Old Mutual Ltd

Good day, ladies and gentlemen, and welcome to the Old Mutual Q3 Voluntary Update. All attendees will be in listen-only mode. There will be an opportunity to ask questions imprompted. If you should need assistance during the call, please see them operated by keying in star and then zero. Please note that this event is being recorded. I will now hand you over to the Head of Investor Relations, Lunga. Please go ahead.

Thank you very much, and good afternoon to everyone who's joining us, and good morning to those who may be dialing in from the States. My name is Langa Magnaile, as introduced. I head up investor relations. On the call with me is Yuri, our CEO. He will be leading the call, and Yuri will be assisted during the Q&A and comment session by Kaspar, our CFO, who is presently our Chief Accountant Officer. I will now turn over the call over to you, Yuri. Thank you.

Thanks, Lago. Good afternoon, everybody, or good morning. It's good to be with you. I think I'm sure you have in front of you the operating update that we put out on the 18th of November. So maybe just by intro from my side, I think we had our capital markets day towards the end of October where we put out the important metrics that we're going to be measuring ourselves on and be reporting on going forward in our medium-term targets. We are not reporting on those metrics in this operating update, but as we make clear in the update, that's from next year onwards, from Q1 numbers onwards, we will be reporting on those. I think internally, since the capital markets down as we head towards the end of the year, the focus has moved, I think, as we spoke around taking those targets and operationalizing them into the business planning process. We've managed to catch the planning cycle to be able to do that, as well as the score-cutting process. They're very much moving from strategy into execution. And so that's the focus internally as we head towards the end of the year. I think just a couple of comments on the operating assets we've put out. I think you will have noticed that there's not major changes from the trends that we reported in the half year. So the last half year, sales continued to fall by 1%. Gross flows flat. A decline in net plan cash flow for, again, the reasons that we reported in the half year. particularly the lower margin outflows in investments. One does the single big outflow, it had an impact there. Curriculum premiums on the non-capital side are 5% on the domestic side, and loans and bonds are also 1% up. The impact would be, of course, there was a sale of an underperforming loan, but only an impact on that. So those are the metrics that we put out there, I think, I'm happy to go to questions for the conversation.

Thank you very much, Yurit. Yurit, kindly open up the call. I do not see yet the queues on the Q&A. Please confirm on your side if you do. But otherwise, if you could just remind the participants on how to put in their questions through. Thank you.

Thank you very much, sir. Ladies and gentlemen, if you'd like to ask a question, please key in star and then 1. a new telephone keypad. A confirmation turn will indicate that Alani is in the question queue. You may key in star and then two to exit the question queue. Our first question comes from Baron Cormon of J.P. Morgan. Please go ahead.

Good afternoon. Just two questions. Firstly, are you able to give some color on the evolution of your CSM since June 2025? And then secondly, can you comment on Obnishol Insure's underwriting performance so far in H2 relative to the strong first half performance we saw? Thanks.

Thank you.

Over to you. So, on the CSM, unfortunately, we weren't able to give you more color on the evolution of the CSM, since that's the half here. We'll obviously be able to give you full reconciliation at the end. I'm sure underwriting margin we haven't seen any material impacts so still positive margin but obviously reported a very high number at the half year so I would expect that to normalise more to to Thank you Kasper.

Next question please Judith.

Thank you. The next question comes from Harry Berto of Bank of America Securities. Please go ahead.

Hi, good afternoon. Thanks very much for the update. Can you comment on the life APA sales that you're seeing in personal finance, excluding guaranteed annuity sales? And you also noted strong growth in retail gross written premium in old Michelin shares, if I understood correctly. H1 was up 5 cents, so it sounds like growth has increased. Can you comment on what's driving that increase? Thanks.

With your comments specific to personal, I'll just deal with it. So I guess if we do look at the personal finance sale, guarantees, annuities were down close to 40%. So it's the majority of the reduction, overall reduction in the interest rate that you're seeing during that period. So So that's what's driving, that's the thing we are seeing, we saw a slight uptick in the recurring premium sales. So the biggest move there is going to see the new 2040%, putting back the sales by about nine. That's really your second question.

Disregarding the credit and premium in retail segment within Old Mutual Insure, it sounded like it was up more than the 5% at June.

I'll just check on that and come back to you. We can go to the next question.

Thank you. Our next question comes from Bradley Moorcraft of Peregrine Capital. Please go ahead. Bradley, your line is open. You can ask a question. Unfortunately, it seems as if Bradley has technical issues and he's welcome to rejoin the queue should he sort that out. Our next question comes from Franchot de Toy of Anchor Stockbrokers. Please go ahead.

