INTEGRATED
REPORT 2022
For the year ended 31 December 2022
DO GREAT THINGS EVERY DAY
OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
About our report
Our reporting suite
Our Integrated Report is supplemented by a suite of online publications and information. These reports can be
accessed on our corporate website. This Integrated Report, when read in conjunction with the rest of the reporting
suite, provides information targeted at meeting our diverse stakeholders’ needs.
https://www.oldmutual.com/investor-relations/reporting-centre/reports
INTEGRATED
REPORT 2022
For the year ended 31 December
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
REPORT 2022
For the year ended 31 December
REMUNERATION
REPORT 2022
For the year ended 31 December
SUSTAINABILITY
REPORT 2022
For the year ended 31 December
CLIMATE
REPORT 2022
For the year ended 31 December
TAX TRANSPARENCY
REPORT 2022
For the year ended 31 December
DO GREAT THINGS EVERY DAY
DO GREAT THINGS EVERY DAY
DO GREAT THINGS EVERY DAY
DO GREAT THINGS EVERY DAY
DO GREAT THINGS EVERY DAY
DO GREAT THINGS EVERY DAY
ANNUAL FINANCIAL
STATEMENTS
Consolidated and separate
For the year ended 31 December 2022
DO GREAT THINGS EVERY DAY
Integrated
Report
Corporate
Governance Report
Remuneration
Report
Sustainability
Report
Climate Report
Tax Transparency
Report
Annual Financial
Statements
Provides a succinct and
balanced view of our value
creation story. Our report
shares our strategic journey
to becoming our customers’
first choice to sustain, grow
and protect their prosperity.
This report is primarily
aimed at the providers of
capital but will be of interest
to all our stakeholders
wishing to understand our
unique value creation story.
Provides an overview of
Old Mutual’s approach
to corporate governance.
The report focuses on
how we do business in
accordance with sound
governance practices,
which are informed by the
highest ethical standards,
integrity, transparency
and accountability. The
report will be of interest to
investors, regulators, and
analysts.
Enquiries
Investor relations
Bonga Mriga
Communications
Vuyo Mtawa
T: +27 (0) 67 866 6348
T: +27 (0) 68 422 8125
E: investorrelations
@oldmutual.com
E: oldmutualnews
@oldmutual.com
Reflects how our rewards
purposefully align
performance outcomes
with shareholder interests,
while balancing our need to
be an attractive employer.
The report will be of interest
to investors, employees,
regulators, and analysts.
Is designed to reflect our
sustainability journey,
sharing insights into our
understanding of, and
approach to, managing
the most significant
environmental, social and
governance issues and
opportunities we face and
will be of interest to a wide
range of stakeholders.
Contains information
relating to the Group’s
climate-related activities,
policies, governance,
strategy, and related
disclosures. The information
provided will help readers
assess Old Mutual’s progress
in our climate adaptation
journey. This report is of
interest to our broader
stakeholders.
Concisely outlines our tax
philosophy, communicates
how the tax strategy is
interconnected to the Group
strategy and demonstrates
our commitment to being
a responsible taxpayer.
This report is of interest to
regulators, investors, and
analysts.
Contains information
relating to the Group’s
financial position and
performance which is useful
in assessing the strength
and risks associated with
the Group. The consolidated
and separate financial
statements were audited
in terms of the Companies
Act, 71 of 2008 (as amended)
(Companies Act). The
report will be of interest to
investors, analysts, regulators
and other stakeholders.
Application of the King IV
principles statements
The application of the King Report on Corporate Governance™ for
South Africa, 2016 (King IV)1 principles statement is a comprehensive
index in our Corporate Governance Report, detailing the arrangements,
processes and systems that are in place for governing and managing
the various areas of the organisation, to achieve the required
governance outcomes. It also confirms the application of the various
principles of King IV as required by the JSE Listings Requirements.
Our design centres around the theme of Africa Connected. With a rich
history, diverse cultures and latent possibilities – Africa is not only where
we are, it is where we want to be. Our reporting suite design echoes this
belief, highlighting the potential and power of a continent connected to
bridge the gaps between people, and the power of networks to create,
execute and deliver value to our stakeholders.
Throughout our reports, you will find succinct “did you know” stories
that provide insight into how we are working to make a meaningful
contribution towards our stakeholders and the continent we call home.
All images in our reporting suite were taken in the countries in which
we operate.
Cover image: V&A Waterfront, Cape Town, South Africa – Coordinates 33.9066° S, 18.4193° E
1 Copyright and trademarks are owned by the Institute of Directors in South Africa, NPC and all its rights are reserved
1
RISKS AND OPPORTUNITIES OPERATING CONTEXTSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE
OVERVIEW OF
THE GROUP
About our report continued
Approval
The Board acknowledges its responsibility for ensuring the integrity of this Integrated Report and confirms
that the report is presented in accordance with the Integrated Reporting Framework. The Board has
considered the operating context, strategy, and value creation model. This report addresses all issues that
are material to or that could have a material effect on Old Mutual Limited’s (Old Mutual or the Group) ability
to create value.
In the Board’s opinion, this report fairly presents the integrated performance of the Group. The Board
confirms that the Group complies with the provisions of the South African Companies Act relating to its
incorporation and is operating in conformity with its Memorandum of Incorporation. The Board approved
this report for release on 14 April 2023.
List of Board members:
Independent Non-executive
Trevor Manuel (Chairman)
Prof Brian Armstrong
Albert Essien
Olufunke Ighodaro
Itumeleng Kgaboesele
Jaco Langner
John Lister
Dr Sizeka Magwentshu-Rensburg
James Mwangi
Nomkhita Nqweni
Stewart van Graan
Non-executive
Thoko Mokgosi-Mwantembe
Executive
Iain Williamson (Chief Executive Officer)
Casper Troskie (Chief Financial Officer)
Reporting frameworks
» Integrated Reporting Framework (2021)
» King IV
» Johannesburg Stock Exchange (JSE) Listings
Requirements for debt and equity issuers
» Companies Act
» Insurance Act, 18 of 2017
» Certain financial information included in this
report was extracted from the audited consolidated annual
financial statements which have been prepared in
accordance with International Financial Reporting
Standards (IFRS)
Materiality
We apply the principle of materiality in assessing which
information to include in our Integrated Report. This
report focuses on the issues, opportunities and challenges
that could materially impact Old Mutual and our ability
to consistently deliver value to our stakeholders in a
sustainable manner.
Reporting scope and
boundary
This report covers the activities of the Group for
the period 1 January 2022 to 31 December 2022.
It provides an overview of:
» Governance (pages 12 to 23)
» Operating context (pages 24 to 30)
» Risk and opportunity management
(pages 31 to 39)
» Strategy and value creation (pages 40 to 49)
» Business model (pages 46 to 47)
» Stakeholders’ value creation (pages 43 to 45)
» Performance (pages 50 to 92)
Our financial reporting boundary aligns with our
financial statements boundary and includes our
operating subsidiaries, joint ventures, and key
associates. Due to hyperinflation in Zimbabwe and
barriers to access capital by way of dividends, we
continue to exclude the results of the Zimbabwe
business from adjusted headline earnings. All data
is at 31 December 2022 unless otherwise specified.
Assurance
Combined reviews by management and internal
audit were performed to ensure the accuracy
of our reporting content, with the Board and its
sub-committees providing an oversight role. This
report has not been audited but contains certain
information that has been extracted from the
audited consolidated annual financial statements
for the year ended 31 December 2022, on which an
unmodified audit opinion has been expressed by
the Group’s joint independent external auditors,
Ernst & Young and Deloitte & Touche. Our Group
internal audit provided limited assurance for non-
financial information disclosures.
Strategic pillars
Our stakeholders
Six capitals
Risk
Old Mutual cares
Always present first
Rewarding digital
engagement
Engaged employees
Solutions that lead
Customers
Communities
Employees
Intermediaries
Investors
Regulators
FC
Financial
MC Manufactured
SC
HC
IC
NC
Social and relationship
Human
Intellectual
Natural
Top risks
Navigation
More information available online
Information within this document
Other reports within the reporting suite
Forward-looking
statements
This report contains certain forward-
looking statements of Old Mutual
Limited’s plans and its current
goals and expectations relating
to its future financial condition,
performance and results, and
estimates of future cash flows and
costs. Words such as “believe”,
“anticipate”, “intend”, “seek”, “will”,
“could”, “may”, “project” and similar
expressions are intended to identify
such forward-looking statements
but are not the exclusive means of
identifying such statements.
By their nature, all forward-looking
statements involve inherent risk and
uncertainty because they are based
on assumptions related to future
events and circumstances which are
beyond Old Mutual Limited Group’s
and its affiliates’ control. These
include economic and business
conditions, and market-related
risks i.e., equity fluctuations, interest
rates, inflation, and deflation. These
circumstances could arise from the
impact of competition, legislation,
and the policies and actions of
regulatory authorities, and the
timing and impact of any uncertain
industry changes.
Any forward-looking information
contained in this report was not
reviewed and reported on by Old
Mutual Limited’s external auditors.
The Old Mutual Limited Group and
its affiliates undertake no obligation
to update the forward-looking
statements contained in this report
and other related supplementary
reports or any other forward-looking
statements it may make. Nothing in
this report shall constitute an offer to
sell or solicitation of an offer to buy
securities.
2
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
CONTENTS
4 Overview of the Group
5 2022 reflections
6 Overview of our business
40 Strategy and value creation
41 Our strategy
42 Our stakeholders
7 An established history for over 177 years
43 Stakeholder value creation
8 The core of who we are
9 Segments
10 Our stakeholders
11 Our values, culture and ethics
12 Governance overview
13 Message from the Chairman
14 Our Board
16 Board composition, tenure and skills
18 Board focus areas for 2022
19 Board future focus areas
20 Message from the Chief Executive Officer
22 Our Executive committee
24 Operating context
46 Our value creation business model
48 Enhancing value creation by investing in
long-term growth
49 Business strategy link with remuneration
50 Performance against strategy
51 Old Mutual cares
53 Always present first
55 Rewarding digital engagement
57 Engaged employees
59 Solutions that lead
61 Group financial performance
73 Segment performance
74 Mass and Foundation Cluster
25 Macroeconomic environment
77 Personal Finance and Wealth Management
26 Industry trends
30 Regulatory changes
31 Risks and opportunities
80 Old Mutual Investments
83 Old Mutual Corporate
86 Old Mutual Insure
32 Our approach to risks and opportunities
89 Old Mutual Africa Regions
33 Risk management process
35 Top residual risks
Feedback:
Your feedback is important to us, and we welcome your input to enhance the quality of our reporting.
We have implemented changes to improve the presentation in this report. We are continually improving
and refining our non-financial data collation processes and definitions used when reporting. This
may result in a re-presentation of prior year data for increased comparability. This will enhance the
completeness and accuracy of the reporting of our non-financial data over time.
3
Mutual Place, Johannesburg, South Africa – Coordinates 26.1068° S, 28.0580° E
STRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE
OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
OVERVIEW OF
OVERVIEW OF
THE GROUP
THE GROUP
Waterloo Solar PV Plant, North West, South Africa – Coordinates 27.0275° S, 24.7936° E
Approximately
84 000
homes
powered
180 000
MWh of clean
energy generated
each year
DID YOU KNOW
South Africa is power-constrained, with load shedding affecting
the whole country. Waterloo Solar is one of South Africa’s largest
solar projects at 75 MW. The project generates enough renewable
energy annually to power 84 000 medium-sized South African
households. The project’s economic development programmes
benefit local communities in the Naledi local municipal area.
The Old Mutual African Infrastructure Investment Managers’
IDEAS Fund invests in Waterloo and is one of South Africa’s
largest domestic infrastructure equity funds, investing in
economic, social and renewable energy infrastructure.
4
About our report continued PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE
2022 reflections
Financial
Responsible investment and environment
Social
Governance
R8.7 billion
Results from
operations
(2021: R4.4 billion)
99%
11.1%
210
bps
Return on net
asset value
(2021: 9%)
Old Mutual Investment Group named
Best ESG Responsible Investor Africa
by Capital Finance International for
the second time in a row
R2.1 billion
Value of Bula Tsela, our
transformation transaction to
increase our black ownership
by 4%
42%
of Board members are
black South Africans
(2021: 50%)
AAA
MSCI ESG Rating on the Old Mutual ESG Equity
Fund
88%
funeral claims paid
in 4 hours (2021: 84%)
Level 1 B-BBEE
certification since
2019
29%
of Board members
are female
(2021: 31%)
R12.5 billion
R146 billion
10%
Life APE sales
(2021: R11.4 billion)
of funds under management invested in the green
economy1
1.8 million
Old Mutual
Rewards customers
(2021: 1.3 million)
R290 million
committed to SMEs
(2021: R260 million)
NO
material fines issued by
regulators in 2022
76c
Total dividend
per share
(2021: 76c)
Active stewardship
968 245
resolutions voted on
(voted against 10%)
42%
senior management positions held
by women (2021: 40%)
(16%)
reduction in recorded
financial crime incidents
600
bps
190%
Group solvency
ratio
(2021: 184%)
(23%)
reduction in total operational carbon
emissions since 2019
senior management positions held
by black employees (2021: 58%)
61%
1 A low-carbon, resource-efficient and socially inclusive economic growth path for improved human wellbeing and social equity while reducing environmental risks. It is an alternative concept to typical industrial economic growth, focusing on
increasing gross domestic product (GDP) above other goals
5
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE OVERVIEW OF
THE GROUP
Overview of our business
OPERATING IN
14 COUNTRIES
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 14 countries.
Old Mutual’s primary operations are in South Africa and other African regions, and we have a niche business in
China. We have structured our operating segments to deliver our products and services to our customers
according to their needs.
Total results from operations R8 743 million (2021: R4 384 million; 2020: R1 663 million)
Segmental results from operations (Rm)
>100%
3 217
>100%
1 978
12%
1 240
1 109
525
448
180
727
87
(11%)
2 752
2 442
3 500
3 000
2 500
2 000
1 500
1 265
1 000
500
0
(500)
(1 000)
(1 500)
>100%
842
(83%)
(9%)
543
495
192
(131)
(391)
(455)
(804)
(1 471)
Mass and
Foundation
Cluster
Personal Finance
and Wealth
Management
Old Mutual
Investments
Old Mutual
Corporate
Old Mutual
Insure
Old Mutual
Africa
Regions
Net result
from Group
activities
2020
2021
2022
Line of business results from operations (Rm)
South Africa
South Africa
Tied advisers
11 218
Employees
24 902
Customers
6.4 million
Southern
Africa
Namibia
Botswana
eSwatini
Malawi
Zimbabwe
Tied advisers
938
Employees
3 000
Customers
2.5 million
East Africa
West Africa
Asia
South Sudan
Kenya
Uganda
Rwanda
Tanzania
Tied advisers
1 747
Employees
3 011
Customers
1.7 million
Ghana
Nigeria
China
Tied advisers
439
Employees
616
Customers
1.1 million
Tied advisers
32
Employees
337
Customers
0.2 million
8 000
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
(1 000)
(1 500)
>100%
7 314
1 631
1 927
23%
1 177
1 123
1 384
(38%)
1 679
1 049
(500)
(190)
2%
459
467
(83%)
(455)
(804)
(1 471)
Life and Savings
Asset Management
Banking and
Lending
Property and
Casualty
Net result from
Group activities
In China, we provide life insurance and investment solutions to high-net-worth retail
customers through a 50:50 joint venture with China Energy Capital Holdings, a subsidiary
of China Energy (a State Owned Enterprise).
2020
2021
2022
Listed on five stock exchanges:
South Africa
Namibia
Malawi
Zimbabwe
United Kingdom
6
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE An established history for over 177 years
For 177 years, we have invested funds in a way that enables our stakeholders to thrive.
As we look back to the early years of our business, we reflect on key achievements
while Africa was undergoing significant changes. We present our milestones in today’s
context, while understanding that South Africa, Zimbabwe, Namibia and Kenya,
among others, were not yet countries when we were founded, but rather colonies or
protectorates of the United Kingdom.
Refer online for details of our history
A track record of delivery
Our Group was established in
Cape Town as South Africa’s first
mutual life insurance company
1 million policies sold and
opened offices in Malawi
Opened our first call centre
of 40 people in Mutualpark,
Pinelands
1845
1895
1954
1971-
1982
1998
1999
Started expanding in Africa with an
office opened in Zimbabwe, followed
by Namibia in 1920 and Kenya in 1930
Annual income increased from
R100 million to R1 billion
Demutualised
and listed on the London
Stock Exchange
Celebrated 175 years and completed
the Nedbank unbundling in 2021
Acquired majority in
UAP and Faulu Bank
in East Africa
Signed our
first B-BBEE deal
2022
2020-
2021
2018
2014-
2015
2013
2005
Kirstenbosch Botanical Gardens, Cape Town,
South Africa – Coordinates 33.9875° S, 18.4327° E
Concluded second
B-BBEE deal:
Bula Tsela
Anchored in Africa by listing on the
JSE and launched South Africa’s first
ESG index unit trusts
Expanded into West Africa with
offices in Nigeria and Ghana
7
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE
OVERVIEW OF
THE GROUP
The core of who we are
Why we exist
Our purpose is to champion mutually positive futures every day
We want to be our customers’ first choice to sustain, grow and protect their prosperity. This is our victory condition,
which is anchored in our purpose. This means that we aim to be their preferred partner for financial wellness and
help them achieve their lifetime financial goals. We do this through the full breadth of solutions.
We
through our lines of
business . .
. . . by offering holistic
solutions and financial advice
Sustain
Banking and Lending
Grow
Asset Management
Protect
Life and Savings
» Transactional banking
» Personal loans
» Business loans
» Long and short-term savings
» Wealth management
» Investment solutions
» Retirement, life insurance, critical
illness and disability
» Funeral cover
» Medical insurance
Property and Casualty
» Property, specialty and credit
risk insurance
catering
to our
customers’
lifetime
financial needs
We deliver our solutions through our distribution channels
We deliver our solutions through a comprehensive range of channels to ensure our customers and advisers can interact with us in a way that is most convenient for them. We use a combination of face-to-face and
digital channels, giving our customers more choice as we move towards delivering consistent omni-channel experiences. Our direct digital channels include our web portal, mobile apps and cell phone channels,
such as WhatsApp and USSD.
39 238 Tied and independent intermediaries
(2021: 35 4681)
1.2 million Active digital users
(2021: 1.1 million)
826 Retail branches
(2021: 871)
48 731
Worksites
(2021: 47 226)
1 Prior period re-presented
8
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE
Segments
Our operating segments are structured to deliver our products and services according to the needs of our customers.
Mass and Foundation Cluster
Personal Finance and Wealth Management
Old Mutual Investments
Simple financial services offerings
Holistic financial advice and long-term financial solutions
Asset management and investment solutions
Target markets
Retail customers in the low-income
and lower-middle-income markets
Lines of business
Target markets
Retail customers in the middle- and
high-income markets and high-net-
worth individuals
Lines of business
Target markets
Institutional and retail customers, as
well as multi-managers
Lines of business
Types of offerings
» Risk and lending
» Transactional banking
» Savings
Key distribution channels
» Tied advisers, sales agents and
financial consultants
» Third-party channels
» Call centre and digital channels
Types of offerings
» Long and short-term risk,
savings, lending, income
and investment solutions
» Wealth management
Key distribution channels
» Tied and independent
financial advisers
Types of offerings
» Listed equity and multi-assets
Key distribution channels
» Our investment solutions
investments
» Direct and digital channels
» Fixed income and credit
investments
» Income solutions investments
» Unlisted assets investments
» Shareholder credit and asset
liability management
are accessible to the
other segments, linked
investment service
providers and multi-
managers
Refer to pages 74 to 76 for the Mass and Foundation Cluster’s
performance in 2022
Refer to pages 77 to 79 for the Personal Finance and Wealth
Management’s performance in 2022
Refer to pages 80 to 82 for Old Mutual Investments’ performance
in 2022
Old Mutual Corporate
Old Mutual Insure
Old Mutual Africa Regions
Traditional employee benefits, including group assurance,
investments and advisory solutions
Short-term insurance solutions
Insurance, banking and asset management services across
different African markets
Target markets
Small, medium and large employers,
retirement funds and other benefit funds,
as well as their members and employees
Lines of business
Target markets
Retail, commercial and corporate
customers
Lines of business
Target markets
Corporates, SMEs and retail
customers
Lines of business
Types of offerings
» Retirement investments and
administration
» Group risk
» Reward benchmarking and
advisory services
» SME funding and support
Key distribution channels
» Intermediaries
» Consultants
» Direct and digital channels
Types of offerings
» Property, personal, commercial,
and credit risk
» Agricultural, engineering,
marine and travel insurance
Key distribution channels
» Tied advisers
» Independent brokers
» Direct and digital channels
Types of offerings
» Medical, short term insurance,
long term insurance, asset
management, savings
» Transactional and corporate
banking and lending
Key distribution channels
» Brokers and advisers
» Partnerships
» Direct and digital channels
Refer to pages 83 to 85 for Old Mutual Corporate’s performance
in 2022
Refer to pages 86 to 88 for Old Mutual Insure’s performance
in 2022
Refer to pages 89 to 92 for Old Mutual Africa Regions’
performance in 2022
Supported by our enabling functions
Group strategy and human capital
Group finance
Group marketing, public affairs and sustainability
Group risk, compliance and actuarial
Group governance
Capabilities cluster and customer solutions
KEY:
Life and Savings
Asset Management
Banking and Lending
Property and Casualty
9
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE Our stakeholders
At Old Mutual, we champion mutually positive futures for our stakeholders and our business. Accordingly, we
act ethically and with intent to ensure our core business activities create sustainable value for the Group while
also benefiting and prioritising our shareholders, customers and employees and addressing the needs of broader
stakeholders and the environment.
For more information on our sustainability approach to all our
stakeholders, refer to our Sustainability Report
Refer to our stakeholder management and value creation on
pages 42 to 45 and our value creation business model on
pages 46 to 47
Customers
Intermediaries
Employees
Our customers are the lifeblood of our business and we
aim to be their first choice. Our customer base ranges from
low-income to high-net-worth individuals, as well as SMEs,
large corporates and institutions.
Our intermediaries serve as a crucial link between us and
our customers. Intermediaries establish relationships with
new customers and provide appropriate advice based on
their needs.
We have a skilled and diverse workforce. Our people are our
greatest competitive advantage, and we continue to prioritise
their welfare. We rely on our highly motivated and engaged
employees to put our customers first with every interaction.
11.9 million
customers
Our physical distribution network includes:
Tied advisers
Independent
financial
advisers
Independent
brokers
Franchise
advisers
Corporate
consultants
Sales agents
We have 31 866 employees
Employee
retention:
87%
Senior management:
women: 42%
black: 61%1
Investors
Communities
Regulators
We rely on our investors for financial capital to ensure our
operations can compete in their chosen markets and drive
sustainable growth.
Who invests in us
Where our investors
are from2
We recognise the interdependence between our business
and the communities we serve. Therefore, to uplift our
communities, we shift our focus beyond our operations to
contributing to socio-economic development in a way that
is impactful and sustainable.
Our communities include:
Our business operates in a highly regulated environment,
and our regulators play a key role in overseeing the financial
soundness of our business, the strength of our governance
processes and the treatment of our customers. We are
regulated by various laws and regulatory bodies in each
country of operation.
Total number of regulators
2022
2022
Institutions
Individuals
Employees
Brokers
Corporates
Other
77%
3%
7%
8%
4%
1%
South Africa
North America
United Kingdom
Europe (excl UK)
Asia
Rest of the world
61%
12%
4%
5%
4%
14%
Citizens of
the countries
in which we
operate
Non-profit
organisations
Partners and
suppliers
2022
1 This percentage relates to South African employees
2 The investor locations disclosed are based on the Share Register as at 25 November 2022
Non-banking financial services
Banking financial services
Revenue services
Financial crime
Competition
Labour and transformation
Company and Listings Requirements
Foreign exchange
Data and privacy
Other
Total
48
10
17
16
10
17
21
13
9
15
176
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RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE Our values, culture and ethics
We believe an ethical culture is critical to doing business responsibly. Our values are key to building this work
environment, and we ensure that we lead with integrity and respect to drive employee, customer and investor
confidence in our business.
l
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O
We foster a culture where
our employees and leaders
are aligned with our values.
Because of this, our values guide
our interactions with each other,
our customers, communities
and other stakeholders.
1
2
3
4
Champion the
customer
The power of
diversity and
inclusion
Agile innovation
that makes a
difference
Always act with
integrity
5
Respect for each
other and the
communities we
serve
6
Trust and
accountability
Our culture
Our ethics
We believe that our culture is key to our ability to deliver on our strategic ambitions. We have
been on our culture transformation journey since 2016, and have made significant strides in
redefining our purpose and values.
While our Board is responsible for setting and steering the Group’s culture, our leaders and employees – supported
by organisational structures and processes – bring our culture to life by reinforcing our desired behaviour.
Old Mutual’s organisational culture is built on four cornerstones:
1
2
3
4
Driving inclusive leadership to create an environment in which our employees can thrive
Building high-performing, autonomous teams aligned with the Group’s purpose and strategy
Fostering psychological safety and a non-threatening work environment for our employees, where
they feel comfortable to voice their ideas and opinions
Supporting our teams by removing the hassles that negatively impact delivery and engagement
Our organisational culture and behaviours are continuously reinforced through communication and engagement,
performance management, organisational structures, training and incentives, which help employees understand
what drives decisions and behaviours from their leaders.
We distribute the Pulse Culture and Engagement Survey every second year to
obtain feedback and monitor the effectiveness and embeddedness of our culture
journey. The survey provides insight into challenges that need to be resolved
to execute and deliver on our culture. We focus on the employee engagement
and psychological safety dimensions of our culture model as these are the
foundational elements that build high performing teams and organisations.
Read more about our culture in our Sustainability Report
Ethics set the standards for our corporate governance. We strive to conduct
our business responsibly and ethically and ensure our behaviour is consistent
with our policies and code of ethics and relevant regulations applicable to
African financial services companies.
Our code of ethics, the Maadili charter, (Maadili meaning ethics in Swahili), defines ethical
behaviour as following the spirit and intention of the law and treating our stakeholders and
competitors fairly and respectfully. It is supported and extended by a number of policies, which
include our Anti-bribery and Corruption Policy and our Group Conflicts of Interest Policy.
The Maadili charter applies to all Board members and employees and is reviewed regularly
and revised accordingly to ensure a progressive ethical culture.
Governance of ethics
The Board
The Board is responsible for setting
and steering the Group’s culture.
Board members are individually and
collectively accountable for their ethical
and effective leadership of the Group.
The Executive committee
As delegated by the Board,
management is responsible for
implementing and executing the
Maadili charter and supporting policies
and the effective monitoring, control
and assurance of the charter.
Ethics governance structures
Old Mutual’s internal and external
ethics governance mechanisms
include a whistleblower hotline, e-mail
and website for reporting actual
or suspected unethical or unlawful
behaviour by directors, employees
or external third parties. These are
supported by strong investigative
capabilities and rigorous disciplinary
processes and sanctions.
Read more about how ethics
is governed from page 4 in our
Corporate Governance Report
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RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEIntegrated Report 2022GROUP FINANCIAL PERFORMANCE
OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
GOVERNANCE
GOVERNANCE
OVERVIEW
OVERVIEW
Blantyre, Malawi – Coordinates 24.7259° S, 31.2109° E
5 400
local farmers
supported and
empowered
900
permanent
employees
DID YOU KNOW
Jacoma Estates is the first fully irrigated macadamia farm and
the largest exporter of bird’s eye chilli and paprika in Malawi. With
a strong commitment to climate change resilience, Jacoma also
provides local communities with access to irrigation.
Through its investment in Jacoma Estates, Old Mutual
Investment Group (Malawi) demonstrates its commitment to
responsible investment. Beyond the significant employment
opportunities for the economy, Jacoma also works closely with
outgrowers in the community, providing quality seed, training
and market access to the smallholder farmers.
12
About our report continuedIntegrated Report 2022 PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Message from the Chairman
Trevor Manuel
Chairman
In 2022, we responded
admirably to challenging
operating conditions,
returning to pre-COVID-19
levels of growth and
regaining market share.
Old Mutual will continue
to differentiate its offering
through a more integrated
and human-focused
approach to financial
services, further enhancing
customer and adviser
experience.
2022 proved to be both a challenging and rewarding
year for the Group and our stakeholders. We returned
to growth despite a difficult economic environment
characterised by rising inflation and interest rates,
as well as fiscal pressures from increased debt
repayments. The easing of COVID-19 pandemic
pressures was offset by an increase in weather-related
catastrophe events, while the ongoing geopolitical
crisis in Europe heightened market uncertainties.
Our business improved productivity and delivered
pleasing shareholder returns, but what has made me
most proud is the strong way we showed up for our
customers in what was a particularly challenging year
for them. We reviewed and strengthened our long-
term strategy through specific focus areas to ensure
that we become our customers’ first choice to sustain,
grow and protect their prosperity.
Congratulations to Iain, the executive team and our Old
Mutual colleagues across the Group for their successful
execution of our strategy and for delivering on the
promises made to our investors and customers. It is
pleasing to see the efforts of the team at growing and
protecting our core retail businesses, which are mainly
based in South Africa, while unlocking new growth
opportunities across the rest of the African continent.
This positive performance by the business occurred
despite the negative impact of loadshedding on our
daily operations in South Africa, especially at branch
level. I express the view that solutions can be found for
other similar challenges by appropriate and timeous
government action. The country is entitled to a speedy
resolution to the epidemic of crime and corruption.
Similarly, there needs to be a swift response to the
infrastructure requirements, both in respect of new
builds and, perhaps more importantly, infrastructure
maintenance.
There can be no doubt that South Africa’s rampant
corruption, unchecked crime and alarming descent
into lawlessness has been exacerbated by a lack of
strong leadership and political will. I believe it is an
appropriate time to make the call for administrative
clarity on how the many governance crises that
currently beset South Africa will best be addressed.
Given the importance of the South African market to
the Group and the significant customer, shareholder
and employee base we serve, we remain fully
committed to working with government to improve
on the conditions for doing business in the country.
This covers regulatory certainty, response times
for regulators and administrators and the general
applications and consistency of rules. This is an ongoing
challenge that requires an openness of approach and
reasonable access for our officers.
Managing diverse risks remained a priority for the Board
in 2022. While the Board is confident that we are taking
appropriate steps, we remain vigilant and continue to closely
monitor the Group’s preparedness for any eventuality.
Our employees continued to adapt well to the ever-
changing macroenvironment, including the new
ways of working. Ensuring employees continued to
receive holistic support remained a priority for the
Board. With our full backing, the business continued
to invest in leadership development, attracting and
retaining critical skills and inspiring a culture of high
performance.
The team is also to be commended on driving
sustainable outcomes both for the Group and society.
We continue to make good progress against our
commitments to drive transformation in line with both
policy and societal expectations. In 2022, we concluded
two major transformation transactions in South Africa
– “Bula Tsela” and “Futuregrowth” - both of which
represent practical ways of broadening the ownership
base of our business in line with national
transformation imperatives.
Read more about these Broad-Based Black Economic
Empowerment Transactions in our Sustainability
Report
Across the business, very clear commitments have
been made to appropriately address climate change,
in line with the requirements of a just energy transition.
The Group’s responsible investment philosophy and
active stewardship programmes are preparing us for
a greater role in the green economy over time.
The impacts of the climate crisis are particularly
pronounced in the developing world. Extreme weather
events escalated across the continent in 2022, resulting
in droughts, floods and the displacement of thousands
of people. Old Mutual responded with speed and
empathy, working with local partners to provide
humanitarian relief to the communities worst affected
by these disasters.
It is now clearer than ever that bold, urgent and
collective action is necessary to limit global warming.
I am encouraged by the initiatives addressing this risk
across the Group.
Read more about these efforts in our Sustainability
Report
Read more about these efforts in our Climate Report
I am particularly pleased that the strategic engagements
undertaken in 2022 resulted in all our resolutions being
passed at our May Annual General Meeting, including the
approval of the Group’s Remuneration Policy. This represents
the culmination of four years’ worth of work and an incredible
amount of collaboration throughout the business.
Going forward, I believe we will continue building on the
momentum gained in 2022 by differentiating our offering
with a more integrated and human-focused approach to
financial services.
We expect the operating environment to remain uncertain,
once again testing our business’s resilience and values.
The headwinds are formidable. The efforts of South Africa’s
business sector to build an economy and society that is
more inclusive, just and stable continue to be considerably
undermined by the country’s crumbling infrastructure, our
recent grey listing and the public sector’s woeful lack of
urgency and commitment.
With civil society holding big business to a higher standard
than ever before, we need to elevate the status of ethics and
corporate governance within our own organisation, while
also safeguarding the financial probity and wellbeing of the
wider society we operate in.
As we resolutely enter what we hope will be a bold new era
of recovery, I am confident Old Mutual has what it takes to
help address South Africa’s ills, while making the most of
the opportunities for job creation and growth that positive
change will present.
It is my fervent wish that our company credo of
championing mutually positive futures every day for all our
stakeholders will strongly motivate us to hold each other
accountable as we set about fixing our broken beloved
country.
Lastly, I would like to thank Nosipho Molope and Marshall
Rapiya, who resigned from the Board in 2022, for their many
years of service and contribution to building a strong Old
Mutual. We wish them all the very best.
Ngiyabonga! Rea leboga! Baie dankie! Thank you! Asante!
