Old Mutual Limited
Incorporated in the Republic of South Africa
Registration number: 2017/235138/06
ISIN: ZAE000255360
LEI: 213800MON84ZWWPQCN47
JSE Share Code: OMU
LSE Share Code: OMU
NSX Share Code: OMM
MSE Share Code: OMU
ZSE Share Code: OMU
("Old Mutual" or “Company” or “Group”)


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22 November 2022


OLD MUTUAL VOLUNTARY OPERATING UPDATE FOR THE PERIOD ENDED 30 SEPTEMBER 2022

OPERATIONAL UPDATE

Despite tough economic conditions, sales recovery has maintained momentum in the third quarter
of 2022 across our life businesses. The difficult global macro-economic conditions have impacted
the operating environment in South Africa and the other countries in which we operate. South
Africa has experienced rising inflation, interest rate increases and ongoing load-shedding. In the
African markets where we operate, the economic climate continues to be volatile due to
escalating inflation rates and depreciating currencies. These factors have resulted in increased
financial pressure on customers.

Financial performance for the period ended 30 September 2022

The table below sets out certain key performance indicators for the nine months ended 30
September 2022 (the “current period”).

 Key Performance Indicators                      30 September      30 September      change
 (R millions unless otherwise indicated)                 2022              2021
 Life APE sales                                           9 498             8 136        17%
 Gross flows                                            136 136           146 631        (7%)
 Net client cash flow                                    (1 163)          (2 627)        56%
 Funds under    management1   (Rbn)                     1 192.7           1 273.6        (6%)
 Loans and     advances1                                 18 931            18 907         0%
 Gross written premiums                                  16 860            15 103        12%
1Comparative      amounts represent FY2021 balance sheet amounts

Life APE sales were up by 17% from the nine months ended 30 September 2021 (the “prior period”),
which was impacted by lockdowns. Sales in the current period benefitted from strong issued sales
across all channels and improved credit life sales in Mass and Foundation Cluster. Sales growth was
also driven by higher group risk and annuity sales in Old Mutual Corporate as well as higher retail
and corporate sales in Namibia. Our China business delivered strong savings sales from the broker
channels. Personal Finance and Wealth Management delivered improved savings and funeral
sales as well as higher endowment sales and investment flows into fixed bond products for the year
to date, which were partially offset by lower guaranteed annuity and non-funeral risk sales.

Gross flows declined by 7% as the prior period included new Liability Driven Investment mandates
together with flows into money market and corporate cash products in Old Mutual Investments
which did not repeat in the current period. Strong flows from Old Mutual Africa Regions and China
as well as significant flows into new deals secured in Old Mutual Investments and Old Mutual
Corporate in the third quarter contributed positively to flows. This was partially offset by lower flows
in Personal Finance and Wealth Management due to lower guaranteed annuity sales and reduced
demand for offshore investments.

Despite the decrease in gross flows, net client cash flow recovered from the prior period due to
reduced mortality claims across the life businesses and lower client disinvestments and terminations.
Funds under management were negatively impacted by market volatility due to weaker
performance of local and global equity markets.

There has been no significant movement in loans and advances compared to the prior period.
Mass and Foundation Cluster delivered steady sales and Old Mutual Africa Regions remain under
pressure with lower disbursements due to tough economic conditions.

Strong growth in gross written premiums was supported by higher renewal rates and new business
sales in Old Mutual Africa Regions, particularly in Kenya’s medical business, coupled with good
premium growth in the Specialty division of Old Mutual Insure.

Results from operations were above the prior period, mainly driven by improved profits in our life
businesses resulting from lower COVID-19 excess deaths in the current period. Despite market
volatility, Old Mutual Investments delivered higher asset-based fees due to higher average asset
levels which positively impacted profits. This was partially offset by deteriorating persistency
experience in Mass and Foundation Cluster and net catastrophe losses related to the KwaZulu-
Natal floods as well as an increase in attritional claims in Old Mutual Insure for the year to date.

Our central costs were above the prior period due to new development costs and license
application costs related to transactional capabilities and Next176 as part of our investment in
growth and innovation initiatives.

Due to the ongoing impact of hyperinflation on the economy in Zimbabwe, we continue to exclude
the results of the Zimbabwe business from adjusted headline earnings. The Group headline earnings
for current period was lower than the prior period due to the significant decline in Zimbabwe
earnings. This was largely driven by the deterioration of Zimbabwean dollar to the rand, the
currency depreciated from closing exchange rate of 1 ZWL$: 0.1369 ZAR at 30 September 2021 to
closing exchange rate of 1 ZWL$: 0.0278 ZAR for the period ended September 2022.

