REG - Old Mutual Ltd - Old Mutual Voluntary Operating Update

Old MutualAnnouncement

19/11/2024 14:15

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RNS Number : 8350M  Old Mutual Limited  19 November 2024

Old Mutual Limited

Incorporated in the Republic of South Africa

Registration number: 2017/235138/06

ISIN: ZAE000255360

LEI: 213800MON84ZWWPQCN47

JSE Share Code: OMU

JSE Alpha Code: OMLI

LSE Share Code: OMU

NSX Share Code: OMM

MSE Share Code: OMU

ZSE Share Code: OMU

("Old Mutual" or "Group")

 

 

Ref: 94/24

19 November 2024

 

OLD MUTUAL VOLUNTARY OPERATING UPDATE FOR THE PERIOD ENDED 30 SEPTEMBER 2024 -
RESILIENT TOP LINE GROWTH DESPITE CHALLENGING CONDITIONS

 

Sales momentum continued into the third quarter of 2024, with double digit
growth in gross flows, which supported the ongoing improvement in net client
cash flow. This performance was achieved against a challenging operating
environment characterised by enduring geopolitical risks. Tensions in the
Middle East, uncertainty around China's economic growth prospects, the
potential for higher trade tariffs and weaker emerging market currencies
driven partly by recent US election outcomes are key concerns impacting the
broader market.

 

In South Africa, the formation of the Government of National Unity and the
25-basis point interest rate cut had a positive impact on investor and
customer sentiment, though tangible improvements in capital investments and
disposable income remain constrained. In our Africa regions, excluding South
Africa, the economic climate continued to be affected by elevated inflation
and currency depreciation in some markets.

 

Financial key performance indicators for the period ended 30 September 2024

 

The table below sets out certain key performance indicators for the nine
months ended 30 September 2024 (the "current period").

 Key Performance Indicators            30 September 2024  30 September 2023  change

 (R million unless otherwise stated)
 Life APE sales                        10 410              9 853             6%
 Gross flows(1)                        170 224             142 748           19%
 Net client cash flow                   (557)              (10 832)                             95%
 Loans and advances(2)                  19 377             19 391             (0%)
 Gross written premiums                20 735              19 306            7%

(1) The comparative amounts for Old Mutual Investments were re-presented to
include institutional products that are an alternative to bank deposits on a
net flow basis

(2) Comparative amounts represent FY2023 balance sheet amounts

 

The strength of our diversified distribution strategy contributed to the
growth in sales. Life APE sales increased by 6% from the nine months ended 30
September 2023 (the "prior period") due to good risk sales in Mass and
Foundation Cluster across all distribution channels. Personal Finance
delivered higher guaranteed annuity sales, better savings and funeral sales
while Wealth Management reported good sales growth in tax-free savings, wealth
life and investment funds. This was partially offset by marginally lower sales
in Old Mutual Corporate due to lower single premium sales and Old Mutual
Africa Regions as a result of currency depreciation in Malawi.

 

Gross flows increased by 19% from the prior period mainly driven by excellent
inflows in Wealth Management which saw a significant uplift across all
platforms, particularly into the new cash and liquidity solutions launched
towards the end of 2023. Gross flows were also bolstered by robust unit trust
inflows in Old Mutual Africa Regions due to a highly productive agency force
coupled with the launch of the Dollar Unit Trust Fund in East Africa. The
strong inflows into the Equity and Multi-Asset capabilities and higher
Alternatives flows in Old Mutual Investments further contributed to growth in
gross flows.

 

Net client cash flow improved materially, benefiting from robust inflows and
reduced levels of outflows in Wealth Management. This was partially offset by
increased outflows in Old Mutual Investments, Old Mutual Corporate and Old
Mutual Africa Regions. Old Mutual Investments experienced low margin outflows
from Futuregrowth mainly due to client liquidity requirements and a change in
the client investment strategy. Old Mutual Corporate recorded higher
retirement, retrenchment and withdrawal benefits outflows, particularly in
Superfund. We expect a negative impact on net client cash flow at year end as
we anticipate higher two-pot withdrawals and further low margin customer
outflows.