Trevor Manuel
Chairman of the Board
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE 6
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Our Board
Our Board
Independent Non-executive
Trevor Manuel (66)1
Chairman
NDip, EMP (Stanford)
Appointed: 2016
Tenure2: 7 years
Expertise brought to the Board:
Finance and audit, information technology,
leadership, listed corporates, responsible business,
risk management, strategy
Committee membership: Corporate Governance
and Nominations, Responsible Business
Other listed directorships: 0
Prof Brian Armstrong (61)1
BSc (Eng), MSc (Eng), PhD (University
College London)
Appointed: 2020
Tenure2: 2 years
Expertise brought to the Board:
Digital ethics, digital transformation, information
technology, remuneration and performance
management, responsible business, risk management,
sales and distribution, strategy
Committee membership: Related Party Transaction,
Responsible Business, Technology and Platforms
Other listed directorships: 0
Albert Essien (67)1
BA (Hons), EDP (INSEAD)
Appointed: 2015
Tenure2: 7 years
Expertise brought to the Board:
Finance and audit, listed corporates, remuneration and
performance management, risk management, strategy
Committee membership: Responsible Business, Risk
Other listed directorships: 0
Olufunke Ighodaro (59)1
BSc (Hons), FCA(ICAEW), CA(SA)
Appointed: 2020
Tenure2: 2 years
Expertise brought to the Board:
Finance and audit, information technology, listed
corporates, remuneration and performance
management, risk management, strategy
Committee membership: Actuarial, Audit, Corporate
Governance and Nominations, Risk
Other listed directorships: 2
Itumeleng Kgaboesele (51)1
BCom, PDip (Acc), Dip (FMI), CA(SA)
Appointed: 2016
Tenure2: 6 years
Expertise brought to the Board:
Finance and audit, remuneration and performance
management, risk management, strategy
Committee membership: Actuarial, Audit, Corporate
Governance and Nominations, Remuneration
Other listed directorships: 0
Jaco Langner (49)1
BCom, FASSA, FFA
Appointed: 2021
Tenure2: 1 year
Expertise brought to the Board:
Actuarial, finance and audit, information technology,
listed corporates, remuneration and performance
management, sales and distribution, strategy
Committee membership: Actuarial, Audit,
Remuneration
Other listed directorships: 0
John Lister (64)1
BSc (Stats), FIA
Appointed: 2017
Tenure2: 5 years
Expertise brought to the Board:
Actuarial, finance and audit, information technology,
listed corporates, responsible business, risk
management, strategy
Committee membership: Actuarial, Audit, Corporate
Governance and Nominations, Risk
Other listed directorships: 0
1 Age as at 31 December 2022
2
Tenure considers the length of time served on either of the previous Old Mutual Emerging Markets or Old Mutual plc Boards or the
Old Mutual Limited Board post listing in 2018, as at 31 December 2023
Dr Sizeka Magwentshu-Rensburg
(63)1
Lead Independent Director
BA, MBA (Webster), DPhil
Appointed: 2017
Tenure2: 5 years
Expertise brought to the Board:
Finance and audit, information technology, responsible
business, risk management, strategy
Committee membership: Corporate Governance and
Nominations, Remuneration, Responsible Business
Other listed directorships: 0
South Africa
Ghana
United Kingdom
Nigeria
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Our Board continued
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James Mwangi (45)1
BA (Econ)
Nomkhita Nqweni (48)1
BSc, PDip (Inv Mgt), LDP, AMP
Appointed: 2017
Tenure2: 5 years
Expertise brought to the Board:
Information technology, remuneration and performance
management, responsible business, strategy
Committee membership: Corporate Governance and
Nominations, Related Party Transaction, Responsible
Business, Technology and Platforms
Other listed directorships: 0
Appointed: 2021
Tenure2: 1 year
Expertise brought to the Board:
Finance and audit, listed corporates, remuneration
and performance management, responsible business,
strategy
Committee membership: Actuarial, Audit, Responsible
Business
Other listed directorships: 1
Stewart van Graan (67)1
BCom (Hons), PMD
Appointed: 2017
Tenure2: 5 years
Expertise brought to the Board:
Information technology, listed corporates, responsible
business, sales and distribution, strategy
Committee membership: Corporate Governance
and Nominations, Related Party Transaction, Risk,
Technology and Platforms
Other listed directorships: 2
Non-executive
Executive
94%
scheduled
Board meeting
attendance
Average age
58
years
Thoko Mokgosi-Mwantembe (61)1
BSc, MSc, SEP (Harvard), MCRP (Institute
Management Development of Switzerland)
Appointed: 2017
Tenure2: 5 years
Expertise brought to the Board:
Information technology, listed corporates, remuneration
and performance management, responsible business,
sales and distribution, strategy
Committee membership: Remuneration, Technology
and Platforms
Other listed directorships: 3
Casper Troskie (59)1
Chief Financial Officer
BCom (Hons), PGDA, CA(SA)
Appointed: 2018
Tenure2: 4 years
Expertise brought to the Board:
Actuarial, finance and audit, listed corporates,
remuneration and performance management, risk
management, strategy
Other listed directorships: 0
1 Age as at 31 December 2022
2
Tenure considers the length of time served on either of the previous Old Mutual Emerging Markets or
Old Mutual plc Boards or the Old Mutual Limited Board post listing in 2018, as at 31 December 2023
11 (79%) Independent Non-executives
1 (7%) Non-executives
2 (14%) Executives
Iain Williamson (52)1
Chief Executive Officer
BBusSc (ActSci), GMP (Harvard), FASSA
Appointed: 2019
Tenure2: 3 years
Expertise brought to the Board:
Actuarial, finance and audit, information technology,
listed corporates, remuneration and performance
management, risk management, strategy
Committee membership: Responsible Business,
Technology and Platforms
Other listed directorships: 0
South Africa
Ghana
United Kingdom
Nigeria
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Board composition, tenure and skills
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What is the composition and tenure of the Board?
Our Board consists of 14 members with the necessary qualifications,
collective skills and expertise required to guide and steer our large and
complex Group.
The maximum tenure in the Group is three terms of three years and the retirement age for directors is
set at 70 years, both subject to the discretion of the Corporate Governance and Nominations committee.
The committee considers, in advance of the Annual General Meeting, the directors required to rotate, in
accordance with the rotation schedule.
The Corporate Governance and Nominations committee also evaluates the composition of the Board
quarterly to ensure an appropriate balance of knowledge, skills, experience, diversity and independence. The
Board composition is also reviewed, taking into consideration its succession plan and rotation schedule.
In terms of the Johannesburg Stock Exchange Listings Requirements, the Board must set transformation
targets in a Board Appointment Policy. Our performance against these targets and other key data points
about the Board, are set out below:
Demographics
Gender diversity
What changes were made to the Board and committee
composition during the year?
Board member
Date
Nosipho Molope
27 May 2022
Nature of
change
Impact on committee
membership
Resigned as an
independent
Non-executive Director
Resigned from the Actuarial
sub-committee
Resigned from the Audit
committee
Resigned from the Risk
committee
Marshall Rapiya
31 July 2022
Retired as a
Non-executive Director
Retired from the Responsible
Business committee
Retired from the Risk
committee
2022
2022
Non-South African
White South African
Black South African
2022
29%
29%
42%
2021
25%
25%
50%
Male
Female
2022
71%
29%
2021
69%
31%
Target
50%
NOT ACHIEVED ✗
The achievement of these targets will inform future Board appointments.
Target
30%
NOT ACHIEVED ✗
How is directors’ independence assessed?
Directors’ independence is assessed annually from the perspective of a reasonable and informed
third party. The assessment is based on, among other things, prevailing circumstances, the definition
of independence in terms of the Companies Act, the King IV guidance in terms of the assessment
of independence (substance over form), conflicts of interest (whether perceived or actual) and
other relevant considerations. The 2022 independence assessment did not result in changes to any
directors’ designations.
Cape Town, South Africa – Coordinates 34.1187° S, 18.4593° E
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What knowledge, skills and experience does the Board have?
In 2018, at the time of Old Mutual’s listing, the Board determined the individual skills required to provide
effective oversight over the large and complex financial services business, creating a skills matrix. The
Corporate Governance and Nominations committee reviews the skills matrix of the Board and its committees
quarterly. Identifying skills gaps helps the Board to make decisions on future Board appointments and
informs training requirements. Directors’ level of institutional knowledge is also considered as part of this
process.
Preference is given to executive and/or industry experience when filling skills gaps on the Board, as the
Board believes that these skills enable effective functioning, and supports robust oversight by Board
members with the requisite practical experience.
Number of Board members with recognised executive industry expertise in a
particular field
Strategy
14
Risk management
10
Strong strategic and risk management expertise required
to successfully govern and steer the Group to ensure
shared value outcome
Finance and audit
10
Key experience required for effective governance, oversight and
tracking of performance of a financial services organisation
Actuarial
4
Information technology
Remuneration and
performance management
10
10
Sales and
distribution
4
Important expertise given the significance of our life business
and the material impact actuarial shifts can have on the results
Key expertise in the context of the rapidly evolving operating
environment and fundamental technology shifts within the
financial services industry
Remuneration expertise is required to steer the Group in
retaining, attracting and developing the talent and skills
required in a complex financial services organisation
Key strategic driver for a financial services organisation
Responsible business
8
Essential expertise required to effectively govern and guide
the Group in future proofing the business
Listed corporates
8
Important expertise required to effectively govern a Group listed
on five stock exchanges
How often do directors rotate and retire from the Board?
In terms of our Memorandum of Incorporation, all directors are subject to retirement
by rotation and re-election by our investors at least once every three years.
Newly appointed directors may hold office only until the next Annual General Meeting,
at which point they retire and become available for re-election by our investors on the
recommendation of the Board. At the Annual General Meeting on 27 May 2022, five of the
six directors who were up for re-election were elected after making themselves available for
election in line with our Board Charter. Ms Nosipho Molope did not make herself available
for re-election, having served on the Old Mutual Group Boards for three consecutive terms of
three years.
When identifying directors with the longest term in office since their last election, we consider
their date of appointment as a Non-executive Director of Old Mutual Emerging Markets
and/or Old Mutual plc, whichever is earlier.
The time served on either the Old Mutual Emerging Markets or Old Mutual plc Board is added
to the time served on the Old Mutual Limited Board in considering rotation decisions.
How does the Board ensure that effective succession
plans are in place for directors and executives?
The Corporate Governance and Nominations committee is responsible for succession
planning for the Board and key executives.
During 2022 the Board commenced engagements to expand its medium-term succession
plans. Of particular focus was the succession plans for the eight directors who are due to step
off the Board over the next three years.
The Board is satisfied that the directors have the appropriate balance of
knowledge, skills, experience, diversity and independence to govern the
Group effectively, considering its nature, size, the scale of operations, and the
laws and customs governing its actions.
Johannesburg, South Africa – Coordinates 26.1936° S, 28.0496° E
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Board focus areas for 2022
Strategy
Transactional capability
» In 2022 the Board and
» The Board supported
management continued to
enhance the Group’s long-
term strategy, with focus
on the detailed execution
steps required for delivery
of our victory condition
to be our customers’ ‘first
choice to sustain, grow and
protect their prosperity’
» The primary outcomes of
this strategy have been
identified, including
providing our customers
with an integrated
financial services offering.
These outcomes are
linked to specific Board-
approved value drivers for
investors, as detailed in the
Integrated Report
» We continued to monitor
the steps to embed the
Group’s medium and
long-term strategy during
the year, taking into
consideration the prevalent
consumer, socio-economic,
business and competitor
trends
» The strategic allocation
of capital was monitored,
with a focus on organic and
inorganic opportunities
the establishment of a
transactional capability
in the Group as part of
the core strategy. This
will improve customer
interaction and cross-
selling opportunities, as
well as provide a more cost
effective source of funding
through retail deposits
» The investment profile was
approved as well as the
expenditures for the build
of a transactional capability
» An ad hoc sub-committee
was created with Albert
Essien (Chairperson)
Prof Brian Armstrong,
Dr Sizeka Magwentshu-
Rensburg, Trevor Manuel
and Nomkhita Nqweni
as members, to oversee
the initiative. The sub-
committee considered
the licence application,
customer value proposition
and integration of the
transactional capability.
It also ensured that the
latest technology was
deployed allowing for an
effective operating model
and improved servicing
» The cloud-based
technology stack was
approved through the
Technology and Platforms
committee
» The Corporate Governance
and Nominations
committee reviewed future
governance structures of
the transactional capability
» The Board also reviewed
the section 13 submission
to the Prudential Authority
and the transactional
capability announcement
strategy
Old Mutual B-BBEE
transaction (Bula Tsela)
» Old Mutual prioritises
transforming the economy
and creating opportunities
to empower and uplift
ordinary South Africans
» The Group had agreed at
listing, via a framework
agreement with the now
Department of Trade,
Industry and Competition,
to achieve a 25% broad-
based black economic
empowerment ownership
by 2021, and best in class
by 2023 (30% at the time
of listing)
» The Board and its
committees provided
oversight of each step of the
process from the design
to the implementation
of Bula Tsela, ensuring
all relevant stakeholders
were considered and the
elements of the transaction
were clearly communicated
» It was ensured that:
‒ The transaction enhances
competitiveness,
aligns with the Group’s
responsible business
principles and shared-
value approach and is
broad-based
‒ Employees are enabled
to share in the success of
Old Mutual, community
development is
supported, and it includes
black South Africans
from lower-income
backgrounds
‒ The benefits of the
transaction must
outweigh and outlive
the costs
Risk management
Customers and product
Culture and human
capital
Digital journey
» The Board monitored
» The Board monitored the
» The Board continued to
» The Board monitored the
oversee the Group’s cultural
transformation to a high-
performance culture
» The outcomes of recent
culture surveys were
considered, and it was
noted that the culture
themes and interventions
of the past two years are
having a positive impact
» We monitored the Group’s
efforts aimed at identifying,
recruiting and retaining
critical skills
» We continued to monitor
the Group’s succession
planning methodology
» We oversaw the
implementation of a hybrid
working environment with
our employees
» Reviewed the
Empowerment and
Transformation Policy
» Provided oversight over
the Diversity and Inclusion
strategy and related
initiatives, noting positive
traction in the execution
thereof
» Reviewed the ethics
management of the
Group, noting it operated
effectively as designed
progress and effectiveness
of the information and
technology strategies
and initiatives across
the Group, focusing on
customer, adviser and
employee experience and
digitalisation
» Through the Technology
and Platforms committee,
we spent significant time
considering and monitoring
the execution and progress
of the Group’s technology
modernisation strategy.
The strategy includes the
migration to the Amazon
Web Services cloud and
the modernisation of
the solutions supporting
finance processes. The
latter project focuses
on the simplification
and rationalisation of
financial data to improve
the efficiency of financial
reporting processes and
enable the implementation
of IFRS 17
» We also considered
information and technology
risks and monitored the
refinement of our business
resilience plans
macroeconomic, socio-
economic, environmental,
external and emerging
risks, including the
emergence of disruptors.
This informed the Board’s
considerations of the
execution steps required
to achieve our strategy, as
well as any enhancements
required to these steps
» Sovereign risk was
considered with downside
scenarios explored. It
was noted that financial
soundness and liquidity
positions remain resilient
under stress conditions for
Old Mutual Life Assurance
Company (South Africa)
Limited and Old Mutual
Limited
» The risks associated with
the Bula Tsela transaction
were reviewed and it was
ensured that these were
mitigated
» The Risk committee, in
targeted sessions, also
specifically considered:
‒ Business resilience given
the unstable electricity
supply in South Africa
‒ The Group’s readiness
to respond should these
risks materialise
Group’s initiatives to ensure
customers were supported
to make informed financial
decisions. It also provided
oversight to ensure that
the Group offers innovative,
value for money, integrated
financial service product
solutions, particularly in the
context of the constrained
macroeconomic
environment and rising
interest rates and inflation
» The Group’s customer
strategy was interrogated
in a targeted session,
considering the targets,
shifts and initiatives
required for it to be
successfully executed
over the medium term
» Significant time was
spent considering the
Group’s efforts to deliver
a consistent, high-value
customer experience
focused on simple
solutions. It was noted
that products are being
proactively improved, based
on customer feedback
» Through the Responsible
Business committee
and the Old Mutual Life
Assurance Company
(South Africa) Committee
for Customer Affairs, the
Board ensured that the
Group’s Market Conduct
Framework, which supports
the fair treatment of
customers, was operating
effectively throughout the
business
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Board future focus areas
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Strategy
Transactional capability
Old Mutual B-BBEE
economic transaction
(Bula Tsela)
Risk management
Customers and product
Culture and human
capital
Digital journey
» Monitor the completion
of the application under
section 16 of the Banks Act
for the registration of the
transactional capability
» Monitor expenditure and
progress to complete the
build of the transactional
capability
» Provide oversight over the
transactional capability’s
customer value proposition,
the differentiation of the
offering and the integration
of it into the Group’s wider
product offering
» Continue to monitor
the steps implemented
to embed the Group’s
medium and long-term
strategy, with a specific
focus on delivering an
integrated financial services
offering
» Monitor the impact of
competitors and disruptors
on the industry and the
Group’s response thereto
» Support management
in the refinement of the
Group’s strategy for the
Africa Regions
» Support management
in appropriate strategic
allocation of capital,
focusing on organic and
inorganic opportunities,
which support innovation
and competitive
positioning
» Continue to consider our
shareholders’ return on
capital profile
» Track and monitor
the rollout of the
transaction across the
Group, in particular
the operationalisation
of the Retail Scheme,
which includes ensuring
appropriate governance
structures over all elements
of the transaction
» Monitor the execution
of key Group strategic
programmes
» Review and monitor the
stability and security of
the technology strategy,
information security and
operational processes to
enable business success
and continuity
» Continue to oversee the
Group’s efforts to enhance
our customer-centric
approach to become our
customers’ first choice,
including the various
capabilities being built to
enhance the customer
experience, particularly
customer service
» Ensure that the transaction
» Monitor retail credit, life
» Monitor the cross-sell
remains in compliance
with all relevant broad-
based black economic
empowerment regulations
and guidelines set out
by the South African
Government
» Monitor community and
stakeholder engagement,
ensuring that valid
concerns or issues related
to the transaction are
timeously addressed
» Ensure ongoing clear
and transparent
communication with the
various stakeholders of
the transaction
and general insurance risks
to ensure that they are
optimally managed
» Continue to monitor
the impacts and actions
required to proactively
address climate and
environmental, social
and governance risks
» Oversee the Group’s
response to the complex
socioeconomic landscape
and muted economic
growth on the continent
and interrupted electricity
supply in South Africa
initiatives being rolled out
across the Group
» Consider and monitor the
impact of the constrained
macroeconomic
environment on our
customers
» Monitor the compliance of
our products and services
with all relevant laws and
regulations, including
those related to consumer
protection and data privacy
» Continue to provide
oversight over the
programme responsible
for market conduct
throughout the Group
» Continue to oversee
the Group’s cultural
transformation to a higher-
performance culture
» Monitor the Group’s efforts
aimed at identifying,
recruiting and retaining
critical skills
» Continue to monitor
the Group’s succession
planning, in particular the
succession plans for the
eight directors who are due
to step off the Board over
the next three years
» Track the impact of the
hybrid working model on
the Group’s culture and
employee wellbeing
» Ensure that the Group
remains at the forefront
of innovation and
digitalisation, which
will ensure that our
products and services are
competitive and meet
the changing needs of
customers. This includes
the use of digital channels
and data analytics to better
understand customer
needs and tailor products
and services accordingly
» Monitor the progress and
effectiveness of the various
information and technology
strategies and initiatives
across the Group, including
the reskilling of employees
» Ensure the Group’s cyber
security risk is managed
within tolerance levels
Storms River Bridge, Western Cape, South Africa – Coordinates 33.9668° S, 23.6464° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Message from the Chief Executive Officer
Iain Williamson
Chief Executive Officer
In 2022, we continued to
shift our focus towards
amplifying growth to
responsibly build the most
valuable business in our
industry. This has enabled
us to create a positive and
sustainable impact for
our stakeholders while
delivering on our victory
condition of becoming our
customers’ first choice to
sustain, grow and protect
their prosperity.
Responsible value creation
The operating environment in 2022 was challenging for the Group and our
stakeholders given the tough economic conditions. We demonstrated resilience
as we continued to navigate a challenging environment. We created value for
our stakeholders through the various strategic initiatives and management
actions implemented during the year.
Earlier in 2022, we became the first South African insurer to join the Net Zero
Asset Owner Alliance. Old Mutual Investments also joined the Net Zero Asset
Manager Alliance, demonstrating our commitment to achieving carbon
neutrality across our investment portfolios by 2050 or sooner. Our efforts are not
going unnoticed; Old Mutual Investment Group was awarded Best Sustainable
African Investment Manager at the European Global Banking and Finance
Awards.
We also announced the launch of our landmark B-BBEE deal, Bula Tsela. The
deal positioned us as the first insurer to offer shares directly to the black South
African public and the first in the country to create an opportunity for lower-
income earners via our Retail Scheme. The deal structure aims to support
meaningful socio-economic transformation and financial inclusion for our
communities and employees. The market response considerably exceeded our
expectations, with the offer being over-subscribed. More than 38 000 black
South African individuals, small businesses, and groups such as trusts and
stokvels qualified to participate in the retail portion of the scheme. The Bula
Tsela deal was shortlisted for the 2022 Exxaro DealMakers BEE Deal of the Year
Award.
We have made good progress on our listed equity stewardship capability,
providing institutional investors a single, consolidated approach to active
ownership that aligns with fiduciary requirements. We have R146 billion of our
funds under management invested in the green economy with our investment
teams having voted on over 960 000 resolutions that supported positive ESG
outcomes.
We remain committed to addressing the biggest systemic risks which climate
change poses to the world’s emerging economies, including the countries in
which we operate. We have recently become one of 56 African companies to
be signatories of the Africa Business Leaders Coalition Climate Statement. This
statement calls for the international community to support Africa in the fight
against climate change.
We are deeply committed to supporting our customers, employees and
communities through difficult times by being a certain friend in uncertain
times. Our humanitarian and disaster support initiatives totalled R53 million
in 2022 and a further R30 million facility for the KwaZulu-Natal rebuild and
restoration project to provide permanent homes for victims of the devastating
floods. Old Mutual was awarded the Ubuntu Economic Diplomacy Award
(Africa) at the 2022 South Africa Ubuntu Awards by the South African
Department of International Relations and Cooperation. This award recognises
a business that has contributed to South Africa’s reputation as an ideal business
destination, created jobs, facilitated trade and attracted investment.
On 1 March 2022, our employees across the continent returned to work
based on our hybrid working model. The benefits of increased face-to-face
collaboration had a positive impact on productivity.
As a company that continually strives to be a progressive and nurturing
employer of choice, we strive to adapt to changing times and incorporating
new ways of thinking and working into our workplace. We have implemented
a revised Parental Leave Policy to demonstrate our commitment to fostering
a culture of care. The progressive Parental Leave Policy is just one of the ways
we are embracing our transformational journey of diversity and inclusion. The
revised policy acknowledges how traditional family units have evolved and, in
response, details how we have redefined the roles and terms of parenting and
raising a family, adjusting the benefits accordingly to become broader and
more inclusive.
Refer to our Climate Report more information on our climate change journey
Refer to our Sustainability Report more information on our sustainability journey
Reflecting on our performance
I am very pleased with our robust operating performance with strong sales
and earnings. The Group delivered a solid set of financial results in 2022
despite the difficult macroeconomic environment and market volatility. The
pressure on our operating earnings caused by the COVID-19 pandemic has
lifted as the ongoing impact of the pandemic becomes muted. Our good sales
performance was achieved on the back of successful execution of our strategy
as we continued to enhance our customer and adviser experience.
Sales maintained momentum throughout the year in our retail segments. We
made progress in regaining market share in the Mass and Foundation Cluster
and Personal Finance during the year, as evidenced by external market surveys.
Life APE sales increased by 10% mainly due to strong risk and credit life sales
in the Mass and Foundation Cluster coupled with higher corporate and retail
sales in Namibia. Our China business also delivered strong savings sales from
the broker channels. This was partially offset by lower pre-retirement and
annuity sales in Old Mutual Corporate.
The value of new business grew by 16% due to strong sales growth in Mass and
Foundation Cluster as well as a change in mix towards higher-margin business
in Mass and Foundation Cluster and Old Mutual Corporate. This was partially
offset by the reduction in Personal Finance value of new business arising from
challenges faced with sales volumes and business mix. We have, however, seen
an improvement in the second half of the year due to management actions
implemented to improve the business mix to higher-margin risk business. The
value of new business margin of 2.2% remains within our medium-term target
range of 2% to 3%.
Gross flows declined by 9% due to the prior year including large transactions
in Old Mutual Investments and Old Mutual Corporate, which did not repeat in
the current year. Lower annuity sales and a decrease in demand for offshore
investments in Personal Finance and Wealth Management also contributed to
the decline in gross flows. This was partially offset by strong flows in Old Mutual
Africa Regions and growth in the sales of savings products in China.
20
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Message from the Chief Executive Officer continued
The Group reported negative net client cash flow
for the year. This was primarily due to the decline
in gross flows combined with large disinvestments
and terminations in Wealth Management and Old
Mutual Investments respectively. We are confident
that the overall health of our pipeline will support
improvements in net client cash flow. Our funds
under management of R1.2 trillion declined by 4%
due to weaker market performance in South Africa
and globally.
Results from operations increased to R8.7 billion,
primarily driven by improved profits on the back
of strong sales and core operational performance
across the Group. Our life profits benefited from
a refinement in hedging methodology, enabling
a material release of excess discretionary margins,
as well as lower mortality in the current year as the
effects of COVID-19 eased. All remaining COVID-19
provisions were released but the impact was
mostly offset by the strengthening of our mortality
basis to allow for endemic COVID-19 claims and
worsened persistency as the challenging economic
conditions continue to impact our retail customers.
The Group return on net asset value improved to
11.1% due to strong growth in earnings and a lower
average adjusted IFRS equity base, resulting from
the unbundling of 12.2% of the Group’s stake in
Nedbank in 2021, thus delivering on our promise to
simplify the Group’s capital structure and provide
a substantial return of capital to our shareholders.
We remain committed to returning capital to our
shareholders, with R59.3 billion returned through
special distributions since 2018.
The Group solvency ratio remains robust at 190%,
within our target range of 170% to 200%. Old
Mutual Life Assurance Company (South Africa)
Limited (OMLACSA) solvency ratio was at 214%,
above the target range of 175% to 210%.
Our Dividend Policy targets an ordinary dividend
cover range of 1.5x to 2x adjusted headline earnings.
The Old Mutual Limited Board declared a final
dividend of 51 cents per share, taking the full
dividend for the year to 76 cents. Adjusting for the
impact of Nedbank in 2021, dividend growth was
up 13% from the prior year.
We have further earmarked between R1 billion and
R1.5 billion for return to shareholders as a share
buyback and we have initiated approval processes
with the Board and Prudential Authority.
We have largely delivered on our medium-term
targets which were set for 2023. Our results from
operations target for 2023 was to deliver the 2019
results plus 5% to 10%. We have met this target
on a comparable basis to 2019, excluding the cost
of our transactional capability and NEXT176. This
was achieved on the back of decisive and focused
management actions through this recovery phase
resulting in our sales and gross flows recovering
to pre-COVID-19 levels. We have also exceeded
our cost efficiencies target and remain within
the ranges set for value of new business margin
and Group solvency. Return on net asset value
continues to recover and is approaching our cost
of equity. Old Mutual Insure’s net underwriting
margin is below our target range owing to the
severe catastrophe events experienced during
2022.
Read more on pages 61 to 92 which provide
context to the Group and segmental financial
performance
Reflecting on our strategy
The continued momentum in our value creation
reinforces the appropriateness of our strategic
choices. These choices are anchored in our victory
condition of becoming our customers’ first choice
while responsibly delivering long-term value for
all our stakeholders. In 2022, we continued to shift
our focus towards amplifying growth while we
deliver on our victory condition. To amplify growth,
we made steady progress over the year across
our focus areas, namely growing and protecting
the core and unlocking new growth engines as
we work towards responsibly building the most
valuable business in our industry.
Growing and protecting the core
Growth across our core (Southern African)
businesses is underpinned by significant
investments towards the digitalisation of our
information technology infrastructure. These
investments are central to transforming the
customer and adviser experience, providing them
with market-leading solutions and positioning us
as their financial services partner of choice.
The year was also notable for several strategic
partnerships and acquisitions, which helped
expand our capabilities and physical reach across
our South African businesses. These include the
acquisition of equity stakes in Preference Capital,
Versma Administrators, Primak Brokerage, Generic
Insurance Company Limited and ONE Financial
Services. With these deals now being concluded,
we are shifting our focus to integration and
realising synergistic benefits with our partners.
We are also pleased to announce that we will
acquire a strategic equity stake in the Two
Mountains Group which is a licensed micro-insurer
that distributes and underwrites funeral policies
and provides burial services. The Two Mountains
brand is well known and respected and will
continue to operate under its own brand. This
transaction will allow us to deliver a more holistic
value proposition to customers and to grow our
distribution reach within the communities we
serve. The transaction is still subject to regulatory
approvals customarily associated with such
transactions.
Unlocking new growth engines
We are making good progress across our
portfolio of new growth engines. While these
currently represent a small part of our business,
our investments in these initiatives are critical to
ensuring sustainable growth over the long term.
Most notably, we received regulatory approval to
proceed with our application for a banking licence
in South Africa. We are in the process of lodging
a section 16 application in terms of the Banks
Act. This represents a natural extension of our
victory condition by enhancing our transactional
capability to better sustain our customers’ financial
prosperity.
Read more on pages 50 to 60 on our
performance against our strategy
Refer to segment performance on 73 to 92
for detail on strategic activities delivered by
segments during the year.
Outlook
The macroeconomic environment in our markets
is expected to remain challenging, which will
continue to exacerbate financial pressure on our
customers.
As a business firmly committed to helping South
Africa and its citizens achieve their dreams and
secure their financial futures, we are extremely
concerned about the impact load shedding is
having on lives and livelihoods. We will continue
to support all moves to find and build alternative
energy solutions that ensure long-term energy
sustainability, while addressing the urgent needs
of climate change.
On 24 February 2023, South Africa was grey listed
by the Financial Action Task Force. Addressing
crime and corruption, with a deliberate focus
on rebuilding government institutions as well
as appropriately tackling the issues of money-
laundering, proliferation, and terrorist financing
is essential to restoring South Africa’s credibility
and driving its recovery.
We continue to evaluate the impact of IFRS 17
and refine the new financial reporting processes,
systems and controls that will underpin our IFRS 17
results. While IFRS 17 will not change the underlying
fundamentals of our insurance business, our cash
generation or our capital strength, it will significantly
change how we report on our insurance business.
We remain on track to report under IFRS 17 for the
first time for the half year ended 30 June 2023 and
restated comparative information for 2022 will be
provided. We are through our recovery phase and
have largely delivered on our medium-term targets
one year ahead of schedule. Our next set of results
will be prepared on an IFRS 17 basis and we will
communicate the revised medium-term targets in
due course.
We have demonstrated our ability to deliver on
our strategy and our focus for 2023 will be to
continue growing and protecting our core business,
including focused management actions to address
the economic and resultant persistency challenges.
We seek to gain further market share in our retail
businesses and unlock our new growth engines. We
will continue to focus on driving shared value and
sustainable growth for our customers, employees
and the communities in which we operate.
I would like to thank the Chairman and the Board
for the unwavering support provided throughout
2022. Thank you to my executive team for the
support, passion and dedication you poured into
this business. To all our stakeholders, thank you
for your continued support and engagements.
Finally, to all my colleagues, thank you for the
resilience and demonstrating the ability to deliver
on the commitments made to our investors and
customers.
Iain Williamson
Chief Executive Officer of Old Mutual Limited
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Our Executive committee
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Iain Williamson (52)1
Chief Executive Officer
BBusSc (ActSci), GMP (Harvard), FASSA
Service years1: 29 years
Appointed to Executive committee: August 2015
Experience: Three decades’ worth of financial services
experience serving in various roles at Old Mutual
across employee benefits, personal finance, corporate
development, distribution, technology and finance.
Former Chief Executive Officer, Chief Financial Officer
and Chief Operating Officer of Old Mutual Emerging
Markets.
Casper Troskie (59)1
Chief Financial Officer
BCom (Hons), PGDA, CA(SA)
Service years1: 4 years
Appointed to Executive committee: March 2018
Experience: Extensive financial services experience
serving as former Chief Financial Officer of Standard
Bank Group, Liberty Group and a partner at
Deloitte. Served on the boards of Liberty Holdings,
Liberty Group and STANLIB.
Celiwe Ross (43)1
Director: Group Human Capital
and Group Strategy
BSc (MinEng), MBA (University of Cape Town)
Service years1: 5 years
Appointed to Executive committee: June 2018
Experience: Financial services experience with roles
at Standard Bank focusing on project and structured
finance and origination. Former leader of Egon Zehnder’s
(global search and leadership advisory firm), a financial
services practice advising clients on leadership needs
and team effectiveness.
Clarence Nethengwe (51)1
Managing Director: Mass and
Foundation Cluster
BProc, BA, LLM, MBA (University of Cape Town),
AMP, EDP (University of Stellenbosch Business
School)
Service years1: 13 years
Appointed to Executive committee: June 2017
Experience: Former General Manager of Sales and
Distribution for the Mass and Foundation Cluster. Prior to
joining the Group, practised as an attorney for over 10 years
and worked as a Judicial Officer for more than five years.