Hi, guys. Can you hear me?

Yes, we can.

Can you maybe comment on your solvency level, maybe just directionality in the quarter and maybe factoring in buybacks as well? I know you don't like telling us whether you're buying back or not and whether you like the price to buy back or not, but maybe if you can just give a sense of how much you executed in the last quarter on your buybacks. That's the first question. Obviously, that's the solvency level function of that, I guess, as well. Your second question, your gross flows, I think, was quite a bit stronger at the half year in terms of percentage growth. Maybe just comment on the reasons for the slowdown. I think you've mentioned the annuity sales, but it seems like there's a further increase slow down there since the half year. But nonetheless, the net flows improved from the half years. It's outflows, but it's not as big outflows level as we had at the half year. So maybe can you just comment on your persistency or client retention in the light of better net flows and whether you've seen positive lapse experience variances or improved levels compared with the half year? Just a sense of what's behind improved net flows and weaker gross flows.

Okay, let me go to solvency levels first. First of all, what we last time went through is just over 10% of the buyback. And we are required to, on a regular basis, at least what we've done. So that's in the market. So if you just look up for those tenders, you'll see that. And then in the quarter, in terms of solvency ratios, I would expect most insurers to see a decline in their solvency ratios, given the fact that the pre-stripe equity shop increased in that quarter. I think it increased by about four or five percents, which means your capital requirements for any equities that you are holding over the day will have gone up. So, and they're an all-time high. They're one percent away from the top level of stress that they can be. So I would have expected a real correspondingly with a reduction in the

Just to test those comments, the share buyback was fully allowed for as a reduction to own funds in our income numbers. So as we execute the buyback, it won't affect our own distributions.

Okay.

On the second, on gross flows, the second point that you raised, So the Overture Investments had a higher base in Q3 2024. So this year we are, so they're competing against that higher base that's detracted from the current year growth. And then, you know, as you said earlier, we have much lower fee of inflows to the points earlier made, but you also had new trip inflows in wealth, whereas wealth was a really strong form of policy. So we've seen a new trip inflows in wealth. Hopefully that helps. So overall, I'm saying we're down 1% from a glossary perspective, and that's the lane we And then with habitual investments down 18% of the time.

And then just to answer Mary's earlier question, so the 5% growth rate and premium growth for all of them ensure the retail growth rate was quite similar to the total.

Thank you. Judith, may we please take the next question?

Thank you. Next question comes from Marius Stradum of Austin Lawrence Pedian. Please hold it here.

Good afternoon. My question is about OM Bank. At the open day or the capital market, say you mentioned you had 145,000 clients and you were adding 5,000 a day. So could you please give us some indication of – whether you've seen that kind of daily addition maintained since the capital markets, or whether it's slowed marketly, or any other information you can provide us around your traction.

So, Maurice, I think on the weekend, I think parents need to note that we were at about $200,000, and that drone race is going at about $2,000 there. 2,000 accounts a day.

Okay. Thank you very much. Thank you. Next question, please.

Our next question comes from Bradley Warcraft of Peregrine Capital. Please go ahead.

Martin. Martin, can you hear me now? Yes, sir. Sorry about the issue earlier. Also a question on the Omnitron Insure top-line. I noticed that the growth has slowed from 9% at the entrance to 7%. I mean, any further color you can give there in terms of the slowdown, persistency challenges, increased competition would be very helpful.

Over to you, Kasper.

Yeah, on your list, it's, I'm going to put the answer there.

Okay.

That'll be my answer.

Yeah. All right, we will come back to you with that detail. Judith, may I check, are there still any questions? I can see anyone who's on the queue at the moment.

No, sir. At this point, there are no further questions in the question queue.

Okay, thank you very much. I will hand back over to you, Yuri, just to... I think there's one question that I see. Julie, should we please check? I think it's right.

Correct, yes.

I have a question for you, not related to Q3, but are you planning to take any restructuring charges in relation to your cost program? And will any of that be allocated to full year 25? Thank you.

And I just understand correctly, if you ask whether we are going to be adding any further restructuring provisions, is that the question? Correct. Yeah. To the extent that you have to meet quite a lot of conditions to handle restructuring provisions, so if you've met all the the conditions that are required at the year end for a restructure, how you've identified the people who've made the announcements, then it can be approved for the year end. If you're not in that position, you actually incur the cost when you actually do that restructure. So there will be additional costs. In the second half, relating to headcount reduction, those have largely been dealt with. So I'm not expecting a large provision outstanding at 31 December. I hear a restructured provision for future costs. We'll see the ones, of course, coming through in the second half.

