Analyst Presentation

1
Analyst Presentation

• Preliminary results for the year to 31 December
  2001

2
Jim SutcliffeChief Executive

• Introduction

3
Agenda

• Jim Sutcliffe
• Highlights
• Julian Roberts
• Finance and operating review
• Jim Sutcliffe
• 2002 and beyond
• Questions and Answers

4
Key financial highlights - Sterling
2001 2000 change Operating profit
(smoothed) 856m 911m -6 Operating EPS
13.2p 17.0p -22 Dividend per share 4.8p 4.7p 2 E
mbedded value _at_ 31/12 3,522m 5,553m -37 Value
of new business 84m 74m 14
5
Key financial highlights - Rand
2001 2000 change Operating profit
(smoothed) R10,601m R9,585m 11 Operating EPS
163.4c 179.4c -9 Dividend per share 72.7c 49.5c
47 Embedded value _at_ 31/12 R61,364m
R62,831m -2 Value of new business R1,053m R782m 3
5

Indicative only
6
2001 Key accomplishments - operational

• South Africa
• New generation of products launched
• Building sales force, bancassurance
• Nedcor and MF remain strong
• US
• Positive net cash flow from asset management
• Record 4th quarter premium flows at FG
• UK
• Gerrard integration complete

7
2001 Key accomplishments - strategic

• Shift to clear geographic focus
• Powerful management team
• Group financing costs lowered
• US asset management affiliates now finalised in
  four groups
• Acquired FG Life

8
Julian RobertsGroup Finance Director

• Finance and operating review

9
South Africa
10
South African profit loss account
Rm 2001 2000 change Life assurance -
operating profit 3,085 2,630 17 -
LTIR 1,830 1,765 4 Asset management 458 484 -5 B
anking 3,593 2,829 27 General
insurance 570 463 23 Operating
profit 9,536 8,171 17 Operating profit
(m) 770 824 -7
Restated for the effect of the MTN on the
investible asset base
11
South Africa Life - new business premiums
1,467
1,573
1,300
1,842
3,040
3,142
Annual premium equivalent
12
Operating review - OMSA
2001 2000 change New business margins
27 23 Value of new business
(Rm) 840 726 16 Funds under management 283 253 1
2(OMSA Rbn) Return on capital 24 23
13
Bancassurance

• Current initiatives
• Personal financial planning
• Proposed OMBS / Permanent Bank merger
• Group schemes / Peoples Bank
• Premium flow to Old Mutual up 77
• OMBS / Permanent Bank merger costsavings R150m
  p.a.