Clement Chinaka (52)1
Managing Director: Old Mutual Africa
Regions
BSc (CompSci and Stats), AMP, FASSA, FFA
Service years1: 31 years
Appointed to Executive committee: January 2017
Experience: Served in various roles at Old Mutual
including Chief Actuary and General Manager of
Actuarial and Old Mutual Life Assurance Company
(Zimbabwe), Head of Channel Finance, Strategy
Executive at Retail Affluent and Head of Group Planning
and Business Insights at Old Mutual Emerging Markets.
1 Age and service years as at 31 December 2022
Garth Napier (44)1
Managing Director: Old Mutual Insure
BCom (Hons), MBA (Harvard)
Service years1: 4 years
Appointed to Executive committee: November 2018
Experience: Former Managing Director of Pep Africa
and former independent Non-executive Director of
Afrocentric Group board. Experienced retail executive
management consulting and strategy.
Kerrin Land (49)1
Managing Director: Personal Finance
and Wealth Management
BSc (Stats and Econ), ALC, FASSA
Service years1: 27 years
Appointed to Executive committee: February 2020
Experience: Served in various roles at Old Mutual
including Chief Executive Officer of Old Mutual Wealth
and Business Development and Operating Director at
Old Mutual Investment Group. Member of several Old
Mutual companies’ and industry boards.
Khaya Gobodo (44)1
Managing Director: Old Mutual
Investments
BCom, MSc (InvMan), CFA
Service years1: 5 years
Appointed to Executive committee: January 2019
Experience: Served in various roles at large, medium
and boutique asset management firms. Former
Strategic Head of the Quality Capability at Ninety One
Asset Management. Founding partner and former Chief
Investment Officer of Afena Capital.
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Our Executive committee continued
Our Executive committee continued
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Maserame Mouyeme (56)1
Director: Group Marketing, Public Affairs
and Sustainability
BSocSc, PGDip (Human Resources Management),
MBA (University of West London), ELP (Harvard)
Service years1: 2 years
Appointed to Executive committee: February 2020
Experience: 25 years of experience in the fast-moving
consumer goods industry, serving in various roles at Coca
Cola, including Director of Public Affairs, Communication
and Sustainability for southern and east Africa, General
Manager of the central Africa franchise and Marketing
Director for west, east and central Africa.
Changes to the Executive
committee composition
during the year
Executive committee member:
Raymond Berelowitz
Date:
29 September 2022
Stepped down as Executive committee
member
Prabashini Moodley (43)1
Managing Director: Old Mutual
Corporate
BBusSc (ActSci), FASSA
Service years1: 20 years
Appointed to Executive committee: November 2019
Experience: Served in various roles across Old Mutual
including at Personal Finance and Old Mutual
Investment Group. Former Chief Financial Officer
of the Mass and Foundation Cluster.
Richard Treagus (57)1
Chief Risk Officer
BBusSc (ActSci), FASSA, FIA
Service years1: 34 years
Appointed to Executive committee: October 2015
Experience: Served in various roles at Old Mutual
including Finance Actuary for the Individual Life
division, Group Assurance Executive, General Manager
of Product Development and General Manager of
Savings Solutions.
Zureida Ebrahim (46)1
Chief Operating Officer
BCom (Econ and Law), MAP (Wits)
Service years1: 1 year
Appointed to Executive committee: November 2021
Experience: Over 17 years’ of experience in the insurance
sector. Former Chief Executive Officer of Client
Engagement Solutions at Momentum Metropolitan
and a member of the Momentum Metropolitan
Executive committee focusing on transactional
banking and client digital experience.
1 Age and service years as at 31 December 2022
Kaaimans River Bridge, Western Cape, South Africa – Coordinates 33.9801° S, 22.5491° E
23
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
OPERATING
OPERATING
CONTEXT
CONTEXT
R47
million
spent on funding
education
108
graduates to
date
DID YOU KNOW
Imfundo means education in Nguni, an appropriate name for a
trust that provides academic bursaries to grow the pool of qualified
individuals in the asset management industry. The Imfundo Trust
was created in 2011 by Old Mutual Investment Group and its affiliates,
Futuregrowth and Marriott, as part of our commitment to the
country’s transformation.
The trust supports Old Mutual’s economic transformation strategy
and helps address South Africa’s shortage of black investment
professionals, with preference given to black women and individuals
from peri-urban areas.
24
APK Kingsway Campus, University of Johannesburg, South Africa – Coordinates 26.18202° S, 27.9991° E
Integrated Report 2022 PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Macroeconomic environment
To ensure the Group’s longevity, we monitor our external environment and consider this context in our annual
strategy development processes to ensure we remain agile while executing our long-term strategy. We continue
to adapt to our changing environment to ensure Old Mutual’s relevance into the future.
While 2021 was marked by significant post-COVID-19 growth, 2022 was characterised by the after effects of
the rebound, including supply chain constraints, significant price increases and the ongoing impact of the
war in Ukraine. These factors resulted in the strongest interest rate upcycle in many decades to fight the
rise in inflation, causing global growth to slow from 6.2% in 2021, to 3.4% in 2022.
Short term concerns are centred around the potential negative impact of continued load shedding. In
rebuilding the economy, the inclusion of the private sector and shift in the energy policy should result in
a lower impact than generally feared.
The economies of countries in our African region continued to record
positive year-on-year GDP growth, albeit subdued.
General currency depreciation and inflationary pressures across most markets, driven by higher energy
and food prices, continued to threaten economic recovery following the pandemic. Despite this, the
overall COVID-19 recovery was much better than expected, which supported the return to profitability
of our Life businesses in Namibia, eSwatini, Kenya and Uganda. In most countries, COVID-19 infections
drastically reduced and the majority of restrictions were relaxed across all markets.
In Kenya, Malawi and Ghana, the fiscal pressures resulting from increased
debt repayments forced governments to turn to the International
Monetary Fund for support. Furthermore, in Malawi, acute dollar shortages
led to fuel shortages and challenges in meeting dollar-denominated
obligations.
These economic conditions led to reduced customer spending due to lower disposable income and
poverty levels, which have limited the affordability of insurance and savings products.
In South Africa, inflation averaged 6.9% in 2022, up from 4.5% in the prior year, supported by increased fuel
and food prices. The South African Reserve Bank raised the policy rate by a cumulative 325 basis points
during 2022 to combat rising inflation. This, together with a relative slow recovery in employment post
COVID-19 and the lingering impacts of the 2021 civil unrest, negatively impacted real income growth.
This downward pressure on disposable income growth, combined with depressed confidence made it
difficult for customers to maintain or increase their contributions to protection, savings and investment
products. Our corporate customers’ growth and liquidity levels were also negatively impacted.
Related risks
1
Sovereign risk
2 Growth risk
8 Business
resilience risk
Value creation opportunities through our strategy
» Responding to competitive advantages that exist
for businesses that are better enabled to deal with
extreme and/or unusual operating conditions
seamlessly
» Reducing the running expenses in the business
through efficiency initiatives
The economic growth rate and public debt of South Africa is in a better economic position than it was
four years ago. Expected economic growth sits at an average of 2.5% a year over the medium term,
compared with only about 1% between 2015 and 2019 annually.
Looking ahead, economic activity in 2023 continues to be hampered by significant interest rate
increases as central banks attempt to combat rising inflation caused by Russia’s war in Ukraine. Severe
COVID-19 lockdowns in China dampened growth in 2022, with the recent reopening paving the way
for a faster than expected recovery. The International Monetary Fund World Economic Outlook for
April 2023 forecasts global economic growth of 2.8% for 2023. In the first quarter of 2023, the South
Africa Reserve Bank increased the repo rate by a cumulative 75 basis points to control inflation. The
International Monetary Fund’s World Economic Outlook for April 2023 has forecast growth in Sub-
Saharan Africa at 3.6% for 2023.
Lagos, Nigeria – Coordinates 6.4570° N, 3.3708° E
25
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Industry trends
Our long-term relevance depends on how adaptable we are to change. As part of the ongoing monitoring of our
environment, we identify the most material and enduring trends that are shaping our operating landscape.
An important contributor across several of these trends is the technological revolution brought about by the Fourth Industrial Revolution, which has further accelerated as a result of COVID-19. Consequently, these
trends should not be viewed in isolation as they have the ability to disrupt the broader industry. The trends described below are materially unchanged from last year. They represent the most material and enduring
trends impacting our business.
Digitalisation
Rapid advancements in digital technology, further aided by the COVID-19 pandemic, are causing
significant disruption across the financial services industry. The democratisation of technology means
more people are able to interact and consume through digital channels, as devices and the cost of
data become more affordable. Customer expectations of their service providers are increasingly shaped
by their interactions in adjacent industries, for example, the retail sector. As a result, expectations of
financial services providers are high and include elements such as customised or personalised solutions
and 24/7 always-on service. Digital technologies are being deployed across the value chain to improve
the customer experience and support the delivery of personalised solutions, drive improved operating
efficiencies and create opportunities for new revenue streams.
Digital technologies
Applications in the financial services industry
Internet
of things
Blockchain
Data
platforms
Blockchain technology can ease the administrative burden on customers by replacing the
manual process of filing claims with an automated system built on a blockchain ledger.
Wearable
devices
Artificial
intelligence
Software
robotics
Unique data collected at a granular, customer level through wearable devices and the
internet of things allows for product development and pricing which is personalised to
each individual’s circumstance.
Artificial intelligence and robotics can be used to create robo-advisers. Robo-advisers
aim to offer an intuitive and intelligent interaction for customers who prefer self-directed
channels, with little human interaction. They have the added benefits of being accessible
24/7 and at a lower cost than traditional, intermediated channels.
Despite this increased pace of digital advancement, the nature of our insurance, investment and
wealth management products still requires face-to-face engagement to share the necessary financial
advice required across many segments of the market. The human element still plays a critical role
in building trust in financial solutions whose benefits are only realised over the longer term. The role
of digital technology in this context is therefore more nuanced. It plays a bigger role in enabling an
improved customer and intermediary experience through the application of these technologies
across various points in customer and intermediary journeys.
Non-traditional market entrants and the rise of platform-based
ecosystems
Industry convergence, which sees companies enter into previously unrelated industries, continues
to gain momentum. This translates to increased competition as we see the likes of non-traditional
competitors, such as retailers and mobile network operators, expand their offerings into financial services.
The democratisation of digital technologies has also played a role in the rise of fintechs, insurtechs and
platform-based ecosystems. These companies often focus on a single, disaggregated point of the value
chain, be it distribution, fraud detection, pricing or offering a single financial services solution.
In South Africa, most financial services providers have integrated some type of fintech into their offerings
through their digital channels or have established standalone business units focusing on technology-
related innovations. In other areas, we see traditional and established insurers partnering with fintechs and
insurtechs by providing underwriting expertise. Fintech offerings are increasingly being included in the
armory of more established insurers, especially in the Property and Casualty arena.
Platform-based ecosystems differ
from traditional, linear business
models because value is derived from
creating and facilitating connections
across a range of market participants.
Embedded finance is a growing feature
which is closely linked to ecosystem
business models, where financial
services are seamlessly integrated
into technology-based platforms. This
presents both an opportunity and
a risk; it provides financial services
players an opportunity to participate
in these platforms. However, the
platform owners may reduce the role of
intermediaries in financial services incumbents.
2 013
Payments
Financing volume by sector since 2017 ($m)
1 553
321
231
89
66
63
Banking/
lending
tech
Financial
management
solutions
Crypto and
blockchain
Health care
fintech
InsurTech
Wealth
and capital
markets tech
Source: FinTech in Africa, FT Partners Fintech Industry Research (2023)
Related risks
2 Growth risk
3
6
Strategic risk
Technology and
information security risk
Value creation opportunities through our strategy
» Invest in our adviser experience to digitalise core
user journeys
» Develop flexible and personalised solutions for
customers, such as usage-based insurance
» Expand the range of digital sales and servicing
channels for customers
Related risks
2 Growth risk
Value creation opportunities through our strategy
» Extend our participation across the financial
services value chains
» Participate in platform-based ecosystems (e.g.
SMEgo and NEXT176)
26
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Industry trends continued
Financial inclusion across Africa
Financial inclusion is an important factor in driving economic growth. Improvements in financial
inclusion also translate to broader societal benefits such as reduced poverty and inequality levels and
more resilient communities. Financial inclusion across sub-Saharan Africa has grown in recent years,
supported by innovative digital financial solutions such as mobile money. Regulatory developments
have also supported this by creating enabling policies to stimulate formal financial inclusion. However,
formal inclusion, in the form of bank account and insurance penetration, remains well below that of
developed markets.
2021 insurance penetration (premiums as a % of gross domestic product)
10.0
5.1
2.2
2.2
3.9
3.0
1.0
1.2
0.5
0.6
0.2
0.2
Namibia
Kenya
Ghana
Nigeria
Non-life
Global average life
Global average non-life
South
Africa
Life
Source: Swiss Re Institute sigma No. 04/22
Insurance penetration across the Africa region remains considerably underdeveloped, relative to South
Africa and developed markets. The core drivers of increased penetration are consumer affordability and
financial literacy. While household disposable incomes are expected to gradually increase over the long
term, African consumers in particular remain prone to exogenous shocks and live close to the poverty
line. From a financial literacy perspective, insurance products are also typically more complex and
intangible compared to banking products, which constrains product uptake across the retail consumer
market. This is more evident across sub-Saharan Africa, where trust, understanding and awareness
remain considerable barriers, particularly for life insurance products that are long term in nature. As a
result, most of Africa’s insurance relates to short-term insurance.
While these themes are supportive of micro-insurance as a growth opportunity across the continent,
profits from this class of business are unlikely to emerge in the short to medium term. Investments
made in micro-insurance should be considered over a longer timeframe and as a market development
initiative.
Partnering for success
Collaborating with partners provides opportunities to deliver shared value. It leverages the strengths
and capabilities of various role-players to drive meaningful growth. In the broader macroeconomic
context, the role of corporates is evolving with the recognition that the private sector can make a
greater collective impact through public-private partnerships. Within the private sector itself, the role of
external commercial partners to drive growth and support strategic delivery has gained importance in
recent years.
Public-private partnerships
Governments across Africa are increasingly turning to public-private partnerships as a means of
sustainably uplifting communities and delivering meaningful socio-economic impact. This is driven
by their capital budgets facing constraints as a result of weak economic growth and competing
development priorities. A cumulative $63 billion was invested in public-private partnerships across
sub-Saharan Africa from 2010 to 2022, with almost $42 billion of this allocated to investments in the
electricity sector (World Bank).
Strategic partnerships in the private sector
Strategic partnerships in the private sector seek to deliver specific business outcomes to the mutual
benefit of both parties. Partnerships are generally entered into to access new distribution channels or
different capability sets. Strategic partnerships also feature high on the corporate innovation agenda,
in the form of partnering and investing in start-ups that have specialised digital capabilities. Overall,
strategic partnerships enable a sustained level of innovation, speed of execution and capital-efficient
value creation through access to multiple ecosystems and diverse customer bases.
Related risks
2 Growth risk
10 Market conduct risk
Value creation opportunities through our strategy
» Focus on financial education as part of socio-
economic upliftment and long-term market
development
» Invest in our East and West Africa operations
» Support formal financial inclusion through the
development of affordable and accessible financial
solutions
Related risks
2 Growth risk
Value creation opportunities through our strategy
» Deploy new digital capabilities and solutions at
pace through technology or insurtech partnerships
» Partnerships with tertiary institutions to support
the development of future required skills
» Accelerate economic growth and development
through public-private partnerships
27
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Industry trends continued
The new world of work
While COVID-19 was the initial trigger to disrupt traditional models of working, organisations continue
to adapt their responses to workforce and workplace changes in what is now called ‘the new normal’.
Although social distancing requirements were the primary accelerator of the adoption of hybrid
working models, employees are now re-evaluating their roles and contributions in the workplace, in
conjunction with overall work-life balance. The pandemic demonstrated that remote work is possible
with minimal disruption to productivity, thanks to the availability of broad-based internet and video
communication tools, such as Zoom and Microsoft Teams. Employees recognise the value of flexible
working options, including remote working, but still seek a human touch and sense of connection.
Individuals are also increasingly seeking meaningful employment that aligns to their personal values
and purpose.
73%
of employees want
flexible remote work options
Source: Microsoft Work Trend Index
67%
of employees want more
in-person work and collaboration
post-pandemic
Related risks
2 Growth risk
3
Strategic risk
9 People risk
Value creation opportunities through our strategy
» Optimise the hybrid working model
» Continue the culture transformation journey, which
we are adapting to cater for this changing context
Skills shortages and the war for talent
The confluence of digitalisation, industry convergence and the new world of work is placing acute
pressure on skills availability and retention in the broader marketplace. Companies across industries
and geographic borders are competing for the same skills in a limited pool of experienced candidates.
The impact of the resultant supply-demand dynamic is three-fold. Firstly, the cost of talent acquisition
is increasing as a result of the heightened demand and competition. Secondly, the time to fill a vacancy
is lengthy as recruiters struggle to source and match the available skills to vacancies. Lastly, retaining
existing talent is becoming more challenging given the worldwide demand and remote working
possibilities for experienced employees.
In addition to the heightened demand for strong technical skills, such as data and technology-related
skills, the pandemic also brought into sharp focus the importance of soft skills. Particularly in a hybrid
working environment, skills such as resilience, adaptability, self-awareness, empathy and influencing are
growing in importance.
Employers are having to continuously adapt their recruitment and retention strategies to ensure they
remain competitive and are able to successfully execute on their business strategies. This includes
sourcing ‘talent on demand’ through a gig-based workforce that allows experienced professionals the
ability to work on short-term contracts.
Related risks
2 Growth risk
3
Strategic risk
9 People risk
Value creation opportunities through our strategy
» Reskill where possible, through internal job
rotations and project-based work to develop new
skills in the existing workforce
» Partner with tertiary institutions to develop an early
pipeline of required skills across our businesses
28
Mutual Place, Johannesburg, South Africa – Coordinates 26.1068° S, 28.0580° E
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Industry trends continued
Climate change
The United Nation’s Intergovernmental Panel on Climate Change’s latest climate assessments (fifth
and sixth reports) highlight the impact of global warming, including global increases in surface and
ocean temperatures, global glacier reduction and high concentrations of greenhouse gases. The
current global warming trajectory, with current policies in place, is predicted to reach 2.8°C by 21001.
To avert extreme climate change, the Intergovernmental Panel on Climate Change stresses the global
temperature increase must not exceed 1.5°C by 21002. Africa has been identified as one of the regions of
the world most susceptible to the impacts of climate change, despite contributing only 3.8% of global
emissions. Temperatures in Africa are expected to rise by 2°C to 5°C during this century. Although
isolated events cannot be attributed to climate change, extreme weather events are on the rise.
One of the long-term outcomes of climate change and its effect on financial services providers will be
the migration of people. It is expected that there will be an influx of people migrating from countries
severely impacted by climate change to less impacted countries. While there will be an increased level
of social and economic pressure in this scenario, there is also an expectation that many economically
active individuals with capital resources will form part of the ‘climate migrants’. Financial services
providers will need to find new ways to serve these migrants but can also use this opportunity to grow
their customer base in terms of asset cash flows. The ability of insurers to effectively pool and price for
risk events will also be impacted, given the shifts in people and weather patterns. The frequency and
severity of claims could also increase due to the combined impact of these factors.
1
2
3
Water: temperature increases lead to droughts, flooding and other evaporative losses
Agriculture: lower yields of important foods, damage due to rainfall changes and drought,
changes to the ecology of plant pathogens
Health: heat stress, outbreak of transmittable diseases, increased fatalities and injuries
Temperature change in Africa3
Relative to average for 1971 – 2000 °C
1.0
0.5
0
(0.5)
(1.0)
1901
1950
2000
2021
International agreements, such as the Paris Agreement, act as a global catalyst for climate change
action through the commitments made by nations to collectively reducing greenhouse gas emissions.
The Paris Agreement aims to restrict global warming to below 2°C, ideally 1.5°C by 2100. In 2022, the
COP27 summit focused on climate adaptation and mitigation in developing nations. Countries at the
summit adopted a final agreement that establishes a fund for loss and damage to help developing
countries bear the immediate costs of climate-fuelled events such as storms and floods.
1 https://www.unep.org/resources/emissions-gap-report-2022
2 https://www.ipcc.ch/sr15/
3 https://apps.automeris.io/wpd/
Related risks
2 Growth risk
4 Life insurance risk
5 Non-life insurance risk
7 Climate risk
8 Business
resilience risk
Value creation opportunities through our strategy
» Demonstrate industry leadership through climate
activism
» Further embed ESG principles into our investment
philosophy
» Progress our commitments through the Net Zero
Asset Owner Alliance and Net Zero Asset Managers
Initiative
For more information on how we are addressing and responding to climate change, refer to our Climate Report
The Metrowind Van Stadens Wind Farm, Nelson Mandela Bay, South Africa – Coordinates 33.8939° S, 25.1981° E
29
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Regulatory changes
At Old Mutual, we support all changes to regulatory and reporting standards that promote financial
stability or inclusion, encourage uniform market practices and ensure customers are treated fairly. While
this could potentially impact the cost of doing business and our non-compliance risk, we mitigate this
by strengthening our compliance capabilities and the systems and processes we have in place.
» A material risk posed by the proposed amendments is that early access to retirement funds may result
in fund outflows and could be a liquidity risk for fund administrators. Operationally, processes and
systems will require substantial changes to accommodate the new requirements.
» While the effective date was moved from 1 March 2023 to 1 March 2024, the timelines for the industry
to align operational processes and systems remain tight.
Reporting
IFRS 17
IFRS 17, a new international accounting standard for insurance contracts, effective for reporting periods
starting from 1 January 2023, replaces IFRS 4. The new standard offers a comprehensive and consistent
approach to accounting for insurance contracts – thereby removing inconsistencies, enabling greater
transparency, and allowing investors and analysts to meaningfully compare insurers. While IFRS 17
will not change the underlying fundamentals of our insurance business, our cash generation or our
capital strength, it will significantly change how we report on our insurance business. IFRS 17 impacts
all segments that issue term and life insurance, life annuities, disability insurance and Property and
Casualty insurance and investment contracts with discretionary participation features. During 2022,
we focused on completing the development of our actuarial models, calculation engines, results
repositories and finance system updates to ensure successful adoption across the Group. We also
prepared the opening balance sheet for IFRS 17, required as at 1 January 2022. We remain on track
to report under IFRS 17 for the first time at our 2023 interim results.
Refer to our 2022 Annual Financial Statements for more information on the financial impact of IFRS 17 adoption
International Reporting Standards Foundation
The consolidation of the Value Reporting Foundation, home to the Integrated Reporting Framework
and Sustainability Accounting Standards Board Standards, into the International Financial Reporting
Standards (IFRS) Foundation was announced in 2022. The IFRS Foundation has two standard-setting
boards, the International Accounting Standards Board (IASB), which will set the accounting standards
and the newly created International Sustainability Standards Board (ISSB). The objective is to create
a global baseline of sustainability-disclosure, which will be connected to financial statements. The
ISSB expects to issue an IFRS Sustainability Disclosure Standard around the end of Q2 2023. The
requirements of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial
Information and IFRS S2 Climate-related Disclosures are expected to be effective for periods beginning
on or after 1 January 2024.
Anti-money laundering
There are several emerging regulations relating to anti-money laundering and the combating of
financing of terrorism out for comment and in draft.
» In South Africa, we are well positioned to comply with any amendments to the anti-money
laundering legislative framework currently being finalised.
» South Africa was grey listed in 2023 – which means the country is identified to have strategic
deficiencies in its policies to counter money laundering, terrorist financing and proliferation
financing by the Financial Action Task Force. This will have a significant impact on capital inflows into
the country and our international business operations. We are working closely with our international
asset and investment managers to understand the potential impact of a grey listing on our clients
and our operations.
» Kenya and Namibia’s evaluation reports were published towards the end of 2022. The findings for
Namibian were similar to South Africa’s. Tanzania was added to the Financial Action Task Force grey
list in October 2022.
Retirement fund reform
National Treasury’s retirement industry reforms, first released in mid-2022, include a proposed two-pot
retirement system to encourage South Africans to preserve their retirement savings. The changes, which
include partial compulsory preservation, will have far-reaching effects on South Africans, as well as fund
administrators.
In addition to the above, several conduct-related standards are in the process of being finalised,
including amendments to Regulation 28 of the Pension Funds Act, 24 of 1956.
Privacy and data protection
» We are serious about protecting customers’ personal information and the Group is finalising
the governance and oversight controls and measures to manage compliance with the fully
implemented Protection of Personal Information Act, 4 of 2013.
» There is a growing trend of privacy legislation being developed across our African regions. Ghana,
Nigeria, Kenya, Uganda, Rwanda and Zimbabwe have in-force data protection legislation. In
Botswana and eSwatini, data protection legislation have been enacted with transitional periods,
while draft legislation was published in Namibia and Malawi.
» We continue to work with in-country compliance officers to ensure we implement privacy
management processes that are aligned with local requirements and the Group’s standards.
Tax legislation changes
We have highlighted the material changes to tax legislation in the countries in which we operate.
South Africa
» The South African National Treasury reduced the corporate income tax rate from 28% to 27% and
has also, in considering the implementation of IFRS 17, provided for six and three-year transitional
adjustment to day one impact of adopting the new accounting treatment for long-term and short-
term insurers respectively.
Southern Africa
» In Zimbabwe management fees expenditure from local related parties in excess of the allowable
deductions will be deemed a dividend subject to resident shareholder tax of 15%
» In Namibia, thin capitalisation measures disallow the deduction of interest or realised currency losses
on the portion of debt exceeding the 3:1 debt-equity ratio.
East Africa
» In South Sudan insurance companies were previously exempt from paying tax, however, from
18 July 2022 tax was levied at 10% and with effect from November 2022, this tax has been increased
to 30%
» Capital gains tax rate increased from 5% to 15% in Kenya, while from 1 January 2023, the Finance Act
introduced a new transfer pricing documentation regime and expanded the scope of transactions
with unrelated non-residents
» Deductions of interest on debt in excess of a 7:3 debt:equity ratio will be disallowed in Tanzania as part
of thin capitalisation measure
For more information on our approach to tax, refer to our Tax Transparency Report
Related risks
2 Growth risk
3
Strategic risk
10 Market conduct risk
Value creation opportunities through our strategy
» We are actively participating in industry and
National Treasury working groups and forums
regarding the retirement fund reform.
30
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE RISKS AND
RISKS AND
OPPORTUNITIES
OPPORTUNITIES
White River, South Africa – Coordinates 25.3341° S, 30.9996° E
Capacity Factor 47.6 %
98%
repayment rate
Over
33 000
women enrolled
DID YOU KNOW
Since its inception, the Old Mutual Masisizane Fund, in partnership
with the Phakamani Foundation, has been steadily scaling up its
successful micro-enterprise lending programme, addressing poverty
and chronic unemployment in rural South Africa.
Phakamani offers micro-business loans, training and support to the
underprivileged women entrepreneurs of South Africa. First time
loans range between R700 and R1 700, increasing to R15 000 once a
good track record has been established. The repaid funds are used to
fund the next group of women in the same communities, ensuring
that the funds invested bring lasting impact to the entrepreneurs,
their families and communities.
31
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Our approach to risks and opportunities
The Board, through the Risk committee, oversees the Group’s
risk management activities. The Risk committee is responsible
for approving the risk strategy and risk policy suite, as well as
providing oversight of the risk management system and risk-
taking activities across the Group.
Our risk strategy
Old Mutual’s strategy is informed by the Group’s risk strategy (appetite) and the Group Financial Management Framework,
thereby establishing an integrated link between our business operations, risks and strategy. The Group Financial
Management Framework defines how the Group allocates and manages capital and liquidity, including performance
hurdles and growth targets to enhance shareholder value.
Our risk strategy follows a top-down approach. It guides risk-taking activities and ensures that we sustainably deliver on
our strategic objectives. The guiding risk principles that underpin our risk strategy are:
» We optimise returns on a risk-adjusted basis
» We focus on risks that align with our business strategy, areas of competitive advantage and evolving skills
» Our tolerance for uncertainty is informed by the maturity and growth aspirations of our businesses
» We use risk mitigation techniques to manage risk exposures
» We recognise the value of diversification and the challenges of risk interconnectedness to avoid excessive risk
concentration and ensure sustainability
» We protect our reputation by maintaining trust with all our stakeholders
Our risk strategy process
Determining our risk preference for each risk
category
The risk classification model forms the basis of our risk management
system. We have a documented risk preference for key types.
Quantifying the risk appetite metrics for financial
soundness, earnings at risk and liquidity
Risk appetite defines the level of risk exposure we are willing to accept
in meeting our strategic objectives. Our financial resources and risk
appetite determine the nature and level of growth that can be targeted,
as they reflect the impact that assumed risk has on capital requirements
and earnings volatility. We use stress and scenario testing to evaluate the
earnings and balance sheet resilience in relation to our business plans and
risk-taking activities.
Creating target ranges for our earnings at risk and
statutory capital requirements
Our risk appetite metrics measure capital requirements, earnings and
liquidity risks and ensure compliance with the Prudential Financial
Soundness Standards. These are calibrated to allow us to manage an
extreme downside scenario with sufficient resources to avoid regulatory
intervention.
Allocating capital
Under the Group Financial Management Framework, we allocate capital
and funding to segments within our risk appetite parameters.
This process facilitates a disciplined and balanced approach to strategic
risk-based decision making, opportunity assessment and resource
allocation, which are expected to maximise value for investors in the long
term.
Updating our risk strategy
We review our risk strategy annually and the Board approves any changes.
In 2022 we added specific risk appetite statements for business resilience
and third-party risks. We also increased our earnings at risk limits to
recognise the unbundling of Nedbank and an increase in credit risk
resulting from improved measurement of the underlying risk.
Tema, Greater Accra, Ghana – Coordinates 5.6367° N, 0.0175° E
Integrated Report 2022
32
RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Risk management process
An effective risk management system supports the sustainability and growth of our business and the ability to create
long-term value for all our stakeholders. Our risk management process is designed to continuously monitor the
internal and external environment for the purpose of identifying any conditions or changes that may require us to
mitigate the related risks. This ensures that we remain within our risk appetite, achieve our business plans and realise
our strategic objectives.
The Group Financial Management Framework brings together capital and liquidity management principles with the business planning process, for the purpose of maximising shareholder value in the
context of the Group’s risk strategy and resultant risk appetite. In doing so, the Group aims to balance competing stakeholder interests, including:
» Shareholders: who have expectations of earnings growth, revenue growth, operating margin, cash generation, dividend growth and return on capital
» Regulators, debt holders and policyholders: who have expectations related to strong solvency and liquidity
Business and risk strategy alignment is the process of ensuring that the risks assumed
in our business plans reflect our risk preferences, considering the interconnectedness of risks
and points of leverage within our risk mitigation activities.
Risk identification is focused on the identification of the key obstacles that can prevent us
from achieving our business strategy and objectives. We categorise all our risks using our risk
classification model to ensure consistent classification of risks and enable aggregation of similar
risks across the Group to understand their full impact.
Risk measurement and response is focused on quantifying risks by considering the
likelihood and impact of the risk and deciding on mitigating actions. Risks are quantified in
three dimensions:
» Inherent: considering the likelihood of occurrence and impact (financial and non-financial)
that the risk may have on the business, without considering any mitigating factors
» Residual: considering the likelihood of occurrence and impact the risk may have on the
business, after considering the control environment and any mitigating actions
» Residual risk vs tolerance: comparing the residual risk to the risk appetite and preferences
that are stipulated by the risk strategy for that type of risk
D RISK
ENT
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IG
L
A
Y
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A
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T
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N
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S
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I
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B
Once quantified, we consider the rating of the risk, together with our appetite for that kind of
risk to determine a risk response and implement mitigating actions as appropriate.
S
C
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E
T
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R I S K M A N AGEMENT PROCES
RISK
I D E N T IFICATION
S
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AND
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Risk monitoring is the ongoing process of assessing the control environment and the
effectiveness of mitigating actions being taken to determine a residual risk rating. It considers
the impacts of materialised risks, assurance work, indicators and changes in the external and
internal environment on both our risks and controls.
Risk reporting is focused on comparing the residual risk exposures to our risk appetite, as
articulated in our risk strategy, reporting on risks that are either outside of the targeted range
or outside of our risk appetite
Stress and scenario testing is the process of evaluating the impact of specified scenarios
on our financial position using several statistically defined probabilities. This facilitates the
assessment of the resilience of earnings and our balance sheet based on our business plans
and the various risk-taking activities.
For details of the Risk committee’s focus areas
and how it addressed risks, refer to page 35 and
36 of our Corporate Governance Report
33
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Risk management process continued
Combined assurance
Our combined assurance processes are well established. Our philosophy
is to build and sustain an integrated and coordinated approach across
all three lines of assurance at all levels in the organisation. Our key focus
is on collaboration and sharing information while ensuring appropriate
coverage and avoiding duplicate work.
The combined assurance plans provide the Board with an integrated view of all assurance activities
related to the Group’s key inherent risks. We identify focus areas for a specific year by considering
the current control environment, assurance work completed in prior years and a risk assessment.
Quarterly reporting against the plans provides an integrated view of the outcome of all assurance
activities, resulting in improved confidence in the effectiveness of internal controls.
The risk function is responsible for developing and maintaining the Group Combined Assurance
Framework. Independent assurance of the Group Combined Assurance Framework and process
is provided on a periodic basis.
Our three lines of assurance
As a Group, we follow the three lines of assurance model, which defines
clear accountabilities for the management of risk and the control
environment.
Line 1 –
management
Line 2 –
internal assurance
providers
Line 3 –
independent
assurance providers
» Management is
responsible for
implementing an
effective system of
internal control, risk
identification and risk
management daily
across the business.
