate charges                                      278              5.9            167              3.3
(Profits) / losses on business disposals                                       (19)            (0.4)             36              0.7
Long-term Investment Returns                                                     26              0.5             42              0.9
Returns on own debt and equity                                                   43              0.9             31              0.6
Dividends on preferred securities                                              (17)            (0.4)           (31)            (0.6)
OMAM equity plans                                                                20              0.4              9              0.2
FV losses / (gains) on plc debt                                                  24              0.5            (7)            (0.1)
OMW business transformation costs                                               102              2.1             97              2.0
Discontinued operations included in AOP                                          72              1.6             66              1.4
Tax on adjusting items                                                         (38)            (0.8)           (60)            (1.2)
Non-controlling interests on adjusting items                                   (66)            (1.4)           (19)            (0.4)
Reported AOP after tax and NCI                                                  928             19.4            931             19.3
IFRS weighted average number of shares (millions)                             4,686                -          4,641                -
AOP weighted average number of shares (millions)                              4,773                -          4,813                -

(1) EPS excludes GBP14 million of dividends paid to holders of perpetual preferred callable securities, net of tax credit (2015: GBP24 million)

IFRS profit attributable to ordinary equity holders was GBP570 million in 2016 compared to GBP614 million in 2015. Profits from discontinued
operations of GBP72 million in 2016 relate to the OMAM businesses with the comparative including OMAM profits of GBP66 million and losses
related to the US Life sale of GBP21 million.

2016 IFRS profit attributable to equity holders of the parent of GBP498 million was 12% lower than that of 2015 (GBP569 million). The 2016
IFRS profit attributable to equity holders of the parent excluding non-core operations was GBP503 million (2015: GBP600 million). AOP after
tax and non-controlling interests was GBP928 million in 2016 and GBP931 million in 2015.

Adjustments to IFRS profit after-tax attributable to equity holders of the parent (excluding non-core operations) were GBP353 million. This
was GBP88 million higher than that in 2015 due to the increased goodwill, intangible and associated impairments and increased fair value
losses on the value of group debt. Net profits of the sale of businesses in 2016 were GBP19 million compared with losses of GBP36 million 
in 2015.

The amount of GBP278 million in 2016 in respect of goodwill, intangible and associate charges includes the impairment of OMSEA goodwill
(of GBP64 million), the impairment of the plc's share of Nedbank's investment in ETI was GBP50 million, and a goodwill impairment of GBP46
million in respect of the sale of the Old Mutual Wealth Italy business. Business transformation costs of GBP102 million incurred by Old
Mutual Wealth related to the delivery of its UK Platform transformation project.

Reconciliation of individual businesses IFRS to AOP

The analysis below summarises the reconciling items between IFRS and AOP for each of the businesses in the Group:


IFRS to AOP Reconciliation                            Old Mutual                         Institutional         plc
year ended December 2016 (GBPm)                         Emerging           Old Mutual            Asset        Head   Non-core   Discontinued
                                                         Markets   Nedbank     Wealth       Management   Office(1) operations     operations     Total
Profit before tax                                            538       737        113              135       (169)        (5)          (133)     1,216
Income tax expense                                         (207)     (199)      (117)             (31)          50          -             29     (475)
Profit from continuing operations
after-tax                                                    331       538        (4)              104       (119)        (5)          (104)       741
Profit from discontinued operations
after-tax                                                      -         -          -                -           -          -            104       104
Profit after tax for the financial
period                                                       331       538        (4)              104       (119)        (5)              -       845
Non-controlling interests - ordinary
shares                                                        13     (234)          -             (32)           -          -              -     (253)
Non-controlling interests - preferred                   
securities                                                     -      (22)          -                -           -          -              -      (22)
Profit/(loss) after tax attributable
to equity holders of the parent                              344       282        (4)               72       (119)        (5)              -       570
Total adjusting items(2)                                     131        62        241                6          17          -              -       457
Tax on adjusting items                                       (8)         -       (24)              (5)         (1)          -              -      (38)
Non-controlling interest in adjusting
items                                                       (30)      (32)          -              (4)           -          -              -      (66)
Non-core operations                                            -         -          -                -           -          5              -         5
AOP after tax attributable to
equity holders of the parent                                 437       312        213               69       (103)          -              -       928
                             
IFRS to AOP Reconciliation                    Old Mutual                               Institutional        plc
year ended December 2015 (GBPm)                 Emerging               Old Mutual              Asset       Head    Non-core   Discontinued
                                                 Markets     Nedbank       Wealth         Management  Office(1)  operations     operations       Total
Profit / (loss) before tax                           569          756          42                118      (135)        (31)          (118)       1,201
Income tax expense                                 (190)        (181)           -               (25)         22           -             27       (347)
Profit from continuing operations
after tax                                            379          575          42                 93      (113)        (31)           (91)         854
Discontinued operations                                -            -           -                  -          -           -             70          70
Profit after tax for the financial
period                                               379          575          42                 93      (113)        (31)           (21)         924
Non-controlling interests - ordinary
shares                                              (17)        (247)           -               (27)          -           -              -       (291)
Non-controlling interests - preferred 
securities                                             -         (19)           -                  -          -           -              -        (19)
Profit/(loss) after tax attributable
to equity holders of the parent                      362          309          42                 66      (113)        (31)           (21)         614
Total adjusting items(2)                              76          (2)         266                 31       (27)           -              -         344
Tax on adjusting items                              (13)            1        (44)                (5)          1           -              -        (60)
Non-controlling interest in adjusting
items                                                (7)          (6)           -                (6)          -           -              -        (19)
Non-core operations                                                                                                      31              -          31
Loss from discontinued operations
after-tax                                              -            -           -                  -          -           -             21          21
AOP after tax attributable to
equity holders of the parent                         418          302         264                 86      (139)           -              -         931

(1) Plc Head Office includes the Old Mutual plc parent company and other centre companies
(2) Full details of the adjustment applied in determining AOP, are set out in note C1 to the Interim Financial Statements, which can be found in Part 3 of this
    announcement; explanations follow below

Old Mutual Emerging Markets

OMEM adjusting items increased from GBP76 million to GBP131 million. This was primarily attributable to the recognition of the goodwill
impairment in relation to OMSEA of GBP64 million (R1.3 billion) during 2016. Although we still believe there are significant opportunities in
sub-Saharan Africa, the constrained macroeconomic environment in Zimbabwe and the introduction of interest caps on lending in Kenya
place strain on the future outlook for profit generation, whilst synergies expected from the acquisition of UAP in East Africa have not yet
manifested in the financial results. Adjusting items in 2016 also include the amortisation of acquired intangibles and PVIF of GBP18 million
(2015: GBP20 million) and short-term fluctuations in investment return of GBP16 million (2015: GBP36 million).

Nedbank

Nedbank adjusting items increased from negative GBP2 million in 2015 to GBP62 million in 2016. Adjusting items include the R1.0 billion (GBP50
million) impairment of Nedbank's investment in ETI. The main cause of this impairment was the challenging macro environment in
Nigeria and the consequential impact on ETI operations.

Old Mutual Wealth

OMW adjusting items have decreased from GBP266 million in 2015 to GBP241 million in 2016. Adjusting items in 2016 included UK Platform
transformation project costs of GBP102 million (2015: GBP97 million), amortisation of acquired intangibles and PVIF of GBP75 million (2015: GBP94
million) and the impairment of goodwill of GBP46 million which was recognised in advance of the sale of OMW Italy.

Institutional Asset Management

Institutional Asset Management recognised adjusting items of GBP6 million in 2016 (2015: GBP31 million), this includes an adjustment of GBP20
million (2015: GBP9 million) that is attributable to the impact of long-term incentive plans for senior affiliate employees. On 31 May 2016,
the Group completed the sale of its interest in Rogge Global Partners Limited, a fixed income asset manager to Allianz Global Investors
GmbH, the profit of GBP10 million on the disposal of this business is excluded from the AOP result. OMAM also received additional income
of GBP8 million (2015: GBP1 million) from earn outs on affiliates disposed in prior periods, this is also excluded from AOP.

Plc Head Office

2016 plc adjustments to Head Office AOP were GBP17 million (2015: negative GBP27 million). The total in 2016 includes GBP10 million received
from Skandia Liv in respect of the various matters relating to the completion of the separation of the Skandia Nordic business from the
Group during 2012. Fair value losses on Group debt instruments were GBP29 million greater than in 2016.

Discontinued and non-core operations

Institutional Asset Management has been classified as a discontinued operation. Furthermore, the assets and liabilities of this business
have been disclosed as held for sale. However, the earnings continue to be recognised in AOP earnings in accordance with the policy.

Non-core operations relate to the Bermuda business operating loss of GBP5 million (2015: GBP31 million). In 2015, discontinued operations
included losses on disposal of GBP21 million incurred as a result of the settlement of litigation arising on the disposal of US Life in 2011
following a court order in favour of the plaintiff.

Shareholders' Equity

Total IFRS Equity and Equity attributable to Shareholders of Old Mutual plc

The table below summarises the movement in Group equity in 2016 and the calculation of average equity that is applied in Return on
Equity calculations:

                                                                                                   Equity
Total IFRS equity 2016 (GBPm)                                                                attributable    Total non-
                                                                                             to equity of   controlling   Total IFRS
                                                                                               the parent     interests       equity
Opening shareholder equity at 1 January 2016                                                        6,680         2,254        8,934
Profit after-tax                                                                                      570           275          845
Net currency translation                                                                            1,261           536        1,797
Dividends                                                                                           (443)         (171)        (614)
Other items                                                                                          (14)           220          206
Closing shareholder equity at 31 December 2016                                                      8,054         3,114       11,168
Average equity 2016 1                                                                               6,987             -            -

(1) Calculated using the average of opening mid-year and year end equity attributable to equity shareholders of the parent, excluding perpetual preferred
    callable securities (of GBP273 million at all three dates) and equity attributed to non-core operations (of GBP68 million at 31 December 2016, GBP95 million at 30
    June 2016 and GBP49 million at 31 December 2015)

As of 31 December 2016, the Group recorded total IFRS equity of GBP11,168 million, (2015, GBP8,934 million). After excluding equity
attributable to non-controlling interests of GBP3,114 million (2015: GBP2,254 million), the equity attributable to shareholders of the parent was
GBP8,054 million (2015, GBP6,680 million).

The GBP1,374 million increase in equity attributable to shareholders is principally due to retained IFRS profit after tax of GBP570 million, net
foreign currency transaction gains of GBP1,261 million (after deducting net investment hedges of GBP104 million), less dividends paid of GBP443
million. The significant foreign currency translation gain in 2016, largely reflects the 26% appreciation in the rand relative to sterling over
the year from (R22.818 to R16.955).

Adjusted Return on Equity (ROE) and Capital Allocation

Adjusted ROE 2016 (GBPm)                                                        Average        Return on       Average     Return on
                                                                            shareholder      shareholder   shareholder   shareholder
                                                             AOP (post-    equity excl.     equity excl.  equity incl.  equity incl.
                                                             tax & NCI)  Intangibles(1)   intangibles(2)   Intangibles   Intangibles
Old Mutual Emerging Markets                                         437           1,786            24.5%         2,126         20.6%
Nedbank                                                             312           1,834            17.0%         2,094         14.9%
Old Mutual Wealth                                                   213             973            21.9%         2,499          8.5%
Institutional Asset Management                                       69            (14)            >100%           601         11.5%
Plc Holding Company                                               (103)       2,408 1,3              n/a         (333)           n/a
Adjusted ROE                                                        928           6,987          13.3% 4         6,987       13.3% 4
Adjusted 2015 ROE                                                   931           6,573          14.2% 4         6,573       14.2% 4
  
(1) Average shareholders' equity as at 31 December 2016. The businesses figures exclude the Plc share of 'Goodwill and other intangible assets' as reported
    in the segmental balance sheet; however these assets are included in the adjusted ROE
(2) Calculated as AOP post-tax and NCI divided by average shareholders' equity excluding plc portion of 'Goodwill and other intangible assets'
(3) Includes plc portion of 'Goodwill and other intangible assets' and excludes the perpetual preferred callable securities (GBP273 million) and non-core
    operations (GBP68 million)
(4) Adjusted ROE is calculated using average ordinary shareholders' equity (i.e. excluding the perpetual preferred callable securities) and excludes 
    non-core operations

Old Mutual plc adjusted ROE decreased by 0.9% from 14.2% in 2015 to 13.3% in 2016, largely due to AOP after tax and non-controlling
interests remaining flat on the prior period in reported currency whilst average equity has increased 6% over the same period.

Average equity has increased mainly as a result of IFRS profits which include the impairments of OMSEA goodwill and the Nedbank
investment in ETI exceeding the dividend outflow, as well as the stronger rand and dollar rates against the sterling. The exchange rate
impact on average equity accounts for approximately 30 basis points of the 90 basis points reduction in adjusted ROE. Future ROE's for
each business will vary in part due to the additional costs incurred following the managed separation, and are also dependant on the
standalone balance sheets of the individual businesses.

Adjusted ROE of business components

The analysis below provides further details of the ROE for the component parts of each business:
                                                                                      
                                                                                           2016
ROE of business components (GBPm)                                                       Average      2016 AOP        2016       2015
                                                                                    shareholder   (post-tax &    adjusted   adjusted
                                                                                         equity          NCI)         ROE        ROE
Old Mutual Emerging Markets
 South Africa                                                                             1,408           361       25.6%      27.5%
 Rest of Africa                                                                             532            54       10.2%      11.3%
 Asia & Latin America                                                                       186            22       11.8%      12.0%
Total Old Mutual Emerging Markets                                                         2,126           437       20.6%      22.4%
Nedbank
 Managed operations                                                                       1,932           322       16.7%      16.5%
 ETI(1)                                                                                     162          (10)      (6.2%)       9.9%
Total Nedbank                                                                             2,094           312       14.9%      15.8%
Old Mutual Wealth
 Invest & Grow
   UK                                                                                     1,670           116        6.9%       9.5%
   International                                                                            351            52       14.8%      13.6%
 Manage for Value markets
   Italy                                                                                    128            17       13.3%      14.0%
   Heritage                                                                                 350            28        8.0%      13.1%
Total Old Mutual Wealth                                                                   2,499           213        8.5%      11.1%
OMAM                                                                                        601            69       11.5%      14.0%
plc Head Office                                                                           (333)         (103)         n/a        n/a
Total                                                                                     6,987           928       13.3%      14.2%

(1) Average ETI equity of GBP162 million in 2016 reflects the average carrying value of ETI in Nedbank's accounts attributable to equity holders of Old Mutual
    plc. The ETI post-tax loss of GBP10 million in 2016 reflects operating losses and finance costs related to the associate investment attributable to equity holders
    of Old Mutual plc

Variations in adjusted ROE across the businesses reflect the differing maturity of the businesses and the impact of recent acquisitions
on performance. The OMEM and Nedbank South Africa businesses have more mature franchises, which translate into higher returns
and remittances. The operations in the Rest of Africa, Asia and Latin America are still building distribution and operational capacity often
in challenging macroeconomic environments. These negatively impact returns, both in profits and cash. In OMW, capital is being
deployed to invest in distribution, accelerate the ability of the business to operate on a standalone basis and its UK Platform
transformation project.

plc capital deployed and productivity of recent corporate activity at            2016                     2016 return    2015 return
cost (GBPm) (>GBP100m)                                                       Invested       2016 AOP      on invested    on invested
                                                                              capital       post-tax          capital        capital
Significant acquisitions 
Quilter Cheviot (acquired in February 2015) (100%)                                585             38             6.5%           5.9%
Intrinsic/Cirilium (acquired in July 2014 and December 2014 respectively)  
(100%)                                                                             98              1             1.0%           9.2%
Ecobank Transnational Incorporated (ETI) (stake acquired in October 2014)  
(approximately 20%)                                                               305           (19)           (6.2%)           8.5%
UAP Holdings (UAP) (acquired in June 2015) (60.7%)                                162              4             2.5%           2.5%
Total                                                                           1,150             24             2.1%           6.4%
 
Whilst we recognise that returns from acquisitions take some time to come through and the macroeconomic environment is challenging
in the territories in which a number of the Group's recent acquisitions operate, the current return on capital deployed continues to remain
well below our expected target range. Each business is seeking to improve these returns, as detailed in the respective business reviews
later in this report.

Since 2013, the Group has exited a number of non-core European OMW businesses with low return on investment and high goodwill
and has generated proceeds from the IPO and subsequent secondary offering of OMAM. The proceeds from this corporate activity have
been invested in the business with the potential to generate higher return on investments in faster growth markets. This includes the
investments in UAP, ETI, Quilter Cheviot and Intrinsic.

Quilter Cheviot's returns improved to 6.5% in 2016 (2015: 5.9%) reflecting higher profits as FUM increased 16% compared to the prior
year, increasing the FUM based revenues earned.

The Intrinsic/Cirilium post-tax AOP includes Old Mutual Wealth Private Client Advisers and the LTIP charge in 2016 in view of
successful business delivery. Excluding these charges the return on invested capital is approximately 14%. Intrinsic also secures flows
for other parts of the OMW business. For example, the Intrinsic restricted channel accounted for 32% of UK Platform net flows in 2016
(2015: 25%). The contribution to profit from these flows is not recognised in the post-tax AOP result stated above. The acquisition has
performed ahead of original expectations.

Synergies expected from the acquisition of UAP in East Africa have not yet been realised in the financial results, nevertheless we
remain comfortable that through executing on our strategic priorities we will realise the desired medium and long-term returns on our
investment.

Plc cash flows and liquidity

Free Surplus Generation

Free surplus generation analysis considers the efficiency of the businesses in converting profits into operational cash flows. In 2016, the
businesses generated free surplus of GBP878 million (2015: GBP945 million), representing a conversion rate of 85% of AOP post-tax and 
NCI (2015: 88%).

For OMEM, 73% (2015: 69%) of the AOP (post-tax and NCI) in 2016 was converted to free surplus. Covered business free surplus
generated in OMEM is calculated using the free surplus component of MCEV earnings. Non-covered business free surplus generated is
calculated as AOP post-tax and NCI adjusted for short-term fluctuations in investment return and movements in required capital for
OMEM's Property and Casualty business.

The OMW conversion rate was 84% in 2016 (2015: 102%). The lower conversion rate partially reflects revised expense assumptions in
the UK Heritage business following the decision to suspend the development of its IT system. OMW free surplus is calculated on a local
statutory basis which for the businesses in the EU is consistent with Solvency II principles.

Nedbank and Institutional Asset Management free surplus is calculated as their AOP post-tax and NCI and therefore the conversion rate
is 100% for both businesses.

The analysis below sets out free surplus generation between hard currency and emerging market businesses given the remittances and
dividend arrangements set out in the Group's demutualisation agreement (as amended over time).

                                                                                         2016                       2015
Source of free surplus (GBPm)                                                                  % of AOP                     % of AOP
                                                                             Free surplus  converted to  Free surplus   converted to
                                                                                generated  free surplus     generated   free surplus
Old Mutual Wealth                                                                     179           84%           268           102%
Institutional Asset Management                                                         69          100%            86           100%
Total northern hemisphere                                                             248           88%           354           101%
Old Mutual Emerging Markets                                                           318           73%           289            69%
 South Africa                                                                         247           68%           239            67%
 Rest of OMEM                                                                          71           93%            50            79%
Nedbank                                                                               312          100%           302           100%
Total southern hemisphere                                                             630           84%           591            82%
Total before interest and plc costs                                                   878           85%           945            88%
 
Head Office company cash position and cash flows

The plc Head Office cash position marginally decreased from GBP750 million as at 1 January 2016 to GBP743 million as at 31 December
2016. This is invested in cash and near cash instruments, including money market funds and a liquid corporate bond portfolio. The plc
Head Office also has access to an undrawn committed facility of GBP800 million (as at 31 December 2015: GBP800 million). In addition to
cash and available resources held at the plc Head Office level, which are considered adequate to support the plc under both normal and
stressed conditions, we evaluate potential further liquid resources that required to be held by the plc Head Office to support underlying
business needs for investment opportunities and for downside scenarios. Consistent with this approach, during January 2017, the
Group established a new GBP200 million RCF for the OMW business and continues to finance seed capital investments for OMAM. Plc
Head Office maintains an early warning liquidity threshold and liquidity buffers reflecting its risk appetite.

As the businesses transition to be standalone entities we will assess their day one liquidity requirements and where appropriate we will
transition liquidity buffers currently held and funded at plc Head Office into the businesses. This is particularly relevant for OMW.