14
Operating review - Nedcor
2001 2000 change Total income
(Rm) 11,418 9,024 27 Total assets (Rm
average) 197,691 158,259 25 ROA 2.22 2.16 ROE
25.1 24.0 Efficiency ratio 49.3 50.3
15
Operating review - MF
2001 2000 change Net premiums
(Rm) 4,306 3,152 37 Operating ratio 97.9 99.9
Operating income 569 463 23(based on LTIR) Net
reserves 2,057 2,007 2
16
United States
17
US profit loss account
m 2001 2000 Life assurance 19 - Asset
management 166 69 Operating profit 185 69 Oper
ating profit (m) 129 44
2000 comparatives are fourth quarter only
18
Operating review - US asset management
2001 2000Operating profit (m) OMAM
(US) 55 23 PBA 42 17 OMA - strategic 31 12 -
financial 38 17 Total 166 69Average b.p. fee
rate OMAM(US) 29 33 PBA 88 84 OMA -
strategic 49 51 - financial 51 49
2000 comparatives are fourth quarter only
19
US asset management divestitures
Number of Funds under m affiliates managemen
t
2000 2 7,507 2001 10 22,960 2002 2 5,230 Total
OM(US)H 14 35,697
At time of sale
20
US funds under management
31 Dec Net cash Market 31 Decbn 2000 Divested
flows movement 2001
OMAM(US) 74.9 - 6.5 -4.7 76.7 PBA 17.5 -
0.8 -5.7 12.6 OMA - strategic 37.4 - -0.7 0.8 37.5
Sub Total 129.9 - 6.5 -9.6 126.8 OMA -
financial 48.0 -22.9 -2.1 0.1 23.1 Total
OM(US)H 177.9 -22.9 4.4 -9.5 149.9
Includes of assets managed by Dwight on behalf
of FG Life
21
Embedded value review - US life
6 months 2001 New business premiums (m EV
Basis) APE 121 Value of new business
(m) 18 New business margin 15 EV discount rate
_at_ 31/12/01 9.5
22
Operating review - US life
6 months 2001 FG return on capital 10 Operati
ng profit (m) FG 45 Acquisition costs
(13) Americom (13) Operating profit 19
23
United Kingdomand Rest of World
24
UK and Rest of World
m 2001 2000 Life assurance (2) 13 Asset
management (3) 34 Gerrard 2 26 Gerrard
integration costs (12) (14) OMAM 6 14 Other
financial services 1 8 Banking Nedcor /
GPB 79 58 Operating profit 74 105
25
Gerrard revenues
Pro-forma m 2001 2000 change Fees 59 68 -13
Commissions 78 112 -30 Total revenue 137 180 -24
Average funds 19.4 21.4 -9under management
(bn) Average number of 2,550 3,700 -31daily
bargains
26
Overview of group finances
27
Rand depreciation
Source Bloomberg
28
Operating profit - Sterling
m 2001 2000 change
Group operations 973 973 0 Other (29) (34) 15 D
ebt servicing costs (67) (28) -139 Write-down (21
) - Operating profit before tax 856 911 -6 Tax (
209) (191) -9 Minorities (179) (145) -23 Smoothe
d post tax 468 575 -19 operating profit EPS
(p)
13.2 17.0 -22
29
Operating profit - Rand
Rm 2001 2000 change
Group operations 12,050 10,237 18 Other (359) (3
57) -1 Debt servicing costs (830) (295) -181 Wri
te-down (260) - Operating profit before
tax 10,601 9,585 11 Tax (2,591) (2,010) -29 Min
orities (2,215) (1,525) -45 Smoothed post tax
5,795 6,050 -4 operating profit EPS (c)
163.4 179.4 -9
30
Capital management

• Debt - short-term US1.6bn acquisition financing
  facility replaced with
• US650m convertible bond issue
• 900m five year revolving credit facility
• Gearing 34 (net)
• EBITDA interest cover of 13.8x
• Group return on average equity 15.5

31
Goodwill impairment review

• Impairment of 500m
• 335m with respect to US asset management
• 165m with respect to Gerrard
• Methodology
• In accordance with provisions of FRS 11
• 5 year discounted cash flow valuation
• Conservative estimate of future growth

32
Embedded value m
Value of in-force
Adjusted net worth
33
Embedded value Rm
Value of in-force
Adjusted net worth
34
Summary

• Growth in local currency in South Africa
  continues to be strong
• Restructuring in USA complete
• Re-engineering of UK commenced
• Focus on expense reduction

35
Jim SutcliffeChief Executive

• 2002 and beyond

36
We are internationalising Old Mutual...
37
Why?

• There are good growth opportunities
• We can create shareholder value

38
.and we have the skills and the expertise
39
Internationalising Old Mutual
Demutualisation listing July 1999
Establish credibleinternational presence
Phase I
Drive value fromacquisitions grow in SA
Phase II
Synergy organic growth complementary
international acquisitions
Phase III
40
We will focus on asset gathering andasset
management
41
Geographical focus
OMAFinancial
Gerrard
OMAStrategic
OMS
Deliver Value
Rebuild Profits
OMAM
AM
GNI
PBA
USA
UK
Old Mutual plc
OMAM
FG
Life
Selestia
South Africa
Americom
MF
OMSA
OMAM
Nedcor
Group
PB
Individual
NIB
OMBPerm
JVs
Grow
42
Group synergies

