INTEGRATED REPORT 2019 - Old Mutual Limited DO GREAT THINGS EVERY DAY - Contentstack
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Old Mutual Limited
INTEGRATED REPORT
2019
DO GREAT THINGS EVERY DAY
About our report
OVERVIEW
1 Our Integrated Report
is supplemented by a
suite of additional online
publications. These Old Mutual Old Mutual Old Mutual Old Mutual OMLACSA
Limited Limited Limited Limited Annual
can be accessed on our Governance Remuneration Responsible Annual Financial
corporate website.
STRATEGY AND VALUE
Report 2019 Report 2019 Business Financial Statements
Impact Report Statements 2019
2019 2019
CREATION
Old Mutual Limited Old Mutual Limited Old Mutual Limited Old Mutual Limited Old Mutual Limited
GOVERNANCE REPORT REMUNERATION REPORT RESPONSIBLE BUSINESS IMPACT REPORT ANNUAL FINANCIAL STATEMENTS OMLACSA ANNUAL FINANCIAL STATEMENTS
2019
Refer to oldmutual.com/investor- 2019 2019 2019 2019
relations/reporting-centre/reports
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
GOV REM RB AFS AFS
Reporting scope and boundary Lines of business
This report covers the activities of the Group for the period 1 January ability to create value. This report fairly presents the integrated
2019 to 31 December 2019. It provides an overview of our strategy and key performance of the Group. This report was approved by the
activities to create value over the short, medium and long term in each of Board on 30 March 2020.
PERFORMANCE
our operating environments. This report extends beyond financial reporting Life and Savings Asset Management
and includes non-financial performance, our approach to risk management, Materiality
an overview of our material risks and a summary of our governance and This report focuses particularly on those issues, opportunities
remuneration practices. and challenges that impact materially on Old Mutual Limited
and its ability to consistently deliver value to our stakeholders in a
Reporting f rameworks sustainable manner.
Banking and
Lending
Property and
Casualty
Our integrated report has been compiled in accordance with the principles
of the International Integrated Reporting Framework and the King IV™
Governance code. As a South African company listed on the JSE, we also Forward looking statements Stakeholders
comply with the JSE Listings Requirements and the South African Companies This report may contain certain forward looking statements with
Act, 71 of 2008 (as amended). Our annual financial statements, an extract of respect to certain of Old Mutual Limited’s plans and its current
GOVERNANCE
which are included in this report, have been prepared in accordance with expectations relating to its future financial condition, performance
International Financial Reporting Standards (IFRS). and results. By their nature, all forward looking statements involve Communities Regulators Employees
risk and uncertainty because they relate circumstances which are
Combined assurance
beyond Old Mutual Limited’s control including, domestic conditions
A combined review by management and internal audit was performed as well as global economic and business conditions, market related
to ensure the accuracy of our reporting content, with the Board and its risks, the policies and actions of regulatory authorities, the impact of
Investors Intermediaries Customers
subcommittees providing an oversight role. This report is not audited, but
competition, inflation, the timing and impact of other uncertainties
contains certain information that has been extracted from the audited
of future acquisitions or combinations within relevant industries, as Capitals
consolidated annual financial statements, on which an unmodified audit
well as the impact of tax and other legislation and other regulations in
opinion has been expressed by the Group’s joint independent external
REMUNERATION
the jurisdictions in which Old Mutual Limited and its affiliates operate.
auditors, KPMG Inc. and Deloitte & Touche.
As a result, actual future financial condition, performance and results
Directors responsibility may differ materially from the plans, goals and expectations set forth Financial Natural Human
in forward looking statements. Old Mutual Limited undertakes no
The Board acknowledges its responsibility for ensuring the integrity of this
obligation to update the forward looking statements contained in
integrated report. The Board has considered the operating context, strategy
this report. Nothing in this report shall constitute an offer to sell or the
and value creation model and this report, in the Board’s opinion, addresses all
solicitation of an offer to buy securities. Social and Intellectual Manufactured
the issues that are material to, or could have a material effect on, the Group’s Relationship
OLDMUTUAL Integrated Report 2019
OVERVIEW
2
STRATEGY AND VALUE
CREATION
PERFORMANCE
GOVERNANCE
Message f rom the Chairman 3
Message f rom the Interim Chief Executive Off icer 4
Our Group at a glance 5
Overview Our operations across 14 countries
Group highlights
6
7
REMUNERATION
An established history over 175 years 8
Operating context 10
Board of directors 11
Executive committee 12
OLDMUTUAL Integrated Report 2019
Message from the Chairman
OVERVIEW
3
“We stand ready to govern through what looks to be a
STRATEGY AND VALUE
challenging year for all of us, our customers, our business
and the global economy”
CREATION
Trevor Manuel, Chairman
2019 was a year where the Board was expected to governance roadshows that we used both for listening and belief of creating shared value for our investors, employees,
demonstrate strong, ethical leadership to get the for sharing updates. In considering how to incorporate their customers and communities. We will retain a sharp focus on the
feedback in our remuneration policy, we again practiced a long term sustainability of the Group and focus on enhancing
business through a difficult leadership decision.
PERFORMANCE
principle of balance, also considering our strategic priorities to our competitiveness. By the end of 2019, we have responsibly
Our governance principles and unity of purpose attract and retain talent in order to create longer term value for invested R133.1 billion in socially inclusive, low carbon and
were tested. The depth and diversity of experience our stakeholders. resource efficient investments, representing 17% of assets under
of the Board ensured we remained united and management.
