Old Mutual H1 Earnings Call Highlights

Key Points

• Interim performance improved: Old Mutual’s results from operations per share rose 11%, while ROGEV increased to 12.7% from 4.1% and the dividend rose 8%. Returns exceeded its estimated cost of capital but remained below medium-term targets.
• Capital returns and efficiency advanced: The group announced an additional ZAR 1 billion share buyback after completing ZAR 2.3 billion of an earlier program. First-half cost savings reached ZAR 338 million, bringing cumulative savings to ZAR 936 million against a ZAR 2.5 billion 2027 target.
• Banking expanded amid mixed operations: OM Bank had about 750,000 customers and ZAR 1.4 billion in deposits at June-end, while Old Mutual is targeting up to 2.8 million customers by 2028. Strong growth in investments and African operations was partly offset by catastrophe losses that contributed to a 25% decline in Old Mutual Insure’s operating result.

Old Mutual LON: OMU reported improved interim operating performance for 2026, with management pointing to progress on its strategy, cost-reduction program and banking expansion while announcing a further ZAR 1 billion share buyback.

Chief Executive Officer Jurie Strydom said the insurer and financial-services group was gaining confidence that its execution plans were on track. “We are where I had hoped, and as a team, we had hoped to be at this point in our strategy,” Strydom said.

The company reported return on group equity value, or ROGEV, of 12.7%, up from 4.1% at December 2025, while normalized return on net asset value rose to 12.6%. Both measures exceeded Old Mutual’s estimated cost of capital of about 12.5%, although they remained below the company’s medium-term targets of 14% to 16% for ROGEV and 15% to 17% for normalized RONAV.

Results from operations per share increased 11%, within the company’s newly signaled sustainable growth range of 10% to 14% based on its 2025 base. Group equity value per share rose to ZAR 20.66. Old Mutual increased its dividend by 8%, within its stated 6% to 9% growth range.

Buyback, Capital and CFO Transition

Old Mutual announced an additional ZAR 1 billion share repurchase, which Strydom said reflected management’s confidence in the group’s value relative to its group equity value. The company had already completed the remaining ZAR 2.3 billion of a prior ZAR 3 billion buyback during the period.

Chief Financial Officer Casper Troskie said discretionary capital stood at ZAR 3.1 billion at the end of June. This balance includes expected capitalization of OM Bank totaling ZAR 2 billion across 2026 and 2027, as well as the newly approved ZAR 1 billion buyback.

Old Mutual expects at least half of a declared ZAR 4 billion interim dividend from OMLACSA to add to discretionary capital in the second half. Troskie said the board would assess whether available capital should be returned to shareholders or used for growth under the group’s capital-allocation framework.

The group’s shareholder solvency ratio improved 10% from December to 172% at June 30, supported by subordinated debt issuance and yield-curve movements. Old Mutual issued ZAR 1.8 billion of debt in the first half, ending the period with a gearing ratio of 16.9%.

The company also named Ranen Thakurdin as CFO-designate, effective Jan. 1. Thakurdin will succeed Troskie when he retires in April 2027. Strydom said the internal appointment would support continuity in strategy and execution.

Cost Savings and Business Performance

Old Mutual said it had achieved ZAR 338 million in cost savings during the first half, taking cumulative savings to ZAR 936 million. The group is targeting at least ZAR 1 billion of savings by the end of 2026 and ZAR 2.5 billion by the end of 2027.

Thakurdin said roughly half of savings achieved so far came from covered businesses and half from non-covered operations, with a similar split expected for the remaining targeted savings. Management expects savings in Old Mutual Insure, Old Mutual Investments and Old Mutual Africa Regions to increasingly flow through to earnings and margins.

Life annual premium equivalent sales increased 21%, while gross flows also rose 21%. Strydom said the sales result included some large corporate wins and estimated underlying growth at about 12% after accounting for those deals. Group value of new business increased 32% to ZAR 569 million, and the value of new business margin improved to 1.4% from 1.2%.

Within Life and Savings, results from operations rose 4%. Wealth Management profit increased 49%, helped by higher average assets under management and a revised retail-margin agreement. Mass & Foundation results rose 19%, while Corporate results declined 8%, as the prior period had benefited from stronger market-related contributions.

Old Mutual Investments posted a 40% increase in results from operations, driven largely by higher non-annuity revenue, including preferred returns and fair-value gains. Gross flows increased 48%, while alternatives capital raises climbed 97% to ZAR 6.7 billion. Chief Operating Officer Zulfa Abdurahman said alternatives revenue is inherently lumpy and could taper as funds move through their life cycles, although the business expects to retain a level of such revenue.

Banking Expansion and Insurance Claims

OM Bank had about 750,000 customers at the end of June and was expected to surpass 1 million within weeks, according to Strydom. Deposits increased to ZAR 1.4 billion at June-end and reached ZAR 1.6 billion by the end of August.

The bank is targeting 2.5 million to 2.8 million customers, ZAR 8 billion to ZAR 10 billion in retail deposits, and ZAR 23 billion to ZAR 26 billion in lending by the end of 2028. Old Mutual is now targeting annual banking-cluster RFO of between break-even and ZAR 200 million in 2028.

Clarence Nethengwe, CEO of OM Bank, said more than 80% of the ZAR 1.4 billion in deposits at June came from former Bidvest money-account customers, with roughly 20% coming from new customers.

Old Mutual Insure’s RFO declined 25%, reflecting lower underwriting earnings and reduced investment returns on insurance funds. Severe flooding in the Eastern and Western Cape generated ZAR 376 million in catastrophe losses, net of reinsurance. Nevertheless, the net underwriting margin was 7.6%, at the upper end of the group’s 5% to 8% target range.

Soul Abraham, CEO of Old Mutual Insure, said the catastrophe losses represented about a 3 percentage-point drag on underwriting margin and that attritional performance improved materially from the prior year.

Old Mutual Africa Regions increased RFO by 65%, supported by Malawi and East and West Africa. Management said Malawi continued to face high inflation and foreign-currency shortages, but underlying performance remained strong across its business lines.

About Old Mutual (LON:OMU)

Old Mutual Limited, together with its subsidiaries, provides financial services primarily in South Africa and rest of Africa. The company operates through Mass and Foundation Cluster, Personal Finance and Wealth Management, Old Mutual Investments, Old Mutual Corporate, Old Mutual Insure, and Old Mutual Africa Regions segments. It offers risk products, including group risk and funeral covers; savings; lending; and transactional products. It also provides financial advice, investment, and income products, as well as asset management services.

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