• Bancassurance
• OMBS / Permanent Bank
• Technology from South Africa
• US websites
• Selestia at one-third UK cost
• South Africa assets managed in US
• Life companies using in-house asset managers
• OMLAC(SA) and OMAM(SA)
• FG and Dwight
• PBA sub-advisory agreements
• Gerrard Private Bank
• Nedcor, Gerrard and OMSA working together
• New Gerrard management team supplemented
  bypeople from Nedcor, OMSA and plc head office

43
The strategy - South Africa

• World class products and profitability
• Dominant distribution
• Number 1 in each customer segment
• Bancassurance
• Cross-border servicing
• Targets - 2004
• Real profits growth of 2-3x real GDP
• ROE of 20 - 25

44
in the USA

• Asset management
• Multi-style specialist asset managers
• Central and local distribution capability and
  mutual funds
• Targets - 2004
• 5bn p.a. of net client inflows
• 10 ROC
• Life
• Focused on fixed annuities and term life
• Distributed by MGAs, banks and independent agents
• Targets - 2004
• Grow net cash inflow to 1bn p.a.
• 12 ROE

45
...and in the UK

• Focus on HNW asset management
• Build reinvigorated Gerrard base
• Tighten expenses
• Move towards 50 discretionary management
• Targets - 2004
• 1bn of net client inflow p.a.
• 40m of operating profit after tax

46
Internationalising Old Mutual

• We will focus on asset management andasset
  gathering
• In SA, USA and UK
• By customer-focused, regional strategies
• That gain from and contribute to the whole
• Right now, much to do organically - grow in SA,
  deliver value in USA, rebuild profits in UK

47
Analyst Presentation

• Preliminary results for the year to 31 December
  2001

48
Appendix
49
South Africa Life value of new business
Rm 2001 Margin 2000 Margin
Individual 506 21 399 18Group 334 49 309 38 T
otal SA life 840 27 708 23
50
OMLAC(SA) financial position
December December Rbn 2001 2000 Assets(net of
provisions and current liabilities) 257 227 Polic
y liabilities (223) (192) Excess
assets 34 34 Statutory capital adequacy
requirement 12.7 11.4 Multiple 2.7x 3.0x
51
OMLAC(SA) net cash flow
Individual Group 2000 Rm Business Business To
tal Restated
Single premiums 11,654 7,409 19,063 19,213 Recurr
ing premiums 9,380 3,432 12,812 12,446 Total
premiums 21,034 10,841 31,875 31,659 Maturities 9
,141 - 9,141 8,378 Annuities 3,309 1,899 5,208 5,1
97 Death disability 2,191 1,110 3,301 3,019 Fund
benefits - 1,457 1,457 2,050 Surrenders/terminati
ons 6,096 8,432 14,528 15,952 Total
claims 20,737 12,898 33,635 34,596 Net cash
flow 297 (2,057) (1,760) (2,937)
52
Composition of OMLAC(SA) policy liabilities
2001 () 2000 () Individual
business 58 58 Smoothed bonus 22 24 Market-
related 22 21 Non-profit 14 13 Group
business 42 42 Smoothed bonus 34 34 Market-r
elated 7 7 Non-profit 1 1 Total 100 100
Smoothed bonus 56 58 Market-related 29 28 N
on-profit 15 14
53
Adjusted net worth
m 2001 South Africa Nedcor 902 MF 112 P
ortfolio investments - SA 548 Portfolio
investments - international 313 SA asset
management 55 Cash and other (9) US US asset
management (incl. goodwill) 1,252 US life
(incl. goodwill) 304 UK and Rest of World UK
asset management (incl. goodwill) 440 Portfolio
investments 65 Gross debt US (1,245) UK and
other (113) Adjusted net worth 2,624