Old Mutual continues to be the dependable and reputable
focused on the tasks at hand. The crisis also
brand we have been to our customers for many decades. In We are living through unanticipated and unprecedented times.
presented as an opportunity to build trust with the early days after the establishment of Old Mutual our motto The stresses induced by the outbreak of COVID-19 (Coronavirus),
our stakeholders in our first full year as a listed became “a certain friend in uncertain times” and this has compel us to factor so much more into the already complex
company. remained the lodestar for all of the 175 years. Over the period we matrix of decision making. We need to understand the new
have grown from a small mutual life company to a large multi- environment and use this appreciation to support all of our
The termination of employment of the former chief executive, offering financial services group, with operations in 14 countries stakeholders and demonstrate continually to be “a certain
Peter Moyo, was a decision rooted in principles-based
GOVERNANCE
and listings on 5 stock exchanges. Through our many years of friend in uncertain times”. At the time of writing we are aware
governance. This was not about simply adhering to rules but operating we have gained valuable insights and vast experience, that the impact of COVID-19, will irrevocably change society
also required the Board to measure its actions as the guardian of which we apply in our business today. The most important across healthcare provision, social dynamics and economic
the Group’s integrity and reputation. This proved to be a difficult lesson we continue to apply is that the things our customers outcomes. Whilst we are not yet certain about the extent of
task. Communicating openly during a period when so many and other stakeholders really care about seldom change. While the devastation of COVID-19 including both the period and
matters were under consideration by the courts and when the the world continues to change, we remain focused on finding depth of disruption, we need to pay detailed attention to our
share price was under pressure was tough. At every step of the modern, innovative and relevant solutions to those core needs contract with stakeholders, including the fact that the business
way we weighed up the impact of our decision on each of the that never change. is sufficiently capitalised and has appropriate liquidity levels to
Group’s stakeholders, understanding that investors, employees, honour our commitments.
customers and the general public may respond differently Being, and being seen to be, a good corporate citizen has raised
depending on the availability of clear information. Further, we the standards of good governance. As senior leaders we must We stand ready to govern the business through what looks to be
REMUNERATION
had to maintain open channels of communication with our commit to be actively accessible and accountable towards our a challenging year for all of us, our customers, our business and
regulators. communities and we must recognise the larger stewardship role the global economy. We remain committed to ensuring that Old
that organizations have to play. It is vital for us to understand Mutual Limited will be a responsible corporate citizen in every
Our first AGM as a South African listed company was a the impact our business has on the environment and to realise jurisdiction that we operate in. Our responsibility is and always
tumultuous event. Firstly, we received exceedingly poor support that being socially responsible and innovative is simultaneously will be, to have accountability to all of our stakeholders, this
for the Remuneration Report. Secondly, we had suspended in our own best interests and that of the communities we principle is central to our governance framework.
Mr Moyo less than 24 hours before the AGM. This also presented serve. During the year we continued to do business responsibly
an opportunity for engaging investors during extraordinary and make a real impact in communities, demonstrating our
OLDMUTUAL Integrated Report 2019
Message from the Interim Chief Executive Officer
OVERVIEW
4
“Despite tough external factors, we have made great strides
STRATEGY AND VALUE
to be more operationally efficient so we remain relevant to
CREATION
our customers of the future. ”
Iain Williamson, Interim Chief Executive Off icer
We faced challenging macroeconomic macroeconomic environment in South Africa, which remains our being under government enforced travel restrictions. We
conditions in South Africa, our largest market, largest operating country, and higher equity market levels. Given are actively dealing with this crisis and have established a
the anticipated disruption in global equity markets and significant dedicated committee to assess new information on a daily
PERFORMANCE
and many of our operating countries in the
downward pressure on GDP growth rates we do not anticipate being basis. In South Africa, a lockdown is in place until 16 April 2020
Rest of Africa in 2019. This put pressure on the able to achieve this target for the 2020 financial year. and a similar lockdown has been announced in Zimbabwe. We
disposable income levels of our customers and have digitally enabled the majority of our employees to work
on the ability of our businesses to grow value Despite tough external factors, we have made great strides to be
safely off premises from their homes, ensuring we can run the
more operationally efficient so we remain relevant to our customers
for our customers and investors. Our business business effectively for our stakeholders during this uncertain
of the future. Since listing in 2018, we have been deliberate and
was resilient against these and we remain time and also supporting the necessary drastic actions that
focused on making what we believe to be essential culture shifts to
have been taken by the South African government and many
confident that our diversified business allows champion positive futures for our customers every day and to attract
other governments in our Rest of Africa business. We placed
us to protect value for stakeholders in tough top talent. We have been working relentlessly to become a digitally
restrictions on all cross border business and personal travel well
economic times. enabled business. We have made good progress on simplifying our
in advance of the lock down to ensure we limited the risk of
legacy systems and processes, transforming the business to be more
infection to our employees and customers.
GOVERNANCE
Our financial results were resilient after taking into account agile and able to meet our customers’ needs and expectations.
the impact of external factors in our operating environment. We also model the impact of perfect storm scenarios (1/200) on
Results from Operations (RFO) decreased by 2% reflecting 2019 was a year in which our customers and communities were
solvency capital and liquidity levels regularly. These stress tests
positive assumption changes offset by a decrease in Old vulnerable and we remained dedicated to make an impact to their
have shown we remain sufficiently capitalised with appropriate
Mutual Insure’s underwriting result. everyday lives through our responsible business efforts. Embedding
liquidity levels. We remain confident that the benefits of our
a culture of being a responsible business has been a key focus since
well diversified business, strong balance sheet and stable
Adjusted Headline Earnings (AHE) was up 5% mainly due listing. We have organised ourselves to make an impact through
cash generating ability will stand us in good stead, in what is
to stronger shareholder investment returns in South Africa, specific focus areas which align with the needs of our stakeholders
anticipated to be a difficult year. As a leadership team we will not
partially offset by reductions in the fair value of properties and we are in the process of refining targets to track desired
be increasing our salaries in 2020 and continue to put in place
in East Africa. We delivered positive Net Client Cash Flow outcomes in each focus area.
a series of management actions to part mitigate the negative
(NCCF) which is commendable in the tough macroeconomic
REMUNERATION
On 11 March 2020, COVID-19 (coronavirus) was declared as a impacts that the COVID-19 pandemic is expected to have on
environment and Funds under Management (FUM)
pandemic due to the rising rate and scale of infection observed. The our business.