The table below summarises plc Head Office cash flows in 2016 and 2015:

Plc cash flows (GBPm)                                                                                                 2016      2015
Opening cash and liquid assets at holding company at 1 January                                                         750     1,003
Operational flows                                                  
Hard currency free surplus generated                                                                                   248       354
Old Mutual Wealth business transformation costs (after tax)                                                           (82)      (78)
Other cash retained or deployed in the businesses                                                                     (82)     (113)
Operational receipts from hard currency businesses                                                                      84       163
Impact of foreign currency hedging                                                                                     (6)       (2)
Operational receipts from hard currency businesses after hedging                                                        78       161
Emerging market free surplus generated                                                                                 630       591
Free surplus used for acquisitions                                                                                    (17)     (191)
Other cash retained or deployed in the businesses                                                                    (203)      (70)
Operational receipts from emerging market businesses                                                                   410       330
Impact of foreign currency hedging                                                                                    (37)        17
Operational receipts from emerging market businesses after hedging                                                     373       347
Corporate costs                                                                                                       (60)      (57)
Other operational flows                                                                                               (46)      (55)
Total operational flows                                                                                                345       396
Capital servicing                                                 
Interest paid                                                                                                         (72)      (32)
Preference dividends                                                                                                  (17)      (30)
Ordinary cash dividends                                                                                              (451)     (426)
     Paid to northern hemisphere shareholders                                                                        (160)     (172)
     Paid to southern hemisphere shareholders                                                                        (291)     (254)
Total servicing of capital                                                                                           (540)     (488)
Capital movements                                                 
Net debt (repaid)/ issued in the period                                                                              (112)       187
Net business unit funding                                                                                               68     (118)
Total capital movements                                                                                               (44)        69
Other Plc cash movements                                                 
Net corporate activity received/(funded) by plc directly                                                               232     (230)
Total plc cash movements                                                                                               232     (230)
Closing cash and liquid assets at holding company at end of period                                                     743       750

Operational cash flows

Hard currency free surplus generated reduced by GBP106 million in 2016 to GBP248 million (2015: GBP354 million) largely due to the reduction in
OMW free surplus to GBP179 million (2015: GBP268 million) as a result of AOP being 15% lower in 2016 than the prior year and the revised
expense assumption in the UK Heritage business following the decision to suspend the development of its IT system. GBP33 million of the
OMW free surplus generated during 2016 was remitted to plc Head Office (2015: GBP109 million). The decrease was due to a higher
proportion of the post-tax free surplus being retained for investing in OMW's UK Platform transformation project (GBP82 million) and for

redeploying into growth opportunities in the business, including the expansion of the Old Mutual Wealth Private Client Advisers business
and planned acquisitions of Attivo Investment Management and Caerus. OMAM remitted GBP51 million (2015: GBP54 million), reflecting its
dividend policy of paying 25% of Economic Net Income (ENI) and agreed payments in-line with the Deferred Tax Agreement.

Emerging markets free surplus increased to GBP630 million (2015: GBP591 million) largely due to higher AOP (post-tax and NCI). GBP410 million
(2015: GBP330 million) of the free surplus was remitted to plc Head Office. During 2016, OMEM generated free surplus of GBP318 million and
remitted GBP253 million after investing in their South African IT investment programme (GBP21 million) and deferred acquisition payments on
AIVA (GBP17 million). During 2016, Nedbank remitted GBP157 million, retaining GBP155 million, reflecting its publicly stated policy of a dividend
cover of 1.75 - 2.25 times Headline Earnings.

Other operational flows include the impact of hedging on anticipated foreign currency remittances of GBP(28) million (2015: GBP1 million) and
payments to the plc employment benefit trust relating to the funding of share incentive awards of GBP40 million. The trust purchased 21.4
million (2015: nil) shares at an average share price of 184 pence per share. This increase primarily reflects the funding of the new long-
term incentive plan (the Managed Separation Incentive Plan), which replaced the annual long-term incentive awards that under previous
arrangements would have been granted and so required funding in 2016, 2017, and 2018.

Servicing of capital

Dividend payments to shareholders of GBP451 million (2015: GBP426 million) have been made in the year in relation to the second interim
dividend for 2015 of 6.25 pence per share and the first interim dividend for 2016 of 2.67 pence per share. Of this, GBP291 million was paid
to shareholders on the SA register (2015: GBP254 million). Plc contributed GBP41 million of central cash to the payment of plc dividends
during the year. Preference dividends reduced by GBP13 million in 2016, reflecting the redemption of the EUR374 million Tier 2 bond in
November 2015. Interest paid in 2016 was GBP40 million higher than 2015 mostly due to GBP450 million of Tier 2 subordinated debt issued in
November 2015.

Capital movements

In October 2016, GBP112 million of senior debt was repaid. Net inflows from business unit funding during 2016 largely reflect returns of co-
investment and seed capital from OMAM of GBP40 million (2015: GBP9 million) and the return of funding of GBP29 million from Bermuda (2015:
GBP111 million funding to Bermuda).

Corporate activity

Cash flows from corporate activity include proceeds of GBP230 million (net of costs and foreign currency hedging) from the secondary
offering and buy back of 20.95 million shares in OMAM during December 2016, receipts from the sale of Rogge and other corporate
inflows and outflows. In 2015, plc Head Office provided intercompany funding to OMW for its purchase of Quilter Cheviot and received
the proceeds from the sale of 15.295 million OMAM shares in the secondary offering during June 2015.

Post balance sheet events

On 9 January 2017, OMW sold OMW Italy to Phlavia Investimenti (previously ERGO Italia), owned by Cinven. The proceeds from the
sale (net of costs and foreign currency hedging) of GBP210 million were remitted to the Group on the same day. On 3 February 2017, we
fully redeemed GBP273 million (being the full amount) of perpetual preferred callable securities that remained outstanding.

OM Asset Management commitments to Old Mutual plc

As part of the managed separation strategy, steps were taken during 2016 to clarify and accelerate seed capital and DTA relationships
between OMAM and Old Mutual plc, with the effect that Old Mutual plc has greater certainty about future cash payments from OMAM.

Purchase of seed capital investments from Old Mutual plc

On 15 September 2016, OMAM purchased approximately $40 million (GBP31 million) of seed investments from Old Mutual plc under the
terms of the Seed Capital Management Agreement, as amended. OMAM intends to purchase all remaining seed capital investments
covered by the Seed Capital Management Agreement in July 2017. At 31 December 2016, the remaining OMAM seed investments had
a value of $83 million (GBP67 million).

Amendment of the OMAM Deferred Tax Asset Deed (DTA)

On 13 June 2016, OMAM and OM Group (UK) Limited (OMGUK) entered into a Heads of Agreement amending the DTA to provide that
the obligations of OMAM to make future payments to OMGUK under the DTA, which were originally scheduled to continue until 31
January 2020, would be amended as of 31 December 2016 resulting in a payment of the net present value of the future payments due
to OMGUK valued as of 31 December 2016. This payment equals approximately $143 million (GBP116 million) and will be made over three
instalments on each of 30 June 2017, 31 December 2017 and 30 June 2018. The agreement contains certain provisions allowing
OMAM to claw back amounts paid in the event that deferred tax assets recognised by OMAM are not recovered by the OMAM
businesses. These clawback arrangements create a potential commitment from OMGUK to OMAM which extends beyond the period of
managed separation.

REVIEW OF FINANCIAL POSITION

Balance sheet review

The analysis below summarises how ordinary equity attributable to ordinary shareholders of the parent is invested in the net assets of
the component businesses including the plc Head Office. It also sets out the composition of plc Head Office net assets. The information
is directly sourced from segmental analysis of the Group's IFRS Balance Sheet in note B4 of the financial statements. The narrative
which follows the table includes forward looking analysis of the unwind of the net assets of the Group and the plc Head Office. The
analysis is intended for illustrative purposes, as it is based on assumptions regarding the implementation of the managed separation
strategy which are uncertain.

At 31 December 2016 ordinary equity attributable to shareholders of the parent was GBP7,781 million (2015: GBP6,407 million). The majority
of this equity value was represented by the operating businesses and of this total only GBP358 million, or 5% related to the equity of plc
Head Office (2015: GBP282 million, 4%):
                                                                                                    Illustrative
(GBPm)                                                                                                3 February
                                                                                                         2017(1)      2016      2015
Equity attributable to shareholders of the parent                                                          7,781     8,054     6,680
Plc perpetual preferred callable securities                                                                    -     (273)     (273)
Equity attributable to ordinary shareholders of the parent                                                 7,781     7,781     6,407
Equity invested in component businesses:                                 
OMEM                                                                                                       2,455     2,455     1,805
Nedbank                                                                                                    2,476     2,476     1,710
OMW                                                                                                        1,687     1,897     1,950
OMAM                                                                                                         527       527       611
OM Bermuda                                                                                                    68        68        49
plc Head Office(2)                                                                                           568       358       282
Equity attributable to ordinary shareholders of the parent                                                 7,781     7,781     6,407
Composition of OM plc Head Office NAV                                 
Cash                                                                                                         680       743       750
Seed investments                                                                                             148       148       223
Intercompany debtors                                                                                         816       816       767
Plc Head Office Assets                                                                                     1,644     1,707     1,740
Third party debt (including plc perpetual preferred callable securities)                                 (1,017)   (1,290)   (1,371)
Net sundry third party creditors                                                                            (59)      (59)      (87)
plc Head Office Liabilities                                                                              (1,076)   (1,349)   (1,458)
plc Head Office NAV                                                                                          568       358       282

(1) 31 December 2016 balances, adjusted for the receipt of Italy proceeds of GBP210 million and the repayment of GBP273 million of Perpetual Preferred Callable
    Securities in February 2017
(2) Excludes Perpetual Preferred Callable Securities that are classified within IFRS equity in accordance with accounting guidance, but not attributable to
    ordinary equity holders, as these were repaid in February 2017. At 31 December 2015 and 2016 they were carried at a book value of GBP273 million

Equity invested in the businesses

Over 80% of the Group's equity is invested in the OMEM, Nedbank and OMW businesses. Under managed separation these
businesses are expected to be distributed to shareholders. The realisation of the available assets of the plc Head Office will be required
to contribute to plc Head Office's remaining liabilities and contingencies as the managed separation progresses.

The equity of OMAM, which is listed on the NYSE, and OM Bermuda businesses, is also potentially realisable by the plc Head Office to
support the managed separation. It is expected that OMAM will provide a source of further cash resources as Old Mutual executes its
strategy of continued phased reductions in its interest in OMAM, when appropriate.

The extent to which the NAV of the OM Bermuda business is realised by the plc Head Office will depend on the resources required to
support obligations arising in respect of the Guaranteed Minimum Accumulation Benefit (GMAB) guarantees in relation to variable
annuity policies due to reach their 10 year maturities in 2017 and 2018 and the release of a guarantee to a third party, with a maximum
potential value of $250 million in May 2018.

OMEM and Nedbank dividend receipts will be available to support the plc dividend, consistent with the original terms of demutualisation
and in line with the plc's capital management policy. OMW and OMAM will continue to provide operational remittances to the plc Head
Office. For OMW this will continue to be constrained by the required investment in the UK Platform Transformation Project; in OMAM's
case it will be in line with the businesses' publicly listed dividend policy.

OM plc Head Office cash resources and third party debt

Although the net assets of the plc Head Office are small relative to the equity of the Group, the plc Head Office balance sheet includes
third party debt totaling GBP1,290 million (2015; GBP1,371 million).

The plc Head Office had cash balances of GBP743 million at 31 December 2016 (2015; GBP750 million). However on an illustrative basis
before other costs, cash balances have reduced to GBP680 million since 31 December 2016 following the repayment of the GBP273 million
Old Mutual plc Perpetual Preferred Callable Securities, and after taking account of the receipt of net proceeds of GBP210 million from the
sale of the Italy business, both of which occurred in 2017. The availability of plc Head Office cash resources is further constrained by the
requirement to support plc Head Office operational expenses including corporate costs, other net shareholder expenses, managed
separation and finance costs and maintaining liquidity buffers.

Effecting the managed separation strategy is expected to require funding in the region of GBP130 million in relation to the one-off costs of
winding down the plc and creating standalone businesses. Within the total one-off costs the plc Head Office expects to incur GBP50 million
to GBP65 million, GBP8 million has already been incurred during 2016. Advisory costs related to implementing managed separation to unlock
the current conglomerate Group discount are expected to be at least GBP100 million. The majority of these will be funded by the plc Head
Office. In 2016, costs of GBP14 million were already incurred by plc Head Office.

The plc Head Office early warning threshold buffers support the inherent costs and constraints of the existing Group structure as well as
being appropriate to the operational risks it faces in respect of its own activities and due to its Group wide role. The plc regularly reviews
its early warning liquidity threshold ("EWT") to ensure adequate liquidity resources are maintained. At 31 December 2016 this stood at
circa GBP500 million. This amount reflects a forward looking assessment of the liquidity required at the center, to cater for normal Head
Office cash demands, downside risks and contingencies as well as the GBP200 million RCF recently put in place with OMW. The liquidity
EWT will reduce dynamically as the plc Head Office cash demands reduce, legacy plc Head Office items are crystallised and
preparations for day one standalone balance sheets are completed. Our liquidity buffers allow for an expected level of funding in the
region of GBP130 million that is required in order to resolve the legacy plc Head Office items.

Plc Head Office net intercompany receivables

Other non-cash plc Head office assets include net intercompany debtors of GBP816 million (2015: GBP767 million), and largely relate to
funding to OMW (GBP789 million), most of which was provided to support the acquisitions of Quilter Cheviot and Intrinsic in 2015. The
long-term funding requirements of OMW require determination as managed separation progresses.

There is a further receivable of GBP85 million due from OMAM, principally relating to the Deferred Tax Asset deed which is further
explained in note A2 of the 2016 financial statements. This will be fully repaid by 30 June 2018, however amounts repaid are subject to
clawback provisions.

Intergroup payables relate to the GBP58 million loan note outstanding from Old Mutual plc to OM Bermuda. This may be called by OM
Bermuda during 2017 and 2018 to the extent that obligations in relation to its GMAB guarantees cannot be met from OM Bermuda's
own resources when the relevant OM Bermuda policies reach their 10 year maturity dates.

Plc Head Office seed portfolio

The table below sets out the Group's seed investments at 31 December 2016 and 2015:

                                                                                          1 in 200
Seed investments market value (GBPm)                                                         event
                                                                                           2016(1)              2016            2015
OM Bermuda
    Millpencil Limited                                                                          59                72              74
    Millpencil US                                                                                -                 -              51
    OM Seed Investments (UK) Limited (OMSI (UK) Ltd)                                             8                15              77
    Millpencil US                                                                               21                35               -
OM plc                                                                                           8                 8               -
OM Group (UK) Limited (OMGUK)                                                                   15                18              21
Total                                                                                          111               148             223

(1) The 1-in-200 event represents the value of seed investments at 31 December 2016 after the impact of a 1-in-200 event allowing for market movements.

The plc Head Office is in the process of winding down its seed portfolio as part of the managed separation. At 31 December 2016 the
plc Head Office held seed investments of GBP148 million (2015: GBP223 million). During 2016 the level of seed capital reduced by GBP75 million
reflecting the redemption of GBP95 million of seed funding offset by GBP20 million of foreign exchange and fair value gains.

The mix of underlying investments carries market risks. The seed portfolio is allocated over a range of assets and at 31 December
2016 was invested 48% in fixed income, 15% in equities and 37% in alternatives. Based on a 1 in 200 downside scenario, the total
value of these investments is estimated to reduce by GBP37 million to GBP111 million.

The accelerated cash realisation from seed investments and intra-group arrangements has been seen in 2016 and is expected to
continue in 2017 and 2018.

Plc debt
                                                                                            Illustrative
Plc debt summary(1)                                                                               2016(3)          2016         2015
Total gearing (gross of holding company cash) - IFRS basis(2)                                      14.1%          15.9%        16.2%
Total book value of debt - IFRS basis (GBPm)                                                       1,818          2,091        1,731
plc book value of debt - IFRS (GBPm)                                                               1,017          1,290        1,371
Total interest cover(4)                                                                       12.5 times     11.1 times   14.0 times
Hard interest cover(4)                                                                         3.9 times      3.4 times    4.8 times

(1) Excludes banking-related debt of GBP3,008 million at Nedbank and GBP209 million at Old Mutual Emerging Markets, of which GBP159 million is held at Old Mutual
    Finance (OMF), GBP23 million is held at CABS and GBP27 million is held at Faulu
(2) 2015 has been restated to adjust for debt instruments that are accounted for as equity
(3) Proforma for redemption of the GBP273 million Perpetual Preferred Callable Securities in February 2017 and receipt of net GBP210 million from the sale of Old
    Mutual Wealth Italy in January 2017
(4) Interest cover is calculated based on the number of times AOP before tax covers finance costs

Total debt (excluding Nedbank) of GBP2,091 million comprises of plc debt of GBP1,290 million, emerging markets non-banking debt of GBP482
million and OMAM debt of GBP319 million.

As at December 2016, Old Mutual plc debt comprises of GBP273 million Preferred Perpetual Callable Securities callable in March 2020,
GBP500 million of Tier 2 debt maturing in June 2021 and GBP450 million of Tier 2 debt maturing in November 2025. At 31 December 2016,
the book value of the Tier 2 instruments was GBP569 million and GBP448 million respectively. The plc value of debt is GBP1,290 million, which
includes the book value of Old Mutual plc debt, excluding a derivative asset of GBP31 million, related to the GBP500 million Tier 2 debt taken
out in June 2012. On 3 February 2017, the Group repurchased all of the GBP273m Preferred Perpetual Callable Securities.

The book value of Emerging Markets non-banking debt is GBP482 million as at 31 December 2016. OMLAC(SA) has R3,475 million in
fixed rate Tier 2 bonds and R2,525 million in floating rate Tier 2 bonds. The fixed rate bonds have first calls in 2019, 2020, 2022 and
2025, while the floating rate bonds have first calls in 2019 and 2020. At 31 December 2016 OMLAC(SA) has drawn R260 million of a
total R3,125 million revolving credit facility (excludes R2,125 million with Nedbank). UAP has debt of KES 2,000 million maturing in
2017, along with $60 million (includes $31 million Nedbank loan) maturing in 2021, 2022 and 2023. OM Properties Africa has debt of
$65 million with maturity in December 2020.

The book value of OMAM debt is GBP319 million. On 27 July 2016, OMAM issued $400 million senior notes, consisting of $275 million due
in 2026 and $125 million due in 2031.

Gearing as at 31 December 2016

Gross gearing is based on non-banking debt of GBP2,060 million (2015: GBP1,680 million), which is the book value of non-banking debt net of
a derivative asset of GBP31 million (2015: GBP51 million) related to the GBP500 million Tier 2 debt. Gross gearing of 15.9% is calculated as the
percentage of non-banking debt (GBP2,060 million) over total Group equity plus non-banking debt (GBP12,954 million). Gearing reduces to
10.2% when net of cash at the holding company.

Capital management policy

We announced a new capital management policy in March 2016 in respect of returns to shareholders for the period of the managed
separation. The aim is to provide flexibility, recognising the need to balance complex considerations, including costs and cash demands
associated with the managed separation, continuing to invest in the businesses to drive enhanced performance and further increasing
their capital strength. Given this, we previously indicated taking a conservative approach to the full year dividend.

We have today announced the second interim dividend for 2016 under the new policy which is 3.39p, the rand equivalent is 53.55 cents.
This will be paid on 28 April 2017.

We had previously indicated that in 2015 and in the first half of 2016, that plc Head Office cash contributed to paying dividends to
shareholders and that dividends going forwards will reflect the capacity for distributions from the underlying businesses. This will
continue to apply for dividends in respect of 2017 and we maintain our target of dividend cover of 2.5-3.5 times AOP for the full year.
The expected cover for the 2017 first Interim dividend is 3 times AOP earnings for that interim period. For 2017, dividends paid in
currencies other than sterling will be converted at the average effective exchange rate after taking into account hedging activities and
timing of remittances for the relevant period.

We will be reviewing our rolling hedging of non-sterling remittances from the underlying businesses in light of the uncertainties of
managed separation.

Capital

Regulatory capital in accordance with Solvency II rules

The Group Solvency II surplus is GBP1.3 billion at 31 December 2016 (1 January 2016: GBP1.7 billion as reported to the Prudential Regulation
Authority (PRA)), representing a Solvency II ratio of 124% (1 January 2016: 138%) calculated under the standard formula. The Group
Solvency II ratio continues to be resilient as the Group surplus excludes GBP1.7 billion of surplus from the South African businesses that
remains available for local loss absorption. The Solvency II information in this preliminary results disclosure has not been audited.

                                                                                                           Solvency II
Group regulatory capital (GBPbn)                                                               31 December     2016 pro-   1 January
                                                                                                   2016(1)      forma(2)     2016(3) 
Own funds                                                                                              6.9           6.9         6.1   
Solvency capital requirements (SCR)                                                                    5.6           5.5         4.4   
Solvency II surplus                                                                                    1.3           1.4         1.7   
Coverage                                                                                              124%          126%        138%   

(1) Based on preliminary estimates. Formal filing due to the Prudential Regulation Authority (PRA) by 7 April 2017
(2) Reflects the sale of Old Mutual Wealth Italy which completed in January 2017
(3) As reported to the PRA as part of the Solvency II day one submission

The weakening of sterling against the rand reduced the Group Solvency II ratio by 8% due to the translation of capital requirements from
OMEM and Nedbank into sterling. The Group Solvency II ratio also reduced due to the payment of dividends to UK shareholders, the
purchase of Landmark Partners by OMAM, net increases in the businesses' capital requirements consistent with business growth, and
the de-recognition of preferred callable securities from own funds following PRA approval to repurchase early in 2017. These negative
movements were offset by the receipt of cash following the public offering of OMAM shares in December 2016.

There was no offset coming from own funds held in rand as any increase in OMEM and Nedbank own funds are restricted by the
increase in their capital requirements as a result of applying fungibility restrictions.

Composition of qualifying Solvency II capital

The Group own funds for Solvency II purposes reflect the resources of the underlying businesses after excluding the restricted surplus
from the South African owned businesses. The Group own funds include the Old Mutual plc issued subordinated debt instruments which
qualify as capital under Solvency II. The composition of own funds by tier is presented in the table below.
                                               
Old Mutual Group Solvency II own funds (GBPbn)                                                               31 December   1 January
                                                                                                                    2016     2016(1)
Tier 1 (unrestricted)                                                                                                5.8         4.8
Tier 1 (restricted)(2)                                                                                                 -         0.3
Tier 2(3)                                                                                                            1.1         1.0
Total Group Solvency II own funds                                                                                    6.9         6.1

(1) As reported to the PRA as part of the Solvency II day one submission
(2) Comprises of GBP0.3 billion of Perpetual Preferred Callable Securities grandfathered under Solvency II that were de-recognised from own funds at 31
    December 2016 in view of the Group's repurchase in early 2017
(3) Comprises GBP0.5 billion of Solvency II compliant subordinated debt and GBP0.6 billion subordinated debt grandfathered under Solvency II

Group SCR is covered by Tier 1 capital which represents 105% of the Group SCR of GBP5.6 billion. Tier 1 represents 85% of Group capital
after fungibility deductions.

