Old Mutual Lim. Regulatory News (OMU)

Old Mutual Limited

Incorporated in the Republic of South Africa

Registration number: 2017/235138/06

ISIN: ZAE000255360

LEI: 213800MON84ZWWPQCN47

JSE Share Code: OMU

NSX Share Code: OMM

("Old Mutual" or "the Company")

Ref 01/19

11 March 2019

STRATEGIC DELIVERY

Delivering against many of our eight

battlegrounds, continued progress

in the turnaround of Old Mutual

Insure and strong sales in Corporate,

Wealth and Investments as well as Mass and

Foundation Cluster

Successful listing of Old Mutual Limited

on five stock exchanges on 26 June 2018 and

the unbundling of 32% of Nedbank on 15 October 2018

marked the completion of Managed Separation.

We were awarded deal of year at the 19th annual Deal

Makers awards

R45.9 billion returned to shareholders in 2018,

with further returns of at least R5.6 billion

expected in 2019 reflecting final dividend and share buyback

Achieved approximately R750 million of recurring

expense savings in 2018. On track to achieve expense

efficiency target of R1 billion of run rate savings

by the end of 2019 and to manage expense growth within

inflation thereafter

Good progress on technology

refresh and customer experience

improvements. On track to deliver

further enhancements in 2019

Segment leadership positions filled

at Old Mutual Insure and Wealth and

Investments

FINANCIAL RESULTS

HEADLINE EARNINGS (HE)

R14,241 million

(FY 2017: R13,144 million)

IFRS PROFIT AFTER TAX ATTRIBUTABLE TO

EQUITY HOLDERS OF THE PARENT

R36,566 million

(FY 2017: R14,372 million)

RESULTS FROM OPERATIONS (RFO)

R9,963 million

(FY 2017: R10,367 million)

ADJUSTED HEADLINE EARNINGS (AHE)

R11,512 million

(FY 2017: R12,947 million)

AHE PER SHARE

239.1 cents per share

(FY 2017: 271.1 cents per share)

FINAL DIVIDEND

72 cents per share

RONAV

18.6%

(FY 2017: 22.9%)

GROUP SOLVENCY RATIO

170%

(FY 2017: 161%)

MESSAGE FROM THE CEO

"I am pleased with the progress we

made on our eight battlegrounds.

We delivered particularly good sales

and NCCF in a tough economic and

competitive environment. We delivered

very well against the promises we made

to investors. Sadly we did not meet our

Results from Operations (RFO) growth

target of GDP+2%. We are still confident

that we will meet all our targets in

the medium term noting that the

RFO target will be difficult given the

negative growth in 2018.

We have improved our customer

experience through digital enhance-

ments and the delivery of key phases

of our IT refresh journey. Whilst we

continue to see economic headwinds

in the near term, our Group is resilient,

well capitalised and managing its costs

tightly."

PETER MOYO

2018 was a momentous year for our Group. We completed

the Managed Separation, highlighted by our successful

listing on 26 June 2018. This was followed by the unbundling

of 32% of Nedbank on 15 October 2018, returning a total

of R38.8 billion to our shareholders and retaining 19.9%. In

addition, we have distributed and declared R10.7 billion

in special and ordinary dividends. We have also made

good progress on accelerating the conversion of Residual

plc net asset value to cash with the repayment of all

outstanding international debt. We delivered well against

the commitments we made to our investors, with the

exception of Results from Operations. I am pleased with

the progress we made on our eight battlegrounds. These

results were delivered in a difficult operating environment.

We have conducted our operations in a responsible way

and managed the business within our risk appetite.

OPERATING ENVIRONMENT

2018 was characterised by volatility in global equity, currency

and bond markets due to escalating global trade tensions.

These global dynamics, in addition to weak local economic

data, negatively affected the South African economic

landscape resulting in low GDP growth in 2018.

Persistently high unemployment rates, a Value Added Tax

(VAT) rate increase and fuel hikes contributed to lower

real disposable incomes for our retail customers in South

Africa. This adversely affected our customer acquisition and

persistency, especially in the middle income market. The

economic outlook has marginally improved relative to the

previous year, when political uncertainty prevailed and credit

downgrades led to an even weaker operating environment.

Improvements in governance and accountability taking

place at State Owned Entities (SOEs) have resulted in some

increase in business and consumer confidence. However,

investor confidence is still fragile with concerns around

government debt levels and policy uncertainty particularly

around the proposed policy on land expropriation without

compensation.

The South African equity market declined with the JSE

SWIX down 14% in the year and down 9% from the end of

the first half of 2018.

Inflation continued to remain within the South African

Reserve Bank (SARB) target range at a 12-month average of

4.6% for 2018. The inflation outlook is benign, although it is

expected to be closer to the upper end of the target range

in the short to medium term due to upward pressures from

effects such as rising utility, transport costs and oil prices.

Although a new government under President Mnangagwa

came into power in the year, economic and political

instability still persists in Zimbabwe. Equity markets were

volatile, with a 40% rise in the second half of the year,

resulting in substantial mark to market gains. In order to

mitigate shortages of physical currency (US dollars) in

Zimbabwe, the use of electronic money was encouraged.