increased by 2% in line with the increase in average market
levels. The achievement of our RFO target of nominal rapid spread of this virus since the start of 2020, and particularly in
GDP+2% CAGR is dependent on an improvement in the recent weeks, has resulted in nearly half of the global population
OLDMUTUAL Integrated Report 2019
Our Group at a glance
OVERVIEW
5
Simple financial products to
customers in the low income
and lower middle income
markets
Winner of
Sunday Times
Level 1 B-BBEE Holistic advice and various
Top Brand
savings and investment
MASS AND
STRATEGY AND VALUE
Insurance products FOUNDATION
products to the middle in the long
to individual and CLUSTER
income market term insurance
CREATION
corporate customers PERSONAL category
FINANCE
OLD MUTUAL
INSURE
Operating in OTHER GROUP
14 countries ACTIVITIES
PERFORMANCE
WEALTH AND
INVESTMENTS 368 Branches
Various financial and across SA
insurance products
to individual and REST OF
AFRICA Investment solutions
corporate customers
Top Investors OLD MUTUAL
to high net worth
customers and an asset
CORPORATE
Public management offering to
17% Investment
Corporation
institutional investors
GOVERNANCE
10% Allan Gray
Group risk and investment
Prudential products to employer
29,861
5% Portfolio sponsored retirement and Employees
Managers benefit funds
REMUNERATION
Life and Savings Banking and Lending Asset Management Property and Casualty
Protection solutions for certain risk Wide range of banking and lending Retail savings and investment products Short term insurance solutions for loss of
events including life, critical illness, solutions including unsecured lending including unit trusts, supported by a full property or liability incurred, providing
disability and funeral cover. Long term and simple retail banking solutions. scale institutional asset management cover for personal, commercial, specialty
savings solutions include retirement and Structured credit through our specialised capability providing access to equity, and trade credit risks.
traditional savings products. finance division. fixed income, property, infrastructure
and ESG investments.
OLDMUTUAL Integrated Report 2019
Our operations across 14 countries
OVERVIEW
6 China2
Number of
FUM (Rbn)
West Af rica customers (m)
6.0
0.2
Number of
STRATEGY AND VALUE
FUM (Rbn)
advisers
1.0
418
CREATION
Ghana South Sudan
East Af rica
Kenya
Nigeria
Uganda
Number of Number of
Rwanda
customers (m) employees1 Number of
Tanzania FUM (Rbn)
1.6 656 advisers
29.0
2,465
PERFORMANCE
Number of Number of
customers (m) employees1
3.8 3,510
Southern Af rica
Namibia
Botswana
Number of
FUM (Rbn) eSwatini
advisers
49.5 Malawi
South Af rica
606
GOVERNANCE
Zimbabwe
Number of Number of Number of
customers (m) employees1 FUM (Rbn)
advisers
0.9 1,446 10.0
222
Number of
FUM (Rbn)
advisers
963.0
7,693 Number of Number of
REMUNERATION
customers (m) employees1
1.4 1,406
Number of Number of
customers (m) employees1
6.0 22,483
1 The total number of employees include the number of tied advisers.
2 We have 360 employees in China.
OLDMUTUAL Integrated Report 2019
Group highlights
OVERVIEW
7
Partnered with
151 active Invested more Amazon Web Services
robots deployed, saving than R300 million as our preferred
Old Mutual
STRATEGY AND VALUE
5.2 million minutes in in education intervention cloud provider
processing time to date programmes since 2013 Rewards
CREATION
500 000 +
members
Sponsored since launch
Artificial Intelligence
PERFORMANCE
Revamped our bootcamps for school 2 500 +
sponsorships to reflect girls to raise awareness daily sign
Launched Workday in ups
our brand’s vibrant new
Nigeria, Ghana, Botswana, spirit and energy 500 million
Zimbabwe, Malawi and rewards
eSwatini to empower and earned since
launch
digitally enable employees Awarded BCX Corporate
Innovation Award for 3rd
GOVERNANCE
Robotics and Cognitive most popular
“Workday will bring a Old Mutual
simpler, quicker and more Automation proposition
efficient way of working
for every single one of 3.2 million customers
37%
our employees on the serviced in 368 South
continent.” African branches 63%
Recipient of the
REMUNERATION
Edith Jiya 100 000 credit reports
Standard Bank
CEO of Old Mutual Malawi issued monthly
Top Women Gender Customers
Customers
Non customers
customers
Non
Icon Award
OLDMUTUAL Integrated Report 2019
An established history over 175 years
OVERVIEW
8 1970
Old Mutual acquires a
1999
Old Mutual is
2013
Old Mutual plc strengthens
2018
Old Mutual
JUN
majority shareholding demutualised its operations in Africa with Limited lists on
in Mutual & Federal, and lists on the acquisition of Provident the Johannesburg,
1845 renamed to Old the London, Life Assurance in Ghana London, Zimbabwe,
John Fairbairn founds Mutual Insure in Johannesburg, and Oceanic Life in Nigeria Malawi and Namibia
The Mutual Life 2017. Acquired the Zimbabwe, Malawi stock exchanges
STRATEGY AND VALUE
Assurance Society of remaining shares in and Namibia stock
the Cape of Good Hope 2004 exchanges as
CREATION
Old Mutual plc
1845
2020
PERFORMANCE
MAY
GOVERNANCE
1885 1973 2000 2014 – 2015 2016 2018
The company Old Mutual Old Mutual plc Old Mutual plc Old Mutual plc Old Mutual Limited
OCT
changes its acquires a stake purchases expands its announces a Managed unbundles it’s majority
name to South in Nedcor Bank United Asset footprint to East Separation strategy shareholding in Nedbank
REMUNERATION
Africa Mutual Life (now Nedbank Management Africa with the to separate the four to shareholders making a
Assurance Society Limited) acquisition of businesses owned: total distribution to Old
60.7% of UAP Old Mutual Emerging Mutual shareholders worth
holdings, and a Markets, Nedbank, approximately R38.8 billion
majority stake in Old Mutual Wealth and marking the completion
Faulu Microfinance (now Quilter plc), and of the Group’s Managed
Bank Limited Old Mutual Asset Separation
Management plc
OLDMUTUAL Integrated Report 2019
OVERVIEW
9
STRATEGY AND VALUE
Like most great stories, ours has humble beginnings.
CREATION
Founded by a Scotsman named John Fairbairn in 1845, with no capital, just the premiums of the first 166
policyholders, the trust of like-minded individuals and the unwavering belief that together people can
achieve more than alone. Our motto became “a certain friend in uncertain times” and we have been
delivering on that promise for 175 years.