Solvency II capital in comparison to IFRS equity
The table below presents the reconciliation of differences between IFRS equity net of non-controlling interests (NCI) and Solvency II
own funds (post restriction).
                                                                                                                       
IFRS compared to own funds (GBPbn)                                                                                       31 December
                                                                                                                                2016
IFRS equity net of non-controlling interest                                                                                      8.1
Removal of goodwill and other intangibles (net of non-controlling interest)(1)                                                 (2.9)
Restatement of technical provisions (net of deferred tax)(2)                                                                     2.8
Inclusion of Old Mutual plc subordinated debt(3)                                                                                 1.1
De-recognition of preferred callable securities(4)                                                                             (0.3)
Fungibility restriction(5)                                                                                                     (1.7)
Other(6)                                                                                                                       (0.2)
Total Group Solvency II own funds                                                                                                6.9

(1) Goodwill and other intangibles are assets that are recognised under IFRS, however, they are deemed inadmissible for regulatory purposes
(2) Solvency II uses a best estimate liability basis to measure insurance liabilities. This effectively recognises a future earnings component within the liabilities
    and results in an increase in capital. This is partially offset by the recognition of the risk margin which replaces prudential margins allowed for in IFRS
    insurance liabilities
(3) Old Mutual plc subordinated debt comprises of Tier 2 debt instruments in Old Mutual plc that count towards the Group's Solvency II capital position
(4) Comprises of GBP273 million of perpetual preferred callable securities grandfathered under Solvency II that were de-recognised from own funds at 31
    December 2016 in view of the Group's repurchase in early 2017
(5) Restriction of the Nedbank and OMEM's surplus (plus an GBP86m restriction relating to OMW) when applying Solvency II fungibility and transferability rules
    (restricting entirely the surplus available from the businesses held through South Africa, as a result of the exchange controls and demutualisation agreement
    that apply to remitting capital from South Africa. Under Solvency II rules, this means that the surplus is not considered to be fully fungible or transferable at a
    Group level)
(6) Includes offsetting items with the largest being sectoral adjustments for non-insurance entities and out of scope entity adjustments

Solvency II sensitivities

The table below presents the estimated sensitivity of the Group Solvency II ratio under certain standard financial stresses, which are
defined by reasonably possible individual movements in key market parameters, while keeping all other parameters constant. The
effects impact both the own funds and capital requirements and consequently the Group Solvency II ratio. In addition, we have included
a non-financial stress assuming 10% of our insurance business in OMW and OMEM lapses immediately.

Solvency II and capital ratio at 31 December 2016 (GBPbn)                             Capital                  Group      Restricted
                                                                                 Requirements      Surplus     ratio         surplus
Base Solvency II surplus                                                                  5.6          1.3      124%             1.7
Equity markets fall by 25%                                                                5.4          1.2      123%             1.5
Impact of 10% of business lapsing immediately(1)                                          5.4          1.3      123%             1.7
Interest rates rise by 100 basis points                                                   5.6          1.3      123%             1.7
Credit spreads increase by 100 basis points(2)                                            5.7          1.3      123%             1.6
ZAR:GBP exchange rate depreciates by 30% (R22:GBP1)                                       4.6          1.3      129%             1.4
ZAR:GBP exchange rate appreciates by 10% (R15:GBP1)                                       6.1          1.3      121%             1.9

(1) Business lapse sensitivity for OMW and OMEM only
(2) A 100bps increase in credit spreads is generally assumed to be a one notch downgrade from BBB to BB- rating and a two notch downgrade on lower
    graded investments
 
Composition of Group capital requirements

The insurance entities in the Group calculate capital requirements using the Solvency II standard formula. In the profile below, the
composition of these requirements is shown by risk type for the consolidated insurance entities in Europe and the aggregated insurance
entities in OMEM

Composition of capital requirement by key risk type (%)                                      Total insurance         
                                                            Consolidated    Aggregated           31 December         Total insurance
                                                            insurance(1)  insurance(2)                  2016       1 January 2016(3)          
Market risk      Equity                                              26%           12%                   16%                     21%   
                 Interest rate                                        5%            6%                    6%                      7%   
                 Currency                                            19%            2%                    7%                      7%   
                 Spread                                               4%            7%                    6%                      7%   
                 Risk concentration                                   0%            3%                    2%                      2%   
                 Property                                             0%            1%                    1%                      1%   
Insurance Risk   Lapse                                               28%           25%                   26%                     26%   
                 Expense                                              7%            5%                    6%                      6%   
                 Mortality                                            2%            8%                    6%                      5%   
                 Other(4)                                             1%            8%                    6%                      5%   
Health underwriting risk                                              0%            4%                    3%                      3%   
Non-Life underwriting risk                                            0%            6%                    4%                      4%   
Counterparty default risk                                             6%            9%                    8%                      3%   
Operational risk                                                      2%            4%                    3%                      3%   
Total Undiversified Insurance Capital Requirement (GBPbn)(5)         1.9           5.0                   6.9                     5.5   
Diversification                                                    (0.7)         (2.2)                 (2.9)                   (2.2)   
Loss absorbing capacity of deferred taxes                          (0.2)         (0.6)                 (0.8)                   (0.6)   
Entities included under local capital requirements(6)                0.0           0.1                   0.1                     0.1   
Total Diversified Insurance Capital Requirement                      1.0           2.3                   3.3                     2.8   
Non-insurance                                                                                            2.3                     1.6   
Total Diversified Capital Requirement (GBPbn)                                                            5.6                     4.4   

(1) Represents European insurance businesses in OMW, and holding companies in OMW and OM plc, according to the current Group structure on a
    consolidated basis
(2) Represents the insurance businesses in OMEM on a deduction and aggregation basis
(3) As reported to the PRA as part of the Solvency II day one submission
(4) Other comprises of Disability, Life Catastrophe and Longevity risks
(5) Represents the capital requirements before diversification and the loss absorbing impact of deferred taxes for insurance entities in the Group only
(6) OM Bermuda is included under local capital requirements on an aggregated basis

The capital requirements by risk type represent the standard formula stresses for only the insurance entities in Old Mutual.

Equity risk reduced from 21% to 16% in 2016 as a result of a change in methodology to exclude the impact of OMLAC(SA)'s investment
in Nedbank; counterparty default risk increased from 3% to 8% mainly due to OMEM now including the impact of intercompany loans,
and the impact of legacy items at Old Mutual.

Selected regulated entity solvency statistics

Each of our individual businesses retain strong and resilient local statutory cover and have sufficient capital to support normal trading
operations and withstand regulatory and internal stress scenarios. In line with our capital management philosophy, throughout the
managed separation, we will continue to hold capital where the risk lies. A key objective of the managed separation is to deliver
appropriately, but not excessively, capitalised businesses to the market. As businesses prepare to standalone as separately regulated
groups, due consideration will be given to the regulatory group supervision that will ultimately apply to that business and the appropriate
development of risk limits and overall solvency levels for the businesses to meet our stated objective. It is only after this determination
that it will be possible to assess the potential for any additional returns to shareholders.

The Group continues to maintain strong local regulatory capital as shown in the table below.

                             Capital        Capital          31 December 1 January   
Local currency             Resources   Requirements   Surplus       2016      2016   
OMLAC(SA)(1) (Rbn)              45.9           14.3      31.6       3.2x      3.2x   
Mutual & Federal(2)(Rbn)         3.0            2.0       1.0       1.5x      1.4x   
Nedbank(3) (Rbn)                73.5           55.4      18.1       1.3x      1.3x   
OMW(4) (GBPbn)                   1.8            1.0       0.8       1.9x      1.9x   
OMBRE(5) ($bn)                   0.2            0.1       0.1       1.8x      1.3x   

(1) South Africa Statutory Valuation Methods (SVM) in accordance with the FSB requirements
(2) Capital Adequacy Requirement (CAR) in accordance with the FSB requirements
(3) In accordance with Basel III and excluding unappropriated profits (the cover ratio including unappropriated profits is 1.4x (1 January 2016: 1.4x))
(4) Solvency II basis (1 January 2016 comparative restated to reflect Solvency II basis). The Capital Resources figure presented includes intra-group capital
    funding of the loan provided to fund the acquisition of Quilter Cheviot
(5) 110% of Internal Economic Capital requirement as set by the Bermuda Monetary Authority. The 1 January 2016 position has been restated on this basis

The Financial Stability Board (FSB) has indicated that the Solvency Assessment and Management (SAM) framework in South Africa is
not expected to be implemented any earlier than 1 July 2017. This follows the tabling of the Insurance Bill in 2016 which is currently
under consideration by the Standing Committee of Finance in the South African Parliament. Draft Insurance Prudential Standards
setting out further detail of the SAM requirements have been further developed and consulted on by the FSB. OMEM remains well
capitalised, ready for implementation of the SAM framework.

OMEM had capital coverage of 2.4x on an internal economic capital basis at 31 December 2015. A South African sovereign downgrade
is expected to reduce the capital coverage by between 0.2x and 0.4x depending on the severity of the scenario outcome on financial
markets. Internal Economic Capital data for 2015 (ECAR) should not be interpreted as an indication or predictor of future capital ratios
or sensitivities under possible future regulatory regimes.

Principal risks

The principal risks facing the plc are covered in detail in the Risk report reflect the underlying markets and business models of each of
the four businesses as well as those at the plc Head Office centre. Whilst these vary in terms of detail, there are common themes and
the principal plc-wide risks are:

    -     Uncertain global economic conditions, impacting asset based fees and business flows as well as adding to the complexity of
          the managed separation process
    -     Political risk, particularly in South Africa, the UK, the US and Zimbabwe
    -     Strategic execution risk including the level of regulatory change across the Group
    -     Credit risk
    -     Currency translation risk, location of capital and sources of remittances

Governance structures are operating in line with the decision making framework, which has been adapted in light of the managed separation
strategy. Strong reliance is placed on the structures and processes in place by the businesses management and Boards. There is senior Old
Mutual plc management representation on each of the subsidiary Boards and the plc Board has joint meetings with the subsidiary Boards. In
addition, strategic systemic and execution risks are considered by plc management and overseen by the plc Board.These structures and
processes, together with businesses that are appropriately, though not excessively, capitalised, provide a solid base to support our business as
we pursue our managed separation strategy.

How our principal risks have changed over the year to date

For as long as we remain a Group the principal risks we face remain broadly consistent with those described in the 2015 Annual Report,
albeit with different emphasis on some risks and new risks for the plc.

During 2016 uncertain global economic conditions and political risk dominated the external risk landscape. This has manifested in
volatile global equity markets and record low bond yields being observed. Brexit and President Trump's US election victory created both
economic and political uncertainty globally, that is likely to continue well into 2017 given our substantial earnings in that country. A South
African sovereign downgrade remains a significant risk within 2017. Apart from the macro perspective, there is risk from managed
separation implementation, the major IT and change programmes underway in OMW and OMEM, and heightened regulatory risk
particularly in the context of regulatory reforms in the UK and South Africa.

Managed separation involves significant corporate and operational change for the businesses and plc Head Office, as well as execution
risk in relation to the transactions to give effect to the actual separation. In addition, the plc is currently managing a number of residual
risks relating to past merger, acquisition and disposal activity. These are not sufficiently material to class as a principal risk at a plc level,
but in the context of managed separation, these legacy risks may crystallise over the next few years. The scale of organisational change
that is occurring means we are particularly cognisant of culture and people risk in the businesses and the plc. We will continue to
manage our people and culture carefully as we all work towards the common goals set out under the managed separation. The
managed separation is planned to be executed within approved risk appetite and value, cost, time and risk and the balancing of
stakeholder interests, which will require optimising liquidity cash management and cash generation at both business and plc levels
which represent an increase in exposure to market risk, ensuring all regulatory capital requirements continue to be met and ongoing
monitoring of risk culture.

Regulatory and governance

The plc operating model has evolved from that of a "strategic controller", to an "active portfolio manager" during the implementation
phase of the managed separation. This means that there will be increased reliance and accountability upon business boards.
Independent chairs will be appointed to business boards at the appropriate time, to the extent they are not already in place, in readiness
for separation. Business committee chairs will be invited to present key issues directly to the plc Board. There will be more formal
interaction with the businesses and with the plc Board, based on shareholder rights and regulatory responsibilities. The plc and the
businesses will continue to prepare for forthcoming regulatory changes, cognisant of the implications of the managed separation and
evolving governance requirements. In particular, the incoming Twin Peaks regulation in South Africa will influence the level of the
appropriate strategic minority stake in Nedbank held by the new SA group, through its ownership of OMLAC(SA).

Performance measures

In line with statutory reporting requirements we report profits assessed on an International Financial Reporting Standards (IFRS) basis.
Consistent with last year, we complement IFRS reporting with additional disclosure on various alternative performance measures (APMs).

APMs are not defined by the relevant financial reporting framework (which for the Group is IFRS), but we used them to provide greater
insight to the financial performance, financial positions and cash flows of the Group and the way it is managed. Summary information
about the key APMs used in our financial review is provided in the following table.

APM                 Definition                                                Why is the measure used?
Group
Adjusting           AOP is a normalised profit measure to reflect the         Due to the nature of the Groups' businesses, AOP is
Operating Profit    underlying operating profit of the Group. It              an appropriate alternative basis by which to assess the
(AOP)               therefore adjusts IFRS profit for the impact of           underlying operating results. It enhances the
                    acquisitions and disposals; short-term fluctuations       comparability and understanding of the financial
                    and IFRS accounting treatments that do not fairly         performance of the Group.
                    reflect the economics of our operations. In
                    addition, AOP excludes the results of non-core
                    operations.

                    The calculation of AOP adjusts the basic IFRS
                    profit for a number of items as detailed in note C1
                    in the financial statements.

Adjusted Return     ROE is calculated as AOP (post-tax and NCI) over          It is measure of the return generated for shareholders
of Equity (ROE)     average ordinary shareholders' equity. For the            over the reporting period.
                    purpose of this calculation, the perpetual preferred
                    callable securities are deducted from equity to be
                    consistent with the related finance costs which are
                    included in AOP.

Adjusted Plc        ANAV uses a MCEV valuation basis for Emerging             ANAV represents a better indication of the value of our
NAV per             Markets covered business and the UK Heritage              covered and listed businesses than the disclosure in
ordinary share      business in OMW as well as the market value of            the IFRS balance sheet would provide.
(ANAV)              listed subsidiaries. Other businesses and other
                    assets are included at IFRS net asset value.

Free Surplus        Free surplus generation measures the efficiency of        Free surplus provides users of the Financial results of
                    the businesses in converting AOP profits into             plc with additional information on the cash generation
                    operational cash flows that support the plc capital       of the businesses that is not directly observed in the
                    management policy.                                        IFRS results.

Gross sales         Gross sales are the gross cash flows received             This measure is a lead indicator of reported and future
                    from customers during the period.                         revenue.

Net Client Cash     NCCF is the difference between money received             This measure is a lead indicator of reported net
Flows (NCCF)        from customers and money returned to customers            revenue.
                    during the period.
Emerging Markets

Present Value of    PVNBP uses the EEV methodology of determining             This measure is a lead indicator of reported and
New Business        the present value of new business premiums                expected revenues in our covered business.
Premiums            written during the reporting period. It is calculated
(PVNBP)             as 100% of new single premiums plus the
                    discounted present value of new regular
                    premiums.
   
Market              MCEV is a reporting standard for life insurance           It is designed to provide an accurate reflection of the
Consistent          companies that provide a common set of principles         valuation and performance of the long-term savings
Embedded            and guidelines for use in calculating embedded            business and a method of comparing companies on a
Value (MCEV)        value. MCEV measures the value of business in-            consistent basis
                    force based on a set of best estimate assumptions,
                    allowing for the impact of uncertainty in future
                    investment returns.
   
Return on           The annualised post-tax adjusted operating profit         It is a measure of the return generated for
Embedded            calculated on an EEV basis expressed as a                 shareholders over the reporting period on an
Value               percentage of the opening embedded value                  embedded value basis.
                    adjusted for dividends paid to equity holders.
Nedbank   
   
Headline            Headline Earnings is calculated with reference to         Headline Earnings is an earnings measure that is
Earnings per        Circular 2/2015 issued by the South African               required by the South African listing authorities. It
Share (HEPS)        Institute of Chartered Accountants. Headline              provides a basis to compare South African listed
                    earnings is a way of dividing the IFRS reported           peers.
                    profit between re-measurements that are more
                    closely aligned to the operating/trading activities of
                    the entity, and the platform used to create those
                    results.
   
Efficiency Ratio    The Efficiency Ratio is total expenses divided by         It measures the expense efficiency of the business.
                    the sum of net interest income and non-interest
                    revenue.

Liquidity           The Liquidity Coverage Ratio (LCR) aims to                It provides a view of the short-term resilience of the
Coverage Ratios     ensure that a bank holds adequate unencumbered            liquidity risk profile of banks.
                    High Quality Liquid Assets to cover total net cash
                    outflows over a 30-day period under a prescribed
                    stress scenario.
  
Economic Profit     Calculated as headline earnings less the cost of          It is a measure of the entity's ability to generate
                    equity. The cost of equity is calculated as the           earnings in excess of the economic cost of the capital
                    average ordinary shareholders equity (excluding           contributed.
                    goodwill) multiplied by the cost of equity.
OM Wealth  

Underlying AOP,     Pre-tax AOP, adjusted for certain one-off costs           The measure is used to provide users of the financial
before one-off      and the timing impact of acquisitions and disposals       statements greater insight into the long-term earning
adjustments         during 2015.                                              ability of the OMW current business on a comparable basis.
                                                                              
Integrated net      This reflects the total NCCF that has flowed              It is a lead indicator of revenue generation driven by
inflows             through two or more segments within OMW.                  an integrated business model
Operating           This is calculated as AOP over net revenue, where         An efficiency measure that allows users of our
margin              net revenue includes gross performance fees.              financial statements to assess what percentage of net
                                                                              revenues that become operating profit.
OM Asset Management

Economic Net        ENI is economic net income, the alternative               This measure is used by OM Asset Management to
Income (ENI)        management metric for OM Asset Management                 evaluate the financial performance of, and to make
                    profit. Similar metrics are used by US industry           operational decisions for, the business.
                    peers.

ENI Operating       The ENI operating margin is a non-GAAP                    An efficiency measure that allows users of our
margin              efficiency measure, calculated based on ENI               financial statements to assess what percentage of net
                    operating earnings divided by ENI revenue.                revenues that become operating profit.

Old Mutual Emerging Markets

Highlights (Rm)                  2016     2015    % change   
IFRS profit pre-tax            10,723   11,108        (3%)   
AOP (pre-tax)                  12,333   12,001          3%   
Gross Sales (Rbn)               213.0    215.5        (1%)   
Covered sales (APE)            13,526   12,732          6%   
Value of new business (VNB)     2,173    2,394        (9%)   
Gross written premium          16,173   14,297         13%   
Underwriting margin (P&C)        1.5%     2.8%   (130 bps)   
NCCF (Rbn)                       17.0     34.3       (50%)   
FUM (Rbn)(1)                  1,008.7    989.9          2%   

(1) FUM is shown on an end manager basis

Operating environment

Macroeconomic headwinds continued to challenge many of the markets in which we operate, with market and currency volatility
remaining high in a year of many unexpected global events and an uncertain domestic political environment in South Africa. Climatic
conditions were also severe in many of our markets with an extended drought further hampering economic growth and extreme weather
events permeating through the year. The regulatory environment remains dynamic across our businesses and markets. For example,
regulated interest rate caps have been introduced in South Africa and Kenya, which have impacted our lending operations in both markets.

During 2016 South Africa averted a credit rating downgrade of its sovereign debt to sub-investment grade status, however the threat of
a downgrade remains with all ratings agencies placing the country on a 'negative' outlook. The South African equity market enjoyed
strong growth during the first half but a slowdown in the second half of the year, and by the end of December the All Share index was
still circa 7% below the all-time peak reached early in 2015. The rand made a strong recovery in the second half of the year to trade
around R14/US Dollar, after reaching its weakest levels in history relative to major currencies in Q1 2016.

Although the US Dollar remains Zimbabwe's official currency, bond notes were introduced in November 2016 and the equity market
responded with a 30% rally as investors moved capital to 'safer' value investments. Many African countries experienced currency
depreciation in 2016, with Nigeria the most notable with a 50% depreciation in the official rate, whilst the East African economies were
generally more stable. India remained a growth economy during 2016 and economic growth in China remained high, at 6.7% for 2016.
Latin American economies suffered from the lag effects of the 2015 low commodity prices and financial strain from
escalating government debt.

Business developments

Strategy update

Our strategy is rooted in our vision of Enabling Positive Futures for our customers, who span all income segments and include both
retail and corporate relationships. Our business model uniquely positions us to deliver on this vision. By being focused on our
customers' needs, both in our asset gathering activities (for example by promoting financial inclusion and providing financial education
and advice); and in our asset management activities (for example by deploying funds into infrastructure, renewable energy, housing
etc.) we remain relevant in the face of social, environmental and technological changes.

This vision is in line with our heritage and, we believe, aligns with expectations of our current and future customers as well as broader
stakeholder groups such as employees we want to attract and retain, the communities we operate in, regulators, governments and
shareholders.

As we continue on our journey towards becoming an African financial services champion, we will focus on the following strategic
priorities:

(i)     Ensuring South Africa remains competitive and keeps growing as a market leader, with our asset management capability being
        recognised as the leading African asset manager,
(ii)    Delivering a sustained turnaround in our Property & Casualty capability,
(iii)   Protect and defend our dominant market positions across the SADC region,
(iv)    Building an East Africa financial services champion,
(v)     Driving our businesses in West Africa to achieve scale, and
(vi)    Compete on a differentiated basis in Latin America and Asia and make tactical portfolio shifts to create value in the medium to
        longer term.