This line also includes
specialist and Group
functions such as tax,
legal, information
security and quality
assurance functions.
» Internal assurance
» Independent
providers are
responsible for assuring
the appropriateness
and effectiveness of
the risk management
system, ensuring that
policies and procedures
are followed, and that
reporting is accurate
and complete. This
line includes the risk,
compliance, actuarial
oversight and forensics
functions.
assurance providers
are responsible for
independent assurance
of the effectiveness of
governance, line one
and two functions
and the system of
internal control. This
line includes internal
and external audit
functions.
Kampala, Uganda – Coordinates 0.3476° N, 32.5825° E
34
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Top residual risks
Changes to the top residual
risks
Top risks are identified based on their likelihood of
materialising in a reasonably short timeframe, with
a magnitude that materially impacts the Group.
Our top risks are assessed and reviewed at least
quarterly. Based on this assessment, we added
non-life insurance and people risk to our top risks.
Operational risk dropped off the top 10 rankings.
Macroeconomic risk is covered in operating context.
Top residual risks
Risk
Sovereign risk
Growth risk
Strategic execution risk
1
2
3
4 Life insurance risk
5
Non-life insurance risk
6 Technology and information security risk
7 Climate risk
8 Business resilience risk
9 People risk
10 Market conduct risk
Refer to Our operating context on pages
24 to 30 to understand the factors that
influence our risk assessment and
management process
The impact and likelihood of our top risks
Significant
Major
T
C
A
P
M
I
Moderate
Minor
Insignificant
1
4
4
2
3
6
7
5
8
10
9
Rare
Unlikely
Possible
Likely
Almost certain
LIKELIHOOD
35
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Top residual risks continued
Sovereign risk
1
Growth risk
2
The risk that governments face challenges in stabilising and servicing the debt which they have issued.
Business perspective
We are directly exposed to sovereign risk through holdings of government bonds and State-owned Enterprise
investments and indirectly via local banks through bank deposits and hedging strategies. We invest in long-dated
sovereign and State Owned Enterprise debt instruments in our shareholder funds as well as to match the long-
term nature of the liabilities to hedge guaranteed products. Although default risk is low, a restructure of sovereign
debt is possible if the fiscal position worsens over the long term.
Impact
» A sovereign crisis could reduce our customers’ investment returns and trigger value-for-money concerns in
some portfolios
» Depending on the severity, our capital and liquidity levels may be impacted, limiting our ability to invest in
growth opportunities
» In some of our Africa region businesses, a substantial portion of shareholder and policyholder funds are invested
in sovereign debt or the local banking sector, which poses valuation risk to these assets should there be a
sovereign default or debt restructure
Key actions
» Introducing portfolio sectoral tilts into our investment portfolios to manage portfolio risk and reduce sovereign
risk exposure
» Reducing local bank exposure by increasing our exposure to offshore banks and other international counterparties
» Rightsizing our exposure to State Owned Entities
» Tailoring product range and investment strategies to mitigate this risk
» Engaging with industry groups on how to respond to the systemic risk posed by a sovereign debt crisis
» Developing a sovereign risk dashboard with forward-looking risk indicators to monitor the extent of sovereign
risk exposure and enable proactive management decisions
» Implementing and embedding the investment credit risk framework in our Africa regions
» Setting appropriate credit risk appetite limits and early warning triggers to ensure actions can be taken
timeously to correct unexpected performance deviations for institutional credit portfolios
Opportunities
» Identifying investment and lending opportunities in sectors which show growth potential, resilience or are
counter-cyclical
Stakeholders
Customers
Investors
Regulators
The risk of being unable to achieve and maintain profitable growth
and be a dominant player in our chosen markets.
Business perspective
Adverse economic conditions increase cost-of-living expenses and
decrease customers’ disposable income. Our corporate customers’ growth
and liquidity levels were also negatively impacted.
Non-traditional businesses and fintechs continue to move into the
financial services space.
Impact
» Planned new business sales are not achieved in our life and non-life
businesses, affecting annual premium equivalent and gross written
premium, respectively
» Pipelines for asset flows and/or regular contributions do not materialise
for our Old Mutual Corporate and Asset Management businesses
» Persistency in our retail life and non-life Insurance businesses worsens
» Expense to income ratios come under pressure as the book size
becomes increasingly unable to support the fixed cost base
Key actions
» Introducing new products and services with more flexibility for
customers and rewards benefits
» Scaling alternative distribution channels to drive direct business
» Prioritising data analytics to drive customer insights and improve
customer experience – this will promote customer acquisition and
create cross-selling and upselling opportunities to drive growth
» New growth engines in the form of our transactional capability are to
be launched in 2024 as well as leveraging off partnerships in strategic
growth markets
» Focusing on corporate business growth across Old Mutual Africa
Regions
Opportunities
» Establishing a new capability to respond to opportunities created
by rapidly changing market dynamics and deliver game-changing
innovation to support sustainable, long-term growth
» Exploring inorganic growth opportunities and addressing market
consolidation in key Africa Regions
Stakeholders
Customers
Investors
Intermediaries
36
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Top residual risks continued
Strategic execution risk
3
Life insurance risk
4
Non-life insurance risk
5
The risk of failing to effectively deliver on our material
programmes in a timely manner to achieve our strategic
objectives.
Business perspective
There are several key change initiatives underway that will set us
up as an organisation to achieve our strategy and business plan
objectives.
Impact
» Delays in progressing change initiatives could result in
additional run costs, opportunities not being fully capitalised
on and benefits not being timeously realised
» Overlapping dependencies on key resources may lead to
slippage and compression
» Sustained pressure on key individuals could also impact staff
wellbeing and retention
Key actions
» Adopting a value chain-led delivery structure to support an
agile delivery approach for strategic programmes
» Back-filling key roles to not impact business as usual delivery
» Ensuring the Old Mutual Prioritisation Board manages the full
portfolio of change initiatives and capacity constraints
» Implementing retention processes in key programmes
Opportunities
» Driving strategic clarity based on delivering an integrated
financial services experience for customers
» Improving resilience, efficiency and agility against a changing
external environment enabled by migrating information
technology estate to the cloud
» Delivering strategic mergers and acquisitions in the Africa
region to drive scalability of businesses and support quality
of earnings
» Maturing our capability to drive innovation and partnerships
to support growth
Stakeholders
Customers
Employees
Investors
The risk that actual mortality and morbidity experience is
worse than what we expected.
The risk of adverse impacts on our ability to write profitable
Property and Casualty business.
Business perspective
We provide insurance cover for a wide range of contingencies to
our customers in the Life and Savings business. The mortality risk
associated with providing this cover is aligned with our business
strategy of offering life protection products.
Impact
» Mortality and morbidity losses reduce earnings where
experience is worse than expected
» Where losses are expected to continue for the foreseeable
future, they are capitalised in that year for the expected future
losses, which multiplies the effect of a single-year loss
Key actions
» Undertaking experience investigations in areas of concern and
adjusting pricing accordingly
» Re-evaluating the protection product strategy and future
pandemics in product pricing
Opportunities
» Refining the granularity of our rating categories for pricing
purposes
» Tilting business mix towards underwritten products in middle-
income market
» Capturing cross-selling opportunities to increase customer
needs met by writing disability, critical illness and other
benefits in addition to death cover
Stakeholders
Customers
Investors
Business perspective
Underwriting experience across our Property and Casualty
businesses continues to be challenging, as are higher
cancellations due to affordability concerns of customers. The
higher inflation and shortages have increased the cost of parts,
which has an impact on the cost of claims.
The reinsurance market has become increasingly difficult
over the past few years, resulting in less capacity and higher
premiums to transfer risk to a third party.
Impact
» Increased claims due to the increased frequency and severity
of weather catastrophes
» Deterioration in the earnings of the Property and Casualty
businesses due to losses and higher cancellations due to
affordability concerns
» Slow or negative growth in the book size of our Property and
Casualty businesses
» Increased retention of risk on the balance sheet of Property
and Casualty businesses due to hardening reinsurance market,
together with possible contraction in underwriting margins
» Inflation has increased the cost of claims
Key actions
» Exploring different reinsurance options across our entities that
offer Property and Casualty products
» Revising pricing and planned premium increases in 2022 and
2023 on Property and Casualty products
» Launching a retail top-up product to ensure indemnity level is
maintained
» Engaging with reinsurers and exploring capital-efficient solutions
» Deliver process efficiencies and reduction in claims
management costs, particularly on motor books
Opportunities
» Leveraging insights derived from the Climate Change Task
Force
» Partnering with other insurers, municipalities and third parties
on climate change
» Exploring opportunities to develop new products
» Exploring partnerships with SMMEs linked to the insurance
industry
Stakeholders
Customers
Investors
37
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Top residual risks continued
Technology and information security risk
6
Climate risk
7
The risk posed by heritage information technology infrastructure on our ability to achieve
targeted customer and adviser experience, operating efficiencies and responding to ongoing
cyber threats. Ongoing cyber threats pose a challenge to business resilience and data security.
Business perspective
A complex and ageing information technology infrastructure poses a threat to our targeted customer
and adviser experience, as well as operating efficiencies.
The evolving global threat landscape may result in Old Mutual being prone to intentional and
unintentional cyber security attacks.
As we evolve our business model, it is critical we understand the risks introduced by third parties.
Impact
» System downtime may disrupt servicing and sales processes
» Customer and adviser experience may not meet expectations, ultimately impacting our growth
ambitions
» Process efficiencies and run costs may be compromised
» Cyber security attacks could result in data, privacy or security breaches
» Data privacy or security breaches occurring via third parties
» Disruption of services due to temporary failure of critical third parties
Key actions
» Adopting a cohesive, Group-wide approach to information technology architecture, business
resilience and information security
» Ongoing modernisation and simplification of application landscape, including completing our
cloud migration
» Optimising and application refactoring for South Africa
» Delivering enhanced capabilities and digitalising our processes to satisfy the continuously changing
demands of our customers and advisers, and increase efficiency for employees
» Extending the reach and take-up of the MyOldMutual and digital adviser experience platforms
» Implementing data mesh models
» Ensuring a centralised capability for oversight of third-party risk management
» Implementing a comprehensive security strategy to protect intellectual property, sensitive customer
information and other business-critical information
» Adapting and enhancing cyber risk monitoring and protection to address changing threats,
including automated security testing and data protection tools
» Implementing mandatory cyber risk training and awareness programmes, including phishing
simulations
Opportunities
» Improving customer and adviser experience by introducing new technologies
» Improving operational efficiency and information security and reduced system downtime
The risk that global warming, extreme weather events and the transition to a low
carbon economy will adversely impact economic growth, asset valuations and insurance
profitability. These, in combination with increased costs of doing business could threaten
the resilience and sustainability of our business.
Business perspective
Increased frequency and intensity of severe weather events can cause business disruption, and
adversely impact claims experience and pricing of insurance products, particularly Property and
Casualty business in the short term.
Policy shifts could lead to stranded assets and job losses from highly exposed industries, including
fossil fuel investments.
Impact
» Property and Casualty claims are increasing due to the rise in frequency and intensity of
extreme weather events
» Increased concentration risk by geography or sector due to physical climate risks or dependency
on primary industries
» Severe weather events have caused business disruption
» Adverse non-life underwriting experience due to worsening claims from increased frequency
and intensity of weather events
» Reduced capacity in reinsurance markets to transfer risk off our own balance sheet
» Increased price for securing reinsurance, which may have a knock-on effect on product pricing
» Stranded assets triggering asset devaluations in highly exposed industries, including fossil fuel
investments
» The possibility of deterioration in mortality and morbidity, due to illness and food insecurity
induced by extreme weather events
Key actions
» Understand Old Mutual’s fossil fuel investment exposure, and influence action in investee companies
on climate risk issues and developing a path to decarbonisation of our investment portfolios
» As a responsible business, we are working to ensure that we minimise the carbon footprint of
our own operations
» Assessing the impact of climate-related risks and opportunities on our businesses, strategy,
financial outcomes, and developing response plans
» Reviewing policy terms and conditions in conjunction with pricing to ensure these accurately
reflect the risk exposures
» Expand our investment projects which develop clean or green prower solutions
Opportunities
» Exploring ways to develop market-leading products that will help our customers protect against
climate risk and ensure we continue providing cover for our customers
» Managing our own carbon footprint as a business by improving our energy management and
waste recycling processes and creating alternative water supplies for our buildings
Stakeholders
Stakeholders
Customers
Investors
Intermediaries
Employees
Customers
Employees
Investors
Communities
Regulators
38
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Top residual risks continued
Business resilience risk
8
People risk
9
Market conduct risk
10
The risk of being able to minimise the impact of disruptions
and maintain business operations at predefined levels due to
internal and external causes.
Business perspective
Scenario planning assists us in assessing where we need to
strengthen resilience to ensure smooth operations and a consistent
customer experience despite challenges affecting operations.
Impact
» Operational systems, people and processes are impacted to
different degrees depending on the cause of the disruption,
with knock-on impacts on reputation and market conduct
» Human error in manual processes could result in financial losses
» Inefficient processes could also result in poor customer service or
non-compliance with regulatory requirements
» Load shedding causes degradation of telecommunication
services, including internet connectivity
» Cyber incidents can adversely impact operations
Key actions
» Strengthening our management and risk oversight of key third
parties and service providers
» Ensuring uninterrupted service levels by bringing contact centre
employees back to the office full-time as part of the hybrid
working model
» Ensuring main campuses can support core processes during
power disruptions, and supporting key roles with uninterrupted
power supply devices
» Implementing plans to deal with sustained load shedding
» Established a Crisis committee, which is invoked if there is a major
business resilience event
» Ensuring our business continuity strategies outline how to operate
should civil unrest occur
» Focusing on business process documentation and automation to
improve efficiencies and automate controls
» Implementing control improvement programmes in areas of our
business with less mature control environments
Opportunities
» Responding to competitive advantages that exist for businesses
that are better enabled to deal with extreme and/or unusual
operating conditions seamlessly
» Reducing the running expenses in the business through
efficiency improvements initiatives
» Decreasing loss events due to tight execution of automated
processes
Stakeholders
Customers
Intermediaries
Employees
Investors
Regulators
This risk arises from not attracting, developing and retaining
the skills necessary to implement our strategic objectives,
and from insufficient action to reduce the risk of burnout
among key employees.
This risk could arise if our products and solutions are
not performing as intended or servicing does not meet
customers’ expectations.
Business perspective
Specialist skills are required to deliver our strategic objectives,
and increased remote working opportunities mean we are
competing to retain and attract talent on a global scale.
COVID-19 changed our ways of work and employee wellbeing
and burnout have become an increasing concern.
Impact
» Retaining specialist skills is becoming more challenging, driven
by the increase in global remote working opportunities – this is
particularly of concern across the Africa regional businesses
» Deterioration in employee wellness could impact delivery and
service, including the execution of large programmes critical to
our strategy
Key actions
» Implementing a hybrid working model, with most staff working
from home for part of the week
» Developing a Group wellbeing strategy, due for
implementation in 2023
» Managing staff burnout risk by filling vacancies, effective
prioritisation and capacity planning and anti-burnout strategies
» Revising remuneration value propositions in line with local
environments where we operate
Opportunities
» Leveraging wider recruitment pools due to hybrid working for
specialist skills
» Marketing employee value proposition effectively to attract new
skills
» Offering retention bonuses for key staff
» Delivering strategic initiatives
Stakeholders
Business perspective
The needs of our customers evolve with changes in the
macroeconomic environment, their financial health and life
events, and competitive activity. We need to be able to respond
seamlessly to all of these.
Impact
» Service challenges erode our brand promise and pose
reputational risk
» If our products are not perceived to be value for money, it will
impact our growth and persistency
» If our products are not flexible enough to adapt to changing
financial health of customers, we may experience a
deterioration in persistency
Key actions
» Ensuring products perform in the manner communicated to
customers at the point of sale
» Embedding a refined Group Market Conduct Framework
through the Board’s Responsible Business committee
» Independently reviewing and challenging the value-for-money
components of our products at both a design stage and on an
ongoing basis
» Introducing flexible resourcing to meet service demand,
especially in times of high claims and transaction activity
» Increasing automation of our servicing activities using robotics
Opportunities
» Launching a new range of savings and investment plans,
focusing on different time horizons, flexibility, and multiple
distribution models to drive improved value for money and
persistency
» Driving digital engagement with our customers and continue
to focus on quality advice
» Focusing on the insightfulness of our campaigns to customers
using meaningful data analytics
Employees
Customers
Intermediaries
Stakeholders
Investors
Customers
Intermediaries
Investors
Regulators
39
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
STRATEGY AND
STRATEGY AND
VALUE CREATION
VALUE CREATION
Harare, Zimbabwe – Coordinates 17.8216° S, 31.0492° E
4
start-ups
launched to
market
800
entrepreneurs
impacted by
the hub
DID YOU KNOW
Eight2Five, powered by Old Mutual Zimbabwe, is an innovative
hub that partners with entrepreneurs to achieve a shared vision of
using technology to solve real-world and business problems.
Training programmes and competitive platforms, such as the
value creation challenge, support SMMEs on their journeys to
build resilience by recognising the tenacity and creativity of
entrepreneurs and equipping them accordingly. Their mission
is to provide start-ups and SMMEs in Zimbabwe with a modern,
professional and energetic work environment that enables
innovation and entrepreneurship.
40
Integrated Report 2022 PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Our strategy
Creating shared value and sustainable transformation is at the core of how we do business. We recognise that the
success of our business is integrally linked to the wellbeing of the communities we form part of and operate in. In
building the most valuable business in our industry, we strive to create a positive and sustainable impact across our
communities, the environment and broader society.
Our strategy has been formulated taking into consideration our operating environment, evolving customer needs, the competitive landscape and rapidly changing technological advancements to ensure
that we are able to sustainably deliver long-term value to all our stakeholders. It remains unchanged from last year and is anchored in our victory condition of becoming our customers’ first choice. Our five
interconnected strategic pillars describe how we will go about delivering on our victory condition. Collectively, they aim to drive brand differentiation, provide holistic solutions that meet changing customer
needs and enable a seamless transition between face-to-face and digital experiences. We draw on our talented and engaged employees to achieve these objectives. Our five value drivers create a link between
our strategic actions and the value creation impact for the Group. They also help inform the prioritisation of these actions to ensure maximum value creation for customers and shareholders alike.
For more information on the Board’s strategic focus areas, refer to pages 18 and 19
V A L U E DRIVERS
R V I C T ORY CON
DIT
I
O
N
U
O
To be our customers’
first choice to
sustain, grow
and protect their
prosperity
e
u
n
R e v e
gr o w t h
O U TCOME
O
p
er
m
ar
a
ti
n
g
i
n
g
s
s
h
t
g
n
e
v
i
t
i
t
e
p
m
Co
stre
e
f
C
a
fi
c
i
p
e
i
t
n
a
c
l
i
e
s
RESPONSIBLY
BUILD THE MOST
VALUABLE BUSINESS
IN OUR INDUSTRY
Execut i o n
and deli v e r y
We will make it evident that
Old Mutual cares
through solutions and actions that
support customers, their families
and communities.
We will aim to be always
present first
by ensuring that propositions and
advice are available to customers
when and how they need them and
ensuring a top-of-mind brand.
We will build rewarding digital
engagement
by using advice and customer data
considerately and effectively.
Our high-performing,
engaged employees
will make meaningful contributions
to achieve our purpose, victory
condition and values.
We will deliver solutions that
lead
in service and performance for
insurance, investments and
supporting banking needs.
41
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Our stakeholders
Value is created by and within an organisation through relationships. We create value for the organisation that affects
the financial returns to our investors, our stakeholders and society at large through our activities, interactions and
relationships. Our stakeholders are those individuals or groups that have a material interest in our decisions and
activities. Our stakeholders provide useful insights about matters that are important to them, including economic,
environmental and social issues that affect our ability to create value.
Stakeholder management
Three core commitments form the foundation of our stakeholder engagement mandate.
Our first commitment is to create value for all our stakeholders. Knowing our stakeholders and
understanding their needs is important to us, as this forms the basis of all our relationships. Wherever
there is shared value, there is a lasting commitment to building and growing together.
Our second commitment is to adhere to strong corporate governance in the management of all our
relationships. Our Stakeholder Relations Policy ensures that the standards by which we operate across
all our markets are in line with international best practices and King IV.
Our final commitment is to follow a method of structured strategic engagement, allowing us to
monitor and evaluate the quality of our relationships and their impact on the communities we serve.
To fulfil these commitments we manage, govern and monitor our stakeholder engagements.
Manage
Govern
Monitor
Our dedicated stakeholder
relations function ensures
we observe effective
industry and international
practices in managing the
requirements and views of
our stakeholders.
The Responsible Business
committee is responsible
for oversight over effective
stakeholder engagement on
behalf of the Board and in
line with policy, governance
codes and best practice.
The Board monitors the
quality and effectiveness
of our stakeholder
relationships and
engagements.
Our subsidiaries’ Boards adopt Old Mutual Limited’s Stakeholder Relations Policy and ensure that the
applicable requirements are implemented and complied with. Subsidiary Boards must ensure local
regulatory requirements are included in the policies adopted at a subsidiary level.
We are proud of our decision as a business to be a responsible social partner within our markets, actively
participating in industry bodies and professional associations that seek to drive financial inclusion
in Africa. We are purposeful about lending our voice to conversations that shape the future of our
continent, using international platforms such as New Partnership for Africa’s Development, UN Higher
Commission for Refugees and the World Economic Forum to support the global sustainability agenda.
We engage with our stakeholders regularly in the ordinary course of doing business to understand,
account for and respond to their needs and interests. We strive to build trust and a willingness to engage
among our stakeholders to continuously improve the quality of our relationships.
Bokamoso Solar Park, Klerksdorp, South Africa – Coordinates 27.1582° S, 26.4007° E
42
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Stakeholder value creation
Our interactions with stakeholders can materially influence our decisions, actions and business performance.
Therefore, we must monitor and measure these relationships in a way that is effective and transparent. By
understanding the needs and priorities of our stakeholder groups, we ensure our Group strategy facilitates behaviours
that are mutually beneficial. Furthermore, as much as is possible, our stakeholders have the opportunity to provide
input into those decisions that could potentially impact them. By following this approach, our strategy safeguards our
business performance, protects our licence to operate and ensures our external relationships deliver value to both our
Group and stakeholders.
What our stakeholders care about
How we engaged
Focus areas in 2022
» Traditional distribution channels (including
» Progress on delivering an integrated financial
» Meeting their financial goals
» Innovative, flexible and personalised product
solutions
» Competitive and transparent pricing
» Omnichannel experience and ease of use
» Fast and efficient customer service
» Responsible and appropriate advice
» Easy access to funding for SMEs
» Relief in times of significant financial difficulty
branches and intermediaries)
» Investment roadshows
» Digital apps and tools
» Media channels
» Bespoke events and sponsorships
» Annual and interim events and reports
» Newsletters
» E-mails
s
r
e
m
o
t
s
u
C
i
s
e
i
r
a
d
e
m
r
e
t
n
I
» Ease of doing business
» Digital capabilities that enable engagement,
sales and servicing
» Product and regulatory training
» Fair incentives that reward efforts
» Association with a brand that delivers on its
promises
» Being enabled to meet a broad range of their
customers’ needs
» Branches and worksites
» Digital apps and tools
» Conferences, roadshows and bespoke events
(online and in person)
» Annual and interim events and reports
For information on the quantification of value created, preserved or eroded for our stakeholders, please refer to our business model on pages 46 to 47
For information on the Board’s engagement with our stakeholders, refer to pages 18 to 21 of the Corporate Governance Report
For information on how we have discharged our responsibilities to our stakeholders, refer to the Sustainability Report
services experience for our customers
» Providing value-for-money financial solutions
to our customers in a responsible way
» Enhancing our digital channels to make it
easier to interact with us
» Using robotics to simplify our processes, giving
time back to customers through a reduction in
servicing and processing time
» Continuously sending our intermediaries on
customer experience training
» Embedding the customer market conduct
framework in our day-to-day operations
» Improving our brand marketing and
advertising
» Providing easy access to funding to SMEs
through SMEgo
» Simplifying tools and processes and
expanding servicing capabilities including
providing dedicated support
» Providing ongoing training to improve the
experience of our intermediaries through our
sales academies
» Continuing to provide market-related
incentives and rewards to our intermediaries
» Providing a comprehensive range of solutions
through value-enhanced propositions
Relationship value for customers
» Timely payment of claims and benefits
» A trusted and respected brand
» Access to propositions across our
operating segments that target
primary financial services needs
Relationship value for Old Mutual
» Income generated from products
and services that serve our customers’
needs
» Ability to reach customers through new
and existing distribution channels
» Opportunities to cross-sell to our
customers through our integrated
financial solutions
Relationship value for
intermediaries
» Access to training and development
» Market-related financial rewards
Relationship value for Old Mutual
» Maintaining customer satisfaction
levels
» Accessing new customers and
better serving existing clients
43
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Stakeholder value creation continued
What our stakeholders care about
How we engaged
Focus areas in 2022
» Competitive reward structures and benefits
» Career growth and access to training and skills
development opportunities
» An inclusive culture that is safe and enabling
» Addressing mental health and overall wellness
» Flexibility – work/life balance
» Rights to freedom of association
» Workday, our digital human capital technology
solution
» Leadership sessions
» Surveys
» Internal communications
» Management roadshows and town hall
meetings
» Annual and interim events and reports
» Collective bargaining for organised labour and
employee formations
» Upskilling and reskilling employees to develop
various technical and role-specific skills and
behaviour to enable a future-fit workforce
» Leadership development programmes
targeting junior, middle, senior and executive
levels in the organisation
» Increasing talent mobility between countries
and businesses
» Revising our Parental Leave Policy towards
greater gender equality and inclusivity
» Revising our hybrid working model in response
to return to work post the pandemic
» Disability awareness campaigns
» Bula Tsela Employee Scheme for employees to
share in the success of Old Mutual
» Driving our culture transformation
journey based on insights from our culture
survey
» Concluding relationship agreements with our
social partners and/or forming structures for
employer-employee engagement to enable
negotiations, consultations and information
sharing
Relationship value for employees
» Financial and non-financial rewards
» Access to skills development and
training opportunities
» Being part of an organisation where
they feel engaged, empowered and
motivated
» Flexible hybrid working model
Relationship value for Old Mutual
» Skilled, experienced and high-
performing individuals in the right
jobs who contribute to our purpose,
victory condition and values
» Long-term sustainable financial returns and
distributions
» Understanding the capital management
journey and unlocking value
» Clear strategic direction and consistency in
operational execution particularly banking
strategy
» Experienced management team
» Transparent reporting and disclosures
» Strong financial control environment,
including corporate governance and ethics
frameworks
» Digital apps and tools
» Media channels
» Investor roadshows engaging over 45% of our
shareholder base
» Stock Exchange News Service
announcements
» Annual General Meetings
» Local and international conferences
attendance
» Annual and interim events and reports
» Ad hoc meetings
» Maintaining a well-capitalised balance sheet
» Strong delivery of our operational objectives
and the Group strategy
» Maintaining transparent reporting and
disclosures in line with our reporting
standards and internal policies and
procedures
» Improving our returns on capital and the
value of new business
» Providing greater clarity on discretionary
capital management
Relationship value for investors
» Sustainable returns on investment
Relationship value for Old Mutual
» Access to financial capital which, in
turn, supports long-term growth
» Ability to fund operational
objectives and contribute positively
to other stakeholders
s
e
e
y
o
p
m
E
l
s
r
o
t
s
e
v
n
I
For information on the quantification of value created, preserved or eroded for our stakeholders, please refer to our business model on pages 46 to 47
For information on the Board’s engagement with our stakeholders, refer to pages 18 to 21 of the Corporate Governance Report
For information on how we have discharged our responsibilities to our stakeholders, refer to the Sustainability Report
44
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Stakeholder value creation continued
s
e
i
t
i
n
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R
What our stakeholders care about
How we engaged
Focus areas in 2022
» Financial education and inclusion
» Skills development and employment
opportunities
» Access to supplier development opportunities
» Community development
» Education support
» Access to funding programmes
» Climate change activism
» On-the-ground support during crises
» Media channels
» Conferences and seminars
» Annual and interim reports
» Community projects and outreach campaigns
» Thought leadership podcast series on
responsible lending
» Green Hands Trust for financial donation and
giving time to social development initiatives
» Imfundo Trust offering scholarships for tertiary
education
» Reaching people across Africa through our
financial inclusion and financial education
initiatives
» Involved in humanitarian relief efforts, including
community rebuilding and food relief initiatives
» Launching Bula Tsela Community and Retail
Schemes to promote financial inclusivity
» Providing bursaries and workplace experience
opportunities to students, learners, interns and
trainees
» Our employee volunteerism initiatives
» Progressing the agenda on black asset
managers through inclusion of smaller industry
players in our value chain and member
representations on trustee boards and climate
change
» Shaping legislation that protects customers
» Compliance with regulations including
regulatory reporting
» The effectiveness of the control functions
» External audit and key external audit findings
» Contribution to national fiscus through
» Direct communication, including submissions
of required reports and attendance of
meetings
» Participating in public forums
» Taking part in the drafting process of new
regulations and bills
» Launching Bula Tsela, our B-BBEE ownership
transaction, which was implemented to fulfil
our commitment to reach a 30% B-BBEE
ownership level by June 2023
» Maintaining our solvency capital at levels
above regulatory requirements
corporate taxes
» Having discussions with industry consultative
» Detailed risk management and controls
» Provision of quality products and services to
bodies
our customers
» Partnering to implement social programmes
» Engaging with international bodies to foster
cooperation
systems and performed a self-assessment for
actuarial, risk and the compliance functions
» Supporting government efforts on climate
change and engaging at COP27
» Delivering on our responsible business
» Ongoing partnership on the annual Budget
agenda
Speech Competition to unearth young talent
in economics and finance
» Delivering on the enterprise supplier
development fund as part of our strategy to
support SMEs
» Risk-proofing the business to deal with future
pandemics as part of business as usual
For information on the quantification of value created, preserved or eroded for our stakeholders, please refer to our business model on pages 46 to 47
For information on the Board’s engagement with our stakeholders, refer to pages 18 to 21 of the Corporate Governance Report
For information on how we have discharged our responsibilities to our stakeholders, refer to the Sustainability Report
Relationship value for communities
» Humanitarian and disaster support
during crises
» Access to bespoke financial
education, skills development
initiatives and financial inclusion
» Access to advice, products and
services that support business
development
Relationship value for Old Mutual
» Opportunity to positively influence
our broader ecosystem
Relationship value for regulators
» Direct and indirect tax contributions
in the regions where we operate
» An active and cooperative
participant during the development
of regulatory strategy and policy
Relationship value for Old Mutual
» Ability to effectively manage
regulatory risk
» Maintaining our reputation of
being a responsible and sustainable
business
45
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Our value creation business model
Through our integrated business model, we actively manage the resources and relationship we rely on to create
sustainable and responsible value for our stakeholders.
FC Financial
HC Human
MC Manufactured
IC Intellectual
SC
Social and
relationship
NC Natural
Our shareholder and debt funding,
which underpin our strong capital
base and support the operations
of our business and fund growth.
Financial capital includes the funds
our customers invest with us.
Our culture and our people, tied
advisers, our collective competencies,
capabilities, experience and
motivation to innovate.
The physical and digital infrastructure
through which we conduct business
activities. It includes our branch
network, digital platforms and
information technology estate.
Our trusted brand and franchise
value, strategic partnerships and
innovative capabilities and expertise.
Our relationships with all our
stakeholders, including deep ties with
the communities we operate in.
The use of, including the influence
and impact of our business activities
on, natural resources.
Capitals
» Equity of R66.5 billion
(2021: R65.3 billion)
» Borrowed funds of R16.7 billion
(2021: R17.5 billion)
» Funds under management of
R1.2 trillion (2021: R1.3 trillion)
» R176.4 million (2021: R82 million)
invested in employee and
leadership learning and
development
» 31 866 (2021: 28 837) employees
» Employees completing agile
training 4 425 (2021: 1 778)
» Employees enrolled on Udemy
11 028 (2021: 8 500)
Inputs
» 826 (2021: 871) retail branches
» 48 731 worksites (2021: 47 226)
» 95% (2021: 51%) of information
technology in the cloud
» Artificial intelligence and
robotics capabilities using data-
driven insights
» Fully functional and enhanced
digital platforms
» Largely cloud-based information
technology estate in South
Africa
» 1.8 million (2021: 1.3 million) Old
» 11.9 million (2021: 12.1 million)
Mutual Rewards members
» A 177-year track record of
delivering financial solutions
» Strong strategic partnerships
» Scalable digital capabilities
built in simplified and secure
technology estate
» Innovative culture underpinned
by the right employee skillset
and mindset
customers
Trained 832 teachers and
supported 878 Early Childhood
Development centres
» R102.8 million (2021: R62.8 million)
in entrepreneurial funds disbursed
by Masisizane
» R4.8 million spent on bursaries
» 400 Education Trust graduates
since 2013
» Contribution to South
Africa’s transformation and
empowerment agenda
» 26.7 billion (2021: 26.4 billion) of
proprietary assets invested in
renewable energy
» R2.2 billion (2021: R2.6 billion) of
proprietary assets invested in water
and sanitation
» 23% reduction in emissions since
2019
» 22% reduction in electricity usage
since 2019
» Integration of material climate
related risks and opportunities into
investment decisions
» Six Green Star rating from Green
Building Council of South Africa for
Mutualpark
» Surges in inflation in emerging
and developing economies
» Affordability concerns due to
difficult operating environment
» Balancing strategic investment
with cost-cutting initiatives
» Attracting and retaining top talent
with the right skills in a competitive
environment
» Hybrid working reduces in-person
work and collaboration between
employees
» Slow digital adoption rates among
» Agility to rapidly respond to
advisers and customers
» Increased digitalisation needs to be
enabled by effective information
security controls
competition threats posed by
digitisation and platform-based
ecosystems
» Increased unemployment, poverty
and inequality in the regions where
we operate
» Loadshedding is causing disruption
to business operations due to
degradation in telecommunication
services and internet connectivity
» Increased electricity and water
disruptions in South Africa
» Longer term implications of climate
change pose risks to many of our
capitals, but particularly natural
capital
Capital constraints
46
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Financial
Through our
Segments
Supported by our
Enabling functions
Our value creation
business model continued
We perform our core business
activities
We gather capital by providing financial advice,
savings and investment solutions
We invest this capital to achieve returns for our
customers, in ways that are good to society
catering to our
customers’ lifetime
financial needs and
delivering on our
victory condition
We protect our customer by taking on and pooling risk
that they are unable to carry individually
To deliver holistic solutions and
financial advice
Governance and sustainability
We govern our activities in a way that ensures we deliver on our strategy. At the same time, we focus on scaling our positive impact on the
communities in which we operate and the wider environment.
