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REG - Old Mutual Ltd - Old Mutual Voluntary Operating Update

Old MutualAnnouncement

26/05/2022 11:00

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RNS Number : 9281M Old Mutual Limited 26 May 2022

Old Mutual Limited

Incorporated in the Republic of South Africa

Registration number: 2017/235138/06

ISIN: ZAE000255360

LEI: 213800MON84ZWWPQCN47

JSE Share Code: OMU

LSE Share Code: OMU

MSE Share Code: OMU

NSX Share Code: OMM

ZSE Share Code: OMU

("Old Mutual" or "OM" or "the Company")

Ref 15/22

26 May 2022

OLD MUTUAL VOLUNTARY OPERATING UPDATE FOR THE PERIOD ENDED 31 MARCH 2022

In South Africa we continue to see good recovery in sales, with Life APE sales
19% ahead of the prior year. This was driven primarily by strong risk sales in
Mass and Foundation Cluster, and improved savings and funeral sales in
Personal Finance and Wealth Management, with risk and annuity product sales
remaining under pressure due to the prevailing economic conditions. COVID-19
impacts were better than our expectations, with existing provisions more than
sufficient given the experience in the first quarter of 2022. We continue to
monitor experience for the second quarter across our markets.

Financial performance for the period ended 31 March 2022

The table below sets out certain key performance indicators for the period
ended 31 March 2022 ("the quarter")

Key Performance Indicators 31 March 2022 31 March 2021 change

(R millions unless otherwise indicated)
Life APE Sales 2,890 2,429 19%
Value of New Business (VNB)(1) 464 304 53%
VNB Margin(1) 2.8% 2.1% 70bps
Gross Flows 40,197 44,263 (9%)
Net Client Cash Flow (NCCF) (Rbn) (5.0) (4.2) (19%)
Funds Under Management(2) (FUM) (Rbn) 1,229.6 1,273.6 (3%)
Loans and Advances(2) 18,496 18,907 (2%)
Gross Written Premiums 5,465 5,073 8%

(1) Represents an estimate for the period

(2)Comparative amounts represent FY2021 balance sheet amounts.

Sales momentum has continued into the first quarter of 2022, compared to the
same period in the prior year ("the prior period"), which was impacted by
lockdowns. Current year sales benefited from strong risk sales in Mass and
Foundation Cluster as productivity levels maintained a growth trajectory from
the prior year. In Personal Finance and Wealth Management, savings and funeral
sales improved while risk and annuity sales declined relative to the prior
year. Group risk sales in Old Mutual Corporate were 79% up against the prior
year due to substantial deals secured in the quarter, however, single premium
pre-retirement sales declined from the prior year. Rest of Africa Life sales
were up 62% on the prior period primarily stemming from improved corporate
volumes in Namibia, Malawi and East Africa as our strategy to pivot to
corporate business gains traction. In China sales growth of 77% was achieved
largely through the successful promotion of savings products in the broker
channels.

VNB improved by 53% due to strong growth in issued sales in Mass and
Foundation Cluster and higher corporate business in Rest of Africa. VNB in
Personal Finance worsened due to a methodology change at the end of 2021 and a
shift in the sales mix. VNB margin of 2.8% remains at the upper end of our
target.

Gross Flows decreased by 9% driven by lower asset management flows in Old
Mutual Investments. This was largely due to the non-repeat of large new
mandates that occurred in the prior year. Old Mutual Corporate saw a decline
in single and recurring premium flows, primarily due to Superfund client
liquidations and lower volumes. These were partially offset by higher flows in
the asset management business in Namibia and in the life business in East
Africa.

NCCF of negative R5.0 billion was impacted by the decline in gross flows. This
was partially offset by lower client terminations and reduced mortality claims
across the life businesses. FUM was negatively impacted by market movements
and the strong Rand which reduced the value of funds managed offshore.

The decline in Loans and Advances was driven by lower disbursements in the
Rest of Africa with Mass and Foundation Cluster being flat compared to the
prior period. The Rest of Africa banking and lending performance remains under
pressure due to the tougher economic climate and increased competition in the
various markets.

Gross Written Premiums grew by 8% from the prior year driven largely by higher
renewal rates and business acquisitions in the corporate and retail channels
in Kenya and Uganda. This was supported by higher premiums in the retail
division of Old Mutual Insure.

Results from Operations for the quarter were marginally ahead of the prior
year, mainly due to improved mortality profits in Personal Finance. In the
first quarter of 2021, we recorded significant excess deaths in Personal
Finance which were largely offset by provision releases. The improved
mortality profits resulting from materially lower excess deaths in Personal
Finance in the current year were partially offset by lower underwriting
results in Old Mutual Insure and Old Mutual Corporate as well as an increase
in central expenses due to our investment in digitalisation and innovation
initiatives.

COVID-19 update

In our South African life businesses, provisions were raised at 31 December
2021 based on our own claims experience and the South African Medical Research
Council's (SAMRC) excess mortality data, as well as an assumption on
vaccination hesitancy.

The impacts of wave 4 were well within provisions raised and no further
provisions have been raised. We released the lower of actual experience and
planned provision releases in the quarter. We continue to closely monitor our
mortality claims experience as future waves and their impacts remain
uncertain. The adequacy of existing provisions will be assessed at 30 June
2022.

Capital position and liquidity

The solvency ratio for Old Mutual Life Assurance Company (South Africa)
Limited for the quarter was 200% - at the upper end of our target range of
175% - 210%. The marginal decrease in our solvency ratio from the 203%, as
reported to the Prudential Authority for 31 December 2021, was largely due to
the redemption of subordinated debt in the first quarter of 2022. The Group
remains well capitalised within our target range of 170% - 200%.

Emerging factors during the second quarter of 2022

Old Mutual Insure ("OMI") remains committed to supporting customers affected
by the devastating floods experienced in KwaZulu-Natal in April and to helping
them to speedily restore their affected assets. To date we have received over
2,200 claims related to this catastrophe.

There are several reinsurance agreements in place which are expected to reduce
our portion of the gross claims with an estimated net impact on the OMI
financials of between R100-R150m. OMI remains well capitalised, and all valid
claims received on our policies will be settled.

OMI will continue to play our part to serve our customers during this
difficult time. We are currently reviewing our claims pattern for the recent
second wave of floods in KwaZulu-Natal in May and we will provide further
updates in due course.

The global economy remains under significant pressure with rising inflation
and interest rates, and continued risk and uncertainty around the Russia and
Ukraine conflict dampening consumer sentiment.

Whilst the full impact is yet to play out, we expect pressure on our customers
because of higher inflation and interest rates which have continued to
increase in the second quarter of 2022. We continue to monitor the impact of
these factors and the declining market levels on our business. We have a
resilient business, with a well-capitalised balance sheet and strong
liquidity, giving us the platform upon which to remain a certain friend in
uncertain times.

Investor engagement

Investors are invited to participate in a conference call to address matters
related to this voluntary operating update on 26 May 2022 at 17:15pm, SAST.
Investors and media may register on the following link:
https://www.oldmutual.com/investor-relations
(https://www.oldmutual.com/investor-relations) .

Please note that registered participants will receive their dial in number
upon registration. We advise callers to dial in at least five minutes before
the conference call starts.

A recorded playback will be available for three days after the conference
call.

Access numbers for recorded playback:

Access code for recorded playback: 86906

South Africa 010 500 4108
UK 0 203 608 8021
Australia 073 911 1378
USA 1 412 317 0088
International +27 10 500 4108

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

Sandton

OMU — Old Mutual News Story

REG - Old Mutual Ltd - Old Mutual Voluntary Operating Update

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