We execute on our vision by driving growth through an integrated financial services offering. This delivers a holistic suite of financial
services to meet all our customers' financial needs through strong tied and independent distribution relationships, our extensive branch
network and an enhanced customer experience. We will implement this strategy in our core African markets where this holistic
proposition is most appropriate, and continuously expand and improve our direct financial solutions.

Our capabilities position us to serve customers across their various needs including life insurance, property and casualty insurance,
savings and lending through our unique distribution footprint, with a leading multi-channel network. This enables us to be competitive in
all income markets in South Africa, and similarly in the other markets we serve across Africa. We manage the operations to realise
growth at optimal risk levels such that we create enduring franchises that are well placed to benefit from the demographic trends in
these markets as our strong customer proposition positions us for superior growth and returns into the foreseeable future, to the
sustainable benefit of all stakeholders.

We have built a proven track record in delivering shareholder value through partnerships, with both public and private sector
enterprises, and within and across geographical borders. We believe that such mutually beneficial partnerships are a strategic
differentiator, unlocking value-added services for customers and growth potential for all partners involved.

Update on the strategic review of our portfolio perimeter and target operating model

During 2016 we communicated the six top priority areas of management focus as we prepare the business for an independent future, as
the principal operation of the new South African primary listed entity. This included, amongst others, a review of our portfolio perimeter
and our governance model.

We have completed the strategic review of our portfolio of businesses and concluded that we will prioritise our high-return and cash
generative businesses in sub-Saharan Africa and seek to improve returns from our recent investments in East and West Africa. Any
changes to our current portfolio of assets and businesses are likely to be effected through various corporate actions which will balance
time, value and risk in delivering enhanced value. These potential portfolio optimisation opportunities cover approximately R3.4 billion of
the OMEM Net Asset Value. We will provide further updates as to the timing and nature of any possible consequential transactions in
due course.

We have agreed with Old Mutual Wealth in the United Kingdom that we will acquire certain of its international operations that service
offshore South African clients. This business generated profits of GBP10 million in 2016.

The governance model review is near completion and aims to simplify our target operating model and unlock efficiencies in our
governance structures in order to speed up decision making, effect change and implement our strategy. Our strong executive and
experienced management team are committed to successfully lead OMEM through the changes in our organisation, whilst deepening
and building future leadership capabilities from within our diverse talent pool.

OMEM operating review

Financial Results

Despite the prevailing operating headwinds, OMEM recorded pre-tax AOP growth of 3% for the year, which reflects a 15% improvement
during the second half of the year. This was supported by strict expense management across the business, a positive contribution from
the South African businesses (82% of OMEM profits), partly offset by weaker underwriting results in South Africa. Gross sales of R213.0
billion were 1% down in 2016, compared to the strong 17% growth reported in 2015, with covered APE sales up 6% whilst non-covered
sales were down 3%. NCCF of R17.0 billion was more challenging in 2016 compared with our record 2015 base, however each
individual business cluster in South Africa as well as each aggregate region continued to record a positive NCCF in 2016. This
contributed to funds under management of R1,008.7 billion, being up 2% on the prior year.

IFRS profit of R10.7 billion was 3% down on the prior year, largely due to an impairment on the OMSEA goodwill of R1.3 billion (part of
the Rest of Africa operations). The impairment was driven by the constrained macroeconomic environment in Zimbabwe placing strain
on the future outlook for profit generation, synergies expected from the acquisition of UAP in East Africa have not yet manifested in the
financial results and the strain placed on the future profit prospects at Faulu as a result of the introduction of interest caps on lending in
Kenya. Nevertheless, we are still comfortable that through executing on our strategic priorities we will realise the desired medium and
long-term returns on these investments. This impairment has no impact on the reported AOP.

As a result, Return on Equity (calculated on a fully diluted IFRS basis) declined from 17.3% in 2015 to 16.6% in 2016. Excluding the
impact of this impairment, Return on Equity in 2016 improves to 19.0%. The Return on Capital (calculated on our historical allocated
capital basis) improved to 23.0%, up from 22.6% in 2015.

OMEM has a strong, well diversified and resilient balance sheet which will be able to withstand a number of shocks, including a possible
South African sovereign credit rating downgrade.

While OMEM is part of the current plc construct, our main metric for reporting profitability will remain Adjusted Operating Profit, in line
with the plc's requirements. However, as we prepare for an independent listing on the Johannesburg Stock Exchange, we are expecting
to align our key profitability metric with our local requirements and competitors.

South Africa operating review

In South Africa, AOP (excluding debt costs) rose 1% to R10,581 million mainly due to 8% growth in the Life & Savings profits, which
was supported by higher expected profits of R5,734 million and the net positive impact of assumption changes of R1,308 million, which
were partly offset by higher new business strain of R617 million. Net positive assumption changes in both Retail Affluent and MFC
included the one-off positive impact of transferring classes of existing risk business to a new tax fund introduced by a change in tax
legislation on risk business, offset by a strengthening of persistency assumptions. Central costs of R677 million were 30% below the
prior year due to expense reduction initiatives, including lower project costs (including investment in IT in South Africa). Debt costs of
R529 million in 2016 were higher than prior year of R296 million following the additional R3.1 billion of OMLAC(SA) debt issued in the
second half of 2015.

In Retail Affluent, profits of R4,088 million were 5% up on the prior year driven by higher asset based fee income and the net positive
impact of assumption changes. This was partly offset by higher new business strain following the loss of tax relief on new risk business
and weaker underwriting experience, however there were signs of improving underwriting experience in Q4 2016. The tougher
economic environment led to lower covered APE sales of R3,681 million, down 2% on lower savings sales, whilst non-covered sales
declined by 6% to R62,013 million driven by the tougher economic environment. As a result of this, coupled with disinvestment of
savings by customers under more financial strain, NCCF of R3.9 billion was significantly lower than the prior year, albeit in line with the
general industry experience.

MFC profits rose 2% to R3,058 million, driven by 7% growth in the Life & Savings result. This was largely due to good expense
management and the net positive impact of assumption changes despite a modest deterioration in retention experience and higher new
business strain. Covered APE sales of R3,956 million were up 9% supported by improved adviser productivity, higher average risk
premiums and strong credit life sales on the back of strong new loans extended under the new product construct that was launched in
response to the Department of Trade and Industry (DTI) interest rate caps. These interest rate caps led to lower Banking & Lending
profits where there were a decline in net interest income and non-interest revenue of 6% and 2% respectively. OMF's gross loan book
increased 10% to R15.1 billion from December 2015 due to an increase in personal loans, whilst maintaining strict lending criteria.
Notwithstanding the tough economic environment, the deterioration in credit losses of the portfolio was less than what was experienced
during 2015, driven by more stringent lending criteria and strong collections experience. his led to an improvement in the credit loss
ratio to 6.0% from 7.9% in 2015.

Corporate profits of R1,403 million were down 8% as a result of weaker underwriting results on group disability products, in line with our
previous experience during times of economic pressure, as well as group life assurance products. Lower expenses (benefitting from
improved administration efficiencies) and higher asset based fee income mitigated some of this impact. Nevertheless covered APE
sales of R3,037 million were 22% above the prior year due to strong Absolute Growth Portfolio smoothed bonus sales and group
assurance risk sales. NCCF of R3.7 billion is R1.0 billion down on the prior year, mainly due to lower non-covered inflows as the prior
period included large one-off deals. This is a good result in the current environment considering the prior year included large non-
covered flows that were not repeated in the current period.

OMIG profits were 3% lower than prior year, mainly as a result of the internalisation of Old Mutual Properties into OMLAC(SA) from 1
July 2017, lower returns and performance fees from the Alternative Investments boutique. This was partly offset by higher base asset
management fees earned in the period. NCCF of R8.2 billion, up 12%, was underpinned by 9% growth in non-covered sales to R42.2
billion following large inflows into the Liability Driven Investment boutique in latter half of 2016. OMIG's one year investment
performance has shown an improvement in the number of funds delivering top quartile performance relative to peers when compared to
the prior year, specifically the number of unit trust funds delivering above median performance increased to circa 70% at the end of
2016, up from circa 35% at the end of 2015.

The buyout of our joint venture shareholder in African Infrastructure Investment Managers (AIIM), completed in December 2015, has led
to the integration of the investment teams from AIIM and OMIG's IDEAS Fund. This provides OMEM with a larger unified infrastructure
investment team, which continues to create value for investors while making a tangible contribution towards growing African economies
and communities through infrastructure development.

The Property & Casualty results improved from an underwriting loss of R44 million in H1 2016 into a profit of R80 million for the full year
(2015: R273 million), benefitting from additional tactical reinsurance to protect earnings volatility purchased in the second half of 2016
and effective expense management. The underwriting margin of 0.9% (2015: 3.1%) reflects tough trading conditions and a competitive
environment, resulting in a higher average cost per claim for attritional losses, with the group schemes business having shown a
significantly deteriorated loss ratio. In addition, the weak macroeconomic environment has resulted in an increase in claims in CGIC,
particularly in its export division. The underwriting result stabilised in the second half of the year.

Gross written premiums growth of 3% to R12,082 million was impacted by management's decision not to renew business offered at
non-commercial terms. The agricultural business in particular was affected by the delayed impact of the ongoing drought in most of the
country through much of the year. Old Mutual Specialised Insurance (OMSI) (previously Corporate & Niche) was under pressure due to
the slowdown in economic activity. However, strong growth of 15% was recorded in iWYZE (previously Direct Distribution) as
turnaround initiatives started to bear fruit. In recent months we have strengthened our management teams in OMSI as well as in the
claims and underwriting departments with appointments of seasoned industry professionals.

As previously announced, OMEM is in advanced discussions with Atradius, a leading global trade credit, bonds and surety insurance
group for the disposal of a 25% stake in Credit Guarantee Insurance Corporation (CGIC). This will result in a strategic partnership that
will see OMEM benefit from the skills and experience of a global leader in this specialised sector. We anticipate that the transaction will
close during H1 2017 and it is subject to conditions consistent with this kind of transaction. This brings to an end the series of corporate
transactions relating to CGIC that started in 2015 and once completed OMEM would have increased its interest in CGIC from 52.5% to
75%; introduced a global leader as strategic partner; and improved its position as controlling shareholder through negotiation of a new
shareholders agreement.

Rest of Africa operating review

Profits were 18% higher than the prior year at R1,655 million, reflecting the full year inclusion of and improvement in UAP results.
Excluding UAP, profits were 12% ahead of the prior year, partly offset by the weaker Malawi result due to higher finance costs in MPICO
(a property development and management company) and increased credit impairment provision at FDH Bank, in which we hold a
minority stake. Covered APE sales of R1,095 million were 1% higher, driven largely by growth in Namibia and Ghana, whilst non-
covered sales rose 3% driven largely by strong asset management flows in Zimbabwe. This resulted in NCCF of R3.2 billion, which was
impacted by higher outflows in Namibia and Zimbabwe. Gross written premiums of R4,091 million, were up 57%. Excluding the impact
of UAP, these were up 3% on the prior year.

In Zimbabwe, profit growth of 20% from R708 million to R848 million benefitted from the depreciation of the rand against the US Dollar
on average in 2016. In constant currency profits grew 7%. NCCF of R1.2 billion was R0.3 billion lower than the prior year following
higher outflows as a result of the current economic crisis and uncertainty surrounding the introduction of bond notes. CABS, which
provides banking services in Zimbabwe, reported a 9% decline in its gross loan book to R8.3 billion, but a 3% increase in constant
currency. This reflects lower personal loans due to a more cautious lending strategy given the Zimbabwean economic outlook, which
was offset by an increase in secured mortgage lending. Deposits increased by 1% in constant currency from 2015 driven by an increase
in transactional accounts. The impairment provisions coverage reduced slightly and higher post-default recoveries resulted in the credit
loss ratio improving to 0.1% (2015: 3.1%).

Namibia profits of R446 million were 13% higher than prior year, with covered APE sales of R520 million up 8% on the prior year and
non-covered sales of R4,741 million down 19%. NCCF of R0.7 billion was significantly down on the prior year reflecting liquidity
challenges faced by the Namibian financial sector resulting in large outflows to banks and stockbrokers as well as a significant
disinvestment by the government pension fund.

The East Africa business was adversely impacted by an increase in Property & Casualty claims in the first part of the year, higher new
business strain affecting the Life & Savings result in Kenya and lower property income. This resulted in a loss of R67 million (2015: loss
of R42 million). Covered APE sales and non-covered sales were up 41% and 2% respectively, reflecting the inclusion of UAP sales from
H2 2015. Gross written premiums of R2,494 million were up 147%, whilst the Property and Casualty underwriting result of R50 million
was an improvement on the loss of R46 million reported in the prior year. Faulu, which provides banking services in Kenya, reported a
3% decline in its gross loan book to R2.5 billion. In constant currency, the loan book increased by 9% mainly driven by growth in
secured small and medium sized enterprise lending. Despite a difficult market, deposits increased by 4% in constant currency from
2015 largely through an increase in retail fixed deposits. A more cautious impairment approach resulted in an increase in the impairment
provision coverage to 2.3% (2015: 1.5%) while the credit loss ratio remained constant at 1.0%.

Progress has been made with the integration of UAP and Old Mutual Kenya and we are focussing on completing the merger
transactions by the end of Q2 2017. This has taken longer than originally expected due to challenges early in the process, however we
are now progressing at a steady pace towards the revised target date. Although the operational performance of the combined UAP-Old
Mutual Group delivered results approximately one year behind our initial expectations, we believe that our desired return on investment
will be achieved in the medium term. Our focus is on driving operational efficiency throughout the organisation, geographies and lines of
business. A restructure of the combined entity is currently underway which we expect to contribute to overall efficiency. Significant
changes have been made in the senior and middle management to help drive improved operational performance. In parallel, key
strategic stabilisation initiatives include the optimisation of the combined entity's balance sheet, completion of the restructuring and
consolidation of the debt and increasing occupancy of the property portfolio, with the review and potential sale of selected properties to
be implemented from 2017 onwards. Positive results from leveraging capabilities from across OMEM are already emerging in the
combined business. For example, in Kenya the Property & Casualty claims ratio has improved in Q4 2016 following a review of the
claims process by Mutual & Federal. The launch of dual-branding commenced in 2016 with the first launch in Kenya, whilst other East
African markets are scheduled for 2017.

In West Africa, an enhanced deal was finalised between OMEM and Ecobank Transnational Incorporated (ETI) at the end of May 2016
and implementation plans have been initiated to further leverage this bancassurance relationship. The enhanced deal is expected to
contribute meaningfully to respective long-term income measures for both OMEM and ETI, and facilitate customer growth, improved
retention, capital efficiency and cost synergies. Due to the delay in the finalisation of bancassurance regulations, progress in Nigeria is
currently slow, however encouraging results have already emerged in Ghana. We continue to consider opportunities that would
complement our business activities in the growing financial services sector of the region.

Latin America and Asia operating review

Latin America delivered profit growth of 29%, contributing R474 million to OMEM AOP. This was driven by improved investment returns
in Colombia, lower expense growth and higher fee based income in Colombia and Mexico, partly offset by reduced profit at AIVA
following a change in strategy with Old Mutual Wealth in the United Kingdom. Covered APE sales in Latin America were 37% above
prior year due to higher sales in Mexico via third party distribution, higher sales in Colombia following the launch of a new pension
savings product and the first time recognition of a portion of Colombia sales. Non-covered sales were 33% above prior year due to large
corporate deals secured in the latter part of 2016 as well as the first time recognition of Old Mutual Global Investors flows through AIVA
and a corporate savings product in Mexico. The OMGI flows are eliminated at OMEM level, with recognition in the Old Mutual Wealth
business in the United Kingdom. NCCF of R10.4 billion, up 1%, reflects large corporate flows secured in the last two months of the year,
partly offset by large low margin corporate disinvestments in both Mexico and Colombia.

In Asia, profits were down 24% on the prior year to R137 million driven by a loss in China resulting from lower investment income and
the impact of the reclassification of certain products for tax purposes. This was partly offset by the strong investment results reported in
the India business. Net client outflows of R0.8 billion were behind prior year due to high surrenders from universal life products in China,
partly offset by good sales generated in India from retail and group business.

Value of new business (VNB) and margin

Despite the tough environment we maintained a strong PVNBP margin of 3.2% in 2016. Covered APE sales were 6% above prior year,
driven by strong Absolute Growth Portfolio smoothed bonus sales. Despite the increase in sales, VNB reduced by 9% to R2,173 million
driven mainly by economic and other assumption changes. In South Africa the PVNBP margin reduced by 10 bps to 3.3%, mainly due to
the strengthening of operating and methodology assumption changes in MFC and Corporate. Sales volumes contributed positively to
the new business margin through improved distribution efficiencies in MFC and Corporate, partly offset by higher distribution costs in
Retail Affluent.

Embedded value

The Return on Embedded Value increased to 14.9% (from 13.5% in 2015). Operating MCEV earnings (post-tax) increased by 11% on
the prior year to R8,377 million, which included South African operating MCEV earnings of R7,549 million, up 15% on the prior year.
This was supported by higher expected returns, the positive impact of the transfer of classes of existing risk business to the new tax
fund and lower central and development costs. These were partly offset by a lower new business contribution and the negative impact
of operating assumption changes. Experience variances were positive overall, with expense, mortality, longevity and other profits being
partly offset by adverse persistency and disability experience. The tough economic environment continues to put financial pressure on
policyholders, and we saw the effect of this via deterioration in risk and persistency experience. In light of our experience variances,
negative persistency and positive longevity assumption changes were made in 2016. In addition, we increased the allowance for future
expenses to recognise additional one-off costs of strategic initiatives over the business planning period.

Solvency position and regulatory developments

As at 31 December 2016, OMLAC(SA)'s capital coverage was 3.2x (2015: 3.2x) using current regulatory capital rules (South Africa
statutory valuation method).

Although the South African Solvency Assessment and Management (SAM) regulations are not yet effective, this new framework will
significantly change the way in which the OMLAC(SA) solvency position will be assessed and reported. SAM also introduces new
requirements for financial groups, including the OMEM Group with its stake in Nedbank. We are confident that the SAM solvency
position for both OMLAC(SA) and the OMEM Group will reflect a strength and resilience commensurate with Old Mutual's reputation
and brand. We believe, on the current proposals, that we are well placed to meet the requirements of the SAM legislation when it
becomes effective.

We routinely conduct stress testing of our liquidity and regulatory capital positions through various adverse scenarios, most recently
including a possible SA sovereign downgrade scenario. The outcomes of these tests have demonstrated that even under significant
stress, capital cover remains well above regulatory requirements and our liquidity position is strong.

OMLAC(SA) credit rating

The OMLAC(SA) long-term and short-term South Africa national scale ratings were affirmed at "zaAAA/zaA-1" while its South Africa
national scale issue rating on the subordinated deferrable debt was lowered to "zaAA-" from "zaAA+". These rating actions follow
Standard and Poor's recent rating action on South Africa and are effective from 12 December 2016.

Customer and product experience developments in the year

OMEM continues to build its customer base and expand its offering through customer centric product innovations and expanding
distribution channels. Over the 5 year period from 2012 to 2016, OMEM has added 4 million customers to its base. As at the end of
2016, OMEM is servicing 10.9 million customers, of which 5.9 million are in South Africa and 4.4 million are in the Rest of Africa.

We continue to invest in IT to enable growth and manage risk, through a refresh of our IT landscape, including improving our direct and
digital offerings, replacing legacy systems from time to time and IT enablement of our East Africa business.

In South Africa we are investing to improve the customer experience, add new propositions and address ageing systems. The key driver
is to replace IT platforms that will reach end-of-life by 2020 and we have taken the opportunity to enhance our South African retail
propositions. We are implementing the changes in a staged manner covering both the enhancing of retail propositions and migrations
from the end-of-life platforms.

Having refined our plans we now estimate the total cost of this delivery at R3.1 billion and are holding an additional R350 million as
operational risk capital against potential uncertainties and risks related to an investment of this nature. The delivery timeline will run until
2020. To de-risk delivery we have included a strategic implementation partner and entered into fixed price contracts with delivery
partners. We continue to take a prudent approach to the capitalisation of intangible assets with circa 40% of the annual investment
being expensed through AOP. This expenditure aligns with our historic annual spend on strategic IT investments and with our future
growth aspirations by enhancing the customer experience through direct and digital offerings. The net financial position of this
investment, taking into account the benefits that will be realised, increased cost and depreciation, remains positive. We are committed to
growing our investment in technology over time to enable innovative growth of our business and improvement of the customer experience.

In South Africa, we have enhanced our direct offering by launching the Old Mutual Flexible Plan in September and are exploring the
possibility of making life cover available digitally. The Old Mutual Tax Free Plan continued its digital growth trajectory, with 26% of plans
now sold through this channel (up from 15% in 2015). In response to tough market and competitive conditions, we launched a balanced
composite index tracking fund with a zero asset management fee for retirement annuity customers and a high-yielding cash fund for
customers investing in the Tax Free Plan.

Integrated Financial Services is the key pillar for the MFC growth strategy to deliver customer value through providing a seamless
experience, particularly in the retail branches. The branch footprint grew by 33 to 292 in 2016, contributing 28% to total MFC covered
APE sales. These branches help us meet multiple financial needs of our customers through cross-selling via in-branch advisers and
enhanced client service delivery. As a result, we have seen better persistency experience compared to other retail channels serving this
market segment. The launch of the transactional Money Account in 2015 has also enhanced the product offering for the MFC customer
base, with a total number of 215,000 accounts opened as at the end of 2016.