»
»
»
Intermediaries:
R7.4 billion (2021: R7.7 billion)
paid in fees and commission
R100.3 million (2021:
89.3 million) spent on
intermediary training
An average of 372 (2021: 335)
intermediaries trained through
our Celestis Academy
Customers:
»
»
»
»
»
1.2 million (2021: 1.1 million)
active digital users
53 000 (2021: 65 000) claims
initiated via WhatsApp, USSD
and websites1
67% (2021: 70%) customer net
promoter score
98% (2021: 99%) of life and
short-term claims paid
Enabled the generation of
R94.7 million in invoices on
SMEgo platform
»
Facilitated the disbursement
of R9.6 million in funding to
SMEs
Stakeholder outcomes
»
»
»
»
Employees:
R12.4 billion (2021: R10.8 billion)
paid in salaries and benefits
In South Africa, 87%
(2021: 84%) employees are
black and 61% (2021: 58%)
black employees in senior
management positions
58% (2021: 61%) female
employees
213 (2021: 305) high performing
employees enrolled in leadership
development programmes
Investors:
Full-year dividend of
76c (2021: 76c) per share
Improved financial
»
»
performance, with return on net
asset value up by 210 bps to 11.1%
(2021: 9%)
»
Group solvency ratio
decreased by 600 bps to 190%
(2021: 184%)
»
»
R780 million (2021:
R645 million) in interest paid
63.6 million Bula Tsela Retail
»
528 922 (2021: 220 451) online
Scheme shares issued
and virtual training courses
completed
»
78.1 million Bula Tsela
Employee Scheme shares issued
Communities:
Regulators:
»
»
»
R14.7 billion paid in taxes
(2021: R14.2 billion)
Maintained our level 1 B-BBEE
status
Participated and contributed
to industry engagements
and thought leaderships,
including ESG and shared value
engagements
»
R146 billion (2021: R150.5 billion)
invested in socially inclusive
investments
»
»
»
»
»
»
»
R1.4 billion (2021: R1.4 billion) of
proprietary assets invested in low
income housing
43% (2021: 43%) South African
SME supplier base
5 270 (2021: 4 600) SMEs reached
R290 million (2021: R260 million)
in funds committed to SMEs
584 jobs created by Masisizane
Fund in 2022
36.6 million (2021: 22 million)
people reached for financial
education
6 million (2021: 2 million) financial
wellness activities completed on Old
Mutual Rewards
»
63.6 million Bula Tsela
Community Scheme shares issued
FC
SC
MC
IC
FC
HC
SC
FC
HC
FC NC
FC
SC
SC
FC
NC
1 Although the volume of overall claims processed reduced year on year, the percentage of processes on web-based platforms is in line with 2021
Value created
Value preserved
Value eroded
47
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Enhancing value creation by investing in long-term growth
In line with our victory condition of becoming our customers’ first choice, we are continually exploring how we can
better understand and serve our customers while generating sustainable long-term value for all our stakeholders. We
continue to make strategic investments to secure Old Mutual’s future growth and build the financial services business
of the future. Our investments represent our response to rapid changes in market trends and our customers’ needs
and preferences. These investments also reflect our commitment to securing our collective futures – not only for our
company, but for our customers, communities and the businesses that we partner with.
These businesses are currently in their infancy, with a considerable amount of investment required to build the requisite infrastructure and capabilities. They
have been deliberately set up in a way that allows us to swiftly adapt to new trends as they emerge and deliver new solutions at pace. We remain steadfast in
our belief that doing the right thing for customers will translate into sustainable financial value over the long term.
Amplifying our growth through NEXT176
NEXT176 was established in August 2021 as our New Growth and Innovation Office, with a mandate to accelerate the
growth and innovation agenda at an enterprise level. Over the past year, we focused on developing its brand identity,
strengthening its team, as well as developing and exploring innovative new solutions and partnerships.
The NEXT176 brand was launched to the market in H2 2022. Conceptualised and announced 176 years after Old Mutual was
formed, it represents an extension of the core Old Mutual brand and the start of the next 176 years of creating shared value
across emerging economies through disruption, innovation, and sustainable growth.
Meeting customer needs through ecosystem-based
business models
We aim to make a meaningful impact on our customers’ lives through our
ecosystem approach; solving friction points in the following ecosystems with
attractive growth potential, where we have a “right to win”.
We will deliver value by:
1
2
3
Building new growth ventures across our priority ecosystems to
enhance our businesses of today and build businesses of tomorrow
Investing in companies for either distribution or capability across key
ecosystems and target sectors
Partnering with large scale businesses to unlock the benefits of
embedded finance to customers
Since launch, we have committed R300 million in capital towards NEXT176. We
are currently incubating five ventures across these ecosystems, including:
i)
Our digital wills offering that continues to show good growth with more
than 9 000 wills finalised on the platform since its launch in October 2021.
We recently concluded the acquisition of a digital wills platform, QuickWill, to
further grow and scale this venture.
Education
Sustainability
and ESG
Income
protection
Debt
Health
Jobs
ii) Through Oystar, we are solving friction points for owners, teachers and
parents in the early childhood development ecosystem with more than
1 000 early childhood development centres active on the platform at
the end of the year.
We also made strategic investments into CoverGo (a ‘no code’ insurtech
platform) and WIZZIT (a mobile payment solutions company).
Investing in our South
African transactional
banking capability
Our application for a banking licence
in South Africa brings us a step closer
to delivering on our victory condition
by enhancing our ability to sustain our
customers’ prosperity. We have existing
lending and transactional solutions in
South Africa, consisting of our Money
Account and an unsecured lending
product.
Our current transactional solution
is delivered through a commercial
arrangement with a third-party bank.
Securing our own banking licence allows
us to hold the primary relationship with
our customers. This will drive greater
regular interaction with them and
enhance the cross-sell opportunity
across our businesses.
We are building this transactional
capability using the latest technology
to allow enhanced servicing and
personalisation. This, together with
a cloud-based technology stack, will
enable us to deliver cost-effective,
flexible and scalable solutions to our
customers. We are on track to launch our
proposition in the second half of 2024.
48
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Business strategy link with remuneration
Delivery of value drivers measured through the
following performance metrics
Our remuneration philosophy underpins our Group strategy in supporting a high-performance
culture that remunerates engaged employees who make meaningful contributions to achieve
the Group’s purpose, victory condition and values. Our core remuneration principles support
this philosophy and are underpinned by our fair and responsible pay approach, ensuring that
remuneration across the Group is externally relevant, internally equitable and supports the
delivery of the Group’s short, medium and long-term objectives.
With effect from the beginning of 2023 our variable pay approach at Old Mutual includes a
short-term incentive and a deferred performance award.
For information on our approach to variable pay, refer to pages 16 to 17 of the Remuneration Report
A single Group scorecard applies to both the short-term incentive and deferred performance
award creating aligned focus across the organisation. The Group scorecard is closely aligned to
the Group’s strategic direction and objectives and measures delivery against financial, strategic
and ESG-linked objectives.
The majority of the incentive outcome remains linked to financial performance. As in the 2022
scheme, operational profit delivery drives the creation of the short-term incentive pool. This
creates a direct link to financial value creation. The scorecard then increases or decreases the
short-term incentive pool depending on wider business performance.
The outcome of the deferred performance award will similarly be driven by financial
performance with a 65% weighting to this category. Capital efficiency, as measured by return on
net asset value, has a high weighting given the focus on ensuring an efficient use of capital in
delivering shareholder outcomes. In addition, total shareholder return relative to peers and the
broader market has been included for 2023. This closely aligns the experience of shareholders
with that of management. The vesting period of the awarded shares is between two and four
years, further aligning management outcomes with those of shareholders.
Category
Performance metrics
Value driver
Results from operations
Outcome of value drivers
Return on net asset value
Value of new business
Capital efficiency
Revenue growth
Financial
Value of new business margin
Operating margin
Gross flows and gross written premiums
Revenue growth
Relative total shareholder return
(Peer group and Capped SWIX 40)
Strategic
delivery
Strategic execution
Engagement index
ESG
Customer growth and experience
Green economy
Outcome of value drivers
Revenue growth
Competitive strengths
Execution and delivery
Execution and delivery
Revenue growth
Operating margin
Revenue growth
Components of the Group scorecard (short-term incentive and
deferred performance award)
Financial
Return on net asset value remains a core component of the scorecard with the largest weighting. This assesses the
efficient use of capital in delivering shareholder outcomes with performance measured against cost of equity.
Value of new business and value of new business margin remain critical components of the scorecard. Value of new
business assesses the growth in life business through profitable new business. Targets are set relative to nominal
gross domestic product +1% indicating the need to grow ahead of the nominal growth in the economy. Value of new
business margin assesses the efficiency of this profit generation with targets set relative to our medium-term targets.
Gross flows and gross written premiums represent growth across Life and Savings, Asset Management and Property
and Casualty through new and existing business. Targets are similarly set relative to growth ahead of the economy.
Relative total shareholder returns aligns the outcome for management with that of shareholders. Performance is
assessed relative to peers (specifically Alexander Forbes, Discovery, Momentum Metropolitan Holdings and Sanlam)
and relative to the Capped SWIX 40 benchmark. Targets are set with performance in line with the peer group or
broader market required before an incentive is achieved.
Strategy
Integrated financial services refers to our strategy of offering a comprehensive suite of financial services to meet
our customers’ needs as they navigate their life-long financial journeys. Our customers benefit by having multiple
products from us and from making good financial decisions. Performance will be measured quantitatively against
a scorecard agreed with the Remuneration committee and aligned with the internal business plan. The scorecard
focuses on delivering our bank build within the project timelines and budget, improving our propositions and
growing our Old Mutual Rewards membership.
Old Mutual Africa Regions remains a key area of growth for the Group and strategic progress will be measured
quantitatively against targets agreed with the Remuneration committee, with a focus on financial performance.
ESG
Employees – The employee engagement index is a component of the culture and engagement index in the current
2022 long-term incentive. This index measures the engagement levels of employees using energy, commitment
and positive feeling as metrics. These dimensions have been selected based on research into their link to improving
service delivery and operational support which are closely linked to better outcomes for our customers. Therefore, as
our organisational culture improves, our customer satisfaction and brand reputation will improve.
Customer growth and experience – A quantitative assessment of the growth we are driving in our retail customer
base together with the experience of our customers. This is made up of:
» Average needs met per customer in the retail segments
» Customer numbers in the Mass and Foundation Cluster and in Personal Finance
» Net Promoter Score across our South African businesses
All three metrics continue from the 2022 incentive schemes.
Green economy – This dataset demonstrates Old Mutual’s contribution towards investing in a sustainable economy,
focused on renewable energy, agriculture, affordable housing, water, health, transport and education.
The Old Mutual green economy taxonomy categorises which assets have an active positive impact on the
sustainability of the economy according to global best practice criteria. Our taxonomy was developed with the
European Green Economy Taxonomy as the guiding framework.
This metric measures the growth in new business across our Listed Equity and Alternatives Green Economy funds and
propositions. This is a strong contributor to building a better, more sustainable future and works alongside our net
zero commitments.
These funds have a positive social impact, as well as a positive impact on the environment and the economy at
large. Success in this area therefore reflects our ability to develop propositions that balance impact with delivering
compelling investment outcomes.
49
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
PERFORMANCE
PERFORMANCE
AGAINST STRATEGY
AGAINST STRATEGY
R2.5
million
funding
provided
10
students funded
by Old Mutual
Insure
DID YOU KNOW
South Africa has a high unemployment rate and lacks critical skills.
C3 Academy offers a 24-month specialised robotics and information
technology programme that sponsors carefully selected candidates,
delivering high-potential candidates to the industry.
Old Mutual Insure, through the Mutual & Federal Development
Trust, partnered with the C3 Auto Body Repair Academy in
Bloemfontein to provide vocational skills training for unemployed
youth in the area. This addresses South Africa’s skills shortage and
increases economic participation.
50
Bloemfontein, Free State – Coordinates 29.0852° S, 26.1596° E
About our report continuedIntegrated Report 2022 PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Old Mutual cares
What we aim for
Being known as a financial services provider that cares for its stakeholders and delivers shared
value across the countries in which we operate.
How do we deliver this
We aim to make it evident that Old Mutual cares through solutions and actions that support
customers, their families and communities. Accordingly, we offer our customers accessible,
affordably priced solutions and support them through our financial education initiatives. As a
responsible asset owner and manager, we also make sure our responsible investment practices
incorporate ESG-related considerations into investment decisions.
We also demonstrate care by treating all stakeholders fairly and ensuring that we create shared
value by contributing towards positive economic, environmental and social outcomes. These
are incorporated into our Sustainability Framework and span education and skills development,
financial education and inclusion, entrepreneurship, humanitarian and disaster risk reduction,
employee volunteerism and stakeholder management.
Our medium-term priorities
What we achieved
» Our Sustainability Framework encapsulates the intention and goals of Old Mutual Cares. A summary
of our achievements is provided below.
Our progress in skills development and stakeholder management is provided on page 57 and 42,
respectively.
Refer to our Sustainability Report for more detail on our approach to responsible
Refer to our Climate Report for more detail on our approach to responsible
Responsible investment
» We have R432 billion (2021: R458 billion) of assets under management under active stewardship.
R146 billion (2021: R150.5 billion) of assets under management is invested in socially inclusive, low-
carbon and resource-efficient investments.
Environmental impact
» Climate is our primary environmental focus. We became one of the signatories to the Africa Business
Leaders Coalition Climate Statement, released at COP27. The statement includes commitments
around adaptation and resilience, a just transition and mitigation, and calls to action the international
community to support Africa in these endeavours. We reported our South African Scope 1 and 2
emissions, and part of operational Scope 3 greenhouse gas emissions, to the CDP and achieved a B
rating. The Old Mutual Investment Group pioneered a low-carbon investment product that is 40% less
carbon-intensive than the Capped SWIX 40.
1
2
3
4
Further embed and accelerate our response to climate change through our
responsible investment philosophy and by proactively reducing our carbon
footprint
For more information on our environmental impact, refer to our Climate Report
Strategic key performance indicators (KPIs)
Deliver an integrated, enterprise-wide financial education strategy and embed
financial education into all our customer touchpoints and solutions
Number of people reached through financial
education (m)
Funding committed in support of SMEs (Rm)
Invest in ‘Learn. Think. Do’, an initiative making education more accessible across
the continent by providing open education resources that can be accessed in
multiple languages and through multiple platforms
Support economic growth and job creation by way of increased investment
in SMEs through vehicles such as the Masisizane Fund and the Enterprise
Supplier Development fund, and support small businesses directly via our
internal value chain
2022
2021
2020
37
22
20
2022
290
2021
260
2020
200
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Old Mutual cares
Financial education and inclusion
» Our extensive portfolio of financial education and inclusion initiatives reaches customers
and communities in the 13 African countries we operate in. Our programmes are designed
to connect with people from both urban and rural communities, and are available through
digital and face-to-face mediums to ensure content is easily accessible to everyone.
Across Africa, our financial education initiatives reached over 36.6 million people (2021:
22 million). As part of our Learn.Think.Do initiative, we developed financial literacy content
in several South African official languages to distribute across key platforms. In Kenya, we
supported the development of a teacher training course to embed financial literacy in the
competency-based curriculum for rollout in 2023.
Entrepreneurship
» We help entrepreneurs build resilient and successful businesses. Our offerings are
designed to provide an integrated commercial service offering while delivering impactful
solutions. This spans customised funding solutions, market access facilitation and
mentoring and coaching. We reached 5 270 (2021: 4 600) SMEs and committed R290 million
(2021: R260 million) in South Africa. The Masisizane Fund disbursed R102.8 million (2021:
R62.8 million), up 68% from 2021.
Education
» Our education initiatives are designed to impact the entire education value chain to support
meaningful systemic impact. Our approach starts from early childhood development through
to tertiary education – in preparation for employment or entrepreneurship. Our Education
Flagship Programme focuses on literacy and numeracy, with a focus on home language
content development. In 2022, we loaded 356 school-owned devices with digital mathematics
content and distributed 6 200 mathematics and reading books. We also supported the
development of two Xitsonga grade 1 books. We invested R4.8 million in higher education
bursaries across the accounting, information technology and actuarial science fields.
Humanitarian and disaster support
» We offer humanitarian support to communities that suffer from natural or man-made
disasters. We provide support through our internal response capability, like the Old Mutual
Foundation, coupled with our external partner network, such as Habitat for Humanity
South Africa. Our humanitarian and disaster support initiatives totalled R53 million in 2022
(2021: R14 million). We provided extensive support to the communities affected by the
floods in KwaZulu-Natal, South Africa, including providing food and shelter. Longer-term
interventions include a R30 million facility to rebuild 80 homes by the end of 2024.
For more information on our ESG activities and their impact, refer to our Sustainability Report
Johannesburg, South Africa – Coordinates 26.1968° S, 28.0342° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Always present first
What we aim for
Offering our customers the right solution (product, service and advice) at the right time and
through the channel of their choice.
By understanding our customers individually, and with the support of superior engagement
levels and leading solutions, we will be the preferred brand for the solutions we offer.
How do we deliver this
We will maintain our dominance across our physical channels and modernise our traditional
distribution advantage by digitally enabling our intermediaries. We will integrate the best
parts of our physical solutions with digital solutions to provide a seamless, integrated customer
experience across all touchpoints. Enhancing our physical reach with a digital presence will help
us be ‘always present’. This is further supported by a strong brand presence to ensure that when
customers think of financial services, they think of us first.
Our medium-term priorities
What we achieved
» Ranked as the 10th (2021: 12th) strongest brand in South Africa (Brand Finance).
» Improved our brand consideration across our South African retail segments. Brand consideration is
an internal measure used to track consumers’ first choice/serious consideration of a financial services
company (Old Mutual), the next time they purchase a financial services product.
» Marginal decline to 67% (2021: 70%) of our SA Net Promoter Score, which is a measure of customer
satisfaction.
» Used WhatsApp, USSD and the MyOldMutual web-based platform to process more than 53 000
claims (2021: 65 000) in South Africa. Although the volume of overall claims processed reduced year
on year, the percentage of processes on web-based platforms is in line with 2021.
» Expanded the rollout of the MyOldMutual app to East and West Africa and Zimbabwe. Customers are
able to register, view their portfolio and product offerings, request a call-me-back and submit the first
notification of loss to make a claim.
» Expanded the rollout of non-app-based channels across our African regions. Customers can now
interact with us using USSD in Nigeria and WhatsApp in Kenya, Uganda and Rwanda.
Strategic KPIs
Net promoter score (%)
Digital life APE1 sales (Rm)2
Deliver superior brand equity through retail proposition marketing in South
Africa
2022
67
2021
70
2020
60
2022
315
2021
310
2020
134
Drive the integration of digital marketing and e-commerce across all marketing
initiatives
1 Standardised measure of the value of new life
insurance business underwritten
2 Digital sales figures are for South Africa only
Grow adviser and franchise footprint across select South African segments
Strengthen Old Mutual brand equity in East Africa by rebranding UAP to Old
Mutual
1
2
3
4
Lake Bunyonyi, Uganda – Coordinates 1.2953° S, 29.9133° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Always present first
Building brand equity in East Africa
A significant milestone in 2022 was the rebranding of our Rwandan and Kenyan businesses
to Old Mutual. This was a culmination of a multi-year process that started in 2015 when Old
Mutual acquired a controlling stake in UAP Holdings (broader East Africa) and Faulu (Kenya).
The rebranding of Uganda is the next focus.
Following these acquisitions, we aimed to migrate the East African brands to Old Mutual in two
stages: a dual brand (UAP-Old Mutual) in 2017, followed by a single brand. A one-brand strategy
across the region allows us to leverage our heritage and brand power to become a source of
growth across East Africa.
Benefits of the rebrand
Reignite staff and
intermediary passion in
the business
Strengthen our
relationships with
customers
Grow the business
through the strength of
the parent brand
Digitally enabling our intermediaries
Face-to-face distribution is our primary channel for advice-led sales and represents the tangible
experience of the trust the Old Mutual brand is known for. Our intermediaries are an important
element of our internal ecosystem. By investing in the digitalisation of the intermediary
proposition, we aim to make it easier for them to do business with us and, by extension, be better
equipped to serve our customers.
We defined the digital adviser experience to give customers a future-fit experience while
delivering quality and service improvements for our advisers. New functionality developed
include digital leads and campaign management, an improved 360-degree view of the
customer, the delivery of customer insights via new digital channels and enhanced servicing
capabilities via web and mobile-based applications.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Rewarding digital engagement
What we aim for
Delivering a meaningful and personalised customer experience integrated across digital and
face-to-face mediums through the MyOldMutual platform.
Our goal is to convert our customer base to multi-product consumers by effectively leveraging
advice and customer data, supported by meaningful incentive structures.
How do we deliver this
We will convert our understanding of our customers’ goals and circumstances to provide
personalised, regular and meaningful engagement. We do this by educating, encouraging and
rewarding customers for taking consistent action towards achieving their personal financial
goals.
At the centre of this intent is MyOldMutual, a pan-African digital platform aiming to deliver a
seamless and integrated customer experience across our full suite of capabilities. This includes
financial advice, financial education, rewards, data-driven nudges and a full suite of modular
products. This will enable us to offer customers the right solutions at the right time, helping
them to reach their financial goals.
What we achieved
» Increased active digital users by 9% to 1.2 million users (2021: 1.1 million).
» Continued growth in our rewards programme with a 38% increase to 1.8 million members
(2021: 1.3 million).
» Expanded functionality on the MyOldMutual app by integrating the rewards programme onto the
platform. We also enhanced the redemption functionality, with customers now able to redeem their
points using WhatsApp.
Strategic KPIs
Active digital users (’000)
Old Mutual Rewards membership (’000)
2022
1 200
2021
1 100
2020
858
2022
1 800
2021
1 300
2020
830
Our medium-term priorities
1
2
3
Increase active digital customers by at least 40% and deliver a converged digital
experience through the MyOldMutual platform
Enhance Old Mutual Rewards, including new features, personalisation and
integration into the MyOldMutual platform, as well as the rollout of Old Mutual
Rewards across selected African countries
Accelerate the rollout of the automated goal-matching capability to South
African customers and advisers
Banana Bridge, Woodstock Dam, KwaZulu-Natal, South Africa – Coordinates 28.7600° S, 29.2458° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Rewarding digital engagement
Old Mutual Rewards
Apart from incentivising good financial behaviour,
the Old Mutual Rewards programme aims to reward
customers for meeting more of their financial needs
with Old Mutual. This helps us get closer to becoming
their lifetime financial partner of choice. Membership
numbers reached 1.8 million in 2022, with 1.4 million
of these being Old Mutual customers. Customers who
are members of Old Mutual Rewards have 35% higher
average needs met (2021: 30%) and take out products
for additional financial needs at twice the rate of non-
members. Our efforts to enhance the programme
were also recognised in the loyalty industry, and the
programme was commended in three categories
at the 2022 South African Loyalty Awards for Best
Loyalty Programme of the year – Financial Services,
Best Short-Term Loyalty Marketing Campaign and
Best Long-Term Loyalty Programme.
We introduced the following functionality and
feature enhancements in 2022:
» Members have the option of completing a
fitness assessment with a biokineticist to earn
fitness bonus points. This was introduced as an
alternative to taking part in qualifying endurance
activities at least every six months.
» We integrated additional functionality into the
MyOldMutual app. This included programme
sign-up and activities for earning points.
» We introduced the redemption of points via
WhatsApp.
» We launched several enhancements to better
integrate the Old Mutual Rewards-Old Mutual Protect
ecosystem. Customers purchasing Old Mutual Protect solutions can now easily sign up to
the rewards programme as part of their policy application process. Members can also earn
up to 500% in rewards points of their premium on qualifying Old Mutual Protect solutions,
including health bonus points.
Our migration to cloud-based technology
Given the rapid technological advancements brought about by the Fourth Industrial Revolution,
we started migrating our core technology infrastructure in South Africa to the cloud in 2019. This
was an important strategic choice to transform our business into a fully digitalised enterprise and
secure our long-term competitive advantage. The shift to cloud-based technologies also enables
us to create an environment where our customers, employees and intermediaries feel secure
and supported with innovative technology tailored to their needs. This technology is also the
foundation of our MyOldMutual platform and ensures that we can deliver flexible, responsive and
scalable solutions for customers and advisers alike.
At the end of 2020, only 15% of our South African legacy technology estate was cloud based. By the
end of 2022, we successfully completed 95% of the migration with the remaining items scheduled
for completion in the first quarter of 2023.
The migration delivers benefits to a broad range of stakeholders:
1.
Improved speed of execution, which has seen a significant reduction in the lead time to deploy
new solutions and systems. In the past, these activities could take up to six months or more
to deploy. In the new environment, we are able to execute in a matter of weeks. This means
our customers and advisers benefit from rapid, continuous improvement in their sales and
servicing experience with us.
Enhanced shareholder and customer value through greater operating efficiencies and
competitive pricing, brought about by lower infrastructure costs.
Enhanced the employee experience through the integration of Workday, our human capital
technology platform.
2.
3.
For more information on our technology operating context refer to page 26
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Engaged employees
What we aim for
We aim to create an environment where our employees find a deep sense of connection and
meaning in our purpose and victory condition, as demonstrated by their relentless focus on
delivering meaningful customer experiences at every stage of the customer journey.
We believe agile delivery driven by engaged employees yields meaningful customer
experiences. We strive to unlock the potential, passion and drive of our employees by creating
meaningful experiences for them. We want our employees to feel empowered and motivated to
be part of an organisation that rewards and recognises high performance.
How do we deliver this
Our people strategy focuses on building a future-fit transformed workforce, culture and
employee experience that enable the business to respond effectively to rapidly changing
customer needs.
In building this workforce, we are creating an environment that embraces new ways of working
and developing the capabilities needed to gear the business for growth. This will be supported
by driving the requisite culture shifts to create an agile and execution-focused organisation. We
will also ensure our employee experience, including our employee value proposition, remains
compelling to attract and retain key talent.
Our medium-term priorities
Implement an agile operating model and ways of working to improve speed to
market and efficiencies
Enable a future-fit workforce by investing in future skills development
Enhance our employee value proposition to attract, engage and retain top talent
1
2
3
4
What we achieved
» Decreased our score in the employee engagement dimension of our culture index score to 4.42 (2021:
4.54). The reduction is a function of the high work effort that employees continue to demonstrate
in the face of low energy levels, which is negatively impacting engagement levels. Our score in the
psychological safety dimension reduced to 4.37 (2021: 4.50). This was driven by the negative impact of
the implementation of mandatory vaccination and hybrid working model policies on the employee
experience.
» Invested R176.4 million (2021: R82 million) in learning and leadership development initiatives to
support emerging talent, employee reskilling and upskilling and future-fitting our leaders.
» Trained 372 (2021: 335) intermediaries through the Celestis Academy.
» Completed more than 4 425 (2021: 1 778) agile training courses across the organisation, supporting
our transition to agile ways of working.
» Progressed the diversity, equity and inclusion agenda through Bula Tsela – our B-BBEE Scheme –
including issuing 78.1 million shares to all qualifying employees, with a tilt to black African employees.
The objectives of the Employee Scheme include providing an opportunity for employees to share in
the success of Old Mutual by becoming shareholders in the business and driving its performance.
» Launched our True Connectors Leadership Signature to progress our culture journey by defining the
behaviours we expect our leaders to role model to drive the required culture shifts.
Strategic KPIs
Culture index score (out of 6)
Skills development spend (Rm)
Employee
engagement
Psychological
safety
4.42
4.54
4.37
4.50
2022
2021
2022
176
2021
2020
82
89
Establish a diverse and inclusive workforce in all countries we operate in
Chale Island, Kenya – Coordinates 4.4450° S, 39.5349° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Engaged employees
Equipping ourselves to become our customers’ first choice
To successfully deliver on our victory condition, we continuously review how we attract and retain talent. This includes providing meaningful work to our employees, building an inclusive, psychologically safe and
delivery-focused culture, growing and developing our talent and providing a holistic wellbeing offering. We recognise that a multi-faceted approach is required as no single solution is going to effectively retain a
productive and engaged workforce.
Transitioning to a hybrid way of work
At the beginning of 2022, we implemented a hybrid working model, requiring employees to be
in the office for two days per week. The transition was supported by a set of guardrails, focusing
on information technology and home office enablement, office readiness, training of line
managers and employees to lead in the hybrid model, wellbeing support, change management
and employee experience tracking.
As part of our commitment to delivering an
optimal employee experience, we relaunched
our employee wellbeing programme,
#BeWELL.
The programme aims to get employees to focus on their
wellbeing in a holistic way. All wellness-related content is
now accessible through a single, online health and wellness hub that provides employees with
tools, advice and events to support them across all aspects of wellbeing (emotional, physical and
mental). Wellbeing was also introduced as part of the onboarding process for new employees.
Building a culture that delivers results
Culture transformation is a complex journey that takes time. While we have made significant
progress on our culture transformation journey, our long-term business strategy amplifies the
need to respond to customers’ changing needs at pace.
Our culture transformation begins with changing how leaders lead, behave and make decisions
in the organisation that support our cultural aspirations. To date, our culture transformation
journey focused on building and role modelling inclusive leadership. This started with shifting
the mindsets and behaviours of executive teams aligned to the desired culture end-state and
cascading this into the next layers of the business. Executive intact team culture workshops are
used to build highly aligned and effective leadership teams by fostering trust, psychological
safety and cohesive relationships.
We also defined a set of leadership behaviours, referred to as the True Connectors Leadership
Signature. This aims to create a shared understanding across the business of what is expected
from leaders and employees alike to achieve our cultural aspiration.
Talent management
We offer talent development and retention programmes aimed at accelerating growth for those
who demonstrate the potential to grow in our organisation. Our programmes are designed
to target employees at various levels of leadership, from junior management to executive
management. Our talent retention initiatives include providing individuals with access to
executive coaches and meaningful exposure through secondment opportunities across the
Group. We specifically emphasise developing high-potential female leaders by running a
custom-designed programme called UnleashHer. The programme aims to advance women to
the next level in their careers by helping them identify and address specific obstacles to their
development progress. One of the desired outcomes of the programme is to improve diversity
by building a strong internal pipeline of female talent.
For more information on our approach to skills and talent development refer to our Sustainability
Report
Guides leaders on how to build their
teams by creating an environment
where everyone can thrive, contribute
and learn from each other to give of
their best.
Challenges leaders to rethink the way
work is done and how we operate so
that we can execute and deliver with
speed.
Guides leaders around putting the
customer at the heart of everything
we do to ensure we deliver the best
customer experience that will allow us
to become our customers’ first choice.
Focuses on leaders using our
business strategy to guide their
actions and decisions to drive
business value for us in the market.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Solutions that lead
What we aim for
Delivering solutions that lead in service and performance, for insurance, investments and
supporting banking needs.
Customers will be able to meet all their primary financial services needs with us.
What we achieved
» Continued growth in sales of our new Old Mutual Protect risk offering, reaching over 1.6 million active
policies (2021: 1.1 million)
» Expanded our solutions for our mass market customers by providing simplified risk solutions at scale,
and by expanding into funeral services in South Africa, Zimbabwe and Malawi
» Enhanced our offerings for SMEs by upgrading our SMEgo funding portal and acquiring a 30% stake
in Preference Capital, a specialist SME lender. This expands our capability to address the funding gap
in the market for SMEs.
How do we deliver this
For solutions where we are already competitive and market leading, we will focus on enhancing
their flexibility and ease of use. We continuously improve solutions and launch innovative
and refreshed propositions. These propositions will enable key shifts our customers require,
including customised solutions and the best advice delivered through a seamless experience.
Strategic KPIs
Old Mutual Protect Life APE sales1 (Rm)
Our medium-term priorities
2022
1 854
2021
1 645
2020
300
1
2
3
Enhance the Old Mutual Protect proposition through granular pricing and the
introduction of new benefits
1 Standardised measure of the value of new life
insurance business underwritten
Launch new flexible and modular solutions, such as the new savings and income
proposition, by utilising the new core technology infrastructure
Accelerate growth in transactional banking
Kruger National Park, Mpumalanga, South Africa – Coordinates 24.9908° S, 31.5968° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Solutions that lead
Enhancing the Old Mutual Protect adviser experience
Following the launch of Old Mutual Protect in 2020, one of the challenges our advisers encountered was
that they were straddling two co-existing systems. Their propositions were mainly split via our heritage/
old generation propositions and the new Old Mutual Protect proposition. This led to frustration around
systems and processes, which ultimately negatively impacted the adviser experience. One of our priority
focus areas in 2022 was to improve the adviser and service experience. Initiatives put in place include the
Prestige Service Model for selected advisers and a Fastlane service across key customer moments of truth.