Over these 175 years we have grown from a small mutual life company to a large multi-offering financial
services group, with operations in 14 countries and listings on 5 stock exchanges.
Through our many years of operating we have gained valuable insights and vast experience, which
PERFORMANCE
we apply in our business today. The most important lesson we continue to apply is that the things
our customers and other stakeholders really care about seldom change. While the world continues to
change, we remain focused on finding modern, innovative and relevant solutions to those core needs
that never change. Today we can pay out funeral claims initiated via the call centre or Money Account
application in less than 4 hours, ensuring that our customers and their families have the funds required
during this difficult time.
As an organisation it is also core to our values that we do business responsibly and make a real impact
in the communities in which we operate. We believe that creating shared value for our investors,
GOVERNANCE
employees, customers and the communities we operate in, will facilitate the long term sustainability
of the Group and enhance our competitiveness. By the end of 2019, we have responsibly invested
R133.1 billion in socially inclusive, low carbon and resource efficient investments, representing 17% of assets
under management.
This is our story and it has just begun - let’s continue to do great things together, every day.
REMUNERATION
OLDMUTUAL Integrated Report 2019Operating context
OVERVIEW
10 Global growth prospects Consumer confidence Trends in Rest of Africa
The global economy has gradually recovered Recent corporate scandals The African population continues to be among the fastest growing and youngest in the
since the 2008 financial crisis and though robust and failing state owned world with changing preferences for products and distribution. Customers increasingly
growth was recently recorded, specifically enterprises in South Africa expect omnichannel distribution centred around digital access, flexibility and speed.
during 2018 and 2019 in the Unites States, the have again highlighted the The insurance market in Africa is characterised by many small insurers competing with
STRATEGY AND VALUE
past decade of anaemic and uneven growth consequences of corruption a few large players. The lack of concentration presents an opportunity for consolidation
speaks to the risks that continue to threaten and mismanagement, reducing of market share, but incumbents are increasingly competing with new entrants
CREATION
financial stability. These risks have become consumer confidence, ultimatly seeking to disrupt the market with unique offerings.
intertwined with trade tensions, amid prolonged leading to lower investment
Financial inclusion in Africa has grown significantly over the last few years driven by the
loose monetary conditions, rapid credit growth sentiment. This has a direct
adoption of digital financial services such as mobile money, but there is still a sizeable
in some emerging economies and high levels of impact on our business as
gap to be addressed. Sub Saharan Africa leads the way with 43%1 of adults holding a
debt. Interest rate cuts are no longer sufficient investors and customers
bank account but other regions still have large segments of the population that are
to stimulate investment and labour productivity are cautious to invest in an
unbanked with limited access to financial services. This lack of market penetration still
growth will stay weak without strong policy environment like this. Eskom’s
presents an attractive opportunity for customer acquisition if the progress on financial
measures, including infrastructure investment, implementation of frequent
inclusion can be sustained.
PERFORMANCE
quality education, formal employment and loadshedding has adversely
innovation capacity. Global wellbeing continues impacted the productivity Food security across the continent continues to be a major concern, most recently
to fall short and a more balanced policy mix is of businesses, resulting in highlighted by the challenges faced in Zimbabwe. The growing population and risks
needed to broaden access to electricity, clean higher electricity costs further associated with climate change compound the issues across the continent, including
water, transport and health care. impacting the quality of life for food shortages.
all South Africans. 1 The Global Findex Survey, World Bank Group, 2017.
Technology disruption in the insurance industry Global pandemics
GOVERNANCE
Customer needs are continuously changing with a shift towards digital access and on demand As societies become more connected through globalisation, the risk
products and services. Technology driven solutions are increasingly prevalent in the insurance of the spread of infectious diseases to unprecedented levels in short
industry to address customer needs which has given rise to new entrants disrupting the market. periods of time increases. This has been evidenced with rising rate of
Many of the new market entrants are using advanced customer profiling techniques to develop infection associated with the Covid-19 (Coronavirus) pandemic. The
customer leads and tailor individual financial solutions. For general insurance businesses in particular, rapid spread of this virus since the start of 2020 has resulted in a lock
this can improve claims assessment and settlement. The benefits of cost efficiencies stemming from down of approximately 20% of the global population, a near global shut
digital distribution can be passed on to customers. Some insurers are moving beyond direct digital down in production and strict travel restrictions shutting down global
sales to use digital technology to embed their offering in customers’ lives. The use of data analytics movement. The volatility of movements on global exchanges such as
REMUNERATION
will enable insurers to let customers pause their car insurance when they are not driving and reward NYSE and FTSE is comparable to previous crises. Global growth forecasts
good driving behaviour with lower premiums. In order to survive, traditional insurers are adapting have been revised downwards with many commentators expecting
by partnering with innovative technology companies to accelerate market entry and play across global recession conditions in 2020. Reserve banks have also had to
the value chain. In certain instances, this outweighs the cost of investing in new technology as costs rapidly lower interest rates and announce significant aid packages to
associated with the migration of legacy systems remain high. boost local economies.
OLDMUTUAL Integrated Report 2019Board of directors1
OVERVIEW
11
Age
Independent non executive (Years)
Executive
Average age
58
42 67
STRATEGY AND VALUE
Trevor Manuel Peter de Beyer Matthys (Thys) du Toit Albert Essien Iain Williamson
(SA) (64) (SA) (64) (SA) (61) (Ghana) (64) (SA) (49)
CREATION
Chairman BBusSc (Hons), FASSA BSc Agric, MBA BA (Hons), EDP Interim Chief Tenure on the board2
NDip, EMP Executive Officer
BBusSc (Actuarial Science), 11 directors
GMP, FASSA
0 years 5 years
4 directors
PERFORMANCE
6 years 10 years
Itumeleng Kgaboesele John Lister Sizeka Magwentshu- Nosipho Molope Casper Troskie
(SA) (48) (UK) (61) Rensburg (SA) (55) (SA) (56)
BCom, PDip (Acc), Dip BSc (Stats), FIA (SA) (60) BSc (Medical Sciences), Chief Financial Officer
(FMI), CA(SA) BA, MBA, DPhil BCompt (Hons), CTA, BCom (Hons), CA(SA)
CA(SA) 20
20
Gender (%)
Gender (%)
GOVERNANCE
Non executive
80 Male
80 Male
Female
Female
James Mwangi Stewart van Graan Paul Baloyi Thoko Mokgosi- Marshall Rapiya
Demographics (%)
(Kenya) (42) (SA) (64) (SA) (64) Mwantembe (SA) (67)
Demographics (%)
20
BA (Econ) BCom (Hons), PMD MBA, AMP, SEP (SA) (58) BAdmin 20
REMUNERATION
BSc, MSc, SEP, MCRP
53 Black
53 Black
White
Risk committee Audit committee Responsible Business committee Related Party Transaction committee 27 White
Non-South
Remuneration committee Technology and Corporate Governance and Chair Lead Independent 27 African