Through our partnership with Telkom, we now cover over 10,000 customers every month for funeral benefits, at no extra cost to them,
simply by topping up with R100 or more of Telkom airtime every month. In November, OMEM entered into a partnership with
Startupbootcamp InsurTech, a global accelerator programme, which gives us access to a management team highly experienced in
successfully accelerating early stage startups to bring pioneering ideas to market, and support corporate partners to refine and enhance
their innovation initiatives. OMEM continues to leverage this relationship to garner early exposure and insights into emerging FinTech
developments to support our various lines of businesses.

In the first half of 2016 OMIG launched the Old Mutual Responsible Investment Equity Index Fund, which invests in the FTSE/JSE
Shareholder Weighted All Share Index, with a tilt towards companies with strong sustainability profiles. In August, OMIG announced a
partnership with the Nigerian Sovereign Investment Authority, to invest in agricultural and commercial real estate developments through
an investment targeted at US$700 million. The US$5 million investment in Apis Growth Fund I (the Fund), which is now invested in five
portfolio companies across Africa and Asia, showed significant traction over the year, closing at US$287 million in December 2016.

In Mutual and Federal, iWYZE continued its turnaround and growth trajectory, following the on boarding of a management team of
experienced industry professionals. It delivered strong premium growth of 15% against prior year and a sustained improvement in the
underwriting margin.

In the Rest of Africa, Old Mutual Namibia launched a new linked investment services platform under the Old Mutual Wealth brand with
support from the South African Wealth business, while in Malawi new savings plan and funeral risk products were launched in Q4 2016.
In Zimbabwe, we launched a drought insurance protection product for smallholder maize farmers, in partnership with Blue Marble
Microinsurance, a group of international insurance and reinsurance companies collaborating to extend protection to underserved
markets. In Ghana, a retirement product was launched that is distributed via ETI bank branches, which contributed a significant portion
of total covered APE in Ghana.

Group collaboration

Nedbank and OMEM (including Mutual & Federal) continue to work towards committed synergies of R1 billion by end 2017 through
deeper collaboration. We have exceeded our 2016 internal targets, and remain on track to meet our 2017 target of R1 billion.

Supporting economic transformation in South Africa

We continue to build relationships with regulators, authorities and other stakeholders and business partners, and much work has gone
into strengthening these in 2016, particularly in South Africa and Zimbabwe.

The Chief Executives of OMEM and Nedbank have played an active role in the CEO's Initiative, which has facilitated engagements
between business, government and labour to jointly and cohesively stimulate economic growth, instil investor confidence and address
socioeconomic development. They further jointly headed up the ratings work stream to avoid a sovereign credit rating downgrade.
OMEM committed R40 million towards the recently established R1.5 billion SME fund, spearheaded by the CEO Initiative, to stimulate
entrepreneurship and support the growth of small and medium enterprises within South Africa.

OMEM continue to invest in various education initiatives, committing circa R75 million in 2016. This included a further R50 million in the
seven-year Education Flagship programme in support of the National Development Plan's objectives. OMEM contributed to the
University of Cape Town to address the funding gap prevalent in the current system and to the Mandela Institute for Development
Studies, which offers scholarships to students at universities across Africa, with the aim of increasing social and economic cohesion
between African countries. OMEM is leading financial education programmes to enable higher levels of financial independence to our
customers in the long-term. This is driven through our successful classroom-based 'On The Money' financial education programme and
internet-enabled Moneyversity website.

We have committed an investment of R20.1 billion on behalf of our customers in approved renewable energy projects, which include
wind farms, solar power projects and a hydro-electric generation project. Furthermore, we have further made substantial investments in
areas of affordable housing, schools and agriculture. The Schools Fund, which has R1.4 billion in assets committed by OMIG's
Alternatives Investments boutique, has invested in 24 schools benefitting approximately 16,000 learners and creating jobs for more than
1,000 staff during 2016.

Key risks

The delivery of our strategic ambitions is subject to a number of key risks which are listed below and covered in more detail (including
mitigating actions) in the Old Mutual plc Annual Report.

-   Low economic growth, aggravated by a potential sovereign credit rating downgrade in South Africa, resulting in market losses that
    could significantly affect growth and profits.
-   Socio-political challenges include political and policy uncertainty in South Africa, as well as political risks in Zimbabwe, and the
    influence of these on financial markets and economic growth.
-   Regulatory change (including, inter alia, Retail Distribution Review, Retirement Fund Reform, Market Conduct oversight and Anti-
    Money Laundering) could all adversely impact sales growth, distribution economics, adviser numbers, assets under management
    and profit margins, while also requiring significant new investment in business processes.
-   Strong growth in our retail lending businesses in South Africa, Zimbabwe and Kenya as well as in our wholesale investment credit
    business has led to an increased focus on managing credit and liquidity risk in both first and second lines of defence.
-   There is a threat that new digital technologies could lower the barrier to entry and result in financial products being more
    commoditised, thereby changing the nature of competition, and requiring rapid development of new business models.
-   Cybercrime, which could manifest in a number of different ways, including breaches of client confidentiality, business interruption or
    unauthorised payments.
-   We take on strategic execution risk in pursuing new initiatives that support our business plan ambitions.

From a risk management perspective we prudently set our risk appetite to support our business strategy and we evaluate business
plans under both normal and stressed business conditions, to ensure they are robust and that our risk profile remains diversified from a
risk type and geographical perspective. We have embarked on a programme to further enhance our Enterprise Risk Management
capability, in both financial and non-financial risk areas. Some of the key outcomes include better risk-based decision making and better
capital allocation, a governance framework that is appropriate for a primary listing on the Johannesburg Stock Exchange, an improved
focus on strategic and forward-looking risks and a more effective control function using an integrated assurance approach.

Business prospects and outlook

Financial market sentiment toward emerging market economies has improved with expectations of lower interest rates in some
advanced economies, reduced concern about China's near-term prospects following policy support to growth and some firming of
commodity prices. Economic conditions are however expected to remain challenging in many markets and continued currency and
market volatility is likely.

Despite these conditions, we believe that OMEM's prospects are for continuing resilience in operating results, given our geographical
and line of business diversity and customer breadth.

The challenging operating environment has further heightened our resolve for expense efficiency, which will be aided by our reviewed
target operating model and related cost savings. One of the objectives of the strategic portfolio and governance review is to deliver an
improved cost to income ratio. However, we expect to spend up to R100 million per annum as recurring listing costs and between
R100 million and R180 million per annum on other recurring costs related to being a standalone company. As we implement business
improvements and establish local capabilities we also expect to incur one-off costs of between R250 million and R300 million over the
next 2 years, with approximately two thirds in 2017. To achieve an improved cost to income ratio we are continuously seeking to
implement operating cost efficiencies which will result in a carefully managed expense base. In 2017, our core non-commission
expenses (including the additional costs as a result of managed separation) are expected to grow at less than inflation. We also expect
that the actions that have been put in place at Mutual & Federal will deliver an underwriting margin inside our target range of 4% - 6%
through the cycle. Furthermore, we are confident that the strategy currently being implemented in our East Africa business, will result in
a Return on Equity of 20% within a 5 to 7 year timeframe.

Notwithstanding additional one-off and recurring costs related to an independent listing, we expect to deliver earnings growth in line with
our historical track record, whilst maintaining a focus on delivering an improved cost to income ratio and a sustainable dividend cover.

Emerging Markets data tables (Rand)

Adjusted operating profit by cluster (pre-tax, Rm)                                                          2016     2015   % change   
Retail Affluent                                                                                            4,088    3,893         5%   
Mass Foundation                                                                                            3,058    2,993         2%   
Corporate                                                                                                  1,403    1,522       (8%)   
OMIG                                                                                                         925      951       (3%)   
Property & Casualty                                                                                           80      273      (71%)   
LTIR                                                                                                       1,704    1,788       (5%)   
Central expenses and administration(1)                                                                     (677)    (968)        30%   
South Africa                                                                                              10,581   10,452         1%   
Rest of Africa                                                                                             1,087    1,026         6%   
LTIR                                                                                                         849      632        34%   
Central expenses and administration                                                                        (281)    (251)      (12%)   
Rest of Africa                                                                                             1,655    1,407        18%   
Asia & Latin America                                                                                         611      549        11%   
Central expenses and administration(1,2)                                                                      15    (111)       114%   
Asia & Latin America                                                                                         626      438        43%   
Debt costs                                                                                                 (529)    (296)      (79%)   
Total Emerging Markets                                                                                    12,333   12,001         3%   

(1) With effect from 2016, Asia & Latin America expenses have been reallocated from South Africa central expenses. Comparatives have been restated
(2) The central expenses for Asia & Latin America include a write back of foreign exchange loss accounted for in 2015 following the appreciation of the South
    African Rand against the US Dollar

Embedded Value (Rm)                                                                                         2016     2015   % change   
PVNBP sales(1)                                                                                            68,848   71,938       (4%)   
PVNBP margin (%)(1)                                                                                         3.2%     3.3%   (10 bps)   
Return on MCEV (RoEV) %                                                                                    14.9%    13.5%    140 bps   
VNB                                                                                                        2,173    2,394       (9%)   
MCEV operating earnings (post-tax and NCI)                                                                 8,377    7,529        11%   

(1) With effect from H1 2016, PVNBP includes life covered APE sales in Colombia. No PVNBP is calculated in respect of life covered APE sales in India and China

Nedbank

Highlights (Rm)                                                                                             2016     2015   % change   
IFRS profit after tax attributable to equity holders of the parent(1)                                      5,617    6,037       (7%)   
IFRS profit before tax(2)                                                                                 14,614   14,681          -   
AOP (pre-tax)                                                                                             15,925   14,729         8%   
Headline earnings                                                                                         11,465   10,831         6%   
Net interest income                                                                                       26,426   23,885        11%   
Non-interest revenue                                                                                      23,503   21,748         8%   
Net interest margin                                                                                        3.41%    3.30%              
Credit loss ratio                                                                                          0.68%    0.77%              
Efficiency ratio (including Associate income)                                                              56.9%    56.1%              
Return on Equity                                                                                           15.3%    15.7%              
Return on Equity (excluding goodwill)                                                                      16.5%    17.0%              
Common equity Tier 1 ratio                                                                                 12.1%    11.3%              

(1) IFRS profit after-tax attributable to equity holders of Old Mutual plc
(2) As reported by Nedbank

The full text of Nedbank's results for the year ended 31 December 2016, released on 28 February 2017, can be accessed on our
website http://www.oldmutual.com/media/news/view-news.jsp?news-id=31139 . The following is an edited extract:

Banking and economic environment

Global political and economic risk increased sharply as 2016 progressed, intensified by the UK's unexpected decision to leave the
European Union (Brexit), the election of Mr Donald Trump as US president and the general surge in antiglobalisation sentiment across
many developed countries. These developments have fuelled uncertainty, triggered significant changes in global investment strategies
and undermined capital flows to many emerging economies. Economic growth in a number of emerging countries was affected by
political challenges, the prolonged downturn in global commodity prices or severe drought conditions. The International Monetary Fund
estimates marginally slower global growth in 2016 of 3.1% (2015: 3.2%) due to advanced economies easing to 1.6% (2015: 2.0%) and
emerging markets expanding to 4.1%, with growth in sub-Saharan Africa slowing sharply to 1.6% (2015: 3.4%).

Growth of South African gross domestic product (GDP) slowed to 0.4% for the first three quarters of 2016, relative to growth of 1.3% in
2015. Rand volatility reflected the decline in business and investor confidence in SA and the risk of the sovereign credit rating being
downgraded to sub investment-grade levels by at least one of the rating agencies. Inflation increased above the upper 6.0% target
range of the South African Reserve Bank (SARB) to end the year at 6.8% and, as a result, the prime interest rate increased by 75 basis
points (bps) to end the year at 10.50%.

Following the combined efforts of government, business and labour to avert a sovereign-ratings downgrade and promote higher levels
of inclusive growth, all three major rating agencies, S&P Global Ratings, Moody's and Fitch, reaffirmed SA's investment-grade status in
2016. The risk of a downgrade remains in 2017, with two agencies ranking SA at only one notch above sub investment grade and all
three agencies placing the country on a negative outlook. A ratings downgrade will negatively impact all South Africans and, to avert
this, the SA economy requires higher levels of inclusive growth. We will continue to work with business, government and labour to
achieve this.

Tough macro conditions continued to place household finances and company profits under pressure. Credit demand has slowed down
substantially, with weak levels of growth in loans to households and companies, and modest growth in total private sector credit
extension of 4.6% in November 2016, compared with 10.2% at the end of 2015. The progress in 2016 on the ratings front, coupled with
a moderate improvement in global commodity prices and expectations of stronger global growth in 2017, lifted the rand to end 2016
almost 19% stronger against its trade-weighted basket of currencies. The SARB has indicated that the interest rate cycle is close to its
peak, as inflation is forecast to return to within the target range during 2017.

Review of results

Despite this challenging background, Nedbank's managed operations produced an excellent performance for the year ended 31
December 2016, driven by net interest income (NII) and non-interest revenue (NIR) growth, while historic loan origination practices and
focused credit risk management enabled the credit loss ratio (CLR) to remain below the mid-point of our through-the-cycle (TTC) target
range. Headline earnings grew 5.9% to R11,465 million and, excluding the impact of Ecobank Transnational Incorporated (ETI), our
managed operations grew headline earnings by 16.2% to R11,839 million.

Diluted headline earnings per share (DHEPS) increased 4.8% to 2,350 cents (2015: 2,242 cents) and headline earnings per share
(HEPS) grew 5.1% to 2,400 cents (2015: 2,284 cents). Excluding ETI, DHEPS was up 15.1%.

Return on average ordinary shareholders' equity (ROE), excluding goodwill, of 16.5% (2015: 17.0%) and ROE of 15.3% (2015: 15.7%)
reflect a slightly lower return on assets (ROA) of 1.23% (2015: 1.25%) as a result of the loss in equity-accounted earnings from ETI.
Excluding ETI, the ROA was 1.27% (2015: 1.18%). Economic profit (EP) decreased to R1,565 million (2015: R2,525 million) due to the
impact of ETI and a higher cost of equity (COE) of 14.2% (2015: 13.0%).

Our tier 1 capital ratio of 13.0% (2015: 12.0%) and our average liquidity coverage ratio (LCR) for the fourth quarter of 109.3% (2015
quarterly average: 88.5%) are both well above regulatory requirements of 8.375% and 70.0% respectively. On a pro forma basis our net
stable funding ratio (NSFR) is above 100%.

Cluster financial performance

Nedbank's managed operations generated headline earnings growth of 16.2% to R11,839 million (2015: R10,187 million) and delivered
an ROE, excluding goodwill of 16.7% (2015: 15.5%).

Nedbank Corporate Investment Banking's (CIB) excellent growth in headline earnings was driven by strong revenue generation while
maintaining a strong ROE despite the increase in capital allocation. Growth in revenue was underpinned by transactional banking client
gains and deeper client penetration through improved and coordinated client value management across all business units.

Retail and Business Banking (RBB) continued to improve its ROE, with Retail achieving an ROE of 17.6%, well above the Nedbank's
COE of 14.2%. RBB grew transactional revenue by 8.7%, driven by growth in transactional clients, particularly in the middle market, and
market share gains in selected advances and deposit categories. In addition, collections were well managed and impairments remained
below the TTC target range, with continued improvement in the personal-loan CLR.

Nedbank Wealth produced reasonable growth while maintaining a high ROE. This was supported by strong balance sheet growth and
continued low levels of impairments in Wealth Management. Despite subdued markets, assets under management increased 6.2%,
while Insurance earnings declined due to higher weather-related claims and lower investment income.

Rest of Africa's earnings were negatively impacted by earnings from our associate, ETI. The Southern African Development Community
(SADC) subsidiaries grew headline earnings off a low base, supported by lower head office costs and improved impairments, while we
continued to invest in staff, systems, distribution channels and regulatory compliance.

The decrease in losses in the Centre was largely due to the lower cost of basis risk retained in the Centre.

Financial performance

Net interest income

Strong NII growth of 10.6% to R26,426 million (2015: R23,885 million) was underpinned by growth in average interest-earning banking
assets of 7.0% and net interest margin (NIM) expansion to 3.41% (2015: 3.30%).

The margin improved by 11 bps, benefiting from endowment income of 18 bps, following the 102 bps increase in average interest rates
in 2016. This benefit was partially offset by among others:

     -    3 bps of asset pricing and asset mix changes, although the negative mix effect has slowed down materially as our personal-
          loan advances book has started to grow; and
     -    5 bps of cost of largely Basel III-related liquidity and funding initiatives.

To align with industry practice from November 2016 average balances of R6 billion in the CIB liquid-asset portfolio were included in our
trading book and removed from average interest-earning banking assets used as the denominator in the NIM calculation. This HQLA
portfolio, together with the associated market risk, is managed as part of the trading book within the Nedbank's Market Risk Framework.
The full-year 2016 NIM would have been 3.54% if the remaining R28 billion of average balances had been removed at the beginning of
the year. This change has no effect on NII.

Impairments charge on loans and advances

Impairments decreased by 4.9% to R4,554 million (2015: R4,789 million) and the CLR improved to 0.68% (2015: 0.77%) supported by
lower impairments across all our clusters.

The CLR reflects improvements in CIB's impairments following the increase in oil and other commodity prices and the settlement or
successful restructuring of certain counters during the year. RBB's CLR improved to below the lower end of its TTC target range. The
improvement was underpinned by lower impairments in Personal Loans and Business Banking. Post writeoff recoveries remained stable
at R1,157 million (2015: R1,137 million), of which R398 million (2015: R398 million) was attributable to Personal Loans and R370 million
(2015: R280 million) to MFC.

Total defaulted advances increased to R19,553 million (2015: R17,559 million), representing 2.72% of advances (2015: 2.53%). The
increase was largely due to the implementation of the SARB-driven new curing definition, which resulted in cured defaulted accounts
being kept in defaulted status for six months after curing. In addition, RBB's defaulted advances increased off a low base on the back of
cyclical increases in the secured lending and card portfolios. The slight increase in CIB's defaulted advances reflects stress in new
sectors following the settlement or successful restructuring of certain counters. Excluding the effect of the new curing definition,
defaulted advances increased by 5.0% to R18,445 million, which is a more accurate reflection of the underlying trend in the quality of
the book.

The total coverage ratio of 62.2% (2015: 65.0%) includes specific coverage of 37.4% (2015: 38.0%) and portfolio coverage on the
performing book of 0.69% (2015: 0.70%). The lower specific coverage was largely driven by the new curing definition, which led to
RBB's ratio decreasing to 41.1% (2015: 45.6%). Excluding the effect of the new curing definition, specific coverage would have been
45.3%. CIB's specific coverage increased to 26.3% (2015: 17.1%) in line with the settlement and/or restructuring of certain counters
during the year. Nedbank Group's advances portfolio has an approximate 60% weighting in wholesale advances where specific
provisions are determined on a deal-by-deal basis. Most wholesale advances are secured by collateral, including deep security pools
held against our commercial-property-finance portfolio. This creates a relatively lower loss given default and, as a function of this, lower
specific coverage levels in CIB and consequently at group level.

The portfolio coverage ratio in CIB remained stable at 0.29% and, since June 2016, central portfolio provisions increased by R150
million to R500 million, remaining at the same level at year end as in 2015. Additional overlays held in RBB decreased to R654 million
(2015: R699 million), mainly due to a reduction in overlays held for the unsecured-debt portfolio. These provisions take into account our
assessment of the risks in some of the more stressed sectors of the economy and other risks that have been incurred but have not yet emerged.

Nedbank's International Financial Reporting Standard (IFRS) 9 implementation programme is on track and we are well positioned for a
parallel run in 2017. While we expect a transitional increase in balance sheet provisions in line with the requirements of the standard,
this is not anticipated to have a significant impact on our capital adequacy levels.

Non-interest revenue

NIR grew 8.1% to R23,503 million (2015: R21,748 million), primarily driven by:

     -    Commission and fee income growth of 6.8% to R16,686 million (2015: R15,627 million), following gains in quality retail clients
          along with improved client coverage in CIB as the integration continues to deliver revenue benefits.
     -    Insurance income decreasing 5.6% to R1,727 million (2015: R1,830 million) as a result of higher weather-related claims.
     -    Trading income increasing 18.8% to R3,761 million (2015: R3,167 million) from higher market volatility, good client flows and
          deeper client penetration in CIB.
     -    Private-equity income increasing to R929 million (2015: R886 million) due to positive revaluations in certain entities, partly
          offset by lower profits realised.
Expenses

Expenses continue to be managed within expectations and increased 8.6% to R28,366 million (2015: R26,110 million), mainly as a
result of:

     -    Staff-related costs increasing 8.6%, consisting of -
                -    7.4% growth in remuneration and other staff costs, driven by a 6.3% average annual salary increase and additional
                     staff hires, mainly for regulatory change programmes;
                -    a 10.5% increase in short-term incentives in line with key performance metrics in managed operations, offset by the
                     impact of ETI; and
                -    a 33.0% increase in long-term incentives as we performed better against the Nedbank's corporate performance
                     targets, thereby increasing expected vesting levels.
     -    Computer processing costs increasing 14.2% to R4,047 million, including amortisation costs that increased 11.3% to R799
          million following the capitalisation of IT projects and branch reformatting costs.
     -    Fees and insurance costs being 8.5% higher at R3,040 million following increased volumes of revenue-generating activities
          such as cash handling and card issuing and acquiring.

Nedbank's growth in revenue of 9.4% exceeded growth in expenses. Excluding ETI, the JAWS ratio from managed operations was
positive at 0.8% (2015: -0.7%). The efficiency ratio increased to 56.9% (2015: 56.2%), while this metric improved to 56.4% (2015:
56.8%) if ETI is excluded.