The Prestige Service Model offers advisers a single entry point for servicing across all work processes,
making it easier to access the support they need. It also includes a dedicated relationship manager and
underwriter to deliver personalised service across all our Personal Finance (South Africa) products and
service processes.
Following the enhancements, we experienced increased sales volumes and adviser usage because of the
optimised functionality. In Q3 2022, we recorded our highest sales month since we first launched in 2020.
By the end of the year, we had over 1.6 million active policies. The adviser Net Effort Score also improved to
76% by the end of the year.
The Fastlane service was launched for both advisers and customers to offer them the best experience for
key ‘moments of truth’, such as disinvestments. The service aims to minimise the friction points in their
journeys by, firstly, removing complexity and clutter in our servicing processes and, secondly, setting up
our servicing teams optimally to ensure ownership and delivery at speed.
Expanding our alternative investments capability in East Africa
Our investments business in Kenya (Old Mutual Investment Group Kenya) expanded its offering for
pension schemes and launched an alternative investment capability, which includes non-traditional asset
classes such as private equity, agri and venture capital. This will allow pension schemes to diversify their
investment portfolios while targeting attractive risk-adjusted returns. Apart from presenting attractive
long-term investment opportunities, alternative investments have the added benefit of delivering tangible
societal impact and contributing to the country’s growth and development agenda. By driving greater
investment in sectors such as agriculture, infrastructure, sustainable energy, health care and education, we
are able to stimulate economic growth to the benefit of our customers, communities and investors.
Mombasa, Kenya – Coordinates 4.0435° S, 39.6682° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
GROUP FINANCIAL
GROUP FINANCIAL
PERFORMANCE
PERFORMANCE
1st
insurer in South
Africa to join the
Net Zero Asset
Owner Alliance
R146
billion of our
funds under
management
invested in the
green
economy
DID YOU KNOW
In 2022 Old Mutual was one of the first asset owners in Africa to
become a member of the UN-convened Net Zero Asset Owner
Alliance, an international group of 70 like-minded institutional
investors with the ambition to drive global delivery of net zero
greenhouse gas emissions by 2050.
We are committed to becoming an active player in the sustainability
space, by strengthening our efforts to transition our proprietary
investment portfolios to net zero greenhouse gas emissions by 2050.
We support worldwide efforts to limit global warming to 1.5°C above
pre-industrial levels, as set by the Paris Agreement.
61
Perdekraal East Wind Farm, Witzenberg, Western cape, South Africa – Coordinates 33.0560° S, 20.1094° E
Integrated Report 2022 PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Group highlights
Casper Troskie
Chief Financial Officer
Our key management
actions that were
implemented in the past
few years are starting
to bear fruit despite the
very difficult economic
backdrop. We have
seen continued positive
momentum in our
core operations, with
key metrics relating to
earnings and capital
improving, while some
value metrics were
impacted by lower
market returns and
economic pressures.
I
I
W
E
V
E
R
L
A
C
N
A
N
I
F
P
U
O
R
G
Key performance indicators
Rm (unless otherwise stated)
Results from operations
Adjusted headline earnings
Headline earnings1
IFRS profit after tax attributable to equity holders of the parent1
Return on net asset value (%)
Group equity value
Discretionary capital (Rbn)2
Group solvency ratio (%)1
Dividend cover
Per share measures3
Adjusted headline earnings per share4
Headline earnings per share1
Basic earnings per share1
Total dividend per share
Interim
Final
Group equity value per share5
2022
8 743
6 371
7 948
7 325
11.1%
89 398
3.5
190%
1.73
2022
139.8
180.1
166.0
76
25
51
1 819.3
2021
4 384
5 402
7 209
6 662
9.0%
91 993
–
184%
1.51
2021
118.5
163.8
151.3
76
25
51
1 952.2
Change
99%
18%
10%
10%
210 bps
(3%)
–
600 bps
15%
Change
18%
10%
10%
0%
0%
0%
(7%)
1 These metrics include the results of Zimbabwe. All other key performance indicators exclude Zimbabwe
2 Discretionary capital was externally disclosed from September 2022 at R3.5 billion
3 Per share measures can be found on page 42 of audited Group annual financial statements
4 Adjusted headline earnings is calculated with reference to adjusted weighted average number of ordinary shares. Weighted average number of shares used in the
calculation of the adjusted headline earnings per share is 4 557 million (2021: 4 558 million)
5 Group equity value is calculated with reference to closing number of ordinary shares. Closing number of shares used in the calculation of the Group equity per share is
4 914 million (2021: 4 709 million)
Supplementary performance indicators
Rm (unless otherwise stated)
2022
2021
Change
Life and Savings and Asset Management
Gross flows
Net client cash flow
Funds under management (Rbn)
Life and Savings
Life APE sales
Value of new business
Value of new business margin (%)
Banking and Lending
Loans and advances
Net lending margin (%)
Property and Casualty
Gross written premiums
Net underwriting margin (%)
I
S
W
E
V
E
R
T
N
E
M
G
E
S
178 027
(12 425)
1 228.9
12 501
1 465
2.2%
19 009
13.4%
22 344
0.5%
194 757
92
1 273.6
11 400
1 266
1.9%
18 907
16.4%
19 982
1.6%
(9%)
(>100%)
(4%)
10%
16%
30 bps
1%
(300 bps)
12%
(110 bps)
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Impact on comparability of results
Nedbank unbundling
In November 2021, the Group unbundled 12.2% of its 19.4% stake in Nedbank by way of a distribution
in specie. The unbundling was in the best interests of shareholders and it allowed shareholders to
participate directly in the investment cases of both businesses while also returning capital to
shareholders. The table below re-presents the prior year metrics to show the movement in these
metrics on a comparable basis.
Adjusted headline earnings (Rm)
Return on net asset value (%)
Total dividend per share (cents)
Interim dividend per share (cents)
Final dividend per share (cents)
2022
6 371
11.1%
76
25
51
20211
4 756
8.7%
67
20
47
Change
34%
240 bps
13%
25%
9%
1 Metrics have been re-presented excluding the distributed stake of 12.2% in Nedbank of R646 million
COVID-19
The volatility in our operating earnings caused by the pandemic over the last two years has stabilised in
the current year as the ongoing impact of the pandemic became muted.
In the current year, our life profits benefited from lower mortality as the effects of COVID-19 eased. All
remaining COVID-19 provisions were released but the impact was mostly offset by the strengthening of
our mortality basis to allow for endemic COVID-19 claims, and worsened persistency as the challenging
economic conditions continue to impact our retail customers.
Building a transactional capability
The Group has received Section 13 approval from the Prudential Authority to proceed with the
application for a banking license. The establishment of an entity in the Group with a banking licence is
a natural progression of our core strategy, helping us to sustain our customers’ prosperity through an
enhanced transactional banking capability. This will allow us to hold the primary relationship with our
customers, driving greater regular interaction with them and enhancing the cross-sell opportunity
across the Group. It will also enable the Group to accept retail deposits, thereby providing a more
efficient source of funding.
The approved expenditure to complete the build of the transactional capability is R1.75 billion. In line
with the business case, to date we have incurred costs of R1 billion and approximately 20% of these costs
were capitalised. Once relevant Prudential Authority approvals are received, the launch is targeted for
the second half of 2024. The entity is expected to breakeven three years after the launch. As the
capability matures post-breakeven, the return is expected to be significantly above the target return of
4% in excess of the cost of equity. We are currently working on our application under Section 16 of the
Banks Act for the registration of the bank.
IFRS 17
IFRS 17 will not change the underlying fundamentals of our insurance business, our cash generation or
our capital strength, it will significantly change how we report on our insurance business. The Group
estimates that the impact of initial application of IFRS 17 on the consolidated financial statements will
be between R3 750 million to R4 500 million decrease to the Group’s total equity at 1 January 2022, net
of adjustments relating to consequential amendments to other IFRS. This range has been determined
in line with the principles underlying the use of ranges in trading statements as per the JSE Listings
Requirements. Total equity as at 31 December 2021 under IFRS 4 was R65 301 million. The increase in
liabilities that results in the decrease in total equity is not material relative to the size of the total IFRS 17
liabilities (less than 1% change).
The impact on Group equity resulting from transition to IFRS 17 arises due to the different requirements
of IFRS 17 compared to the accounting policies and actuarial methodologies used under IFRS 4. The
differences include the removal of compulsory and discretionary margins that were required or allowed
under IFRS 4 but not under IFRS 17, offset by the requirement to set up a contractual service margin
and risk adjustment under IFRS 17. The contractual service margin and risk adjustment will be released
into profit over time as service is provided and as risk expires, respectively.
The various portfolios of business in the Group are impacted differently by the transition to IFRS 17. The
majority of the Group impact arises from OMLACSA. The impacts for the other Group entities are less
material. The most material impact observed is for the Mass and Foundation Cluster risk portfolio
where liabilities increase on transition to IFRS 17. IFRS 4 required the set-up of material lapse margins
associated with expected higher levels of lapses at early durations for this portfolio. These margins were
then released into profit at early durations under IFRS 4 as the high early lapse risk expired. Under
IFRS 17, the contractual service margin is released more slowly as the service is provided. This, together
with a history of favourable basis changes following management and other interventions that increase
the contractual service margin under IFRS 17, rather than directly impacting profit as was the case
under IFRS 4, resulting in an increase in liabilities which will be released over time into profit.
Transition
Contractual service margin (CSM)
Prudent
margins
CSM
Equity
Equity
R3.8bn to
R4.5bn
IFRS 4
IFRS 17
Change in
timing not
value –
Reduction in
transition
equity offset
by CSM (stored
future profits)
and risk
adjustment
which are
released into
profit over time
Largely deferred
to CSM
Release of ‘stored’
CSM profits
Opening
CSM
Assumption
changes
Interest
accreted
on CSM
New
business
CSM
Closing
CSM
Released
into
operating
profit
63
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Supplementary income statement
Rm
Mass and Foundation Cluster
Personal Finance and Wealth Management
Old Mutual Investments
Old Mutual Corporate
Old Mutual Insure
Old Mutual Africa Regions
Net result from group activities1
Results from operations
Shareholder investment return
Finance costs
(Loss)/income from associates2
Adjusted headline earnings before tax and
non-controlling interests
Shareholder tax3
Non-controlling interests
Adjusted headline earnings
Note
A
B
C
2022
2 442
3 217
1 240
1 978
495
842
(1 471)
8 743
1 468
(662)
(53)
9 496
(2 866)
(259)
6 371
2021
2 752
448
1 109
727
543
(391)
(804)
4 384
2 726
(543)
1 252
7 819
(2 088)
(329)
5 402
Change
(11%)
>100%
12%
>100%
(9%)
>100%
(83%)
99%
(46%)
(22%)
(>100%)
21%
(37%)
21%
18%
1 The name of this operational segment has changed from ‘net expenses from central functions’ to ‘net result from
Group activities’ to better reflect the nature of income and expense items reported in this segment
2 Reflects our share of loss related to our investment in China. Comparatives include our share of earnings in our
investment in Nedbank pre-unbundling
3 Shareholder tax increased on the back of improved profits and excluding Nedbank in our income from associates
line, the effective tax rate is in line with the movement in profits
Reconciliation of adjusted headline earnings to IFRS profit
after tax
Rm
Note
2022
2021
Change
Adjusted headline earnings
Impact of Group equity and debt instruments1
Impact of restructuring
Operations in hyperinflationary economies
Residual plc
Headline earnings
Impairment of goodwill, other intangible assets
and property
Remeasurement of non-current assets held for sale and
distribution
Reversal of impairment of investments in associated
undertakings
Loss on disposal of subsidiaries and associated
undertakings
IFRS profit after tax attributable to ordinary equity
holders of the parent
D
E
F
G
6 371
422
(152)
1 134
173
7 948
5 402
(190)
(1 482)
3 489
(10)
7 209
(492)
(552)
—
—
4
37
18%
>100%
90%
(67%)
>100%
10%
11%
(>100%)
(>100%)
H
(131)
(36)
(>100%)
7 325
6 662
10%
1 IFRS does not allow for the recognition of investment returns and other impacts related to Group equity and debt
instruments held by life policyholder funds, however, these impacts are recognised in the valuation of the related
policyholder liabilities. This creates a mismatch in IFRS, which is eliminated in adjusted headline earnings. The
movement was mainly a function of the fair value movement for the period
A Net result from group activities1
Rm
Shareholder operational costs
Interest and other income
Net treasury (loss)/gain
New growth and innovation initiatives
Transactional capabilities
NEXT176
2022
(1 116)
367
(9)
(713)
(601)
(112)
2021
(880)
183
88
(195)
(179)
(16)
Change
(27%)
>100%
(>100%)
(>100%)
(>100%)
(>100%)
Net result from group activities
(1 471)
(804)
(83%)
1 The composition of the shareholder operational costs and net treasury (loss)/gain was revised. Comparatives were
re-presented to reflect this change
The loss on net result from group activities of R1 471 million increased by 83%. The increase in
shareholder operational costs was primarily due to an increase in employee related costs following
increased variable pay and inflationary increases as well as an increase in project costs, including IFRS 17.
The increase in interest and other income was largely driven by higher interest income earned on cash
balances, and favourable fair value movements. The negative mark-to-market movements on assets
relative to the liabilities on the post-retirement medical aid obligation resulted in the net treasury loss.
The increase in new growth and innovation initiatives reflects further investments in NEXT176 and the
building of our transactional capabilities.
B Shareholder investment return
Rm
South Africa
Old Mutual Africa Regions
Shareholder investment return
2022
741
727
1 468
2021
1 931
795
2 726
Change
(62%)
(9%)
(46%)
Shareholder investment returns for the Group of R1 468 million decreased by 46% largely due to market
volatility experienced across most asset classes over the year. The difficult global and local
macroeconomic environment provided a challenging backdrop for investment markets. The South
African asset base reduced, contributing to the lower shareholder investment returns earned. Despite
the volatile investment environment, the shareholder investment strategy continued to meet the
primary objective of protecting and preserving shareholder capital.
South African interest-bearing assets earned a 5.5% return for the year representing a 0.3%
outperformance of the STeFI Composite Index. This outperformance was due to various enhancements
and cash optimisations executed within the portfolio.
The local bond portfolio returned 4.4% for the year, marginally outperforming the Government Bond
Index by 0.2%. The local bond portfolio benefited from favourable positioning across the bond curve
relative to the index.
The South African listed protected equity portfolio (excluding Nedbank) returned 4.3% for the year. Over
the same period, the Capped SWIX 40 Index returned 6.5%, driven by a strong rally in equity markets
in the fourth quarter of the year. By year end, the portfolio was fully transitioned from the SWIX 40 Index
to the Capped SWIX 40 Index, with the Capped SWIX 40 Index outperforming the SWIX 40 Index by 1.9%
for the year.
64
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Supplementary income statement continued
The hedging strategies on the protected equity portfolio, excluding Nedbank, are executed in the form
of zero cost collars whereby the exposure to losses is limited to 0% to 15% of the investment value, while
the underlying equities track the Capped SWIX 40 Index. Although the underlying equity holdings
passively track the market index, the overall equity strategy protects against downside losses via a
hedging overlay structure and is therefore expected to underperform in rapidly rising markets. As the
local protected equity strategy is used primarily to reduce capital losses it incurs an opportunity cost to
ensure this level of protection. The Protected Equity portfolio targets on average 50% to 60% of overall
market performance. Thus in 2022, given the market returns of 6.5% this translates to a targeted return
of 3.3%-3.9% with our portfolio outperforming the target by yielding a 4.3% return. The investment
performance on the protected equity strategy is also limited to the cap levels, which are determined at
the onset when entering into the various hedging strategies over the year.
The Nedbank investment is similarly fully hedged using a collar structure with a protective downside
floor limiting losses to between 2%-5% of the initial starting price, and an associated ceiling, that limits
the upside gains to between 105%-112%. As the collar structure unwinds, the proceeds will be reinvested
in accordance with the Group’s Strategic Asset Allocation Framework. For the year, the Nedbank
holding returned 9.1% primarily due to an increase in the Nedbank share price relative to the prior year.
All unhedged Nedbank holdings were disposed during the first half of the year. The remaining stake in
Nedbank is 3.56% at the end of the year.
The unlisted equity portfolio returned negative 10.3% for the year. This was primarily due to impairment
losses experienced on a subset of assets in the portfolio including legacy agriculture investments. The
agriculture sector has been negatively impacted by geopolitical tensions, rising input costs and a
constrained trading environment.
Shareholder investment returns in the Old Mutual Africa Regions of R727 million decreased by 9%. This
was primarily driven by lower investment returns in East Africa and Namibia, as well as impairment
losses in Ghana. In East Africa, fair value losses on fixed income securities, equity and property were a
major contributor to the decrease in returns. Namibia’s investment returns reduced due to a decline in
equity markets relative to the prior period. This was partially offset by higher fair value gains in Malawi
resulting from a rally in local equity markets as well as an increase in interest income in Nigeria. The
increase in interest income in Nigeria is attributable to a rise in interest rates and a higher average asset
base as equity investments were transitioned to interest-bearing assets over the year.
C Finance costs
Finance costs on the long-term debt that supports the capital structure of the Group increased by 22%
to R662 million. This was largely driven by the significant interest rate increases and issuance of
additional floating rate subordinated debt instruments. OMLACSA issued R1.6 billion of floating rate
subordinated debt instruments and redeemed R977 million of subordinated debt instruments in 2022.
D Impact of restructuring
In the current year, the restructuring line includes one-off costs related to the Bula Tsela B-BBEE
ownership transaction, which was implemented in November 2022.
In East Africa, the remaining at-acquisition provisions relating to UAP Holdings were released in the
fourth quarter of the year following the completion of the balance sheet substantiation project. The
release of the provisions has been excluded from adjusted headline earnings as it does not represent
the operating activity of the Group and is not expected to persist in the long term.
In the prior year, the restructuring line included costs mostly relating to the Nedbank unbundling, with
R1.1 billion deferred tax raised on the total stake at 30 June 2021. For the distributed stake, the difference
between the carrying value under IFRS 5 and the tax base of the investment was a taxable difference in
terms of IAS 12, resulting in a tax liability of R731 million at the capital gains tax rate. This amount was
reclassified from deferred tax to a current tax liability upon recognition of the held for distribution
liability and was settled prior to 31 December 2021.
E Operations in hyperinflationary economies
Due to hyperinflation in Zimbabwe and barriers to access capital by way of dividends, we continue to
exclude the results of the Zimbabwe business from adjusted headline earnings.
Profits in Zimbabwe continue to be driven by investment returns earned on the Group’s shareholder
portfolio and volatile currency movements. The decline in Zimbabwe earnings was largely driven by the
deterioration of Zimbabwean dollar to the rand and the lower investment returns on equities traded on
the Zimbabwe Stock Exchange relative to the prior year.
The Zimbabwe Stock Exchange generated returns of 80% during the year compared to 311% reported in
the prior year as market participants seek to invest in equities which preserve value in an inflationary
environment. At 31 December 2022, the year-on-year inflation rate for Zimbabwe was reported at 244%.
We caution users of our financial results that markets remain volatile and there is a risk of returns
reversing in the future.
F Residual plc
Residual plc reported a profit of R173 million, a significant increase compared to the prior year. This was
primarily driven by positive foreign exchange movements recognised on US dollar-denominated cash
balances following the weakening of the rand in 2022. Staff costs were lower than the prior year due to
the continued winding down of the remaining operations.
G Property and intangible asset impairments
Impairments recognised in the current year relate mainly to write downs in respect of our offices, to
ensure alignment of the property value with prevailing market conditions. In East Africa, the UAP Old
Mutual brand was impaired after the business rebranded as Old Mutual during the year.
H Disposal of subsidiaries and associated undertakings
The loss on disposal of subsidiaries relates mainly to the disposal of the Group’s investment in Old
Mutual International (Guernsey) to Northstar Group (Bermuda) Limited during the year, in line with
strategy to simplify the Group structure.
65
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Management of the Group’s balance sheet
Shareholder capital management
Overview
The Group proactively manages its balance sheet to maximise shareholder value. This is achieved
through various frameworks and initiatives that drive capital optimisation and efficient capital
allocation, combined with sophisticated financial risk management and the optimal allocation of
shareholder funds. The Group also actively manages the returns and related capital of guaranteed
products. This ensures optimal allocation of scarce resources (capital and funding) in line with the
Group’s business strategy and risk appetite.
Solvency risk management
The Group solvency position remained strong at 190% for the current year, within the solvency target of
170% to 200%. Capital is allocated within the Group based on subsidiary risk profiles, the requirements of
relevant regulators, competitor and customer considerations, and return on capital targets. All entity
solvency positions are monitored on a regular basis to ensure they are appropriately capitalised. The
largest insurer in the Group, OMLACSA solvency position was above the solvency target range of 175% to
210%, at 214% as at 31 December 2022.
Discretionary capital
The Group manages its discretionary capital by optimising the balance sheet and allocation of capital
within the Group. Discretionary capital represents the surplus assets that are available for distribution,
deployment and/or acquisitions. The discretionary capital balance includes amounts earmarked for
investments in growth and innovation initiatives including building our transactional capabilities. The
Group’s discretionary capital balance as at 31 December 2022 was R3.5 billion.
Capital optimisation
The Group continues to optimise its capital structure to enhance value for shareholders. The cash flow
optimisation in Old Mutual Investments resulted in a capital release to the Group, which improved
return on capital for the segment and discretionary capital for the Group. The Residual plc board
declared a dividend, which was paid to the Group in December 2022. The dividend increased the
discretionary capital for the Group. The Group will continue to identify opportunities to optimise its
balance sheet.
Capital allocation
The Group’s strategy is supported by financial metrics and targets that drive shareholder value. These
targets and metrics are embedded in all significant business decisions, including the annual business
planning process and in the assessment of inorganic growth opportunities. Any new opportunities are
further appraised against our Group acquisition framework. During the year, the largest portions of
capital were allocated to Mass and Foundation Cluster and Personal Finance and Wealth Management
to support new business and growth in the in-force book. These segments contribute the majority
of Group earnings.
During the year, the Group successfully concluded the following strategic
acquisitions and disposals:
The acquisition of a 51% equity interest in ONE Financial Services,
which writes short-term insurance via a cell captive
An agreement was reached with Letsema Brokerage Solutions to create
a new majority Black-owned joint venture, which will be aimed at
acquiring small to medium-sized brokerages and administrators in
the short-term insurance industry
The acquisition of an equity interest in Preference Capital, a leading local
provider of SME finance and foreign exchange solutions. The deal comprises a
30% equity investment and the provision of funding to the business
for on-lending to small and medium businesses
The acquisition of a 51% equity interest in a general insurance
administrator, Versma Administrators and Primak Brokerage
The acquisition of the remaining 25% interest in Old Mutual Finance
(RF) (Pty) Ltd resulting in Old Mutual Finance becoming a wholly owned
subsidiary of the Group
The sale of 21.2% of Futuregrowth to African Women Chartered
Accountants Investment Holdings. This has allowed Futuregrowth and
Old Mutual Investment Group to move towards becoming majority black
owned
The sale of a Guernsey based life insurance closed book of business,
inherited from Managed Separation
In early 2023, we completed the acquisition of a 100% equity interest in
Genric Insurance Company Limited, a licensed non-life insurer and
specialist insurer focused on bringing innovative and niche insurance
solutions to the market. We also acquired the remaining 25% interest in
Old Mutual Finance (Namibia) Proprietary Limited
The Bula Tsela B-BBEE ownership transaction was approved at the General Meeting held on 12 August
2022 and implemented in 2022. This transaction was implemented to fulfil our commitment to reach a
30% B-BBEE ownership level by June 2023.
66
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Management of the Group’s balance sheet continued
Shareholder investments
The Group manages its shareholder assets in accordance with the Strategic Asset Allocation Framework
which aligns to the Group Financial Management Framework. The Strategic Asset Allocation
Framework prescribes a low-risk investment strategy for shareholder invested assets aimed at
protecting and preserving shareholder capital. The investment strategy targets an asset allocation that
maximises net of tax expected returns subject to a defined market risk budget and the Group’s liquidity
and solvency requirements.
Shareholder liquidity risk management
The Group’s liquidity is managed centrally and ensures that sufficient liquidity is available to withstand
severe market stresses; all subsidiaries carry sufficient liquidity to support their respective business
activities. The Group’s liquidity position remained robust and within target ranges throughout the year
and remains sufficient to cover the Group’s modelled stress scenarios. Liquidity sources consist of liquid
assets and Group contingency facilities. The Group continuously aims to enhance the modelling that
results in optimising the management of liquidity and reducing related costs.
In South Africa, we mainly target a combination of protected equity and interest-bearing assets
(including a small allocation to bonds). During the year, we disposed of a number of our unlisted assets,
resulting in a significantly smaller allocation to unlisted equity assets which are deemed to be strategic
in nature. Post unbundling in November 2021, the retained Nedbank stake is recognised as part of
shareholder invested assets. The protected equity allocation therefore includes a 3.56% stake in Nedbank
which is also fully hedged using a similar collar structure.
The shareholder investment strategy is designed to ensure optimal, long-term investment outcomes.
Various optimisations have been implemented during the year. These include transitioning the
protected equity underlying index to Capped SWIX 40 from SWIX 40, the disposal of the unhedged
portion of the Nedbank stake and various enhancements to the fixed income portfolio. The shareholder
investment portfolio will be managed in adherence to the Group’s Responsible Investment Policy and
transitionary climate action plans.
Across the Old Mutual Africa Regions, the shareholder investment strategy adheres to the Group’s
low-risk investment strategy aimed at protecting shareholder value. The strategy targets capital and
inflation protection, subject to the market risk appetite. Each entity has a bespoke investment strategy
which is influenced by the respective macroeconomic and regulatory regimes. Significant progress has
been made in de-risking the balance sheet in this regard and enhancing the investment outcomes for
the entities in these regions. This includes transitioning the investment strategies to low-risk
asset classes.
Issuance of tier 2 subordinated debt
During the year, OMLACSA redeemed R977 million of subordinated debt and issued R1.6 billion of
floating rate subordinated debt under the Old Mutual Limited Multi-Issuer Domestic Medium-Term
Note Programme (the debt programme) at 155 bps over three-month Johannesburg Interbank Average
Rate. The debt programme was amended to include updates to the JSE debt listing requirements and
to remove Old Mutual Insure as an issuer on the debt programme. Old Mutual Insure redeemed the
R500 million listed subordinated debt in November 2022.
We intend to issue subordinated debt annually to optimise the Group’s weighted average cost of capital,
in line with the optimal gearing ratio of 15% to 20%, subject to market conditions and investor demand
remaining favourable.
The Group refinanced its revolving credit facilities – both ZAR and multi-currency – which form part of
the Group’s liquidity risk mitigation strategies. This refinance included sustainability linked parameters,
one of the first of such facilities in the insurance industry.
Dividend Policy
The Dividend Policy targets a full year ordinary dividend cover of 1.50x to 2.00x adjusted headline
earnings. When determining the appropriateness of a dividend, we consider the underlying cash
generated from operations, fungibility of earnings, targeted liquidity and solvency levels, the Group’s
strategy, and market conditions at the time.
In light of our strong liquidity levels and well-capitalised balance sheet, the Old Mutual Limited Board
is pleased to declare a final dividend of 51 cents per share which amounts to a dividend cover of 1.73x.
Asset liability management
Products with shareholder guarantees or guaranteed rates of return are managed according to the
Group’s risk appetite. Financial risks (including market, liquidity, funding, and reinvestment risk) are
mitigated through a range of hedging strategies.
Within OMLACSA, guaranteed products are managed centrally (in line with the Group’s Three Manager
Model operating framework) to optimise hedging costs and ensure that capital within the Group is
preserved. Through the Three Manager Model, the optimal deployment of funds generated through
product premiums is facilitated once the related financial risks have been efficiently mitigated. Funding
generated from guaranteed products post financial risk mitigation are invested according to a
guaranteed product investment strategy, the bulk of which is invested in fixed interest credit assets
within the respective investment businesses, taking into consideration the duration and nature of the
product liabilities.
For the rest of the Group, the financial risks resulting from the sale of guaranteed products are
mitigated through the selection of appropriate matching assets (usually fixed interest assets); where
capital markets allow, more sophisticated hedging programs are executed to mitigate financial risk.
During the year, the refinement of hedging methodologies resulted in the release of R1.3 billion of
discretionary margins. Specific focus was also devoted to changes resulting from IFRS 17 to ensure
strategies remain effective. This included a review of valuation curves and rebalancing of hedging
programs where appropriate.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Balance sheet and capital metrics
Rm (unless otherwise stated)
Return on net asset value (%)
Invested shareholder assets
Embedded value
Group equity value
Group solvency ratio (%)
Discretionary capital1 (Rbn)
Gearing ratio%2
Interest cover (times)
Note
A
B
C
D
E
E
F
2022
11.1%
34 676
64 795
89 398
190%
3.5
14.3%
15.3
2021
9.0%
38 458
70 315
91 993
184%
–
15.1%
15.4
Change
210 bps
(10%)
(8%)
(3%)
600 bps
–
(80 bps)
(1%)
1 Discretionary capital was externally disclosed since September 2022 at R3.5 billion
2 Gearing ratios are calculated with reference to the IFRS value of debt that supports the capital structure of the Group
and closing adjusted IFRS equity
Adjusted IFRS Equity
Rm (unless otherwise stated)
Closing adjusted IFRS equity
Equity attributable to the holders of the parent
Equity in respect of operations in hyperinflationary
economies
Equity in respect of non-core operations1
Closing adjusted IFRS equity by geographical split
South Africa
Old Mutual Africa Regions
Average adjusted IFRS equity
South Africa
Old Mutual Africa Regions
2022
59 766
63 841
(2 818)
(1 257)
59 766
47 816
11 950
57 352
46 149
11 203
2021
Change
55 827
62 174
(4 414)
(1 933)
55 827
45 141
10 686
59 816
50 195
9 621
7%
3%
36%
35%
7%
6%
12%
(4%)
(8%)
16%
1 This includes the consolidation adjustments reflecting own shares held by consolidated funds
A Return on net asset value
South Africa
Old Mutual Africa Regions
Return on net asset value
2022
11.4%
9.8%
11.1%
2021
10.4%
2.1%
9.0%
Change
100 bps
770 bps
210 bps
Return on net asset value of 11.1% increased by 210 bps from 9.0% in the prior year, due to the significant
improvement in adjusted headline earnings and a lower average adjusted IFRS equity base, resulting
from the unbundling of 12.2% of the Group’s stake in Nedbank in 2021. Adjusted headline earnings
would have been up 34% excluding the distributed stake of 12.2% in Nedbank in the prior year.
Return on net asset value of 11.4% in South Africa increased by 100 bps from the prior year, reflecting
growth in adjusted headline earnings attributable to South Africa from R5 202 in the prior year to
R5 268 million. This was primarily due to strong growth on results from operations partially offset
by lower shareholder investment returns.
Closing adjusted IFRS equity in South Africa increased by 6% due to higher profits from the South
African businesses and dividends received from Residual plc operations. This was partially offset by
dividends paid to shareholders of R3 424 million. In contrast, the average adjusted IFRS equity base was
8% lower as the prior year included the distributed stake in Nedbank of 12.2% in the opening balance
prior to unbundling in November 2021.
Return on net asset value of 9.8% in Old Mutual
Africa Regions increased by 770 bps from the prior
year. This was primarily due to higher adjusted
headline earnings, resulting from the substantial
improvement in operating profits, which was
partially offset by lower shareholder investment
returns. Average adjusted IFRS equity increased by
16% from the prior year, reflecting the impact of
higher opening balances in the current year and an
increased closing adjusted IFRS equity due to
retained profit for the year and capital injections.
Return on net asset value (%)
20
15
10
5
0
.
2
5
1
1
.
1
1
0
9
.
8
3
.
2019
2020
2021
2022
68
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Balance sheet and capital metrics continued
C Embedded value
The return on embedded value increased to 7.3% largely due to less negative assumption changes,
improved mortality and expense experience and higher new business value. Overall, the operating
embedded value earnings increased to R5 103 million.
Experience variances improved from the prior year, with materially better mortality and expense
experience, partially offset by significantly worse persistency in the Mass and Foundation Cluster.
Assumption changes were less negative in 2022, with the release of remaining COVID-19 provisions
being partially offset by strengthening of persistency bases and mortality bases (to include expected
future endemic COVID-19 costs into base mortality).
Value generated by new business was higher than
the prior year driven by strong sales in the Mass and
Foundation Cluster and a change in mix towards
higher-margin business in Mass and Foundation
Cluster and Old Mutual Corporate. This was partially
offset by an adverse change in mix and expense
attribution change in Personal Finance. However, we
have seen an improvement in the second half of the
year due to management actions implemented to
improve the business mix to higher-margin risk
business.
Embedded value reduced by 8% mostly due to a
R5.5 billion dividend from covered business and
negative economic variances, as subdued equity
market performance led to lower-than-expected
future asset-based fees on investment products and
lower-than-expected shareholder investment returns.
Embedded value (Rbn)
80
60
40
20
0
72.3
12.7%
65.9
.
2
8
3
.
0
4
3
1
.