Non-South
Platforms committee Nominations committee Director African
1 Directors at 31 December 2019.
2 Tenure considers length of time served on either of the previous Old Mutual Emerging Markets and Old Mutual plc boards or the Old Mutual Limited
Board post listing in 2018.
OLDMUTUAL Integrated Report 2019Executive committee1
OVERVIEW
Age
12 (Years)
Average age
Interim
Chief Chief Customer
Managing
Director:
47
Financial Solutions
Executive Rest
Officer Director
Officer of Africa
38 56
STRATEGY AND VALUE
Iain Williamson (49) Casper Troskie (56) Raymond Berelowitz (51) Clement Chinaka (50) Tenure at Old Mutual
CREATION
BBusSc (Actuarial BCom (Hons), CA(SA) BBusSc (Actuarial Science), BSc (Computer Science and 6 members
Science), GMP, FASSA FASSA, FIA Statistics), AMP, FASSA, FFA
0 years 10 years
Managing
Managing Chief Managing 3 members
Director:
Director: Wealth Marketing Director:
Personal
and Investments Officer Corporate
Finance
11 years 20 years
PERFORMANCE
Khaya Gobodo (42) Vuyolwethu Lee (42) Prabashini Moodley (40) Karabo Morule (38)2 4 members
BCom, MSC (Investment BCom (Hons), MBA BBusSc (Actuarial Science), BBusSc (Actuarial Science and
Management), CFA FASSA Finance), FFA, FASSA, AMP
21 years 40 years
Managing
Managing Human
Director: Mass
Gender (%)
Director: Old Capital
and Foundation
Gender (%)
38
Mutual Insure Director 38
Cluster
GOVERNANCE
62
Garth Napier (41) Clarence Nethengwe (48) Celiwe Ross (41) 62
Male
BCom (Hons), MBA BProc, BA, LLM, MBA, AMP, EDP BSc (Mining Eng), MBA Male
Female
Female
Demographics (%)
8
Demographics (%)
8
REMUNERATION
Acting Chief
Chief Risk Operating
Officer Officer
Black
38 54
Black
White
38 54
Richard Treagus (54) Heloise van der Mescht (58) White
Non-South
BBusSc (Actuarial Science), MBA African
Non-South
FIA, FASSA African
1 Executive committee at 31 December 2019.
2 Karabo Morule resigned effective 31 January 2020, her role was filled by Kerin Land on 1 February 2020. OLDMUTUAL Integrated Report 2019OVERVIEW
We remain committed to
13 our goal to minimise waste and to
prevent the generation of waste that
cannot be recycled.
STRATEGY AND VALUE
Globally, the most common type of waste material found on beaches
and landfills is plastics, with the majority being single-use plastics
CREATION
such as shopping bags, water bottles, coffee cups and lids, stirrers
and take away containers.
As a responsible business committed to reducing our impact on the
environment, we are on a journey to reduce the amount of waste
we send to landfills, and our use of single-use plastics. During the
year, Mutualpark and 1 Mutual Place banned the use of plastic bags
and straws, allowing only the use of certified compostable “green”
packaging to be sold by vendors. This has led to the reduction of
PERFORMANCE
waste transported to landfills, subsequently contributing to the
reduction of our carbon footprint.
At 1 Mutual Place, the introduction of bio bins and the supply of
fresh milk in reusable glass bottles, instead of plastic or box cartons,
has positively contributed to the amount of waste we diverted from
entering the waste stream.
We have also piloted the use of Reverse Vending Machines (RVMs)
to maximise our recycling initiatives. The machines allow users to
deposit bar-coded plastic bottles, glass bottles, aluminium cans and
GOVERNANCE
tetrapak (milk and juice cartons) into the machines for recycling to
Organic Waste diverted More than 5,400 earn rewards such as airtime.
Waste from landfill milk cartons At Wanooka Place, efforts to maximise recycling and reduce waste
150 tonnes 52%, 688 tonnes diverted from contamination include the installation of recycling bins throughout
the building and the appointment of an onsite supplier that
(2018: 90 tonnes) (2018: 37%, 370 tonnes) the waste separates waste for recycling and facilitates the conversion of food
stream waste into compost.
REMUNERATION
Reverse Vending Machines 1 Mutual Place – our office in Sandton, Johannesburg
Mutualpark – our office in Pinelands, Cape Town
More than 9,000 kg
16,250 transactions on 34,633 items Wanooka Place – Old Mutual Insure’s head office in
of waste diverted
the machines recycled Parktown, Johannesburg
from landfill
OLDMUTUAL Integrated Report 2019OVERVIEW
STRATEGY AND VALUE
CREATION
14
PERFORMANCE
GOVERNANCE
Strategic priorities 15
Delivery against long term strategy 16
Our business model 17
Strategy and value Value created for our stakeholders
Value outcomes for our stakeholders
18
19
creation
Stakeholder management 20
REMUNERATION
Our interaction with stakeholders 21
Our approach to Risk Management 23
Material risks 24
Emerging risks 26
OLDMUTUAL Integrated Report 2019Strategic priorities
OVERVIEW
Our purpose Improving key underperforming businesses
is championing
mutually positive Turnaround of We continue to focus on operational effectiveness Organic growth remains
through a review of the efficiency of our structures challenging in this
futures everyday East Africa and in each region and cost management initiatives. We environment and therefore
improve returns are taking deliberate action to improve underwriting the formation of strategic
Improve the across Rest Continued experience by leveraging capabilities in the South partnerships is important.
competitiveness turnaround African business. We are committed to our digital We will focus on ensuring
of Africa
Our vision transformation journey that improves customer profit generation from these
STRATEGY AND VALUE
of Wealth and of Old Mutual experience and the competitiveness of our offering. partnerships remain in line
is to be our Investments Insure with our targets.