Earnings from associates

The earnings in associates decreased to a loss of R105 million (2015: R871 million profit). This mainly comprised the equity-accounting
of our 21.2% share of ETI's Q4 2015 loss of R676 million, which was partly offset by our share of profits for the nine-month period ended
30 September 2016 of R551 million, in line with our policy of accounting for ETI earnings a quarter in arrear. The total headline earnings
impact of ETI for 2016 was a negative R374 million, including the R249 million impact of funding costs.

The carrying value of Nedbank Group's strategic investment in ETI decreased from R7.8 billion to R4.0 billion during the year, due to a
combination of foreign currency translation losses arising from the naira devaluation and therefore ETI's balance sheet decreasing in
US dollars, the rand strengthening against the US dollar, our share of losses incurred by ETI during the 12 months to
30 September 2016 as well as an impairment provision of R1.0 billion.

The market value of the Nedbank's investment in ETI, based on its quoted share price, was R2.4 billion on 31 December 2016 and R2.1
billion on 24 February 2017. The ETI share trades in low volumes, given its low free float, while also being listed in an illiquid market.
The difference between market value and carrying value is significant and prolonged, which has represented evidence of an impairment
indicator at 31 December 2016.

Where there is evidence of an impairment indicator, IFRS determines that an impairment test be computed, which compares the value
in use (VIU) and the carrying value of the investment. The computation of the VIU in accordance with IFRS is subject to significant
judgement as it is based on, inter alia, economic estimates, macro assumptions and the discounting of future cash flow estimates. This
is particularly complicated in the current economic environment in many of the jurisdictions in which ETI operates and with the limited
public information available. As a result, management has computed the VIU based on a number of scenarios by taking into account
publically available information. Based on the results of this VIU calculation, management determined that an impairment provision of
R1.0 billion was appropriate. This has reduced the carrying value of the Nedbank's investment to R4.0 billion at 31 December 2016.

This calculation is required to be revisited at each reporting period where the indicators of impairment would be reconsidered and the
VIU calculation would be reassessed taking into account any future changes in estimates and assumptions. Any significant changes
after this reporting period that require the VIU calculation or underlying carrying value of the ETI investment to be revisited could result
in a further impairment or a release of the current R1.0 billion impairment provision. The impairment was recorded within 'non-trading
and capital' items and does not impact headline earnings. Regulatory capital was not impacted as the impairment amount was less than
the full threshold deduction already taken against regulatory capital.

Nedbank's strategic investment in ETI has been impaired in accordance with the IFRS accounting considerations and the main driver of
this was the significant change in the economic estimates and macro assumptions from Nigeria. ETI remains an important long-term
investment for Nedbank, providing our clients with a pan-African transactional banking network across 39 countries and access to
dealflow in Central and West Africa since its acquisition in 2014. We remain supportive of ETI's endeavours of delivering an ROE in
excess of its COE in due course. Conditions in the key markets in which ETI operates are currently expected to remain difficult in 2017,
before improving in 2018 and beyond.

Statement of financial position

Capital

Nedbank continued to strengthen its capital position and we operated well within and/or above our internal capital adequacy targets. Our
tier 1 ratio improved to 13.0% (2015: 12.0%) as a result of strong organic capital generation and the issue of R2.0 billion of additional
tier 1 capital. Initiatives for risk-weighted asset optimisation in certain retail portfolios provided further support.

Nedbank's total capital ratio was further strengthened with the successful issuance of R2.0 billion of tier 2 capital instruments.

Our strong capital base supports our dividend cover of 2.00 times, which recognises our capacity to generate internal capital in the
economic environment projected in our business plans and takes into account that our approximate 20% share of associate earnings or
losses from ETI does not impact regulatory capital.

Funding and liquidity

Optimising our funding profile and maintaining a strong liquidity position remain priorities for the group in the current environment.

Nedbank's three-month average long-term funding ratio improved to 29.6% for the fourth quarter of 2016 (December 2015: quarterly
average of 28.7%), supported by growth in Nedbank Retail Savings Bonds of R4.7 billion to R19.2 billion and the successful issue of
R10.8 billion in senior unsecured debt. Our funding profile benefitted from our market share in the medium-to-longer-term wholesale
funding buckets, which reduced our LCR HQLA requirements and consequently, the all-in total cost of wholesale funding.

Nedbank's quarterly average LCR of 109.3% (December 2015: 88.5%) exceeded the minimum regulatory requirement of 70% in 2016
and 80% from 1 January 2017. In addition, Nedbank maintained appropriate operational buffers to absorb seasonal and cyclical volatility
in this ratio. We will continue to do this as we proactively position our balance sheet during the phase-in period as the LCR regulatory
requirement increases by 10% per annum to 100% by 1 January 2019.

Liquidity Coverage Ratio                                                                                   2016      2015   % change   
High quality liquid assets (Rm)                                                                         137,350   117,997        16%   
Net cash outflows (Rm)                                                                                  125,692   133,272       (6%)   
Liquidity Coverage ratio (%)(1)                                                                           109.3      88.5              
Regulatory Minimum (%)                                                                                     70.0      60.0              

(1) Average for the quarter

Further details on the LCR are available in the table section of Nedbank's Securities of Exchange News Service (SENS) announcement.

Nedbank's portfolio of LCR-compliant HQLA increased to a quarterly average of R137.4 billion (December 2015: quarterly average
R118.0 billion). Together with our portfolio of quick-liquidity sources, the total available quick liquidity amounted to R180.4 billion (2015:
R160.7 billion), representing 18.7% of total assets.

SARB released a directive on 8 August 2016 confirming that the available stable funding factor applicable to wholesale deposits in the
0-to-6-month bucket will be increased from 0% to 35% to better reflect the actual stability of these deposits in the SA context. Taking
cognisance of the finalised Basel Committee on Banking Supervision (BCBS) NSFR standard and the directive issued by SARB,
Nedbank is already compliant with the minimum regulatory requirements that will become effective on 1 January 2018 as our NSFR on
a pro forma basis, at 31 December 2016 was above 100%. The remaining key focus areas relating to the NSFR are finalising a number
of minor interpretational matters and ensuring that compliance is achieved within the context of balance sheet optimisation.

Loans and advances

Loans and advances increased 3.7% to R707.1 billion (2015: R681.6 billion). Advances growth continued to be led by wholesale
banking, although the rate of growth slowed down while growth in retail advances has remained relatively stable.

CIB's advances growth was mostly from commercial-mortgage advances increasing by 12.1% and term loans by 10.5% on the back of
a good deal pipeline. Our leading market share of 42% in commercial mortgages continued to be underpinned by a strong client base
and a large, secure asset pool.

Advances growth in RBB was driven by MFC, Personal Loans and Card growing ahead of the industry, while Home Loans grew at
market levels. MFC's growth of 7.7% and the increase in Personal Loans, Card and Home Loans of 7.7%, 5.9% and 2.4% respectively
are evidence of the progress made with our strategy of increasing cross-sell activities and doing more business with our clients, while
not relaxing credit criteria.

Advances growth in the Rest of Africa Cluster was driven by new-business flows and the consolidation of our acquisition of Banco Único
from October 2016. Excluding Banco Único, growth was 4.7%.

Deposits

Deposits grew 4.9% to R761.5 billion (2015: R725.9 billion), while total liabilities increased 4.4% to R884.3 billion (2015: R847.0 billion).
The loan-to-deposit ratio improved to 92.8% (December 2015: 93.9%).

Nedbank continues to actively enhance its deposit and transactional banking franchise through innovative and competitive products.
Our focus is on growing household and commercial deposits within the structure of the SA banking sector, which creates a large
proportion of institutional funding in the system. Good progress was made against our funding strategy, with RBB deposits up 9.7% to
R272.2 billion (2015: R248.1 billion) and our household deposit market share increasing to 18.7% in 2016 (2015: 18.4%), supported by
market share gains in current accounts to 19.3% in 2016 (2015: 18.4%). Growth took place across most deposit categories, with our
current accounts increasing 9.3%, call accounts and term deposits 6.0%, fixed deposits 7.0%, and cash management deposits by 9.7%.
This growth, together with that of negotiable certificates of deposit and other structured deposits, reduced the proportion of more
expensive foreign currency funding.

Group strategic focus

Our five strategic focus areas were refined in 2016 and strategic enablers introduced to ensure that we deliver on our financial targets of
increasing our ROE, excluding goodwill, closer to our medium-to-long-term target of COE plus 5% (currently estimated around 19%)
and reducing our cost-to-income ratio from 56.9% to within our medium-to-long-term target of 50-53%.

At the same time, to support strategic delivery further, we initiated an operating-model review in the latter part of 2016. The revised
model, which we expect to begin implementing in 2017, will enable us to develop greater agility with a view to innovating quicker and
responding to disruptive threats faster, optimally addressing new-client requirements and providing best in-class client experiences, and
creating an enterprise-wide capability with the client at the centre of all we do. In addition, we aim to organise ourselves, our data and
data analytics and IT to enable differentiation in our clients' universe, to respond more effectively to regulatory change and to improve
our ability to execute our strategy more effectively. Collectively these activities are currently expected to generate approximately R1.0
billion of pre-tax benefits by 2019 and will support our ability to meet our medium-to-long-term targeted cost-to-income ratio of 50-53%.

Old Mutual plc managed separation

Following the Old Mutual plc (OM) and Nedbank Group SENS announcements released on 28 June 2016, the managed-separation
process was presented at the OM Capital Markets event in London on 11 October 2016.

In summary, following the creation of a new SA holding company, OM intends to distribute, in an orderly manner, a significant proportion
of the OM group's shareholding in Nedbank to the shareholders on the register of the new SA holding company at that time, leaving Old
Mutual Emerging Markets (OMEM) as the principal business in the group. Through its ownership of Old Mutual Life Assurance
Company SA the new SA group will retain an appropriate strategic minority stake in Nedbank, with the exact level still to be determined
together with Nedbank, based on OMEM's commercial relationship with Nedbank and influenced by the implications of the incoming
Twin Peaks regulation. The boards of directors and management teams of OM and Nedbank continue to work closely together on these
matters. The announced target date for the material completion of the managed separation is the end of 2018.

For Nedbank it is business as usual and OM's decision will have no impact on the strategy and the day-to-day management or
operations, nor will there be an impact on the staff and clients of Nedbank. Our engagements have been at an arm's length, overseen
by independent board structures. OM operates predominantly in the investment, savings and insurance industry, which has little overlap
with banking. Our technology systems, brands and our businesses have not been integrated and we compete in the areas of wealth and
asset management and personal loans.

Our collaboration with OM to unlock R1.0 billion of synergies from the OM businesses in SA will continue to be underpinned by OM's
strategic shareholding of Nedbank Group. We are fully committed to working with Old Mutual South Africa to deliver benefits from the
synergies.

Economic outlook

SA's economy is forecast to grow by around 1.1% in 2017 off a low base. The risk to growth remains on the downside. Inflation is
expected to return to within SARB's inflation target range, resulting in our forecast of interest rates decreasing in the second half of the year.

The improvement in the economy is expected to be underpinned by a recovery in agriculture as the drought recedes, and in mining and
manufacturing as global commodity prices drift higher. Corporate credit demand should benefit from the recovery in these sectors,
although demand will remain contained by global growth, the uncertain domestic policy environment, the pace of the rollout of
government's renewable-energy programme and generally difficult operating conditions.

Households will remain vulnerable, with job creation and wage growth unlikely to bounce back quickly. Household income and spending
will therefore remain under pressure in the first half of the year. However, some relief is expected later in the year as inflation recedes
and interest rates are expected to decline. This should lead to household credit demand improving moderately from low levels.

Government spending will be kept in check by the need to reduce the budget deficit and contain the rise in government debt to avoid a
sovereign-rating downgrade.

Prospects

Our guidance on financial performance for the full year 2017 is as follows:

     -    Average interest-earning banking assets to increase slightly ahead of nominal GDP growth.
     -    NIM to be slightly above the 2016 rebased level of 3.54%.
     -    CLR to increase, but to remain below the mid-point of our target range of 60-100 bps.
     -    NIR, excluding fair-value adjustments, to grow at upper single digits.
     -    Associate income, including ETI's earnings likely to remain volatile and uncertain (reported quarterly in arrear)
     -    Expenses to increase by mid-to-upper single digits.

Our financial guidance is for growth in diluted HEPS for the full 2017 year to be greater than growth in nominal GDP (consumer price
index plus GDP growth).

Nedbank data tables (Rand)

Cluster performance                                                                        Headline earnings (Rm)          RoE (%)   
                                                                                       2016         2015   % change     2016    2015   
Nedbank Corporate & Investment Banking                                                6,014        5,208        15%    21.1%   22.6%   
Nedbank Retail & Business Banking                                                     4,960        4,460        11%    18.9%   16.6%   
Nedbank Wealth                                                                        1,192        1,134         5%    35.2%   41.5%   
Rest of Africa                                                                           87           47        85%     2.1%    1.4%   
Centre                                                                                (414)        (662)        37%                    
Managed operations                                                                   11,839       10,187        16%    16.7%   15.5%   
ETI                                                                                   (374)          644     (158%)   (9.7%)   18.1%   
Total                                                                                11,465       10,831         6%    15.3%   15.7%   

Cluster performance                                                Average Allocated Capital              Economic Profit (Rm)   
                                                                     2016          2015   % change      2016         2015   % change   
Nedbank Corporate & Investment Banking                             28,462        23,096        23%     1,970        2,205      (11%)   
Nedbank Retail & Business Banking                                  26,254        26,924       (2%)     1,230          960        28%   
Nedbank Wealth                                                      3,387         2,734        24%       711          778       (9%)   
Rest of Africa                                                      7,942         6,799        17%   (1,413)        (193)     (632%)   
Business clusters                                                  66,045        59,553        11%     2,498        3,750      (33%)   
Centre                                                              9,516         9,864       (4%)     (933)      (1,225)        24%   
Total                                                              75,561        69,417         9%     1,565        2,525      (38%)   
Cost of equity(1)                                                                                      14.2%        13.0%              

(1) The cost of equity (COE) is forecast at 14.1% for 2017

Credit loss ratio by cluster (%)                                                      % banking                    Through-the-cycle
                                                                                       advances   2016    2015         target ranges       
Nedbank Corporate & Investment Bank                                                      48.9%   0.34%   0.40%         0.15% - 0.45%   
Nedbank Retail & Business Banking                                                        43.9%   1.12%   1.14%         1.30% - 1.80%   
Nedbank Wealth                                                                            4.4%   0.08%   0.15%         0.20% - 0.40%   
Rest of Africa                                                                            2.7%   0.98%   1.25%         0.65% - 1.00%   
Total credit loss ratio                                                                          0.68%   0.77%         0.60% - 1.00%   

                                                                             Net Interest Margin                Loans and advances   
Cluster performance (Rm)                                                            2016     2015      2016          2015   % change   
Nedbank Corporate & Investment Bank                                                1.97%    1.98%   370,199       355,784         4%   
Banking activity                                                                                    335,113       321,699         4%   
Trading activity                                                                                     35,086        34,085         3%   
Nedbank Retail & Business Banking                                                  6.08%    5.82%   289,882       279,929         4%   
Nedbank Wealth                                                                     2.15%    1.93%    28,577        28,206         1%   
Rest of Africa                                                                     4.17%    3.53%    19,582        16,515        19%   
Centre                                                                                              (1,163)         1,198     (197%)   
Total                                                                              3.41%    3.30%   707,077       681,632         4%   

Credit loss ratio analysis (%)                                                                                          2016    2015   
Specific impairments                                                                                                   0.69%   0.70%   
Portfolio impairments                                                                                                (0.01%)   0.07%   
Total credit loss ratio                                                                                                0.68%   0.77%   

Capital (Basel III)                                                     2016    2015   Internal target range   Regulatory minimum(1)   
Common equity Tier 1 ratio                                             12.1%   11.3%           10.5% - 12.5%                   6,875   
Tier 1 ratio                                                           13.0%   12.0%                  >12.0%                   8,375   
Total capital ratio                                                    15.3%   14.1%                  >14.0%                  10,375   

(Ratios calculated include unappropriated profits)

(1) The Basel III regulatory requirements are being phased in between 2013 and 2019, and exclude any idiosyncratic or systematically important bank
    minimum requirements

                    Metric                   2016 performance           Medium-to-long-term targets                2017 outlook                                                                   
RoE (excluding goodwill)                            16.5%           5% above cost of ordinary shareholders'        Below target
                                                                                   equity(1)
Growth in diluted headline earnings per              4.8%             >- consumer price index + GDP growth +       Below target                         
share                                                                                 5%                                                             
Credit loss ratio                                   0.68%             Between 0.6% and 1.0% of average           Increases but remains
                                                                             banking advances                  below midpoint of target
                                                                                                                       range
NIR-to-expense ratio                                82.9%                           > 85%                          Below target
Efficiency ratio (including associate               56.9%                       50.0% to 53.0%                     Above target
income)(1)
Tier 1 capital adequacy ratio (Basel III)           13.0%                           >12.0%                         Within target
Economic capital                               Internal Capital Adequacy Assessment Process (ICAAP): A debt rating (including 10% capital buffer)
Dividend cover                                    2.00 times                   1.75 to 2.25 times               Within target range

(1) The COE is forecasted at 14.1%

Shareholders are advised that these forecasts are based on organic earnings and our latest macroeconomic outlook.

Old Mutual Wealth

Significant strategic progress in year of transition

"Old Mutual Wealth's results for the year ended 31 December 2016 continue to reflect management's strategic ambition to successfully
transition the business from a low margin platform and closed life business in 2012 into a leading, integrated, advice-led, UK investment
and wealth management business.

"Overall the business has continued to perform well in difficult market conditions, reporting an adjusted operating profit of GBP260 million
(2015: GBP307 million). Before allowing for the reduction in exit fees in our Heritage business and costs related to managed separation and
changes to our executive management team, our adjusted operating profit for 2016 would have been GBP298 million (2015: GBP305 million).
Since the year end we have sold our Italian business, completing the exit of all our European life businesses and agreed the transfer of
the South African branches to Old Mutual Emerging Markets. Adjusted operating profit from these businesses amounted to GBP34 million
in 2016.

"As we transition to a standalone listed entity, our costs will increase, reflecting both those previously incurred by Old Mutual plc and
incremental costs. The operating margin, which in the future will be reported excluding the one-off costs associated with separation from
Old Mutual plc, is expected to decrease in the short-term as the business incurs the ongoing costs associated with an independent
future. Over the medium term our operating margin should improve from 32% reported in 2016 as we build scale on an efficient
operating base.

"Despite a challenging year for the sector where UK net retail sales for the whole of the industry amounted to GBP4.7 billion, triggered by
investor uncertainty particularly in the lead up to, and following, the UK referendum to exit the European Union, Old Mutual Wealth's net
client inflows remained strong. Net client cash flow at GBP5.2 billion, as a percentage of opening funds under management, excluding our
closed book, was 6%, demonstrating the increasing value of our wealth solutions for our customers and the attractive benefits of our
integrated business model. We target net client cash flow growth of over 5% of opening funds under management. Funds under
management were GBP123.5 billion at the end of 2016, up 18% on prior year.

"As part of our investment in the future success of the business, we took a number of important measures to focus on customers' UK
and cross-border needs, including expanding our financial advice capability and offering a variety of new investment solutions. The
inorganic activity during 2016 has been smaller "in-fill" acquisitions that have supplemented our core organic strategy of growing and
consolidating distribution in the affluent and high net worth space. As a result we have built the second largest advised investment
distribution business in the UK from a standing start two years ago. The focus now is one of integration and driving operational leverage.
Outside of our Old Mutual Wealth Private Client Advisers, where we expect some small acquisitions in 2017, we do not anticipate further
inorganic activity before our separation from Old Mutual plc.

"We believe that Old Mutual Wealth will benefit from the growing demand in the UK for financial advice, investment and wealth solutions
provided in a transparent and increasingly efficient manner. We are making excellent progress towards becoming a standalone
business."

Paul Feeney, CEO
March 2017

Highlights                                                                                                   2016    2015   % change   
IFRS profit/(loss) after tax attributable to equity holders of the parent (GBPm)                              (4)      42     (110%)   
AOP (pre-tax, GBPm)                                                                                           260     307      (15%)   
Invest & Grow AOP (pre-tax, GBPm)(1)                                                                          210     205         2%   
Manage for Value AOP (pre-tax, GBPm)(2)                                                                        57     102      (44%)   
Other shareholder income and expenses (OSIE) (pre-tax, GBPm)(3)                                               (7)       -     (100%)   
Underlying AOP, before one-off adjustments (pre-tax, GBPm)(4)                                                 298     305       (2%)   
Gross sales (GBPbn)                                                                                          21.1    20.1         5%   
NCCF (GBPbn)                                                                                                  5.2     6.9      (25%)   
FUM (GBPbn)                                                                                                 123.5   104.4        18%   
Pre-tax operating margin(5)                                                                                   32%     40%              
Revenue margin (bps)(6                                                                                         63      66              

(1) Invest & Grow includes Old Mutual Global Investors, Quilter Cheviot, UK Platform, Old Mutual International and UK Other (which consists of Intrinsic,
    series 6 pensions, institutional platform assets, protection products and service companies)
(2) Manage for Value includes Heritage, Europe Open (Italy) and Europe Heritage (all divested)
(3) OSIE for 2016 includes the costs incurred to prepare the business for separation from Old Mutual Group of GBP7 million ("managed separation and
    standalone costs")
(4) Pre-tax AOP, after adjusting for one-off costs associated with Heritage fee restructuring charges and managed separation, and the net contributions of
    acquired or disposed of businesses during 2015
(5) Operating margin is pre-tax AOP divided by net revenue, where net revenue includes gross performance fees
(6) 2015 revenue margin has been restated to be consistent with the 2016 basis of calculation

Financial results

Gross sales

Old Mutual Wealth gross sales of GBP21.1 billion were up 5% from 2015 (GBP20.1 billion). Gross sales in Old Mutual Global Investors (OMGI)
were 19% higher than prior year with good sales into the Global Equity Absolute Return fund and the Cirilium fund range. UK Platform
gross sales, of which 16% were generated via Intrinsic advisers, were 4% higher than prior year. Pension sales in the UK Platform have
performed well and were 22% higher than prior year as our flexible drawdown pension continues to meet investors' needs following the
2015 pension reforms. Consistent with wider industry trends, 2016 saw tax changes favour large pension contributions rather than ISAs,
and as a consequence ISA sales were 12% below prior year.