2
3
.
8
3
3
70.3
3
5
3
.
.
0
5
3
3%
1.2%
64.8
6
2
3
.
7.3%
.
3
2
3
15
12
9
6
3
0
2019
2020
2021
2022
Adjusted net worth
Value in force
Return on embedded value
B Invested shareholder assets
Rm
South Africa
Old Mutual Africa Regions
Invested shareholder assets
2022
24 942
9 734
34 676
2021
29 593
8 865
38 458
Change
(16%)
10%
(10%)
The total invested shareholder assets of R34 676 million reduced by 10% from R38 458 million at
December 2021.
The asset base in South Africa decreased by 16% due to dividend payments made during the year, a
material reduction in the unlisted equity portfolio and a sharp equity markets decline during 2022. The
reduction in the unlisted equity portfolio aligns to the low-risk investment strategy and the broader
Strategic Asset Allocation Framework.
Within Old Mutual Africa Regions, invested shareholder assets increased by 10%. The growth was driven
by an increase in interest-bearing assets due to capital injection and significant interest rate increases,
which resulted in higher returns earned as well as fair value gains on investment properties. Most
countries have adopted a low-risk investment strategy in line with the Group’s Strategic Asset Allocation
Framework. This has resulted in a higher allocation to fixed income assets to preserve capital in an
efficient manner. In countries experiencing macroeconomic difficulties such as higher inflation and
sovereign risk concerns, a tailored Strategic Asset Allocation Framework is in place to better preserve
shareholder capital.
Invested shareholder assets by asset class (%)
7%
17%
5%
25%
14%
24%
4%
2022
2%
29%
11%
5%
4%
6%
2021
15%
28%
4%
● South African protected equity
● Protected Nedbank1
● South African bonds2
● South African fixed income assets2
● South African unlisted and other assets2
● Old Mutual Africa Regions equity
● Old Mutual Africa Regions interest-bearing assets3
● Old Mutual Africa Regions investment property
1 In order to enhance disclosure, previously disclosed South Africa equity has been split out to South Africa protected
equity and Protected Nedbank. Protected Nedbank includes the respective values of the hedging instruments. Prior
periods have been re-presented to reflect this.
2 In order to enhance disclosure we have further split out previously disclosed South African interest-bearing assets into
three categories: South African bonds, South African fixed income, and South African unlisted and other assets. Prior
periods have been re-presented to reflect this.
3 We reallocated pooled investments previously disclosed separately to Old Mutual Africa Regions interest-bearing
assets category. Prior periods have been re-presented to reflect this.
69
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Balance sheet and capital metrics continued
D Group equity value
Group equity value of R89.4 billion decreased by 3% from the 31 December 2021 position, mainly driven
by the lower closing value of covered business as outlined in the embedded value note above. The
equity attributable to covered business also includes a capital outflow to Asset Management and
Banking and Lending following a refinement of the allocation of equity between lines of business.
The Group equity value of non-covered businesses increased by 15%. The value is based on a series of
directors’ valuations for each material legal entity, with the remaining entities included at IFRS equity
attributable to equity holders of the parent.
Asset Management Group equity value increased by 5%, mainly due to a higher valuation of Old Mutual
Wealth. The Asset Management business was reallocated equity of R1.7 billion from the covered line of
business and paid dividends of R1.1 billion in the year.
E Solvency and capital
Solvency
The solvency ratio for OMLACSA increased to 214% from 203% in December 2021, due to a combined
decrease in both eligible own funds and the solvency capital requirement.
The decrease in eligible own funds was primarily due to negative investment variances across the
segments and shareholder assets as well as the negative impact of economic basis changes. The
eligible own funds were further reduced by the impact of poor persistency experience in Mass and
Foundation Cluster, as well as mortality and persistency basis changes in Personal Finance and Mass
and Foundation Cluster and net capital flows. This was partially offset by the impact of positive new
business written over the period and a decrease in the iterative risk margin, which was mainly driven by
the year-on-year reduction in the non-hedgeable risk component of the solvency capital requirement.
The Group equity value of the Banking and Lending business increased by 45% reflecting higher
valuations of both Specialised Finance and Old Mutual Finance in South Africa and Namibia. Old Mutual
Finance was valued with reference to the purchase price agreed in December 2022 to acquire the 25%
minority shareholding. The Banking and Lending business was reallocated equity of R1.6 billion from the
covered line of business in the year.
The reduction in solvency capital requirement was driven by lower equity risk, due to the decrease in the
size of the prescribed equity shock and lower shareholder equity exposure. There was also a reduction in
life risk due to the impact of book run-off on certain products. The reduction in life risk was offset by a
decrease in the diversification benefits between life risk and market risk, following the large decrease in
equity risk.
Property and Casualty Group equity value increased marginally by 1%. The Property and Casualty
business received capital injections of R0.5 billion and paid dividends of R0.2 billion in the year.
Following the unbundling of 12.2% of our stake in Nedbank in November 2021, the retained stake in
Nedbank is no longer classified as an associated undertaking and is included at fair value in the Group
equity value related to covered business.
The Residual plc contribution to Group equity value is based on the realisable economic value of
approximately £20 million at 31 December 2022, translated at the closing exchange rate. The Residual
plc business paid dividends of £39 million in the year.
The value of the business in Zimbabwe is reduced to zero in Group equity value due to the continued
impact of hyperinflation on the Zimbabwean economy, and in particular the unrealised nature of the
listed investment return supporting the IFRS net asset value for this business.
The value of ‘other’ increased mainly due to dividends received in holding companies from the covered,
Asset Management and Property and Casualty businesses, as well as from Residual plc. This was
partially offset by dividends paid of R3.4 billion and capital injections mainly to Old Mutual Africa
Regions and Old Mutual Insure.
Group equity value (Rbn)
(0.5)
(1.5)
2019
2020
2021
2022
72.3
6.2 6.4 5.3
24.3
0.3
2.2
65.9
4.94.6 6.0
15.8
1.7
70.3
7.9 5.5 6.3
64.8 8.3 7.9 6.4
1.1
0.8
0.4
1.6
Total
116.5
24.3
97.4
24.3
91.9
89.4
● Covered business
● Property and Casualty
● Zimbabwe
● Asset Management
● Investment in Nedbank
● Other
● Banking and Lending
● Residual pIc
The Group solvency ratio has increased to 190% from 184% in December 2021. This was primarily driven
by higher solvency ratios for unregulated entities due to a lower prescribed equity. The Group solvency
ratio was further improved by the increase in the OMLACSA solvency ratio.
The Group regularly models the impact of an extreme but plausible sequence of events leading to a
‘perfect storm’ scenario on our solvency capital and liquidity positions. These stress tests have shown
that we remain sufficiently capitalised with appropriate liquidity.
OMLACSA solvency ratio (%)
Group solvency ratio (%)
250
200
150
100
50
0
8
1
2
5
1
2
3
0
2
4
1
2
Target range
175% – 210%
250
200
150
100
50
0
9
8
1
9
9
1
4
8
1
Target range
170% – 200%
0
9
1
2019
2020
2021
2022
2019
2020
2021
2022
70
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Balance sheet and capital metrics continued
Discretionary capital
The Group’s discretionary capital balance was maintained at R3.5 billion as at 31 December 2022. This is
the net impact of inflows and capital allocations since 30 September 2022. The main inflows included
R330 million from Old Mutual Investments as a result of refinements to the risk management strategy,
which released capital and £39 million from Residual plc. Capital allocations included the buyout of the
shares for the minority stake in Old Mutual Finance for R1 082 million and continued investment into
our growth and innovation initiatives. The discretionary capital balance at year end is earmarked for the
Genric acquisition of R300 million, which was concluded in January 2023, the minority buy of Old
Mutual Finance Namibia of N$214 million, the acquisition of a strategic equity stake in the Two
Mountains Group and continued investment in our growth and innovation initiatives. The Group has
further earmarked between R1 billion and R1.5 billion for return to shareholders as a share buyback and
has initiated approval processes with the Board and Prudential Authority.
Free surplus generated from operations
Operating segments generated gross free surplus
of R7 473 million, representing 117% of adjusted
headline earnings. Our operating segments continue
to generate a high proportion of cash earnings which
were paid to the Group as dividends. The
distributions made to the Group through once-off
capital transactions and optimisation initiatives have
also increased our free surplus. The free surplus is
net of central costs and can be deployed to
dividends, working capital and transactions.
Distributions include dividends from OMLACSA of
R5.5 billion, Old Mutual Investments of R880 million,
Residual plc of £39 million and other operating
subsidiaries net of central costs of R309 million.
F Gearing
The gearing ratio of 14.3% was 80 bps lower than the
prior year, due to increased closing adjusted IFRS
equity reflecting retained profit for the period and
dividends received from Residual plc operations.
The IFRS value of debt remained largely flat in
comparison to the 2021 closing value. OMLACSA
issued in total R1.6 billion of floating rate
subordinated debt instruments and redeemed
R977 million of fixed rate subordinated debt
instruments during the year. Old Mutual Insure
redeemed the full balance of issued subordinated
debt of R500 million towards the end of 2022.
Interest cover of 15.3 times decreased marginally
from 15.4 times in the prior year, reflecting the
increase in adjusted headline earnings before tax,
non-controlling interest and finance costs.
Free surplus generated
from operations (Rm)
189%
0
0
7
4
4
9
7
6
69%
8 000
6 000
4 000
2 000
0
9
4
1
6
114%
3
7
4
7
117%
200
150
100
50
2019
2020
2021
2022
Free surplus generated from operations
% of adjusted headline earnings converted
to free surplus generated (right-hand side)
Gearing (%)
20
15
10
5
0
1
.
5
1
.
3
4
1
2
.
1
1
8
.
1
1
2019
2020
2021
2022
KenGen Ngong Wind Hills Wind Power Station, Ngong, Kenya – Coordinates 1.38088° S, 36.63555° E
71
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Group financial performance
Condensed consolidated statement of financial position
As at 31 December 2021
Rm
2022
Investment property
Investments in associated undertakings and joint ventures
42 530
1 065
2021
38 672
908
Condensed consolidated income statement
For the year ended 31 December 2021
Rm
Net earned premiums
Investment return (non-banking)
Investments and securities
Reinsurers share of policyholder liabilities
Cash and cash equivalents
Other assets1
Total assets
Life insurance contract liabilities
Investment contract liabilities with discretionary participating features
Investment contract liabilities
Property and Casualty liabilities
Third-party interests in consolidated funds
Borrowed funds
Other liabilities1
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Non-controlling interests: ordinary shares
Total equity
892 091
899 388
Banking interest and similar income
9 544
37 467
84 259
13 372
32 931
68 583
1 066 956
1 053 854
145 118
233 695
375 044
11 706
102 749
16 713
115 385
155 349
245 483
393 787
11 206
77 308
17 506
87 914
Banking trading, investment and similar income
Fee and commission income, and income from service activities
Other income
Total revenue
Net claims and benefits incurred
Change in investment contract liabilities
Fee and commission expenses, and other acquisition costs
Change in third-party interests in consolidated funds
Other expenses3
Total expenses
Share of gains of associated undertakings and joint ventures after tax
1 000 410
988 553
Reversal of impairment of investments in associated undertakings
66 546
63 841
2 705
66 546
65 301
62 174
3 127
65 301
Loss on disposal of subsidiaries
Profit before tax
Income tax expense
Profit after tax for the financial year
2022
74 537
20 646
4 505
1 026
11 560
935
113 209
(69 482)
7 657
(10 401)
(1 846)
(29 971)
2021
72 551
157 047
4 347
433
11 827
1 609
247 814
(131 566)
(54 947)
(10 506)
(11 874)
(26 861)
(104 043)
(235 754)
118
–
(133)
9 151
(1 352)
7 799
1 385
18
(36)
13 427
(5 964)
7 463
Net assets
The net asset position has remained relatively stable year on year with a 2% increase. The increase in
total assets of R13 billion was offset by a R12 billion increase in total liabilities. The increase in total
assets was driven by a combination of increases in investment property, cash and cash equivalents
and other assets and a decrease in investments and securities due to a decline in market
performance. A R25 billion increase in third-party interests in consolidated funds was the main driver
of the increase in total liabilities. This increase was offset by a decrease in long-term business
policyholder liabilities2 mainly due to weakening market performance. All remaining COVID-19
provisions were released but the impact was mostly offset by the strengthening of our mortality
basis to allow for endemic COVID-19 claims and worsened persistency as the challenging economic
conditions continue to impact our retail customers.
Equity attributable to equity holders of the parent
Equity attributable to equity holders of the parent increased by 3%, largely as a result of IFRS profit
recognised for the period, offset by dividends declared for the current year.
Total revenue
Total revenue decreased by 54% to R113 billion, largely due to a decrease in investment returns.
Investment returns decreased by 87% from the prior period, primarily due to global factors
negatively impacting market values.
Total expenses
Total expenses decreased by 56% to R104 billion, largely due to a decrease in net claims and benefits
incurred, change in investment contract liabilities and change in third-party interests in consolidated
funds. Net claims and benefits incurred decreased due to a decrease from lower mortality as the
effects of COVID-19 eased. Change in investment contract liabilities expense and change in
third-party interest in consolidated funds were significantly lower than the prior year mainly as a
result of lower investment returns earned, which was largely driven by the weaker
market performance.
1 For presentation purposes, certain assets and liabilities lines not separately listed have been grouped into other
assets and liabilities respectively
2 Long-term policyholder liabilities include life insurance contract liabilities, investment contract liabilities and
investment contract liabilities with discretionary participating features and investment
3 For presentation purposes, certain expense lines have been grouped into the other expenses line
72
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE OVERVIEW OF
THE GROUP
GOVERNANCE
OVERVIEW
OPERATING
CONTEXT
RISKS AND
OPPORTUNITIES
STRATEGY AND
VALUE CREATION
SEGMENT
SEGMENT
PERFORMANCE
PERFORMANCE
2nd
time winner of
the Best ESG
Responsible
Investor Africa
award
R26.7
billion
invested in
renewable
energy
DID YOU KNOW
In 2022 Capital Finance International named Old Mutual
Investment Group Best ESG Responsible Investor Africa, for the
second year in a row.
The award is a valuable reflection of Old Mutual Investment
Group’s commitment to responsible investment and unwavering
focus on delivering sustainable long-term, risk-adjusted returns
for clients, positively impacting communities and ecosystems.
With R26.4 billion of renewable energy assets held, Old Mutual
Investment Group leads ESG-focused investment product
development in South Africa.
73
Samburu Park, Kenya – Coordinates 0.6124° N, 37.5321° E
Integrated Report 2022 PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Mass and Foundation Cluster
Mass and Foundation Cluster is a retail segment
that offers a wide range of simple financial services
products to customers.
Mass and Foundation Cluster is a business segment that operates in the low-income and lower-middle-
income markets. The segment’s existing and potential customers span individuals who earn R1 000 to
R30 000 per month. The Mass and Foundation Cluster has an established brand presence in its core
markets driven by vast distribution channels built from and for communities. We offer a comprehensive
range of products to the mass and foundation markets across underwritten life and funeral insurance,
savings, lending and transactional banking.
Key differentiators
1
2
3
4
5
Diversified distribution channels
Longstanding relationships with our stakeholders
Positive brand affinity
Holistic product proposition
Established financial education programmes
Operating context
2022 was a difficult year for our customers, who grappled with severe increases in the cost
of living created by steep rises in inflation and interest rates. The growing financial pressure
our customers faced worsened our persistency experience due to higher levels of lapses,
surrenders and missed premiums. Despite the challenging environment, we managed to
post a relatively strong set of results.
Operational metrics
3.0
million
customers
2021: 3.1 million
348
retail branches
2021: 358
4 065
tied advisers
2021: 4 003
8 666
employees
2021: 8 461
Soweto, Johannesburg, South Africa – Coordinates 26.2744° S, 27.7935° E
74
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Mass and Foundation Cluster continued
Strategic focus areas
Key activities 2023
1
An enhanced customer experience and cross-sell
We delivered an enhanced integrated financial services customer experience by
building rewarding customer relationships. We delivered improvements to the
servicing and claims experience and meaningfully increased Old Mutual Protect
underwritten life sales by 92%. We achieved R1.1 billion lending cross-sell to the
life customer base.
2
Grow long-term insurance market share through appropriate,
relevant product propositions and by increasing points of
presence
We made significant strides in regaining market share in 2022 due to strong
sales growth across most of our channels, with standout results coming from
our branch adviser, foundation market, third-party and digital channels. The
growth in our risk mix was particularly pleasing, driven in part by the strong
growth in our non-advice risk sales and underwritten life sales. We also
materially increased the capacity in our third-party and foundation market
channels, which positions us well to continue to deliver strong sales growth
over 2023.
3
Drive profitability in the long-term Insurance business by
improving business mix, persistency and cost efficiency
2022 was a difficult year for our customers, who had to grapple with severe
increases to the cost of living created by steep increases in interest rates
and inflation rates. This led to a negative persistency variance and the
strengthening of our persistency basis. However, favourable mortality
experience has started to emerge in 2022, which is expected to persist.
Despite these effects, our financial results delivered material growth on the
prior year.
4
Profitable growth in Old Mutual Finance
We continue to drive profitable growth in Old Mutual Finance via
transactional banking and diversifying income streams. Old Mutual Finance
has extended wholesale lending to Bridge Taxi Finance that has created
access to a new market. Good progress has been made within Old Mutual
Finance to grow its alternative channels (direct and digital) during 2022. The
net transactional revenue from each active Money Account grew materially in
2022 by 38%.
5
Execute on the people plan
Windhoek, Namibia – Coordinates 22.5609° S,
17.0658° E
We continue our focus on talent, culture and core capabilities. Strong progress
has been made on our key human capital metrics, including employment
equity, skills development and culture scores. We continue to retain our high-
potential employees despite strong competitor recruitment activities.
» Increase needs met through an enhanced integrated financial services
customer experience
» Drive customer growth through holistic propositions
» Continue to grow market share through expanded points of presence
» Continue to enhance profitability by improving persistency, product mix and
efficiency
» Continue to build the right capabilities, talent and culture
» Promote sign-on to Old Mutual Rewards and drive financial wellbeing
through financial education
» Continue to use models to manage credit experience, appetite and level of
risk-taking
Value creation
Customers:
» R6.9 billion (2021: R7.2 billion)
in claims and benefits paid
» R15.5 billion (2021: R14.8 billion)
in responsible lending to Old Mutual Finance customers to meet
their financial goals
» 88% (2021: 84%)
of funeral claims paid within four hours
Intermediaries:
» R44.0 million (2021: R33.1 million)
spent on intermediary training and development
Trade-off
Our responsible lending approach to a heavily indebted mass market
that is experiencing the financial pressure in the tough economic
environment has resulted in muted growth in the loan book but has
continued to support a strong core credit experience.
75
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Mass and Foundation Cluster continued
Results from operations by line of business
23%
R million
2022
44%
2021
56%
● Life and Savings:
● Banking and Lending:
1 892 (2021: 1 541)
550 (2021: 1 211)
77%
Performance overview
Gross flows of R12 924 million (2021: R12 870 million) were slightly
ahead of prior year due to growth in the life in-force book following
annual premium increases, which was largely offset by a decline
in savings sales and worse persistency during the year. Despite
this, net client cash flow improved by 13% to R5 580 million (2021:
R4 959 million) due to lower funeral claims from the easing impact
of the COVID-19 pandemic. We saw an increase in surrenders as
more customers chose to access their savings to support them
during these difficult economic conditions.
Life APE sales of R4 216 million (2021: R3 475 million) increased
by 21% from the prior year, driven by good growth across several
non-advice and advice channels, with particularly strong growth
from within the foundation market. This was supported by very
good credit life growth on the back of a 37% growth in unsecured
new business loans, higher average prices and the increase in the
shareholding of Old Mutual Finance. Risk sales recovered to well
above 2019 levels and remain a key focus area in driving sustained
long-term value.
Loans and advances of R15 512 million (2021: R14 795 million) grew
by 5%, supported by the higher levels of sales which included
wholesale funding granted to Bridge Taxi Finance.
The net lending margin of 13.6% (2021: 18%) decreased by 440 bps
while the credit loss ratio increased by 390 bps to 4.8% (2021:
0.9%). The prior year benefited positively from a material once-off
provision unwind from a declining loan book. The core credit loss
ratio remained stable over the year.
Results from operations declined by 11% to R2 442 million (2021:
R2 752 million) due to lower profits from the Banking and Lending
business. The prior year included a significant once-off provision
release on the back of a declining loan book.
Life profits were well ahead of the prior year due to higher annual
premium and cover increases on the existing book and the net
positive effect of basis changes which included economic basis
changes related to the refinement of hedging methodology.
The claims experience was significantly better due to less severe
COVID-19 variants and higher levels of immunity resulting in
mortality profits recognised over the year. We have now fully
released the mortality provisions for excess claims. Higher sales
volumes, improved sales mix and good cost management
contributed further to the strong results from operations. These
were partly offset as our customers’ growing financial pressures
translated into a worse persistency experience due to higher
levels of lapses, surrenders and missed premiums. The impact of
the strengthening of our persistency basis was more than offset
by the release of the excess claims provision and various other
discretionary reserves.
Value of new business grew by 48% to R945 million (2021:
R638 million), due to higher issued sales volumes and good cost
management, partly offset by the strengthening of persistency
basis. Value of new business margin of 7.6% (2021: 6.2%), was up
140 bps from the prior year, attributable to increased risk sales
volumes and strong credit life performance as well as effective
cost management.
Namitete, Malawi – Coordinates 14.0242° S, 33.3626° E
76
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Personal Finance and Wealth Management
Personal Finance and Wealth Management is a
retail segment that offers holistic financial wellness
propositions to middle and high-income and affluent
customers both digitally and face-to-face through
our high-calibre advisers.
Personal Finance operates primarily in Life and Savings and offers a wide range of holistic financial
advice and long-term risk, savings, income and investment solutions. Personal Finance targets the
middle and high-income market, which the Group defines as individuals earning R30 000 to R100 000
per month. Products are distributed through tied advisers, brokers, agency franchises and direct
channels including digital, iWYZE and tele-advisers.
Wealth Management is an advice-led, vertically integrated retail investment business that offers wealth
management, investment solutions and funds to high-income and high-net-worth individuals. Wealth
targets the affluent market which the Group defines as customers earning more than R100 000 per
month or net assets of greater than R15 million. The business’s distribution channels include tied
advisers, independent financial advisers and direct channels.
Key differentiators
1
2
3
4
5
High-net-worth and private client solutions locally and offshore
Strong distribution network, with a large financial adviser base
Integrated wealth planning
Old Mutual Rewards programme
Comprehensive customer and adviser propositions
Operating context
Our customers’ sentiment and disposable income was heavily impacted by rising inflation
and interest rate increases, lower offshore markets and a weaker rand exchange rate. These
economic conditions affected our customers’ ability to maintain or increase protection, savings
and investment products.
We saw an industry decline in the underwritten risk1 and single premium businesses, which
affected our volumes and mix. Overall investment gross flows were lower due to decreased
demand driven by market volatility and a weaker rand. We benefited from a decreased
COVID-19 impact and positive economic basis changes.
1 NMG survey
2 Prior period re-presented
Operational metrics
1.7
million
customers
2021: 1.7 million
2 398
tied advisers
2021: 2 528
8 168
independent
intermediaries
2021: 8 2962
3 912
employees
2021: 3 996
Monkey Bay, Lake Malawi – Coordinates 14.0821° S, 34.9148° E
77
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Personal Finance and Wealth Management continued
Strategic focus areas
1
Retain and acquire new customers in Personal Finance through:
» Digitised and adviser-enabled customer experiences
» Improving our adviser base and productivity levels
The efforts made towards improving our adviser experience are gaining traction following the funding of
additional resources and collaboration across teams to re-train, introduce fast lanes and automate. This
resulted in the reduction of backlog and complaints.
We stabilised and grew our experienced adviser base. The focus on better quality recruitment and an
improved development academy is yielding results, with an overall increase in adviser activity.
We continued to improve the adviser experience on Old Mutual Protect, our risk product, and made
progress towards the planned delivery of the new Savings and Investments product. Integrating Old Mutual
Rewards with Old Mutual Protect contributed to exceeding the 2022 target for new members by 30%.
We introduced client wealth managers linked to our services and products, which was well received with
a resultant increase in net client cash flows. The digital enhancements to our customer journey led to an
increase of 21% in digital sales and advice tool usage.
2
In Wealth Management, grow our share of the independent financial advisers market,
extend our lead in the offshore space and build out our high-net-worth client offering by:
» Improving customer and planner experience
» Building sustainable distribution businesses
We enhanced the customer propositions for more holistic and integrated services.
We improved our planner experience through enhancements to our integrated wealth planning
tools, simplified operational processes and increased automation and digital capabilities. Our offshore
administration capabilities were simplified and enhancements were made to our product offering and
platform. We continued to build a sustainable distribution business that supports our target market.
We implemented the first phase of tighter integration in our high-net-worth client proposition and
enhancements to the service model.
3
Rectify our mix of new business to improve margins
We improved our business mix by driving middle and upper-income solutions. In the second half of the
year we achieved higher guaranteed annuities, fixed bond and living benefits sales, which contributed to
improving our margins.
4
Optimise our expense base through efficient cost management
Johannesburg, South Africa –
Coordinates 26.1968° S, 28.0342° E
We continue to focus on efficiency by removing duplication, inefficiency and better prioritising. Some of the
cost savings were applied to focused investment in our capabilities. The expense for Wealth Management
grew 1%, which is below the inflation rate, and Personal Finance managed to deliver expenses below 2021.
Key activities 2023
» Launch:
‒ New discretionary fund management capabilities
‒ An enhanced offering for our high-net-worth clients
‒ A new Savings and Investments solution
» Focus on enhanced private client solutions in Wealth
Management
» Continue to improve the ease of doing business for advisers
and productivity through simplified platforms and delivering
the Digital Adviser Enablement tool
» Manage sales and product mix towards higher-margin
products and recurring premiums
» Continue to build competitive propositions for independent
financial advisers and become their partner of choice
Value creation
Customers:
» R43.7 billion (2021: R46.8 billion)
in claims and benefits paid
» Improved customer experience through use of an
enhanced advice tool
Intermediaries:
» R52.0 million (2021: R51.5 million)
spent on intermediary training and development
» 372 (2021: 335)
intermediaries trained in the Celestis sales academy
Trade-off
Notwithstanding cost pressures, we allocated
additional servicing resources to improve service
delivery to our advisers. We also continued the focus
on recruiting quality advisers. We prioritised the
delivery of enhancements to our Old Mutual Protect
product and the Greenlight migration and accepted
delays in the rollout of our Savings and Investments
product.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Personal Finance and Wealth Management continued
Results from operations by line of business
10%
2022
90%
2021
52%
48%
● Life and Savings:
● Asset Management:
2 897 (2021: 216)
320 (2021: 232)
R million
Performance overview
Gross flows decreased by 5% to R77 130 million (2021:
R81 186 million) due to lower annuity sales in Personal Finance
and a significant decrease in demand for offshore investments
in our Wealth Management business resulting from lower
offshore markets and weaker performance of the rand against
the US dollar.
Life APE sales for the segment were flat on prior year, with growth
in savings sales largely offset by the decrease in guaranteed
annuity sales. In Wealth Management, we saw a shift to our
smooth bonus and fixed bond options as customers showed
a preference for stable and guaranteed funds.
Despite significantly lower mortality claims in Personal Finance,
net client cash flow ended well behind the prior year due to a
combination of lower offshore flows and large disinvestments
in Wealth Management, partially offset by strong inflows in the
Private Client Securities and Treasury Advisory Services businesses.
Results from operations for the segment recovered to
R3 217 million (2021: R448 million). Our mortality experience
improved significantly in 2022 and was better than the levels
provided for, but we still experienced excess mortality on our
underwritten risk book. We have therefore released the short-
term COVID-19 provisions in full, and made an adjustment to the
long-term mortality basis, applied on the underwritten risk book,
to allow for the future impact of excess COVID-19-related mortality.
Net positive economic basis changes included the release of
discretionary margins related to the refinement of our hedging
methodology. Results from operations has now recovered well
above 2019 levels.
Wealth Management results from operations decreased by
4%. Volatile global markets negatively impacted Old Mutual
International profits and the market value of our offshore seed
capital investments.
Value of new business of R152 million (2021: R285 million) for the
segment reduced by 47%, with a corresponding 40 bps decrease
in the value of new business margin to 0.5% (2021: 0.9%). Despite
Life APE sales being flat on the prior year, Personal Finance’s
value of new business declined due to lower policy volumes in
key products, which led to worse initial expense variances. Value
of new business was further impacted by the decrease in high-
margin annuity sales. During the second half of the year, the value
of new business improved with a shift in mix to higher-margin
risk business and a review of the persistency assumptions in our
funeral products.
Wealth Management’s value of new business of R81 million
(2021: R72 million) was up 13%, driven by a more profitable mix
of business following higher sales of smooth bonus and fixed
bond products.
Dar es Salaam, Tanzania – Coordinates 6.7924° S, 39.2083° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Old Mutual Investments
Old Mutual Investments is one of South Africa’s
leading investment managers, offering investment
solutions to institutional and retail customers.
Old Mutual Investments operates through five affiliates across three investment business lines, namely:
» Asset Management which comprises the following affiliate businesses:
‒ Old Mutual Investment Group: listed equity and multi-asset investments
‒ Futuregrowth Asset Management: fixed income and credit investments
‒ Marriott Investment Managers: income solutions investments
» Old Mutual Alternative Investments: unlisted alternative investments
» Old Mutual Specialised Finance: shareholder credit and asset liability management
Each affiliate is focused on their niche strategies to deliver on the customer propositions and improve
competitiveness.
Key differentiators
1
2
3
4
Largest specialised fixed income manager
Offer active and passive investment management
Largest infrastructure and renewables investment manager in Africa
Market leading with regards to the integration of ESG in our investment decisions
Operating context
The increase in inflation rates caused downward pressure on the equity and bond markets
requiring a recalibration of metrics to accommodate the shift from low inflation and low interest
rates. This new reality is marked by periodic panic selloffs.
The ongoing market volatility from local and international geopolitical developments,
macroeconomic uncertainty and a decline in the equity market continue to grow fears of a global
recession. The benefit of having a diverse capability set and asset class exposures was evident in
2022 as we delivered double-digit growth in results from operations despite the tough trading
conditions.
Operational metrics
75%
funds above
benchmark over a
three-year period
2021: 50%
357
institutional
customers
2021: 339
672
employees
2021: 655
R774.0
billion
assets under
management
2021: 809.1
Waterloo Solar Farm, North West, South Africa – Coordinates 27.0392° S, 24.7888° E
80
Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Old Mutual Investments continued
Strategic focus areas
1
Deliver consistent top-quartile investment performance
Overall, investment performance for 2022 was not as strong as the preceding 12 months, however, against a volatile market backdrop, our investment
teams have performed credibly in navigating the year for our clients. Longer term investment performance relative to benchmarks has shown a steady
improvement with 75% of our funds above benchmark over the three-year period, up from 50% a year ago.
2
Drive transformation efforts within the business, including majority black ownership
We concluded the sale of 21.2% of our stake in Futuregrowth Asset Management to African Women Chartered Accountants. This, along with the Bula Tsela
initiative, moves both Futuregrowth and Old Mutual Investment Group towards becoming majority black owned. Client engagements continue to highlight
a positive response to the deal.
3
Grow market share in both retail and institutional markets
Growing our retail and institutional market share is critical to remaining relevant and defending our status as the largest asset manager in the country. We
have enhanced our capabilities in the Alternatives business to enable us to compete better in the third-party institutional market. We have invested in our
client-facing teams to drive growth in flows across our affiliates.
4
Focus on key revenue and growth initiatives
New revenue lines are critical for all our affiliates and a key part of their KPIs. We completed our Private Markets initiative and launched infrastructure debt
and hybrid funds, improving competitiveness in the third-party institutional market. We launched global active ESG, the applied intelligence capabilities,
Africa Income and Retirement-Driven Investments capability, a Venture Capital Fund in Futuregrowth, scrip lending and extended our Liability-Driven
Investments capability for defined contribution funds . Our Alternatives business raised R17.4 billion (2021: R9.9 billion) of capital during the year, which will
support annuity revenue growth.
5
Stabilise and invest in our operating platforms
Ongoing upgrading of front office information technology systems is critical to significantly improve our operating efficiency and de-risk the business to
ensure that it remains future fit. We continued to make progress on our strategy to refresh our technology environment, which includes process automation
and leveraging artificial intelligence to improve efficiencies and drive investment outcomes. We also improved our client relationship management tool across
our affiliates.