CREATION
We will continue to develop
15 customers’ most
trusted lifetime Defend South
Continuous improvement of investment
performance and customer propositions
unique solutions through
strong underwriting
practices and optimal
to grow our market share and increase the reinsurance structures.
partner, passionate African market competitiveness of our offering. This coupled We remain focused on
share in the with improvement in operational efficiencies enhancing our operational
about helping Mass and and cost management initiatives will excellence to improve our
improve our profit contribution to the Group.
them achieve their Corporate customer offering and
profitability.
markets
financial goals
Our strategic
PERFORMANCE
battlegrounds Defend and grow our market share
Our values Defend and
grow in the South Our adviser force is a key Despite intense competition in the mass market
African Personal channel through which we segment, we believe growth opportunities
deepen relationships with still exist in the transactional market and our
Finance market customers. underwritten product set, which remains an
We continue to place underpenetrated market opportunity in this
more trainee advisers in segment. Old Mutual Protect featuring improved
worksites and branches, underwriting capability and increased flexibility,
where productivity and lead will help us grow our market share.
generation rates are higher. In the Corporate market segment we are
GOVERNANCE
Win the We are enhancing sources deliberate about improving customers’
Cost-efficiency
war for for data driven leads to experience and continue to strengthen our
leadership improve the efficiency of umbrella fund offering to maintain our leading
Refresh the talent
customer acquisition. position.
Group’s
technology Building long term competitive advantage
offering
We believe that the We continue to invest We have exceeded our cost savings
digital enablement of in technology to build target by delivering cost savings of
our employee experience a capability that can R1.2 billion. The biggest drivers of
will motivate, retain and deliver outcomes to cost savings were improvements
REMUNERATION
attract talent as we embark our customers at a in IT processes, a reduction in
on developing new ways pace that meet their consultant spend and improved
of working to remain needs and transforms space utilisation.
relevant to stakeholders. their experience. We will continue to drive further
Since listing we have been Enhancements to systems efficiencies through group
driving a high performance and customer servicing structure optimization, the
culture and have made processes combined with simplification of our operating
progress with reviewing innovation remain key models and IT infrastructure over
our reward philosophy and priorities. the medium term.
policies to align to our long
term strategy.
OLDMUTUAL Integrated Report 2019Delivery against long term strategy
OVERVIEW
During 2019 we commenced the refresh of our long term strategy through a series of strategy workshops with our Board.
We have defined 5 strategic pillars, the delivery of which will allow us to sustain and grow the prosperity of the customers,
families and communities we serve. In the medium term we will continue to measure our delivery against the eight
battlegrounds until the longer term strategy is fully implemented. Achievements in 2019 already demonstrate delivery
against new strategic pillars.
STRATEGY AND VALUE
Always present first Solutions that lead
CREATION
16
Enhanced National roll Old Mutual cares
our MyOMInsure out of Old
platform Mutual Protect R80 million
disbursed from the
Launch of a Enhanced our R500 million Enterprise
PERFORMANCE
refreshed Wealth Development Fund
website and Proposition
MyOldMutual
17% of AUM
application
invested
in green economy
Rewarding digital engagement Engaged employees
Advanced
GOVERNANCE
Partnered
Pulse Culture
with Amazon Web
intervention with
Services
our employees
to modernise
technology
Launched
Workday in
More than
certain countries
500 000 Old Mutual
REMUNERATION
across Rest of Africa,
Rewards members
to empower
with more
and digitally enable
than 500 million
our employees for
points earned
growth
OLDMUTUAL Integrated Report 2019Our business model
OVERVIEW
Capital inputs Our business activities Distribution channels Capabilities Value outcomes
• Tied advisers in our
branches
Product development • I ndependent financial
• End to end product development of new advisers
Funding from equity solutions that are innovative and inclusive • Franchise advisers Customers
and debt investors to communities in which we operate • Old Mutual website
used to support our
operations • Enhancements to products Distribution channels
to meet changing customer needs • Independent financial
STRATEGY AND VALUE
advisers
er Employees
nd lust
Distribution channels
Business support • Specialist brokers a • Tied advisers in
ss C
CREATION
• Old Mutual website branches and worksites
Ma tion
17
• Support services through
Our impact on natural functions including finance, • iWYZE website • Independent financial advisers
a Pe
resources through our human capital, marketing, • iWYZE call centres
nd Fi n r s o n
• Franchise advisers
Investors
business activities strategy, information F ou • Old Mutual website
Capabilities an al • iWYZE website
technology, procurement and ce
corporate affairs to improve
Old Mutual
operational efficiency Capabilities
Strategic focus
Insure
• Responsible for overall
Skills and expertise
branding campaigns
of employees and
advisers, our culture
areas
PERFORMANCE
and values Customer servicing
• Support services to our Conducted in a
customers including advice,
responsible way
Investments
Wealth and
administration, complaints
Distribution
and information technology
Stakeholder channels
relationships and assistance
• Independent brokers
Strong governance
communities in which
we operate to address
• Central capability that
improves customer service
• Tied advisers oversight Distribution channels
•B ancassurance branches • Independent financial
societal issues through the use of robotics. • Partnerships with mobile Re advisers
Af st o
network operators and • Asset consultants
fintechs
Capital and risk ric f • Personal Finance
management
• Old Mutual website a distribution channels
al
GOVERNANCE
• Old Mutual website
• Comprehensive and mature risk Capabilities u tu e •R etail online
Our brand values,
M t
d p o ra
strategic partnerships management framework that platform Regulators
and innovative ensures disciplined risk based l
O or
capabilities decision making C
• Compliance with regulatory
requirements Capabilities
Intermediaries
• Monitoring of capital requirements and
Our physical and optimal capital allocation Distribution channels Capabilities
digital infrastructure • Direct sales force in worksites
through which • Corporate consultants
REMUNERATION
we conduct our • Independent financial Communities
operations advisers
• Personal Finance distribution
channels
OLDMUTUAL Integrated Report 2019Value created for our stakeholders
OVERVIEW
We leverage our size and scale to
generate significant and meaningful R288.7 billion
value for all our stakeholders of value created in 2019