 

Loans and advances were in line with the prior period. In Old Mutual Africa
Regions, loans and advances were higher due to currency impacts in our Kenyan
market. In constant currency, the loan book reduced due to lower
disbursements, in line with our strict lending criteria in a constrained
environment. Loans and advances in Mass and Foundation Cluster were marginally
lower than the prior period, aligned with our cautious lending strategy.

 

Gross written premiums grew by 7% from the prior period, primarily driven by
strong new business and rate increases in Old Mutual Insure, particularly in
the Specialty business.

 

Capital

 

The regulatory solvency ratio for Old Mutual Life Assurance Company (South
Africa) Limited ("OMLACSA") for the current period marginally reduced to 198%
and remains within our target range of 175% - 210%.

 

The Group discretionary capital balance as at 30 September 2024 has increased
to R1.6 billion from the R1.4 billion reported at 30 June 2024 principally as
a result of dividends received from Old Mutual Africa Regions of R650 million
largely offset by capital allocations to the bank build of R351 million.

 

The Group received approval in October from the Prudential Authority for the
OMLACSA special dividend of R2 billion and the Old Mutual share buyback of R1
billion under the general repurchase authority obtained at our May 2024 annual
general meeting. The OMLACSA special dividend will increase discretionary
capital by R2 billion upon its receipt in the fourth quarter. The share
buyback will reduce discretionary capital by R1 billion as we execute on the
repurchase programme into the first quarter of 2025. The remaining
discretionary capital remains available for investment into growth or return
to shareholders. Further detail will be provided at the full year results
announcement.

 

Two-pot retirement regime

 

The two-pot retirement regime was implemented effective 1 September and
provides for a one-third savings pot, which members may withdraw once in a tax
year, and a two-thirds retirement pot, which needs to be preserved. We remain
well positioned to manage the impact of the increase in claims volumes. As at
the end of October 2024, we have paid 93% of the 240 000 claims submitted,
amounting to R2.4 billion, with most of the claims paid in October. In our
continued focus to encourage digital adoption, 99.7% of claims were submitted
via WhatsApp. Over the medium to long term, the initial outflows will be
offset by higher assets under management retained as a result of the
compulsory preservation of the accumulated contributions in the non-accessible
retirement savings pot.

 

Investor engagement

 

Investors are invited to participate in a conference call to address matters
related to this voluntary operating update on 21 November 2024 at 12pm, SAST.
Investors and media may register on the following link:

Diamond Pass Registration
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=5137280&linkSecurityString=154b618680)

 

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 3 days
after the conference call. The replay can be accessed in the following link:
https://services.choruscall.com/ccforms/replay.html
(https://services.choruscall.com/ccforms/replay.html)

 

Access numbers for recorded playback:

Access code for recorded playback: 46893

 South Africa   +27 10 500 4108
 UK             +44 203 608 8021
 Australia      +61 73 911 1378
 USA            +1 412 317 0088
 International  +27 10 500 4108

 

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

 

Sandton

 

Sponsors

 JSE                                           Equity Sponsor: Tamela Holdings (Proprietary) Limited

                                               Debt Sponsor: Nedbank Corporate and Investment Banking, a division of Nedbank
                                               Limited
 Namibia                                       PSG Wealth Management (Namibia) (Proprietary) Limited
 Zimbabwe                                      Imara Capital Zimbabwe plc
 Malawi                                        Stockbrokers Malawi Limited

 Enquiries
 Investor Relations
 Langa Manqele                                 M: +27 82 295 9840

 Head of Investor Relations                     E: investorrelations@oldmutual.com (mailto:investorrelations@oldmutual.com)

 Communications
 Wendy Tlou                                    M: +27 82 906 5008

 Chief Communications and Reputation Officer   E: oldmutualnews@oldmutual.com

 

Notes to Editors

About Old Mutual

Old Mutual is a premium African financial services group that offers a broad
spectrum of financial solutions to retail and corporate customers across key
market segments in 12 countries. Old Mutual's primary operations are in Africa
and it has a niche business in China. With over 179 years of heritage across
sub-Saharan Africa, Old Mutual is a crucial part of the communities it serves
as well as broader society on the continent.

 

For further information on Old Mutual and its underlying businesses, please
visit the Corporate website at www.oldmutual.com (http://www.oldmutual.com)
 

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