CAPITAL UPDATE

Capital position
The solvency ratio for Old Mutual Life Assurance Company (South Africa) Limited for the current
period remained at 212%, above our target range of 175% - 210%. The combined decrease in
eligible own funds and solvency capital requirement for the period ended 30 September 2022
resulted in no movement in the ratio from June 2022. We continue to monitor the Group solvency
ratio which remains within our target range of 170% - 200%.
Discretionary Capital
The Group proactively manages its discretionary capital to maximise shareholder value by
optimising the Group’s balance sheet and allocation of capital within the Group. Discretionary
capital represents the surplus assets that are available for distribution, deployment or acquisitions.
The Group’s discretionary capital for the current period was R3.5 billion. The discretionary capital
balance at 30 September 2022 includes amounts earmarked for investments in growth and
innovation initiatives including building our transactional capabilities which will enable us to
responsibly build the most valuable business in our industry.

The Residual plc board has approved a dividend of GBP39 million, which is expected to be paid to
the Group before the end of 2022. The dividend will increase the discretionary capital for the Group.
Further detail on the allocation of discretionary capital will be provided at the full year results
announcement.

STRATEGIC TRANSACTIONS
We have anchored our strategy in our victory condition of becoming our customers’ first choice to
sustain, grow and protect their prosperity. We are pleased to announce several developments
which bring us closer to delivering on this victory condition.

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. The Group has existing lending and
transactional solutions which, in South Africa, consist of our Money Account and an unsecured
lending product. These solutions are offered mainly to our Mass and Foundation Cluster customer
base and the unsecured lending solution is already a strong contributor to Group profitability. The
current transactional solution is delivered through a commercial arrangement with a third-party
bank. While this commercial arrangement has allowed us to gain experience in transactional
banking services, a divergence of aspiration requires us to reassess our future arrangement to
deliver on our customer needs. The establishment of a bank within the Group 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 cheaper source of funding.

We are building this transactional capability using the latest technology that will 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.

The approved expenditure to complete the build of the transactional capability is R1.75 billion. In
line with the business case, we have incurred costs of R830 million for the current period and
approximately 10% 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 break-
even 3 years after the launch. As the capability matures post break-even, 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.

Old Mutual Insure has concluded a transaction to acquire a 51% shareholding in Versma
Administrators (“Versma”) and Primak Brokerage (“Primak”), both are financial service providers
operating in the Western Cape in the non-life insurance space. Versma and Primak are family-
owned businesses that reached maturity in their life cycle and welcomed a large industry player to
take the businesses to the next level. These transactions have already received Prudential Authority
approval and will have a minimal impact on the discretionary capital balance.
OUTLOOK

Our balance sheet remains well capitalised with Group solvency ratio within our target range. We
are committed to deliver on our medium-term targets, noting that the results from operations target
will be difficult to achieve given the current economic climate and market volatility. We remain on
track to achieve our cost savings target of R750 million, with savings of more than R700 million
achieved for the period ended 30 September 2022. The value of new business margin remains within
our medium-term target range of 2% to 3%.

We continue to be concerned about the impact that the current economic environment is having
on policyholders’ ability to maintain their policies. At year end we will reassess the remaining COVID-
19 provisions, the long-term impacts of COVID-19 and increased pressure on persistency in Mass
and Foundation Cluster.

We are making progress on the implementation of IFRS17 to produce an opening balance sheet.
We will provide an update next year at our 2022 results announcement.

INVESTOR ENGAGEMENT

Investors are invited to participate in a conference call for a business update on 22 November 2022
at 15:00, SAST. Investors and media may register on the following link:

https://www.oldmutual.com/investor-relations/

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

A recorded playback will be available for three days after the conference call.
Access numbers for recorded playback:
Access code for recorded playback: 43326
 South Africa                       010 500 4108
 UK                                 0 203 608 8021
 Australia                          073 911 1378
 USA                                1 412 317 0088
 International                      +27 10 500 4108

The financial information in this voluntary operating update is the responsibility of the Old Mutual
Board of Directors and has not been reviewed or reported on by the Group's external auditors. The
targets included in this announcement do not constitute profit forecasts and have not been
reviewed or reported on by the Group's external auditors.

Sandton
Sponsors
 JSE                                  Merrill Lynch South Africa (Pty) Limited t/a BofA Securities
 Namibia                              PSG Wealth Management (Namibia) (Proprietary) Limited
 Zimbabwe                             Imara Capital Zimbabwe plc
 Malawi                               Stockbrokers Malawi Limited

Enquiries
 Investor Relations
 Bonga Mriga                          M: +27 67 866 6348
 Interim Head of Investor Relations   E: bmriga@oldmutual.com
 Communications
 Vuyo Mtawa                          M: +27 68 422 8125
 Head: Group Communications          E: vmtawa@oldmutual.com

Notes to Editors
About Old Mutual Limited
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 Africa, and it has a niche business in Asia. With over 177 years of heritage
across sub-Saharan Africa, Old Mutual is a crucial part of the communities it serves as well as
broader society on the continent.

For further information on Old Mutual and its underlying businesses, please visit the corporate
website at www.oldmutual.com.