STRATEGY AND VALUE
CREATION
18 Customers Intermediaries Employees
R116.4 billion R7.6 billion R9.8 billion
R7.5 billion of fees and
R93.7 billion paid in claims R9.7 billion paid in salaries
PERFORMANCE
commissions paid
and benefits and benefits
R72.7 million invested in
R22.7 billion of Loans and Advances R114 million invested in staff training
adviser training
GOVERNANCE
Communities Investors
R11.1 billion Regulators
R143.9 billion
R5.4 billion of ordinary cash
R131 billion1 invested dividends paid Level 1 B-BBEE
responsibly in socially inclusive,
REMUNERATION
certification
low carbon and resource efficient R804 million interest paid
investments to debt holders
Group solvency ratio
R12.9 billion in taxes paid R4.9 billion returned through of 161%
share buybacks
1 R39.6 billion invested through shareholder funds with the remaining amount invested on behalf of customers
OLDMUTUAL Integrated Report 2019Value outcomes for our stakeholders
OVERVIEW
Inputs Activities Outcomes Inputs Activities Outcomes
Customers Intermediaries
Strong distribution force Improvement of service delivery Reducing payout times of Innovative and integrated New or enhanced digital tools and 7 693 tied advisers
capabilities to reduce system qualifying funeral claims to less digital tools applications enable advisers to
Investment in IT systems downtime than 8 hours, 4 hours via money better serve customers
and digital infrastructure account
Training and upskilling of servicing Online and classroom Regular training to improve advice
STRATEGY AND VALUE
Active custodian of teams to provide better customer Almost 4,000 call centre agents based learning capability.
customer funds service educated on our digital tools to
CREATION
19
Branch activations to convert better assist customers
Engaged employees
that contribute to our customers to digital platforms Engaged 5,000 customers as part
customers’ experience Deployment of robotics to claims of branch activations
and customer engagement R22.7 billion of Loans and Advances
processes to improve speed and R93.7 billion claims and benefits
efficiency paid
Employees Communities
PERFORMANCE
Capable and diverse Meaningful engagement with 70% of employees participated in Being a responsible Continuous commitment to Refer to the Responsible
executive team senior leaders during the year the new culture survey business is a core part of environmental sustainability Business Impact report RB
Progress made to create a diverse 85% black employees1 our strategy through waste, water and energy 133 million litres of drinking water
Over R114 million invested
and inclusive working environment 43% of our executive positions are management initiatives was produced by the water
in employee development Water filtration and solar
and training Implemented Workday, a digital female Regular engagements with filtration plant since operation in
panels installed
employee engagement tool, to R9.7 billion paid in salaries and communities 2018
New values adopted to better engage
drive culture shift benefits Employee initiatives to Increased focus on socially inclusive 2.1 million kWh of energy generated
Improved physical and online give to communities investments by the solar plant at Mutualpark
More than R4 million learning capabilities 52% of waste diverted from landfill
invested in employee Established community
wellbeing relationships and R12.9 billion in taxes paid
partnerships
GOVERNANCE
Investors Regulators
Returned excess capital through Total ordinary dividends of 120 Robust risk and Participated in various thought Compliance with regulatory
R78 billion net asset value
share buybacks and dividends cents per share in respect of 2019 compliance frameworks leadership forums on topics such as requirements
R2 billion of debt raised, Optimized the group capital earnings economic growth, job creation and Group solvency ratio of 161%
R1 billion repaid A member of industry digital technology
structure through new debt R4.9 billion of share buybacks Input from an industry perspective
bodies and associations
R1.7 billion drawn on issuance and repayments R804 million of interest paid to Engaged regulators on regulatory on various new legislative bills
revolving credit facilities Improved capital management debt holders returns, reports and consumer
REMUNERATION
and resource allocation matters, capital requirements and
Level 1 B-BBEE rating R9.8 billion AHE alignment to Twin Peaks
Continued simplification of R6.8 billion free surplus generated
Residual plc Strengthened regulatory
relationships in Rest of Africa
Continued to align capital basis
to Prudential Standards in South
Africa
1 This relates to South African employees only.
OLDMUTUAL Integrated Report 2019Stakeholder management
OVERVIEW
At the heart of our stakeholder engagement
mandate are three core commitments. Our first
commitment is to creating value for all our stakeholders. Knowing
our stakeholders and understanding their needs is important to
us as it forms the basis of all our relationships. Wherever there is
shared value, there is lasting commitment to building and growing
STRATEGY AND VALUE
together. Our second commitment is to adhering to strong
corporate governance in the management of all our relationships.
CREATION
Customers
20 Our groupwide Stakeholder Relations Policy ensures that the
standards by which we operate across all our markets are in line
Regulators with both international best practice and the King IV Code. Our
final commitment is to following 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.
We are proud of the decision we have made as a business to be a
PERFORMANCE
responsible social partner within our makets, actively partcipating
Intermediaries in industry bodies and professional associations that seek to drive
finanancial inclusion on our continent. We are purposeful about
Stakeholders lending our voice to conversations that shape the future of our
continent, using international platforms such as NEPAD, UNHCR
Investors and the World Economic Forum to support the global sustainability
agenda. Furthermore we work together with our regulators and all
levels of governments to build stronger economies across Africa.
Whether partnering with municipal government structures in
GOVERNANCE
Nairobi to roll out IT systems to strengthen public health care
facilities Kenya, to leading student development and mathematics
education initiatives in Zimbabwe or running financial education
Employees programs for unions and public servants in South Africa – we remain
committed to unlocking shared value for all our stakeholders.
Communities
In December 2019 we had the privilege of celebrating some of our
strongest and most impactful stakeholder relationships at the
Old Mutual Partnership Awards (OMPA). This initiative powerfully
reinforces the significance of the socio-economic impact of our
REMUNERATION
relationships across our broad network of stakeholders. In an
increasingly interconnected world, in which we must all play our part,
our business – together our community of stakeholders – continues
to demonstrate that the collective practice of responsible business
principles yields the most optimal results for all social partners.