Net client cash flow (NCCF)

Net client cash flow performance was robust at GBP5.2 billion which includes GBP1.0 billion of net redemptions from our Heritage closed book
of business. This was 25% lower than prior year (2015: GBP6.9 billion) but was a strong performance given the challenging market context.
Integrated flows were GBP1.8 billion, an increase of 6% from 2015 (GBP1.7 billion). Investors have remained cautious following uncertain
global economic and political developments, including the "Brexit" vote, during the year. We experienced more normalised levels of
flows following the US presidential election result as markets began to stabilise in the short-term, with Q4 2016 net inflows of GBP1.1
billion. Net inflows were 6% of opening funds under management, excluding our closed book, demonstrating robust growth in a difficult
environment. 65% of the GBP5.2 billion of net flows were through external partners illustrating the benefits of our business model.

OMGI net inflows were GBP2.4 billion, 31% down on prior year (2015: GBP3.5 billion) but strong against UK net retail sales for the industry as
a whole of GBP4.7 billion. Whilst we have experienced continued strong net inflows into the Global Equity Absolute Return fund and the
Cirilium range (GBP1.7 billion and GBP1.0 billion respectively), we did encounter increased outflows in Q3.

Quilter Cheviot net inflows of GBP0.8 billion were robust despite being adversely impacted by investor cautiousness and were 20% behind
prior year (2015: GBP1.0 billion). This was in line with wider industry trends with reduced investor activity in the discretionary asset
management market.

Intrinsic continues to secure increasing flows for our business, in part due to the expanded capabilities of Old Mutual Wealth Private
Client Advisers (OMWPCA). The restricted channel accounted for GBP0.9 billion (32%) of UK Platform net inflows in 2016 (2015: GBP0.7
billion, 25%). Intrinsic also contributed 42% (GBP1.0 billion) of OMGI's net inflows in 2016 through the Cirilium and Generation fund ranges.
Integrated net inflows from Intrinsic into Quilter Cheviot amounted to GBP0.1 billion, over half of which was through OMWPCA.

UK Platform net inflows were GBP2.8 billion, broadly in line with prior year (2015: GBP2.7 billion). This was driven by strong pension growth,
with net inflows 26% up on 2015.

International offshore net inflows of GBP0.7 billion were in line with prior year (2015: GBP0.7 billion). Economic conditions and increased
regulatory impacts adversely affected net flows in the Middle East, Singapore and Hong Kong, while European sales were lower
following last year's UK pension reforms which made international pension transfers less attractive for some UK expatriates. We have
been able to maintain the level of NCCF by having a geographically diversified business. The lower sales in Latin America and Asia,
which were strong in 2015, were offset by strong sales in the UK and South Africa regions (up 57% and 22% respectively on prior year sales.

UK Heritage net outflows of GBP1.0 billion were lower than prior year (2015: GBP1.1 billion of net outflows), despite a large institutional
scheme with GBP700 million funds under management that began transferring out during H2 2016. The cGBP460 million of remaining
members' assets related to this scheme is expected to transfer out during 2017. During 2016 we took the decision to not actively seek
new institutional business opportunities on the UK Heritage platform due to the low margins that are generated from this business line.
Improved surrender rates on our retail closed books have limited the impact on the net position.

In Italy net inflows were GBP0.2 billion (2015: GBP0.6 billion) with investor uncertainty in the local market resulting in a shift towards traditional
life and guaranteed products, which we choose not to offer.

Funds under management (FUM)

FUM were GBP123.5 billion, up 18% from the end of 2015 driven by positive NCCF of GBP5.2 billion in the period and positive market
performance of GBP13.9 billion. Average FUM were 11% ahead of the prior year and heavily weighted to the market rally in H2 2016. Intra-
group FUM were GBP13.8 billion, most of which is managed by OMGI, up from GBP10.9 billion at 2015 year end.

OMGI FUM were GBP31.4 billion, up 27% on the start of the year (31 December 2015: GBP24.7 billion) and increasingly diversified with
Cirilium now exceeding the GBP4 billion mark, GEAR close to GBP6 billion and UK Mid Cap, UK Alpha, and the Select fund range all over GBP2
billion of FUM. Quilter Cheviot FUM were up 16% from the start of the year to GBP20.7 billion (31 December 2015: GBP17.8 billion). Funds
managed by OMGI and Quilter Cheviot represent over 40% of the total Old Mutual Wealth FUM. OMGI manages 15% of UK Platform
assets, increasing from 14% at 2015.

UK Platform assets were GBP41.4 billion, up 20% since the start of the year (31 December 2015: GBP34.5 billion) and International offshore
FUM of GBP18.9 billion were up 18% over the same period (31 December 2015: GBP16.0 billion).

IFRS post-tax profit/loss

Old Mutual Wealth IFRS post-tax loss was GBP4 million for 2016, compared to a profit of GBP42 million in 2015. Adjusting items between
adjusted operating profit and IFRS profit include IT transformation costs of GBP102 million pre-tax (2015: GBP97 million) and charges
reflecting the effect of goodwill impairment and the impact of acquisition accounting of GBP138 million (2015: GBP120 million) including GBP46
million goodwill impairment as a result of the sale of the Italian business. Prior year included a GBP52 million loss in relation to the sale of
our French and Swiss businesses.

Adjusted operating profit (AOP)

Old Mutual Wealth pre-tax adjusted operating profit ("AOP") of GBP260 million for 2016 was 15% lower than prior year (2015: GBP307 million).
This was after allowing for GBP26 million negative impact related to changes in Heritage fees, GBP7m managed separation and standalone
costs and GBP5m of costs related to changing our executive management team and includes GBP26 million of net performance fees earned in
2016, which was broadly in line with the prior year of GBP25 million.

Invest & Grow business

Invest & Grow pre-tax AOP of GBP210 million has increased by 2% from prior year (2015: GBP205 million) driven by revenue growth, partially
constrained by lower revenue margin and increased costs associated with investing in revenue generating initiatives. Around GBP27 million
of the profit in 2016 was generated by the increasing inter-connectivity of our business, most of which was recorded within OMGI.

Profit in OMGI increased by 11% to GBP79 million (2015: GBP71 million) driven by revenue growth. Costs also increased year on year
reflecting organic investment in desk builds and increasing variable compensation as the funds under management increases. UK
Platform profit of GBP27 million was lower than 2015 (GBP33 million) due to the impact of our decision to remove our minimum investor charge
and drawdown charge, the FCA sunset clause and competitive industry margin pressures. 2015 included ten months of profit from
Quilter Cheviot following the acquisition at the end of February 2015. On a full year basis profit would have been GBP7m higher in 2015.
Quilter Cheviot profit in 2016 was GBP46 million, GBP12 million higher than that recorded for the ten months in 2015. International profit of GBP52
million was marginally higher than prior year (2015: GBP50 million) as we adjusted our charging structures to provide better customer
outcomes and reflecting the AAM acquisition. The reduction in UK Other profit from GBP17 million in 2015 to GBP6 million in 2016 was due to
investment in OMWPCA and the planned charge in Intrinsic in respect of successful business delivery relating to the original acquisition
agreement of GBP10 million.

As noted at the half year, whilst strengthening our executive management team we incurred GBP5 million of restructuring costs in H1 2016.

Manage for value business

Manage for value profit was GBP57 million in 2016, a 44% reduction from 2015 (GBP102 million). In 2015 we benefitted from GBP9 million
reported profit in Switzerland (sold in September 2015). The previously announced restructuring of our Heritage fees has reduced profit
by GBP26 million in 2016, including legal and other costs experienced in the second half of 2016 (GBP21 million at H1 2016). Of this, GBP5
million was recorded in higher administration expenses, and GBP21 million as an offset to revenues.

Other shareholder income and expenses

We have incurred GBP7 million of one-off costs associated with the managed separation activity as we invest in business readiness in
preparation for becoming a standalone business (GBP3 million was accounted for as managed separation transaction costs and GBP4 million
as standalone business costs).

Underlying AOP pre-tax

As set out in the table below, on an underlying basis profit was 2% lower than prior year (2016: GBP298 million, 2015: GBP305 million).
Underlying profit excludes the impact of corporate activity, the costs associated with Heritage fee restructuring, managed separation and
standalone costs and costs related to changes to the executive management team.

                                                                                                                       2016     2015   
Invest & Grow(1)                                                                                                        210      205   
Manage for value(2)                                                                                                      57      102   
Other shareholder income and expense(3)                                                                                 (7)        -   
Reported IFRS AOP pre-tax                                                                                               260      307   
Corporate activity(4)                                                                                                     -      (2)   
Heritage fee restructure                                                                                                 26        -   
Managed separation and standalone costs                                                                                   7        -   
Changes to executive management team                                                                                      5        -   
Underlying IFRS AOP pre-tax                                                                                             298      305   

(1) Invest & Grow includes Old Mutual Global Investors, Quilter Cheviot, UK Platform, Old Mutual International and UK Other (which consists of Intrinsic,
    series 6 pensions, institutional platform assets, protection products and service companies)
(2) Manage for Value includes Heritage, Europe Open (Italy) and Europe Heritage (all divested)
(3) OSIE for 2016 includes the costs incurred to prepare the business for separation from Old Mutual Group of GBP7 million ("managed separation and
    standalone costs")
(4) Corporate activity includes Quilter Cheviot, Switzerland and AAM acquired in 2016

Revenue

Average assets during 2016 were 11% higher than during the prior year, contributing to increased fund-based revenue of GBP702 million in
2016 compared to GBP639 million in 2015, an increase of 10%. Most fund based revenue for our businesses is calculated using a daily
average. Quilter Cheviot fund based revenue is calculated using the end of month position.

Above benchmark investment performance in OMGI funds (primarily the Global Equity Absolute Return, UK Specialist Equity and UK
Dynamic Equity funds) generated additional net performance-related fees of GBP26 million. This was broadly in line with the amount
earned in 2015 of GBP25 million.

Industry revenue margins remain under pressure and the overall Old Mutual Wealth revenue margin of 63bps was 3bps lower than that
for 2015. As expected, our UK Platform business has experienced a 3bps revenue margin reduction compared with 2015 due to the
removal of our minimum investor charge and drawdown charge, the FCA sunset clause and competitive industry margin pressures. The
resulting reduction in revenue was cGBP10 million compared to 2015, although this has been offset by fees being earned off a growing
asset base.

Quilter Cheviot margin has decreased by 3bps compared with prior year due to a reduction in commission levels and cash yields which
have been experienced industry wide, reducing revenue by cGBP5 million when compared to 2015.

We have also experienced reduced margins in our International offshore business as we replace older-style products with higher
margins by products with simpler charging structures which provide better outcomes for our customers.

Whilst we anticipate that overall revenue margins are likely to reduce in some of our individual businesses due to a combination of a
changing fee structure mix and industry pressures our integrated business model will absorb much of this impact as we earn an
increasing proportion of revenue by providing solutions across the value chain.

Expenses

Overall costs were 21% higher in comparison to the prior year (2016: GBP564 million; 2015: GBP468 million). The increase is analysed into
three main components, as below:

                                                                                                              2016   2015   Variance   
Reported administration expenses                                                                               564    468         96   
Revenue related initiatives                                                                                                            
Corporate activity                                                                                              21      5         16   
Variable revenue incentives                                                                                    104     89         15   
Investment in new business initiatives                                                                          33      5         28   
Administration expenses increase non-recurring expenses                                                        406    369         37   
Non-recurring expenses                                                                                                                 
Heritage fee restructure                                                                                         5      -          5   
Managed separation and standalone costs                                                                          7      -          7   
Changes to the executive management team                                                                         5      -          5   
Remaining administration expenses (organic growth and inflation)                                               389    369         20   

Revenue related initiatives

We continue to make investments in our business as we execute on our strategy and develop our business by expanding our financial
advice capabilities and diversifying our offerings in OMGI. This has resulted in changes to our cost base, much of which is recurring in
nature. The benefits of these investments is expected to be reflected in an improvement in the revenue that the business generates and,
in some instances, the revenues associated with the investment lags the timing of the cost. The total impact of revenue related
initiatives on our 2016 cost base was GBP59 million which was comprised of the following:

     -    During 2015 we acquired Quilter Cheviot and reported ten months of profit and expenses for this business, we disposed of
          Switzerland, reporting nine months of profit and expenses for this business, and in 2016 we acquired AAM in Singapore,
          including its profit and expenses in the 2016 reported results. The net impact, to expenses, of this corporate activity was an
          increase in expenses of GBP16 million with the profit arising from the acquisitions also included in the 2016 reported result.

     -    Higher variable incentives account for GBP15 million of the cost increase (excluding the impact of Quilter Cheviot acquired part
          way through 2015), rising from GBP89 million in 2015 to GBP104 million in 2016. The majority of incentives are performance-linked
          and vary in relation to funds under management and revenue. Variable compensation as a proportion of revenue remains
          broadly consistent with prior year at around 13%.

     -    We continue to build our financial advice capabilities, including our investment in Old Mutual Wealth Private Client Advisers
          (OMWPCA, our branded national advice business), incurring an additional GBP6 million of expenses in 2016 compared to 2015.
          As OMWPCA builds scale and momentum we expect it to generate positive contributions with an additional GBP4 million of
          revenues associated with this initiative in 2016. As planned, we incurred an LTIP charge of GBP10 million in Intrinsic in 2016 in
          respect of successful business delivery to date and expect a further cGBP8million charge in 2017 in accordance with the
          acquisition agreement. We have also incurred a full year run rate associated with desk builds undertaken in OMGI during
          2015, increasing expenses in 2016 by GBP6 million.

Non-recurring expenses

One-off costs totalling GBP17 million in 2016 have been incurred as a consequence of the Heritage fee restructure in relation to legal fees
and other costs, managed separation and standalone costs, and costs incurred resulting from changes to the executive management
team.

Organic growth and inflation

The remaining increase in costs of GBP20 million was due to the ongoing organic growth of the business as well as inflation. We continue
to invest in our IT infrastructure and we have been building our corporate governance capabilities in line with best practice, including
strengthening our second and third lines, ahead of our transition to a standalone business.

Operating margin

Operating margin was 32% in 2016. The reduction from 2015 operating margin of 40% reflects the ongoing investment in developing
both our advice and investment management capabilities. We expect an improving operating margin in the medium term as we
transition and grow our business while absorbing the additional costs that will be incurred as we operate as a separate standalone
business. Over the shorter term, the operating margin will be constrained by these incremental expenses.

IFRS NAV and adjusted NAV

Net assets of GBP1,897 million at 31 December 2016, which includes the remaining goodwill and other unamortised intangible assets
associated with the original acquisition of the remaining Skandia business, are slightly lower than the closing 2015 position (December
2015: GBP1,950 million). The goodwill and other intangible assets carrying value has reduced by GBP186 million as a result of the sale of Old
Mutual Wealth Italy and the standard amortisation of the intangible assets.

Our adjusted NAV also reflects the revised expense assumption in the embedded value of the UK Heritage business following the
decision, taken with our suppliers, to suspend the development of its IT system.

Cash and capital

In 2016 we experienced good operating cash generation, from which we funded the investment in our IT infrastructure programme,
converting 84% of our post-tax AOP to free surplus (2015: 102%). We remitted GBP33 million to Old Mutual plc in respect of interest on
intercompany subordinated debt. The remaining surplus has been used to support the increased capital requirements associated with
an expanding business, to fund the investment in the growth of the business and the costs associated with our platform transformation
project. The proceeds from the sale of the Italian business have been repatriated to Old Mutual plc in the form of a dividend early in
2017.

The capital strength of the underlying businesses remains robust with a proforma Solvency II standalone ratio of 185%.

Our liquidity buffers currently benefit from being part of Old Mutual plc and we have a committed facility from the Group of GBP200 million
which is presently undrawn. As part of our preparation to be a strong independent business, we are considering our future liquidity and
capital requirements.

Business developments

We continue to invest in distribution, recognising the importance of sound financial advice in securing good customer outcomes. In
2017, we have recently announced the acquisition of Caerus, subject to obtaining the necessary approvals, one of the UK's leading
primarily restricted financial planning firms, which enhances our opportunity to grow our distribution capability. Caerus has over 300
advisers, including 150 restricted financial planners and more than GBP4 billion of assets under advice. The acquisition complements our
existing controlled distribution footprint in the UK and is a modest "in-fill" acquisition.

We are committed to improving the strength and sustainability of the financial advice industry and improving customer access to advice.
Before taking into account the Caerus acquisition, Intrinsic restricted financial planners have increased by 193 since 2015 to 1,423 (31
December 2015: 1,230), including 38 advisers in OMWPCA. OMWPCA's advisory capabilities and coverage was enhanced during 2016
through small-scale acquisitions made in the year.

We have increased the level of referrals from Intrinsic and OMWPCA to Quilter Cheviot and expect momentum in this part of the
business to grow in 2017. OMWPCA, which started in January 2016, now has GBP1 billion of assets under advice and delivered GBP0.1 billion
of assets under management to Quilter Cheviot in 2016. We expect this to increase in 2017.

Our commitment to quality advice is supported by our investment in our Financial Adviser School (FAS) where the first cohort of
students will graduate in April 2017.

We are investing in Quilter Cheviot's business development and have signed a share purchase agreement to acquire Attivo Investment
Management, the discretionary investment management arm of Attivo Group Limited. The transaction has received regulatory approval
and we expect the deal to complete by the end of Q1 2017, at which point approximately GBP300 million of assets under management will
transfer to Quilter Cheviot. This is a small "in-fill" acquisition that readily integrates into the existing infrastructure of Quilter Cheviot.

Our strategy is to further diversify the range of funds managed by OMGI across sectors and within single strategy, multi-asset and
absolute return funds. During 2016 we embedded the Absolute Return Government Bond team which joined in 2015, and launched the
UK Specialist Equity fund, the Silver and Gold fund and the Style Premia Absolute Return (STAR) fund.

We completed the sale of Old Mutual Wealth Italy on 9 January 2017 to Phlavia Investimenti (previously ERGO Italia), owned by
Cinven, for a consideration of EUR278 million in cash. Italy's adjusted operating profit in 2016 was GBP24 million and funds under
management were GBP6.2 billion. The sale is the final part of the divestment of Old Mutual Wealth's European businesses allowing us to
focus on our core UK and cross-border markets. Since 2012 Old Mutual Wealth has divested of nine businesses operating in
Continental Europe where we lacked scale, and have received cGBP550 million in proceeds which has been remitted to Old Mutual plc,
offsetting the investment made in acquiring Intrinsic and Quilter Cheviot.

As announced at the half year, in March 2016 we completed the acquisition of AAM Advisory in Singapore as part of the expansion of
our International advice capabilities. Our newly launched Compass fund range in OMGI, designed specifically for our International
customers, generated net inflows of GBP345 million in 2016, and we expect traction to build over 2017.

Delivering good customer outcomes

The delivery of good customer outcomes is a priority for Old Mutual Wealth. During H1 2016 we announced the implementation of a 1%
cap on UK Heritage pensions exit charges for our customers aged over 55 years and the restructuring of our UK Heritage pension
product fees. This has improved outcomes for our customers and provides increased choice for customers through improved access to
market-wide pension investments, following the UK Government pension reforms introduced in 2015. In H2 2016, the FCA announced
that exit charges across the pensions industry will be capped at 1% from 31 March 2017.

We have achieved strong investment performance in OMGI, with 74% of all funds above target over 3 years on an AUM-weighted basis
at 31 December 2016, compared to 66% at December 2015. Our single manager funds continue to perform well, with 69% of funds
ahead of their target. 60% of our multi-asset fund ranges were above their target. We have made changes to fund managers and
strengthened investment process and controls where investment performance has not delivered to expectation.

Our largest absolute return fund, Global Equity Absolute Return (GEAR) fund, continues to outperform target performance and
competitor offerings. The fund experienced strong net inflows (2016: GBP1.7 billion, 2015: GBP1.6 billion) as investors continue to look for
alternative investment options delivering positive returns in a low interest rate environment.

Managed separation and governance

In 2016 we started our programme of activity to operate as a standalone listed business once the managed separation from Old Mutual
plc has been achieved. To ensure our organisation is fit for purpose as a listed standalone entity, we have reshaped and strengthened
both our executive management team and Board and enhanced our governance during the course of 2016 and will continue this in
2017. Glyn Jones joined the Board as an independent Chairman in November 2016 and Moira Kilcoyne, George Reid, Tim Tookey and
Cathy Turner have joined the Board since the end of 2016 as independent non-executive directors. As announced, Rosie Harris will join
the Board as an independent non-executive director in April 2017.

Following the growth of the business and the subsequent acquisitions made in the period, we are implementing our revised operating
model to drive increased efficiency and collaboration and seek to offset some of the expected incremental costs associated with being a
standalone business.

UK Platform transformation

We are continuing with our UK platform transformation. We gave guidance at the October 2016 Capital Markets Day as to timing and
cost. Costs to 31 December 2016 amount to GBP279 million, which have been expensed and which reflect the benefit of a GBP30m receivable
from our suppliers. Whilst progress continues to be made, this remains a complex project, and there are certain pressures which,
potentially, could increase timescales and costs. We are in active negotiations on these areas to reduce delivery and cost risk and to
ensure we achieve the best outcome for the business. At this point, because of commercial confidentiality and the ongoing negotiations,
it would be inappropriate to disclose further details. We expect to be able to update the market by the time of the Old Mutual plc AGM in
May 2017.