I hope that helps. That was helpful. Thank you very much.

Thanks, Kalfa. Please do a final round and check if we have any questions left, and let's take those.

Thank you. Ladies and gentlemen, just a final reminder, if you'd like to ask a question, you're welcome to key in star and then one. We have a follow-up question from Harry Butter of Bank of America Securities. Please go ahead.

Thanks very much. Just to follow up around the loan growth issue, I think you noted the sale that had an impact on growth. What is your outlook for growth? How could you see loan growth or mutual finance improving?

Thank you. Over to you, Kasper.

Yes, so how you... As we mentioned earlier, part of the reason that the loan balances are flat is we were editing specific pieces of the book. We are expecting to see better growth rates coming out of our loan book as we still very responsibly improve our lending. So we are maintaining tight credit criteria. We do expect that book to grow going forward.

Thank you, Ranin.

Operator, please kindly check if we have any outstanding questions.

Yes, sir. Our next question comes from Jared Houston of Allweather. Please go ahead.

Afternoon, everyone. Just checking you can hear me. Yes, thank you. Perfect. Thanks, guys, for the call and thanks for the update.

Just a question on your... investment results, your shareholder investment return, obviously in the first half saw a very strong number. Is it fair to assume, just given what's happened with markets both locally and in the rest of Africa as well as bond yields, is it fair to assume current run rate is a continuation of that strong trend?

Yes, I think it's fair to assume. Investors should just recall that we used We do have collars around, so we have a protected equity structure. So upside is limited, but you do try and roll those collars on a regular basis in charges to manage the position over time. But yes, you should see, you still see strong investment performance coming through in line with the market's

Thank you, Kasper.

Perfect.

Sarah, it sounded like you were going to ask a follow-up.

Yes. Just a comment earlier about the progress on the buyback.

To clarify, did Kasper say only 10% of the buyback has been completed? And then just a question mark on

We've obviously seen quite a big step up in market volume as a result of an index outflow. Is the group participating in a higher level of market volume, or is it just slowly ticking away over time? So, obviously, we... in the high market volume. If that's consistently happening, we set, we actually work within the limits as an issue. The limits are on, so we can't move the market. So we actually work within those limits and then we have, you know, we're doing this by back With this mandate, we're not sure of the large banks, so they have specific parameters to work within. But I think the thing was a few weeks ago that might have caught up within the last week or two.

So you mean just over $400 million? Yeah.

Thank you, Kasper and Ramon. Operator, I'm comfortable that we round up and let me take one last question.

Thank you. Final question. It comes from Marius Stradum of ALG. Please go ahead.

Okay, thank you. Firstly, your South African asset management performance in the third quarter versus the first half, Considering higher AUMs at 30 June and continuing strong market performance, should we expect a decent acceleration in your earnings run rate since the half year? And then the second question, considering the lapse assumption changes that you made, and the management actions that you've taken. Have you seen some improvements in your lapsed experience at MFC?

So, Mario, so, just to remember, as a manager, you know, a very small part of that is equity. So, really, you're going to The assets that you have will result in quite awesome. We've seen pressure on credit spreads. So, the regeneration targets are quite steady. They might be a bit behind on their flows. And then the alternatives, you're looking at much longer valuation cycles. So, I would expect the price to increase in the third quarter, but there are quite a few new reports.

So, Mario, just remember that most of our 17 products on BSA, we get values in the equity market, it goes to the CSM, it doesn't go up through to earnings. So, So you will see that largely coming through the CSM.

My question is really related to the asset management businesses, so those that don't form part of the CSM. Okay.

Thank you, Kasper, and thank you, Rana.

Sorry, Rana, there was one more question. Sorry, Rana, there was a question. Mario is on MFC Persistency. So, I mean, we obviously are progressing with the management actions, but I think it's too early to call a material agreement yet.

Okay. Thank you very much.

Thank you. Parita, I don't see any questions. I'm comfortable to wrap up here and hand back to you, Yurich, just to wrap up the call for us. Thank you.

Okay. Well, thanks for being with us, everybody. Yeah, I think they were one or two questions which we have a bit longer to get back to the individual done. But for the rest, thanks for the conversation. I suspect our next conversation will be in the end.

Thank you very much.

Thank you. Ladies and gentlemen, that concludes today's event. Thank you for joining us. Any more notice, connect your line.