OLDMUTUAL Integrated Report 2019Our interaction with stakeholders
OVERVIEW
Customers Intermediaries Communities Employees Investors Regulators
• Innovative and flexible • Digital applications and • Skills development • Fair and competitive • Sustainable financial • Compliance with
STRATEGY AND VALUE
product solutions tools that save time and and employment remuneration returns and distributions legal and regulatory
are easy to use opportunities requirements
CREATION
• Competitive and • Training and development • Clear strategic direction
21
Key interest and concerns
transparent pricing • Support and • Access to enterprise for personal and career and operational execution • Being a responsible
infrastructure to enable supplier development advancement taxpayer
• Omnichannel digital productivity programmes • Strong governance
experience and ease of • An inclusive, diverse and frameworks and ethics • Contribution to industry
use • Product and regulatory • Financial education and safe working environment and regulatory working
training financial inclusion • Experienced groups
• Fast and efficient • Being employed by a management team
customer service • Fair incentives that reward • Corporates to company that embraces • Strong governance
efforts contribute to social and new ways of working in a • Transparent reporting and oversight
PERFORMANCE
• Responsible and environmental issues digital era disclosures
appropriate advice • Treating customers fairly
• To be treated in a • Meeting capital
responsible and fair requirements
manner
• Tied advisers, independent • Sales conferences and • Community projects and • Workday, an employee • Investor days and • Regular engagement
GOVERNANCE
Channels of engagement
brokers, agents and roadshows campaigns engagement technology roadshows with the Regulator
consultants in branches, solution
call centres and worksites • Digital applications and • Digital and traditional • Annual and interim • Participation in industry
tools media channels • Extensive internal reports bodies and public forums
• Digital applications and communications
tools • Digital and traditional • Annual reports • SENS announcements • Provide input on draft
media channels • Management roadshows regulations
• Digital and traditional and town hall meetings • Annual General Meetings
media channels • Quarterly regulatory
• Annual reports • Digital and traditional submissions
REMUNERATION
• Annual reports media channels
OLDMUTUAL Integrated Report 2019OVERVIEW
Fourleaf Residential
Development
Fourleaf Estate, a residential development in
Port Elizabeth, offers 323 affordable housing
units to low and middle income families. This
was funded by the Housing Impact Fund of
STRATEGY AND VALUE
South Af rica (HIFSA) and developed by Similan
Properties.
CREATION
22 HIFSA, is a Development Impact Fund
managed by Old Mutual Alternative
Investments, and its investors comprise Old
Mutual Life Assurance Company South Af rica,
the Government Employees Pension Fund, the
Development Bank of Southern Af rica and the
Eskom Pension and Provident Fund.
PERFORMANCE
Fourleaf Estate became the f irst residential
development in Af rica to receive the EDGE
f inal certif ication and includes features such as
advanced green initiatives, security, internet
connectivity, innovative landscaping and
community vegetable gardens. Homes in the
estate are modern designs with flexible add-on
options to suit different budgets.
The houses deliver signif icant energy savings
GOVERNANCE
through practical solutions, such as heat
pumps for hot water, low-flow taps which
reduce hot water consumption through
aeration and water-eff icient f ittings including
low-flow showerheads and dual-flush toilets.
Adjusted window-to-wall ratios and good
roof insulation also ensure optimal energy
eff iciency.
REMUNERATION
This estate is predicted to realise annual
savings of R414,000 as a result of applying
EDGE certif ied energy and water eff iciency
measures. This is expected to translate into
approximately R1,280 savings in utility costs
for each housing unit.
OLDMUTUAL Integrated Report 2019Our approach to Risk Management
OVERVIEW
Our risk management Risk mitigation techniques are used Our risk strategy supports our
approach is aligned to to help manage risk exposures by business strategy, in delivering on
passing certain risks to third parties our vision of being our customers
the Group’s purpose and
in the form of reinsurance or use most trusted financial partner
strategy. A comprehensive
of derivatives instruments such as and our brand promise of being a
STRATEGY AND VALUE
and mature risk management swaps or hedges, as well as ensuring certain friend in uncertain times.
framework is in place, which robust internal processes and a Our reputation and success as a
CREATION
23 is anchored in a three lines
of assurance model, and
strong control environment. business is anchored in financial
strength.
includes a clear articulation
of our risk strategy. It ensures
disciplined risk based decision
making in the Group and
active control over the risk
exposures to which our
Maintaining trust with
PERFORMANCE
earnings and capital are stakeholders steers our Diversification is key in
exposed. This achieves a reputation. Integrity Principles insurance to avoid excessive
more sustainable delivery of remains one of our core informing our risk concentration, and we
AHE and RoNAV within our values as we believe it is look to achieve this across a
Risk strategy broad spectrum including
chosen risk appetite. We have essential for sustainable
a comprehensive suite of risk long term growth. We risk types, products,
are committed to treat geographies, target markets
policies to direct how specific
customers fairly and have and distribution channels.
risks should be managed and As a highly interconnected
controlled, aligned to our good controls in place
to minimise operational financial services institution,
risk categorisation model.
GOVERNANCE
risk that could have an we manage and mitigate
Appropriate escalation adverse impact on any of our potential contagion effects in
mechanisms are in place stakeholders adverse conditions.
for risk events and breaches
in risk limits and targets. A
forward looking Own Risk
and Solvency Assessment
(ORSA) enables us to assess Tolerance for uncertainty within well defined We optimise returns on a risk adjusted
the robustness of our balance risk appetites is key to executing our business basis by focusing on the risks where the
sheet in adverse conditions, strategy, which is predicated on strong and long term expected return more than
REMUNERATION
responsible growth in market share and profits. compensates us for the risk taken and the
and we have modelled severe
We are willing to take on certain risks on behalf of cost of capital. We take on risks that are
scenarios to ensure strong our customers to improve their financial security, efficient from a capital perspective as this
resilience of solvency capital whilst operating within the bounds of strong will optimise RoNAV.
and liquidity. expertise and competitive advantage through
agile innovation. We have higher tolerance for
risk in our Rest of Africa business as we build our
brand and experience in these markets.
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