A robust platform that meets customer needs is vital for our future and we continue to invest in the existing platform to maintain high
levels of service and resilience

Key risks

Old Mutual Wealth is exposed to a number of risks as a result of the market environment and our business model, including the UK
Platform transformation programme, as well as the managed separation from Old Mutual plc. We have a diverse set of businesses,
offering active asset and discretionary management, advice and product solutions. The diverse nature of our businesses and our
integrated model expose us to certain strategic, business, operational and regulatory risks and competitive pressures. We are investing
further in diversifying our asset management capabilities and in the provision of financial advice to customers. While the nature of our
business risks are largely consistent with those we have faced over recent years, we are increasing our exposure to advice and conduct
risk through the expansion of our distribution capabilities, and increasing both our key person dependency and reliance on fund
performance to deliver desired client outcomes. The UK Platform transformation is a large scale and complex programme which carries
a high degree of execution risk. More generally, operational risk, including cyber risk, is also increasing in our business.

We are affected by macroeconomic conditions and geo-political risks that arise given the impact that these conditions have on financial
markets and customer behaviour. Our fund-based management fees, which comprise the majority of our revenues, are directly linked to
investment markets and investor confidence.

Increased exposure to regulatory risk is expected as a consequence of our preparation for separation from Old Mutual plc and from the
FCA investigation and thematic review into our Heritage business. We continue to be transparent, proactive and responsive with the
regulators to help manage and build our relationships.

We manage the above risks by establishing a risk appetite and managing risks within that appetite, which is integrally linked to our
business strategy. Risk appetite is used to provide boundaries for business decisions, to guide our monitoring of risks and business
performance and to trigger actions to manage risks. In addition, we regularly perform stress and scenario testing in order to test the
resilience of our business and validate our management action plans.

Outlook

We anticipate continued equity market and currency uncertainty, with the geo-political landscape increasing in complexity and as the
impact of the UK's exit from the EU is progressed in 2017 and 2018. Similarly, retail investor sentiment is influenced by general market
conditions and their confidence in the future outlook of economies, which has a bearing on the flows of assets that are available to be
attracted to our wealth solution offering.

Following the divestment of our Italian business, year-on-year pre-tax adjusted operating profit will be reduced by GBP24 million in 2017.
There will also be corresponding decreases to our 2017 reported funds under management (GBP6.2 billion at 31 December), gross sales
(GBP0.8 billion in 2016) and net flows (GBP0.2 billion in 2016).

During 2017 our International South African branches will transfer to Old Mutual Emerging Markets ("OMEM"). Financial results, flows
and FUM from these branches will not be reported by Old Mutual Wealth in 2017, but will be reported by OMEM instead. Operating
profit for those entities in 2016 was GBP10 million, which benefitted from a GBP4 million positive exchange rate impact, expected to decrease
to cGBP6 million in future years. The branches had funds under management of GBP2.0 billion at the end of 2016 and NCCF contribution for
the year was GBP0.2 billion.

Our business is evolving as we prepare to operate on a standalone basis and continue our development for the future. Our investment
in distribution and building asset management capabilities will continue. This investment will be primarily organic but minor "in-fill"
acquisitions may also be considered if these fit into the core business, are readily integrated, enable good customer outcomes and are
demonstrably incremental to shareholder value. Allowing for known changes in our business perimeter, we expect to deliver above-
market growth in funds under management, and robust revenue growth in the face of margin and regulatory pressure and the current
market environment.

We target NCCF above 5% of opening FUM (excluding Heritage business), and anticipate continued sales growth of our UK Platform
products and the Cirilium fund range from our own advisers in 2017 as we expand our distribution network. Within OMGI, we will
continue to evolve our multi-asset offering and appraise opportunities to broaden our asset management capabilities as they arise.

As we move towards being a standalone listed business, we anticipate that the one-off costs for Old Mutual Wealth in respect of
separation from Old Mutual plc and listing activity will be cGBP50-55 million over the next 3 years. On an ongoing basis, we currently
expect separation will increase our cost base by circa GBP25-30 million. This consists of recurring listed entity costs of up to GBP10 million as
disclosed at the Capital Markets Day in October 2016 and circa GBP15-20 million of incremental costs, of which GBP8 million of branding
costs were incurred by Old Mutual plc. Given the dynamic nature of the process, these costs will be refined further as we get closer to
separation and there may be additional costs that we incur in the future as a standalone business, such as financing costs.

Taking all of this into account, we expect 2017 to be another year of transition with our costs increasing as we separate the business
from Old Mutual plc. Consequently, we anticipate operating leverage benefits emerging in later years with an improving operating
margin in the medium term as we transition and grow our business while absorbing the additional costs that will be incurred.

Old Mutual Wealth data tables   
                                  
Adjusted operating profit pre-tax (GBPm)                                                                      2016   2015   % change   
Invest & Grow markets                                                                                                                
UK Platform                                                                                                     27     33      (18%)   
UK Other(1)                                                                                                      6     17      (65%)   
International                                                                                                   52     50         4%   
Old Mutual Global Investors                                                                                     79     71        11%   
Quilter Cheviot                                                                                                 46     34        35%   
Total Invest & Grow                                                                                            210    205         2%   
Manage for Value markets                                                                                                               
UK Heritage                                                                                                     33     69      (52%)   
Europe - Open book(2)                                                                                           24     24          -   
Europe - Closed book(3)                                                                                          -      9     (100%)   
Total Manage for Value                                                                                          57    102      (44%)   
Managed separation costs(4)                                                                                    (7)      -              
Total Old Mutual Wealth                                                                                        260    307      (15%)   

(1) Includes profit from Intrinsic, series 6 pensions, institutional platform assets, protection products and service companies
(2) Includes Italy (sold 9 January 2017) and France and Luxembourg (sold in February 2015, profit was zero in 2015)
(3) Includes Switzerland (sold 30 September 2015)
(4) Includes managed separation transaction costs of GBP3 million and standalone costs of GBP4 million

Institutional Asset Management

Institutional Asset Management consists of OM Asset Management plc (OMAM) and until 31 May 2016, Rogge. OMAM is listed
on the New York Stock Exchange with market capitalisation of $1.7 billion as at 31 December 2016. Further information is
included in Old Mutual plc's Financial Disclosure Supplement and at OMAM's corporate website -http://ir.omam.com/investor-
relations/news/

Highlights: OM Asset Management                                                                              2016    2015   % change   
IFRS profit pre-tax (GBPm)(1)                                                                                 134     118        14%   
IFRS profit post-tax (GBPm)(1)                                                                                104      93        12%   
AOP (pre-tax, $m)                                                                                             195     229      (15%)   
ENI (post-tax, $m)(2)                                                                                         145     150       (3%)   
Operating margin, before affiliate key employee distributions                                                 36%     38%              
Operating margin, after affiliate key employee distributions and before interest expense                      30%     33%              
Net client cash flows ($bn)                                                                                 (1.6)   (5.1)              
Funds under management ($bn)                                                                                240.4   212.4        13%   

(1) Institutional Asset Management, including Rogge
(2) ENI is economic net income, the alternative management metric for profit used by OM Asset Management in external reporting. This excludes the
    exceptional performance fee from 2015

Overview

OMAM had a strong finish to 2016, notwithstanding a challenging equity market environment in the first half of the year. OMAM's
Affiliates produced solid investment performance in 4Q16 as a return to fundamental valuation in the equity markets favored active
asset management. OMAM continued to produce inflows into higher fee asset classes, generating positive revenue impact from net
client cash flows. In addition, the Company's successful acquisition of Landmark Partners, a leading specialist in secondary private
equity, real estate and real asset investments contributed to its earnings for the year.

The full text of OMAM's 2016 earnings announcement, released on 2 February 2017, can be accessed via the OMAM corporate website
- http://ir.omam.com/investor-relations/news/

Business developments

OMAM expanded its Affiliate group to eight firms in 2016 with the acquisition of Landmark Partners, which was completed in August. In
addition, in July, OMAM enhanced its long-term financial flexibility through the placement of a $275 million 10-year institutional debt
offering and a $125 million 15-year retail-oriented debt offering.

In furtherance of Old Mutual plc's managed separation strategy, OMAM purchased approximately $39.6 million of seed investments
from Old Mutual in September. As of 31 December 2016, OMAM managed approximately $83 million of remaining seed capital
provided by Old Mutual. OMAM will purchase all remaining seed capital on or around 30 June 2017. OMAM also agreed to pay $142.6
million to Old Mutual plc over three instalments (30 June 2017, 31 December 2017 and 30 June 2018) under the terms of the amended
Deferred Tax Asset Deed between Old Mutual plc and OMAM.

In December 2016, Old Mutual plc sold 14.95 million shares of OMAM to the public at $14.25 per share. The offering of shares and
concurrent 6 million share buyback by OMAM brought Old Mutual's ownership of OMAM to 51.1%.

OMAM declared total dividends for 2016 of $38.8 million. Old Mutual plc's portion of this amounts to $25.4 million.

AOP pre-tax results and operating margin

2016 pre-tax AOP decreased by 15% to $195 million, or decreased by 7% excluding the pre-tax AOP impact of exceptional
performance fees in 2015.

Revenues of $679 million for the period were 5% lower than 2015 (2015: $712 million total), but 2% higher when excluding $48 million
of exceptional performance fees earned in 2015. Management fees increased due to higher average bps earned on stable average
AUM. Performance fees in the period were $2.6 million (2015: $13.7 million excluding exceptional performance fees, $61.8 million total).

AOP margin before Affiliate key employee distributions decreased 2% to 36%, as performance fees decreased and expenses
increased. On a post-Affiliate key employee distributions basis, reported operating margin decreased to 30% in part due to the higher
ownership stake (40%) retained by the Landmark Partners employees.

Investment performance

OMAM Affiliates have produced solid long-term investment performance. While OMAM's value-oriented strategies faced headwinds
through much of 2016, Affiliates continued to generate long-term track records of relative outperformance.

OMAM's aggregate investment performance is reported as weighted by the revenue generated by its products. As of 31 December
2016, assets representing 49%, 55%, and 73% of revenue were outperforming benchmarks on a one-, three- and five-year basis,
respectively (31 December 2015: 60%, 83%, and 92%; 30 September 2016: 35%, 69%, and 69%).

On an asset-weighted basis, over the one-, three- and five-year periods ended 31 December 2016, 42%, 45% and 61% of assets were
outperforming benchmarks (31 December 2015: 72%, 73% and 91%; 30 September 2016: 34%, 58%, and 58%).

The overall decline in investment performance during 2016 reflects an investing environment characterized by macroeconomic-driven
volatility and higher demand for bond proxies in the equities markets in the first three quarters of 2016. This presented challenges for
our Affiliates who employ long-term strategies in value portfolios. In the fourth quarter of 2016, there was a strong shift in the broader
market away from yield securities, toward financials and value equities, which resulted in an improved one-year investment performance
relative to 30 September 2016.

Funds under management and net client cash flows

Gross inflows totalled $29.9 billion (2015: $26.6 billion) at a weighted average fee of 41.9 bps, with flows driven by global/non-US
equities, managed volatility equities, dividend focus equities and secondary private equity and real estate strategies. Gross inflows of
$10.5 billion were from new client accounts.

Gross outflows (including hard asset disposals) totalled $31.5 billion (2015: $31.7 billion) at a weighted average fee of 36.3 bps, driven
by US value equities, hard asset disposals, and some global/non-US and emerging markets equity products.

Although negative, net client cash flows of $(1.6) billion for the year (2015: $(5.1) billion) are expected to generate positive annualised
revenue of $11.0 million (2015: $18.9 million), representing 1.5% of beginning of period run rate management fee revenue, with inflows
in higher fee non-US, emerging markets, and alternative products offsetting losses in lower fee US sub-advisory assets.

OMAM's FUM ended the period at $240.4 billion, up $28.0 billion, or 13%, from 2015 (31 December 2015: $212.4 billion) due to
improving markets in H2 2016 and the acquisition of Landmark Partners ($8.8 billion) in the third quarter. OMAM's FUM consists of
long-term investment products diversified across US equities (34%), global & non-US equities (40%), fixed income (6%) and alternative
investments (20%).

The OMAM Global Distribution team continues to work with Affiliates to expand their non-US client base in key markets and jurisdictions
around the world. Non-US clients currently account for approximately 20% of FUM (31 December 2015: 19%). The Global Distribution
initiative raised $2 billion in 2016. Overall, gross client cash flows generated by OMAM from seed capital, expansion initiatives, Global
Distribution and new Affiliate sales represented approximately 23% of OMAM's 2016 gross sales of $29.9 billion.

Balance sheet and capital management

In July 2016, OMAM raised $400.0 million of senior notes, consisting of $275.0 million of 4.80% senior notes due 2026 and $125.0
million of 5.125% senior notes due 2031. Proceeds from the offerings were primarily used to fund the $242.4 million investment in
Landmark Partners, purchase seed capital investments from Old Mutual plc, settle an interest rate hedging contract, and pay down
$50.0 million on OMAM's outstanding line of credit; no debt is currently outstanding on OMAM's $350 million facility. At 31 December
2016 OMAM's debt/EBITDA ratio is 1.9x, consistent with the Company's target debt/EBTIDA ratio of 1.75-2.25x. In 2016 OMAM
received investment grade long-term credit ratings of Baa2 from Moody's Investors Services and BBB- from Standard & Poor's.

At year-end, equity equalled $170.5 million and cash equalled $101.9 million, including approximately $68.5 million held at the Affiliates
and $33.4 million held at the holding company.

Outlook

While the equity market environment remained volatile for much of 2016, OMAM's Affiliates generated strong results for the year overall.
In addition, the Company made excellent progress in positioning the business for continued growth through its successful acquisition of
Landmark Partners. OMAM remains committed to working closely with its Affiliates to enhance and expand their businesses, and to
accessing specialised and non-US markets on their behalf through its Global Distribution initiative. In addition, OMAM will continue to
identify and develop relationships with at-scale asset management boutiques with strong investment and executive talent and a vision to
enhance and expand their business by partnering with OMAM.

OMAM continues to enjoy the support of Old Mutual plc as the latter implements its previously announced managed separation strategy.
As described in Business Developments above, OMAM intends to make payments to Old Mutual of approximately $225 million between
30 June 2017 and 30 June 2018 related to the repurchase of seed capital and deferred tax assets. Under the Deferred Tax Asset Deed,
OMAM retains the benefit of certain indemnities from Old Mutual plc, related to past and future payments made by OMAM under this
Deed, in the event of changes in tax laws or challenges from governmental tax authorities which reduce the value of the deferred tax
assets covered by the Deed.

NON-CORE BUSINESS - BERMUDA

History of operation

Old Mutual's operation in Bermuda was closed to new business in March 2009 and has subsequently pursued a risk reduction strategy.
The main business risks in this operation arose from Guaranteed Minimum Accumulation Benefit (GMAB) guarantees, in respect of
variable annuity policies, largely written in 2007 and 2008.

The operation was reorganised in 2015, with a separate reinsurance business, Old Mutual (Bermuda) Re Ltd. (OMBRE), reinsuring the
GMAB obligations of variable annuity policies originally held by Old Mutual (Bermuda) Ltd., and a holding company, Old Mutual
(Bermuda) Holdings Ltd. (OMBHL) was also formed.

On 31 December 2015, Old Mutual (Bermuda) Ltd. was sold to Beechwood Bermuda Ltd. and subsequently renamed Beechwood
OMNIA. OMBHL retains the risks in respect of the GMAB obligations of variable annuity policies, reinsured via OMBRE, and provides
policyholder administration services to Beechwood OMNIA. All other guarantees and responsibilities for policyholder administration
(post the OMBHL tenure) have been transferred to Beechwood OMNIA.

Old Mutual plc has retained a guarantee of up to $250 million to a third party in respect of certain variable annuity policies distributed by
that third party. The guarantee will expire at the end of May 2018, although any payment under the guarantee is considered remote
given the management of GMAB risks within OMBRE and administration services are provided by OMBHL.

Overview of current business

As discussed above, OMBHL and its retained subsidiaries (collectively, OM Bermuda) provide reinsurance and policyholder
administration services to a third party, Bermuda regulated entity, Beechwood OMNIA. The reinsurance terminates in October 2018,
shortly after the final GMAB maturity in August 2018 and the policyholder administration services extend through to Q4 2018.

The reinsured GMAB obligations mainly consist of Universal Guarantee Options (UGOs), providing for a Capital Return Guarantee of
120% of the original investment value at the 10 year anniversary date, and in addition, a Highest Anniversary Value (HAV) feature
whereby, if elected, guaranteed the highest policy value at any preceding anniversary date. In view of the current market conditions and
the short time to maturity, the HAV risk is not considered to be material.

Excluding HAVs, the funding of the remaining underlying UGO GMAB obligations is anticipated to be circa $90 million after taking into
account hedging strategies used to substantially limit the downside risk to this cost. Residual risks that remain include basis risk and a
small portion of un-hedged equity, foreign exchange and bond risks. Liquidity risks associated with the GMAB reinsurance obligations
are managed through the holding of cash and other liquid investments, supplemented by hedge proceeds following adverse equity and
foreign exchange movements.

In addition to risks associated with reinsurance obligations, the balance sheet includes Group Seed investments consisting mainly of
fixed interest and real estate investment funds ($93 million at 31 December 2016).

Abridged statement of IFRS financial position for the year ended 31 December 2016

The statement of financial position illustrates the excess assets backing the liabilities of Old Mutual (Bermuda) Holdings Ltd.

$m                                                                                                 31-Dec-16   31-Dec-15    % change
Assets
Cash                                                                                                      27          39       (31%)
U.S. Treasuries                                                                                           65           -        100%
Derivatives                                                                                               33          32          3%
Group Seed investments                                                                                    93         260       (64%)
Inter-company loan notes                                                                                  71         118       (40%)
Other assets                                                                                               6          18       (67%)
Total Assets                                                                                             295         467       (37%)
Liabilities
Reinsurance (GMAB) reserves                                                                              104         125       (17%)
Other liabilities                                                                                         15          10         50%
Total Liabilities                                                                                        119         135       (12%)
Total Equity                                                                                             176         332       (47%)

At 31 December 2016, liabilities relating to the reinsured (GMAB) reserves were $104 million (31 December 2015: $125 million), a
decrease of $21 million, mainly due to the shortened time to maturity and a decrease in the value of the remaining guarantees, given
the higher equity markets and foreign exchange gains at the end of 2016 compared to 2015.

Other liabilities include a provision against the Letter of Credit provided to Beechwood OMNIA. In the event that the Letter of Credit is
drawn, Beechwood Bermuda Ltd is required to repay it. Further counterparty exposure to Beechwood entities is small.

Business developments during 2016

Put options were purchased on 31 August 2016 in order to cover circa 90% of the anticipated reinsured equity and foreign exchange
UGO GMAB exposures. This replaced existing hedging strategies for non-HAV risks, with the effect of insulating the business against
equity and foreign exchange market declines until the GMAB maturity dates. No further significant changes to the hedging programme
are expected.

OM Bermuda de-risked its balance sheet during 2016 by repatriating the majority of its Group Seed investments and certain inter-
company loan notes to Old Mutual plc following approval from the Bermuda Monetary Authority (BMA). Seed investments with a fair
value of $38 million were repatriated to Old Mutual plc in H1 2016 and a further $94 million in H2 2016. As a result of these de-risking
initiatives, OM Bermuda's investment in Group Seed investments reduced from $260 million as at 31 December 2015 to $93 million as
at 31 December 2016. In addition, approximately $50 million of inter-company loan notes were cancelled in H2 2016.

IFRS results

Bermuda has been treated as a non-core business since its closure to new business and as such its result is excluded from AOP.

IFRS post-tax profit for the period was $25 million (FY 2015: $45 million loss) mainly due to fair value gains of $29 million arising on
Group Seed investment disposals. The gains on disposal of the Group Seed investments are eliminated for Group consolidated reporting.

Capital position

The table illustrates the reduced capital and capital requirements of the regulated insurance business:

OMBRE Bermuda statutory capital surplus ($m)                                                                 31-Dec-16  31-Dec-15(1)
Capital                                                                                                            169           293   
Capital requirement                                                                                                 92           219   
Surplus                                                                                                             77            74   
Cover (times requirements)                                                                                         1.8           1.3   

(1) The capital requirement has been restated to the new calculation basis of 110% of the economic capital requirement which was approved by the BMA
    in Q1 2016 for subsequent regulatory capital measurement

OMBRE statutory capital is calculated as 110% of economic capital requirements and has significantly improved as a result of the
revised hedging strategy and repatriation of Group Seed investments.

OMBRE statutory capital of $169 million (31 December 2015: $293 million) decreased mainly due to the capital repatriations (Group
Seed investments and inter-company loan notes), partially offset by profits earned in the period.

Outlook

Reinsurance obligations will run off significantly during 2017 with circa 50% of the underlying GMAB maturities taking place during the
year and the bulk of remaining maturities taking place during H1 2018. Reinsured GMAB obligations are expected to be met with
existing liquid investments as well as proceeds from the hedging programme. In addition, Group Seed investments will be liquidated
during 2017, adding to available liquidity. We currently anticipate that all reinsurance obligations will be met with existing assets
without the need to redeem inter-company loan notes.

We expect small operating losses for the business going forward through to the end of the GMAB maturities and the ultimate wind
down of Bermuda operations.

Sponsor: 
Merrill Lynch South Africa (Pty) Ltd

Joint Sponsor:
Nedbank Corporate and Investment Banking




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