Awards
» Old Mutual Investment Group was awarded Best Sustainable African Investment Manager at the European Global Banking and Finance Awards and
the Capital Finance International Award for Best ESG Responsible Investor (Africa) 2022, as well as an award for the 2022 27four ESG Annual Asset
Manager Survey, reaffirming our pedigree as a leader in ESG investing
» Futuregrowth garnered the award for the Most Watched Masterclass (Institutional) in 2022 at the inaugural South African Asset TV Audience Choice
Awards
Key activities 2023
» Continue to deliver consistent top-quartile investment
performance across the fund range
» Launch new funds with embedded key capabilities in
response to client needs
» Capacitate the Old Mutual Investment Group teams to be
locally and globally competitive
» Continue to invest in responsible investment strategies
and embed ESG across our offerings
» Continue driving the Private Markets initiative to grow
third-party institutional assets
» Upgrade and invest in operating platforms, data
warehousing and artificial intelligence
Value creation
Customers:
» 75% (2021: 50%)
of funds performed above the benchmark
over a three-year investment period
» Several of our alternative investment
strategies, in particular our Infrastructure
and International Private Equity funds, have
performed well ahead of their benchmarks
over the last year
Communities:
» R47.0 million
spent on higher education scholarships by
the Imfundo Fund, with 108 graduates since
inception in 2011
» 2 204 learners
benefited from donated computer
equipment by the Green Hands Trust
» Embedded ESG strategy
Trade-off
Investment in key capabilities which reduces
shareholder returns in the short term will lead to
increased profitability in the longer term.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Old Mutual Investments continued
Results from operations by business unit
33%
41%
39%
2022
2021
51%
R million
● Asset Management:
● Alternatives:
● Specialised Finance:
504 (2021: 570)
324 (2021: 113)
412 (2021: 426)
26%
10%
Performance overview
Despite the ongoing market volatility and macroeconomic
uncertainty, we achieved good results, which benefited from
exceptional non-annuity revenue, as well as solid growth in annuity
revenue. The combination of lower inflows and a decline in the
equity markets saw assets under management decrease by 4%
from December 2021 to R774.0 billion (2021: R809.1 billion) at the
end of the year.
The higher annuity revenue was supported by record levels of
capital raised in our Alternatives business, which came through as
management fees, commitment fees and catch-up fees.
A major differentiator from our peer group is our operating model
that delivers significant non-annuity revenue. This revenue is
more volatile but provides significant economic value through the
investment cycle. The component parts include carried interest,
revaluation of fund co-investments and mark-to-market impacts
from changes to credit spreads and equity exposures. Non-annuity
revenue grew by 48% from the prior year, mainly due to strong
investment returns in our Alternatives business and positive market
movements on the credit portfolio in our Specialised Finance
business. Excluding the impact of COVID-19 on our results, our non-
annuity revenue has ranged between R156 million and R515 million
over the past five years.
Gross flows in 2021 represented a five-year high for Old Mutual
Investments with strong flows in Liability-Driven Investments,
indexation capabilities and Marriott. Gross flows in 2022 were
relatively subdued following such a strong performance. Higher client
liquidity requirements resulted in net outflows from low margin
money market funds, which led to negative net client cash flow of
R7 723 million (2021: positive R4 907 million). Net client cash flow was
also impacted by structural outflows given the ongoing strain in the
South African pension fund market, as well as some unexpected
terminations and client restructures. Our success in Liability-Driven
Investments is creating a higher base of expected benefit payments
because of the larger book. The overall health of our pipeline supports
our expectation of better net client cash flow in future years.
Results from operations increased by 12% to R1 240 million
(2021: R1 109 million) driven by higher revenue, partially offset by
increased expenses. Expenses are up as a result of key vacancies
being filled, inflationary salary increases, and the continued
investment in revenue-generating initiatives and technology.
Asset Management
Results from operations were 12% down, largely due to lower non-
annuity revenue from reduced performance fees and fair value gains
compared to the prior year, as well as higher expenses as outlined
above. The elevated prior year flows into Liability-Driven Investments
and Marriott were not repeated and Futuregrowth experienced
lower flows into money market and corporate cash products. This,
along with expected Liability-Driven Investments benefit payments
of R3.7 billion, contributed to the negative net client cash flow of
R7 990 million (2021: positive R4 560 million). Flows from our retail
channels were up mainly due to higher money market net flows.
Lake Kariba, Siawaja, Zambia – Coordinates 17.7904° S, 27.1121° E
Alternatives
The business produced a strong set of results with R17.4 billion
(2021: R9.9 billion) of new capital being raised and R14.9 billion
(2021: R7.9 billion) of new deals concluded during the year. Annuity
revenue was higher mainly due to the significant increase in capital
raised in recent years and the addition of credit capabilities that have
transferred from our Specialised Finance business. Non-annuity
revenue also increased significantly following higher investment
returns, with some unlisted assets delivering excellent returns in the
year, which was partially offset by lower performance fees on certain
domestic funds. The overall impact was an increase in results from
operations of 187% (excluding the impact of the Private Markets
transfer, results from operations was up by 136%).
Specialised Finance
The total deal volume originated during the year resulted in the
balance sheet growing by 8% to R35.4 billion. Results from operations
declined marginally due to lower annuity revenue related to the
transfer of certain credit capabilities to Alternatives and mark-to-
market losses in the equity portfolios. These were largely offset by
higher non-annuity revenue driven by other positive mark-to-market
gains and lower expenses following the transfer of capabilities to
Alternatives.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Old Mutual Corporate
Old Mutual Corporate is a leading player in the mature
traditional employee benefits industry and provides
employee benefits and consulting services to large
corporates and SMEs in South Africa. The segment
remains a leader as against its listed competitors.
Old Mutual Corporate provides pre-retirement and post-retirement investments, group risk cover,
administration, consulting services and specialised solutions to employer-sponsored retirement and
benefit funds. The segment’s distribution network includes a direct sales team, employee benefits
specialist intermediaries, consultants and direct and digital channels. Adjacent propositions provided to
the market include remuneration surveys and benchmarking, and SME lending and support.
Key differentiators
1
2
3
4
Integrated employee-focused propositions and services
Strong brand and established track record
Expertise in management and governance of umbrella funds
Capital strength mostly valued by large corporate clients
Operating context
COVID-19 tested the resilience of most companies. In its aftermath, increasing inflation and
interest rates led to slow macroeconomic recovery and a volatile market environment which
increased cost of doing business. Consequently, we have seen an increase in company
liquidations, low SME growth, higher benefits outflows and slower decision making around
procuring employee benefit solutions.
The employee benefits industry remains subject to various retirement reforms, such as
the two-pot system for retirement savings, which present opportunities to enhance value
propositions. We continue to actively participate in consultative processes and to prepare
for implementation of upcoming reforms.
Operational metrics
1.8
million
members
2021: 1.6 million
1 224
independent
intermediaries
2021: 1 182
350
employees
2021: 356
Nonoti River Bridge, KwaDukuza, KwaZulu-Natal, South Africa – Coordinates 29.3201° S, 31.3267° E
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE Old Mutual Corporate continued
Strategic focus areas
1
Strengthen and grow core and large enterprise
We focused on improving the resilience and competitiveness of our employee benefits business, while innovating growth opportunities in
the SME market. Our Group Life Assurance business remains a leading provider of Group risk solutions, while our smooth bonus offerings
remained attractive in a volatile environment, with strong bonuses and flows. We continued to achieve strong results from our annual client
satisfaction survey, with 88% overall satisfaction with our corporate consultants, 83% for value for money, and 90% for skills, knowledge and
expertise. To support growth, we reviewed the remuneration structures of our intermediaries.
The integration of Remchannel, our reward management solution, continues to create value for the Employee Benefits and Corporate
business and the Old Mutual SuperFund continued with its ongoing endeavours to educate, enable and empower members through the
Financial Wellbeing Programme.
We launched the Old Mutual SA Retirement Gauge, which is an analysis tool designed to analyse the retirement readiness of members
in umbrella funds and a social experiment campaign that highlighted the dilemma most households will face at retirement and created
awareness by reaching over 6 million views across all social media platforms. We also introduced ‘Big Business Insights’, a new Old Mutual
Corporate Podcast series that focuses on sharing business insights relating to human capital management and employee benefits.
2
Accelerated execution of the SME proposition
The update of our SME digital channel SMEgo2.0 was launched and features increased capabilities beyond offering a funding platform. It
delivers a holistic proposition to small business owners based on three pillars: enabling efficient business operations, providing access to
funding and access to markets, to facilitate entrepreneurs to run and grow their businesses successfully.
New features include enabling small business owners to generate invoices with payment links online, automate payment reminders to
support operational efficiency and invoice discounting, which assists SMEs in accessing funds earlier for outstanding invoices. 1 950 invoices
were generated on SMEgo2.0 to the value of R94.7 million.
Key activities 2023
» Improving employee benefits offerings by investing in servicing and
administration, as well as improving the customer and intermediary
experience
» Preparing for the regulatory changes implied by the two-pot system
» Investing in our digital and data and continuing to enhance Old
Mutual Corporate’s product offerings
» Growing and extending the core employee benefits business
through internal innovation, external partnerships and acquisitions
to diversify channels, markets, capabilities and offerings
» Scaling the SME business by accelerating traction in the lending
business and extending the SMEgo platform proposition
Value creation
Customers:
» R41.5 billion (2021: R49.3 billion)
in claims and benefits paid
» Facilitated the disbursement of R9.6 million to SMEs
through our funding concierge
Intermediaries:
We successfully launched our SME e-market, a marketplace to connect SMEs with each other and customers. The platform currently has
over 2 000 SME products on offer and 600 buyers and sellers.
» R1.7 million (2021: R0.8 million)
spent on intermediary training and development
We acquired a 30% stake in a specialist SME lender, Preference Capital, which provides SME finance solutions in response to the funding
gap for SMEs in the market.
» 550 intermediaries
and 50 clients attended our face-to-face roadshows
3
Build business agility through improved business responsiveness and operational efficiency
Our servicing and administration came under pressure, particularly in dealing with the volumes of death claims caused by a backlog which
continued into 2022 from the spike in COVID-19 claims in 2021. In response, we enhanced the resourcing and management focus and
positive results are emerging. We provided multiple servicing channels to improve access and responsiveness and focused on process
re-engineering and automation to ensure faster turnaround and improved customer experience.
We reviewed our data and digital capability to leverage our information technology and developed a digital roadmap for implementation
in 2023.
Awards
» Our Nine Yards magazine won three awards: from the Global Content Awards, United Kingdom Content Marketing Association Awards and
New Generation Digital Awards
» Our Nine Yards video series won three awards: at the SA Publication Forum Awards, New Generation Digital Awards and first place in the
Content Council 2022 Pearl Awards (United States)
» Our Mindspace magazine (thought leadership) won two awards: at the Content Council’s Pearl Awards in New York and at the local
SA Publications Awards
Trade-off
Trade-offs were made to ensure the sustainability of the
business while meeting the needs of clients. Old Mutual
Corporate experienced a surge in death claims in 2020 and 2021
as a result of COVID-19.
We prioritised increasing our specialist operational capacity
for the moving of our information technology estate to the
cloud for medium to long-term value for all stakeholders at the
expense of short-term claims delivery capacity availability. This
created a lag and backlog in our claims processing. This had a
regrettable impact on customer experience.
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Integrated Report 2022RISKS AND OPPORTUNITIES OPERATING CONTEXTGOVERNANCEOVERVIEWOVERVIEW OF THE GROUPSTRATEGY AND VALUE CREATION PERFORMANCE AGAINST STRATEGYSEGMENT PERFORMANCEGROUP FINANCIAL PERFORMANCE
Old Mutual Corporate continued
80
70
60
50
40
30
20
10
0
(10)
Sources of revenue (%)
80
61
28
25
(557)
Asset-based
revenue
2021
Service
fees
2022
12
2
(4)
(4)
Underwriting
profits
Other
Performance overview
Gross flows decreased by 4% to R32 765 million (2021:
R33 957 million) mainly due to lower pre-retirement single
premiums, with the prior year including a very large umbrella
deal. Recurring premiums improved with strong Group assurance
new business sales, while flows in our smooth bonus products on
our retail platforms grew by 16%. Life APE sales decreased by 8%
to R2 212 million (2021: R2 416 million) mainly due to decline in pre-
retirement single premium sales. Following the buyout of minority
shareholders of Old Mutual Finance in December 2022, credit life
premium sales were excluded from Old Mutual Corporate’ s life
sales and reported in the Mass and Foundation Cluster.
While Life APE sales decreased, it was pleasing to see that
value of new business improved by 14% to R235 million (2021:
R207 million), with a corresponding increase of 20 basis points in
the value of new business margin to 1.2% (2021: 1.0%). Value of new
business benefited from a more favourable product mix within
our investment offering compared to the prior year, improved
expense efficiencies and strong growth in Group assurance new
business sales. During 2020 and 2021, we deepened and cultivated
relationships with our Group assurance customers by supporting
Dar-es-Salaam, Tanzania – Coordinates 6.7924° S, 39.2083° E
them through the unique challenges and uncertainties
experienced during the pandemic, including several COVID-19
support services made available free of charge. We purposefully
followed a customer-specific approach in tailoring solutions for
customers, which contributed to the growth in new business
in 2022.
Despite the decline in gross flows, net client cash flow improved
by R660 million from the prior year due to lower benefit
outflows from mortality and morbidity claims, and lower
client terminations.
Funds under management declined by 4% to R293.5 billion (2021:
R304.7 billion) due to a weaker performance in the equity market
and the impact of negative net client cash flow. A component of
the funds under management relates to our flagship smoothed
bonus funds, which performed well in an extremely unpredictable
market environment. This reduced the market volatility customers
experienced through smoothing, while building investors’
retirement savings by providing consistent real returns.
Results from operations improved substantially from R727 million
in the prior year to R1 978 million. The prior year included large
net negative basis changes, mostly related to the strengthening
of COVID-19 provisions. Results from operations benefited from
strong mortality underwriting profits as a result of a muted
COVID-19 experience and we released the remaining COVID-19
provision. Net positive economic basis change included a release
of discretionary margins in respect of investment guarantees. Our
asset-based revenue grew on the back of higher average funds
under management over the year.
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Old Mutual Insure provides short-term insurance
services to personal, commercial and corporate
customers.
Old Mutual Insure is proud of its tradition of service quality and extensive range of non-life insurance
products and solutions designed to meet its personal, commercial, and corporate customers’ needs.
Old Mutual Insure partners with independent intermediaries to deliver advice and non-life insurance
solutions to customers and delivers non-life insurance products directly to the market through its
distinctive channels:
» Retail personal (including iWYZE)
» Retail commercial lines
» Specialty
» Mutual & Federal Risk Financing (cell captive)
» Credit Guarantee Insurance Corporation
Key differentiators
1
2
3
4
Market-leading position – a recognisable and dependable brand coupled with a history
of diverse product mix and underwriting experience
Specialist insurance skills to support and bring innovation to the corporate and niche
markets
Customised insurance solutions supported by first-in-class customer service and
experience teams
Credit Guarantee Insurance Corporation is a market leader in trade credit with an
experienced management team and a strong brand
Operating context
The 2022 year was characterised by weather events which were a reminder of the risk and
impact that climate change has on our business. This was coupled with an increase in claims
costs due to significant strain on the global supply chain resulting in disruption and shortages
in parts. Catastrophe events in the year, specifically the KwaZulu-Natal floods and two adverse
weather conditions in December had an impact on claims. Load shedding has resulted in an
increase in power surge claims. High inflation rates continued to impact repair and replacement
costs, increasing claims values. The severe increase in the cost of living has influenced client
retention which impacted the gross written premium.
Operational metrics
Operational metrics
471 877
retail customers
2021: 463 768
4 750
tied advisers
2021: 4 9591
1 843
independent
brokers
2021: 1 8191
3 077
employees
2021: 2 456
Gqeberha, South Africa – Coordinates 33.9608° S, 25.6022° E
1 Prior period re-presented
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Strategic focus areas
Key activities 2023
1
Diversify our distribution channels and products to grow revenue
We established a virtual distribution model within retail to optimise the costs to
service our customers and established a tied agency capability within our retail
business. Several branches were closed down as we reduce our branch footprint.
We formed strategic partnerships that will enhance our product offering in iWYZE
and Mutual & Federal Risk Financing.
Alternative business solutions including the tied agent model, grew rapidly,
reaching a new monthly sales milestone of R1.8 million in November, while iWYZE
continued to grow through the business partner programme and increased digital
presence as customers registered on WyzeHub.
» Acquired 100% of Genric Insurance Company in the first quarter of 2023
» Realising synergies from our acquisitions
» Non-motor sales force migration to commence
» Acquiring new customers through direct channels and growing new
customers in the intermediated market
» Improve adviser productivity to reduce expense ratios and improve
customer experience
» Continue to diversify our distribution channels and products
» Continue to leverage data and technology for operation efficiencies
» Enhance our platforms through acquisition and partnerships
We made satisfactory progress in securing inorganic growth opportunities through
the purchase of Versma Administrators and Primak Brokerage. We also activated
the Letsema broker services pipeline.
Value creation
2
Leverage data and technology to drive efficiency, pricing and risk
selection
We focused on a sustainable reduction in costs through technology development
and stabilisation for future savings, invested in the right skills and systems and
simplified, digitised and automated products and processes. The expense
management project unlocked R174 million in savings and the automation
currently underway will enable the next phase of cost savings in 2023.
We continued the implementation of advanced analytics use cases, including
pricing and renewals informed by actuarial analytics and techniques. We
implemented a technology re-platforming in Credit Guarantee Insurance
Corporation and began quoting new business and renewals in Corporate property
using the new rating platform. We also implemented a new reinsurance system to
improve data quality, reporting and governance.
3
Enhance customer engagement models
We continued with the sales force rollout to automate the capturing of complaints,
significantly reducing the time to respond and action client complaints. We
enriched our customer experience through enhanced digital solutions.
4
Optimising reinsurance structures
Whalebone Pier, Umhlanga, KwaZulu-Natal, South
Africa – Coordinates 29.7263° S, 31.0886° E
Bespoke programmes are in place for all business divisions. The new reinsurance
system together with an exercise underway to optimise reinsurance structures will
create protection against volatility and improved value for money. It will also unlock
reinsurance placement synergies on completed acquisitions.
Customers:
» R5.1 billion (2021: R5.0 billion)
in claims and benefits paid
» Improved customer experience with growth of the digital
presence of iWYZE
Intermediaries:
» R239 000 (2021: R229 000)
spent on intermediary training and development
Trade-off
The trade-off remained in the deployment of funds in the business. The
ongoing information technology strategy refresh to align the business
with the broader Old Mutual Limited information technology strategy
requires investment which may have otherwise been spent elsewhere
however, it is aimed at long-term value retention and generation for
the shareholder and customer.
In underwriting, remediation across several portfolios results in
premium growth sacrifices and potentially broker resistance. However,
it also strengthens the quality of the book over time and aims to
enhance the margins. This is planned for large books within Retail, ONE
Financial Services and the Premier book.
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Old Mutual Insure continued
Gross written premiums contribution by division
10%
10%
2022
48%
35%
34%
2021
49%
7%
7%
1 Specialty includes premiums from ONE Financial Services for 2021 and 2022
R million
● Retail:
● iWyze:
● Specialty1:
● Credit Guarantee Insurance
8 184 (2021: 7 778)
1 273 (2021: 1 141)
6 057 (2021: 5 487)
Corporation:
1 676 (2021: 1 521)
Performance overview
Gross written premiums of R17 190 million (2021: R15 927 million)
increased by 8% largely due to good premium growth across all
our divisions. The Specialty division onboarded several new cells
in the Mutual & Federal Risk Financing business and new policies
were secured in Retail, particularly in the alternative business
solutions channel and elite products. The continued growth of
our direct channels in iWYZE benefited from increased customer
numbers and in Credit Guarantee Insurance Corporation
improved customer retention contributed to the growth in gross
written premiums.
Results from operations were 9% below prior year, primarily driven
by the decrease in net underwriting result, which was partially
offset by higher investment returns on insurance funds given the
higher interest rate environment.
Retail
Net underwriting loss of R392 million(2021: loss of R100 million)
significantly increased from the prior year, largely due to a
combination of higher volumes of attritional claims and weather-
related catastrophe claims related to KwaZulu-Natal, Gauteng and
North West floods.
Net underwriting results decreased by 25% due to increased
claims following severe weather events, the impact of rising
inflation on claims costs and an increased claims frequency
as a result of load shedding. The KwaZulu-Natal floods had a
net negative impact of R87 million and the storms recorded in
December negatively impacted the results in the last quarter of
the year. Repair and replacement costs increased due to inflation,
resulting in an overall increase in the cost of claims. This was partly
offset by the release of business interruption reserves held in the
prior year amounting to R83 million, the inclusion of ONE Financial
Services profits in the current year, and an increase in Specialty
underwriting profits. The decline in underwriting results led to a
net underwriting margin of 3.1% (2021: 4.8%), which is below the
target range of 4% to 6%.
iWYZE
The strong net underwriting result of R100 million (2021: R67 million)
was due to a new excess structure implemented across all products,
which benefited the claims experience. The weather-related
catastrophe events had a minimal impact on the results.
Specialty
Net underwriting result of R97 million (2021: R5 million) substantially
improved from the prior year, primarily driven by ongoing prudent
underwriting and risk selection practices which assisted in ensuring
that the attritional losses remained low. This was partially offset by
the catastrophe claims in our Corporate Property and Marine lines of
business related to the KwaZulu-Natal floods.
Luderitz, Namibia – Coordinates 26.6420° S, 15.1639° E
Credit Guarantee Insurance Corporation
Net underwriting result marginally increased to R502 million
(2021: R489 million) due to continued underwriting discipline,
and moderate attritional claims. The business was not directly
impacted by the weather-related catastrophe events.
ONE Financial Services
The acquisition of ONE Financial Services has led to additional
net earned premiums of R1.2 billion in the current year. Net
underwriting results of R55 million (2021: nil) improved significantly
from a loss of R36 million during the first half of the year due to the
effectiveness of remedial actions implemented by management.
Management action is ongoing and expected to continue to
balance the risk exposure to the benefit of the business. Net
underwriting profits were partially offset by increased attritional
losses on motor sections as well as the catastrophe events claims.
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Old Mutual Africa Regions operates in 12 countries
across three regions: Southern Africa, East Africa and
West Africa.
The segment offers Life and Savings, Asset Management, Banking and Lending (including micro-
lending) and Property and Casualty (including medical insurance) services to the retail mass
and affluent market, and SMEs, corporate and institutional customers. The segment has a wide
distribution network, including physical branches, independent agents, brokers, digital channels,
and bancassurance.
Key differentiators
1
2
3
Strong broker relationships
Leading Life and Savings offerings across Southern Africa
Strong brand recognition in Namibia, Malawi, Zimbabwe and Kenya
Operating context
The operational environment was challenging in our markets in 2022. The nascent economic
growth recovery from the COVID-19-driven induced recession was slowed down by rising
inflation and interest rates, exchange rate volatility, and a tightening of policies by central banks.
Ballooning external debt payments increased demand for US dollars accelerating currency
volatility and widespread depreciation. In Kenya, Malawi and Ghana, the fiscal pressures forced
governments into public debt restructuring programmes and to turn to the International
Monetary Fund for support. Inflationary pressure continues to be a key factor impacting the
regional economies driven by the knock-on effects of the Russia-Ukraine conflict.
In Malawi, acute dollar shortages resulted in fuel shortages and challenges in businesses
meeting US dollar-denominated obligations. The Cholera outbreak in Malawi is putting
increasing strain on the economy and health system.
In Ghana, the debt restructuring plan announced by the government is expected to result in
bond holders incurring some losses on the value of their holdings.
The net effect has been pressure on household disposable incomes and rising levels of poverty,
thus impacting top-line growth in some segments.
The economic pressures have largely affected the credit quality in the banking businesses
which we have mitigated by tightening the lending criteria. Our other lines of business have
experienced top-line growth.
Operational metrics
5.3
million
customers
2021: 5.7 million
3 124
tied advisers
2021: 2 7481
6 627
employees
2021: 7 119
202
Old Mutual
branded
branches
2021: 210
Adomi Bridge, Adome, Ghana – Coordinates 6.24061° N, 0.09694° E
1 Prior period re-presented
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Strategic focus areas
1
Profitable top-line growth
Our insurance and asset management business delivered strong year on year topline growth driven by improving distribution
efficiencies and cross-selling as we continue to integrate our offerings. Life APE sales grew on good margins and gross written
premiums also increased by 27%. Mortality experience improved from prior year but is still elevated.
We made progress on improving Property and Casualty margins in Kenya, but more work is required in other markets. Although
growth in our lending book remained constrained as we tightened lending criteria, net lending margins improved from prior
year.
We launched a Broker’s portal to improve engagement in West Africa. In Namibia, Rwanda and Uganda, we launched the
MyOldMutual app to our customers. We also enabled secure web and USSD platforms in Kenya, Uganda, Rwanda and Botswana,
thus increasing our reach and improving our customers’ access to our solutions.
2
Turnaround underperforming businesses
The number of profitable operating entities increased to over 80% in comparison to 63% in the prior year. We completed the
East Africa control improvement project and each business has established the necessary governance systems and structures to
ensure the sustainability of the control environment. Our Zimbabwe business was also profitable and remitted the 2021 declared
dividend of USD 1.2 million to the Group. The rightsizing of our Nigeria business continues; however, delays were encountered
related to the implementation of shared services and automation. We also exited unprofitable product lines and client segments
and pivoted to corporate sales in East and West Africa to support top-line growth and margins.
3
Strategic partnerships and scaling to optimise long term sustainable return on capital
To support growth and acquisition of new capabilities, we strengthened and expanded bancassurance partnerships in West
Africa. We continued to pursue other partnerships to support our ambitions in loyalty programmes, strategic distribution and
claims management. We continue to evaluate options to build scale in our smaller businesses through strategic partnerships
and pivoting to other profitable financial services verticals in some markets with the goal of optimising return on capital in the
long term.
4
Build a leading brand and relevant solutions
We successfully rebranded UAP-Old Mutual entities in Kenya and Rwanda to Old Mutual. In Malawi and Zimbabwe, we continued
to grow our end-to-end funeral services offerings and integrating them to our suite of risk products. In Kenya we launched
alternative investments to expand the asset classes available for our long term investors. We continued to scale alternative
investments in Malawi and Zimbabwe with a bias towards sustainable energy, infrastructure and agriculture.
Key activities 2023
» Grow life retail offering in Southern Africa
» Drive turnaround efforts so that we deliver 90% profitable entities in 2024
» Improve underwriting margin in Property and Casualty
Value creation
Customers:
Intermediaries:
» R2.4 million
(2021: R3.2 million)
spent on intermediary
training and
development
» >R2.2 billion
paid in commission
» 92% and 100%
retention scores of
intermediaries in East and
West Africa respectively
» R5.6 billion
(2021: R6.8 billion)
in claims and benefits paid
» R3.5 billion
in responsible lending to
(2021: R4.1 billion)
customers
» 80% growth
in digital sales and
improvement in customer
experience through digital
channels
» Increasing our reach and
improving our customers
digital access to our
solutions
Trade-off
To improve the affordability of our Property and Casualty products, we
had to forgo passing on inflationary increases to our customers. We
instead managed these increases by negotiating preferential pricing
with suppliers.
We are invested in the implementation of IFRS 17 and are dependent
on actuarial and finance skills. High demand and scarcity have made it
increasingly difficult to retain talent in these fields. We have therefore
improved our employee value proposition for the finance and actuarial
jobs to improve retention.
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Old Mutual Africa Regions continued
Results from operations by line of business (%)
Results from operations by region (%)
>100%
550
13%
208
236
100%
84
42
67%
(28)
(84)
600
400
200
0
(200)
(400)
(600)
(557)
(557)
Life and
Savings
2021
Asset
Management
Banking
and Lending
Property
and Casualty
2022
1 000
800
600
400
200
0
(200)
>100%
984
>100%
86
(104)
East
Africa
2022
(16)
Southern
Africa
2021
47%
1%
(47)
(89)
West
Africa
(182)
(181)
Central
regional
expenses
Performance overview
Please note that the financial performance commentary excludes
the performance of our business in Zimbabwe. This is in line
with the Group decision to exclude Zimbabwe from our key
performance indicators due to the existing hyperinflationary
conditions in the country. All other non-financial data points
include Zimbabwe.
Southern Africa
Gross flows increased by 7% to R13 618 million (2021:
R12 691 million) due to improved corporate and retail flows in
Namibia and Malawi as both markets saw a recovery in operating
conditions following a tapering of the COVID-19 pandemic. This,
coupled with reduced outflows on account of the non-repeat
of the high death claims related to the COVID-19 pandemic,
resulted in a significant improvement in net client cash flow
to R738 million (2021: R215 million).
Life APE sales increased by 23% to R838 million (2021: R681 million)
due to large single premium corporate inflows as well as improved
retail and corporate recurring premium sales in Namibia. The
value of new business increased by 4% due to higher sales and
profitable sales mix in Namibia. The effects of high expense
inflation and increased sales of lower-margin Group funeral
business in Malawi partially offset the increase in value of new
business, which led to a reduction in the value of new business
margin by 120 bps to 3.6% (2021: 4.8%).
The continued tightening of credit granting criteria implemented
to manage credit quality resulted in gross loans and advances
decreasing by 4% to R1 281 million (2021: R1 334 million). These
management actions and improved collections resulted in lower
impairments, which absorbed the reduction in interest income
on account of the smaller loan book. As a result, the net lending
margin improved by 200 bps to 18.3% (2021: R16.3%).
Gross written premiums increased by 10% to R1 087 million
(2021: R990 million) due to higher new business and renewals
written in both Namibia and Botswana. Net underwriting margin
decreased by 80 bps largely due to adverse claims experienced in
Botswana’s motor book as the lifting of COVID-19 travel restrictions
saw a higher incidence of claims and higher severity of claims due
to the impact of inflated cost of spare parts.
There was a marked turnaround in results from operations, which
increased significantly to R984 million (2021: loss of R16 million),
largely due to a recovery in the Life and Savings business. This was
attributable to an improved mortality experience across the region
as the COVID-19 excess claims reported during the third wave did
not repeat in the current year. In addition, improved experience
variances and positive assumption changes contributed to the
improved results. The assumptions changes in 2022 included a
release of COVID-19 provisions, which was offset by strengthening
mortality basis in Namibia to mitigate changes in mortality levels
from future endemics.
Mbabane, Swaziland – Coordinates 26.3054° S, 31.1367° E
Asset Management results from operations increased by 8% to
R230 million (2021: R213 million) mainly due to higher fee income
on the back of increased funds under management. This was
driven by higher flows and improved investment returns following
a good equity performance in Malawi. The Banking and Lending
results from operations were flat on prior year due to the lower
interest income earned on the smaller loan book. Property and
Casualty results from operations decreased by 20% to R12 million
(2021: R15 million) due to the adverse claims experience in
Botswana.
East Africa
Gross flows increased by 65% to R10 943 million (2021: R6 614 million)
due to strong retail unit trust flows in Uganda and corporate flows
in Kenya. Higher gross inflows more than offset higher outflows in
Uganda as customers sought liquidity in the challenging economic
climate which resulted in net client cash flow of R2 845 million
(2021: R1 243 million).
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Life APE sales increased by 6% to R214 million (2021: R201 million)
mainly due to improved productivity, which resulted in increased
retail and corporate sales in Uganda and Kenya. There was an
improvement in the value of new business and the value of new
business margin due to the continued higher proportion of more
profitable corporate sales.
Stricter lending criteria and buyoffs by mainstream banks led
to a 20% decline in loans and advances to R2 216 million (2021:
R2 778 million). The stricter lending criteria coupled with improved
collections translated into lower impairments resulting in a 130 bps
improvement in the net lending margin.
Good customer acquisition and retention strategies led to a
33% increase in gross written premiums to R3 822 million (2021:
R2 873 million). However, poor claims experience resulting from the
higher incidence of both health and general insurance claims as well
as the higher cost of claim settlement continue to adversely impact
the underwriting experience, with the net underwriting margin
decreasing by 60 bps to negative 8.7% (2021: negative 8.1%).
A turn around in results from operations, at R86 million (2021:
negative R104 million), was driven by improvements in all lines of
business. Life and Savings results from operations significantly
improved due to better mortality experience and positive basis
changes related to Kenya. The COVID-19 provision of R21 million
was released in the current year. Asset Management results from
operations improved by 22% to R60 million (2021: R48 million) due to
higher fees generated from higher funds under management, which
benefited from the positive net client cash flow of recent years.
Banking and Lending results from operations improved by
R35 million, mainly due to lower impairments stemming from
improved collections and a stabilising loan book. Property and
Casualty results from operations improved by R6 million due to
higher investment returns driven by growth in fixed interest assets
backing policyholder liabilities due to the growth in business written,
as well as higher yields on fixed assets in Kenya and Uganda. These
returns offset an underwriting loss as a result of high claims in health
and motor insurance lines.
Life APE sales decreased by 15% to R163 million (2021: R191 million)
due to the appreciation of the rand against the Ghana cedi. In local
currency, Life APE sales increased by 2% due to improved retail and
corporate sales in Ghana, which were partially offset by the closure of
an unprofitable product line to new business in Nigeria. Value of new
business and value of new business margin worsened due to low
margin product mix as well as new business initial expense losses in
retail book.
Gross written premiums increased by 28% to R245 million (2021:
R192 million) due to new business onboarded and improved
productivity. Despite the impact of high inflation on expenses, the
strong top-line performance coupled with the containment of
claims resulted in a significant improvement to the net underwriting
margin.
West Africa
Despite increased corporate flows in Nigeria, in line with the strategy
to pivot towards corporate business, gross flows decreased by 6% to
R548 million (2021: R583 million) due to a 39% appreciation of the
rand against the Ghana cedi. In local currency, Ghana flows increased
by 10% due to higher corporate and retail flows. Net client cash flow
decreased by 10% as the lower outflows partially offset the decrease
in inflows, driven by better claims experience.
Life and Savings results from operations loss improved by 4% to
R26 million (2021: R24 million) due to positive basis changes related
to the refinement of hedging methodology. Property and Casualty
results from operations loss improved by 66% to R21 million (2021:
loss of R62 million) driven by the improved underwriting result and
higher investment returns on assets backing policyholder liabilities
due to higher interest rates.
Trans-Kalahari Highway, Namibia – Coordinates 21.9493° S, 15.9413° E
Integrated Report 2022
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