This is facilitated through the Real Time Gross Settlement

(RTGS) system. The increased reliance on RTGS, which

is purely a mechanism for settlement of Bond Notes,

effectively became a de facto currency. On 20 February 2019,

the Reserve Bank of Zimbabwe announced that the RTGS

would be recognised as an official currency and that an

inter-bank foreign exchange market would be established

to formalise trading in RTGS balances with other currencies.

In line with industry consensus on this matter we have

applied a reporting change to the functional currency for

our businesses in Zimbabwe from 1 October 2018. This

change has reduced both reported profits and net asset

value in 2018.

Macroeconomic indicators in Kenya remained broadly

stable in 2018 with overall inflation within target, GDP

growth and short term interest rates remaining low. Equity

markets remained volatile with a decline in the levels over

the period.

In Nigeria, economic growth accelerated in the third quarter

of 2018, assisted by improved dynamics in both the oil and

non-oil economy. Oil output increased in the second half of

the year following a reduction in pipeline disruptions.

FINANCIAL PERFORMANCE

We delivered our 2018 financial results in tough economic

and market conditions in our key markets. Strong sales and

excellent Net Client Cash Flow (NCCF) supported average

Funds under Management (FUM) levels which rose in the

year. Closing FUM of R1.044 billion declined by 3% from the

end of 2017, largely reflecting lower equity market levels in

the fourth quarter.

Return on Net Asset Value (RoNAV) of 18.6% was ahead of

our Cost of Equity (COE)+4% target of 17.4%.

Results from Operations (RFO) of R9,963 million decreased

by 4% over the period reflecting net reserve movements,

and mortality and morbidity losses in Personal Finance in

the first half of 2018 and the change in functional currency

in Zimbabwe.

We delivered Adjusted Headline Earnings (AHE) of

R11,512 million, a decrease of 11% compared to the prior

period. The primary cause of this was the lower RFO, lower

investment income in South Africa as a result of weaker

equity markets and in Zimbabwe, the change in functional

currency in the fourth quarter. This decrease was partially

offset by higher income from associates, reflecting higher

earnings from our stake in Nedbank.

We have delivered R750 million of cost savings, putting us

in a good position to meet our R1 billion efficiency target

next year.

The Group solvency ratio1 increased to 170% (FY 2017: 161%),

reflecting the robust capital position of the Group.

OUR BATTLEGROUND SCORECARD REVIEWS

We remain committed to delivering value in the medium term through our strategic priorities, which are

defined through our eight battlegrounds.

DEFEND AND GROW Mass and Foundation Cluster 

SOUTH AFRICAN MARKET - Maintained strong sales in the mass market despite ongoing

SHARE IN MASS AND competition from existing players and new entrants

CORPORATE MARKETS

- Opened 25 branches, increasing our branch footprint to 348 branches,

contributing to strong sales growth

- Growth in loan book, with low credit losses, as we continued to lend

responsibly

- Investment in technology has resulted in reduced claims payout

time from 24 hours to 8 hours, and 4 hours for those initiated via the

Money Account app

- Online funeral policy launched in 2018

Old Mutual Corporate

- Market leader with attractive offering for customers, excellent cost of

delivery and strong underwriting capabilities, backed by our strong

balance sheet

- Strong flows into our umbrella proposition, producing an improved

business mix, even with the lumpy nature of the business

- Good traction on management actions to improve Group Risk

underwriting experience

- Launch of self service portal for retirement members

(1) The Group solvency ratio is presented consistent with the disclosure in the pre-listing statement except for the use of the iterative risk margin approach.

DEFEND AND GROW IN - A number of initiatives launched to meet customer needs and

THE SOUTH AFRICAN enhance our product offering, including the launch of Old Mutual

PERSONAL FINANCE Rewards and enhancements to our savings and risk propositions

MARKET

- Mortality losses stabilised in H2 2018, management actions

determined at H1 2018 to improve mortality and morbidity profits are

being implemented. We continue to actively monitor the experience

in this area

- Overall sales were affected by the tough environment but we

continue to maintain and grow our position in this market

- Distribution channels contributed a total of R69.2 billion in gross

flows, R37.2 billion to Wealth and Investments

IMPROVE THE - Improved investment performance across diversified asset base

COMPETITIVENESS

OF WEALTH AND - Strong NCCF and record high transaction activity in Specialised

INVESTMENTS Finance

- Made good progress on building our internal distribution capability

CONTINUED TURNAROUND - Improved underwriting margin, now at upper end of target range

OF OLD MUTUAL INSURE

- Substantial completion of remediation and claims management

processes

- Launch of MyOMInsure, a digital platform for claims registration

TURNAROUND EAST - Staff reorganisation completed in East Africa during the first half

AFRICAN BUSINESS AND of 2018 to optimise staffing levels and eliminate duplication. This is

IMPROVE RETURNS expected to create savings going forward

ACROSS THE REST OF

AFRICA - Positive RFO delivered by East Africa for the first time since acquisition

- Southern Africa continues to generate strong profit growth, particularly

in Malawi and Zimbabwe

- Appointment of a new Managing Director of West Africa in November 

2018

- Launched Dream Enabler, a sales and servicing mobile application

WIN THE WAR - Embarked on a cultural transformation journey to align

FOR TALENT behaviours to our values

- Attracting and retaining the talent that we want in the

organisation, evident in the appointment of Garth Napier and Khaya

Gobodo as Managing Directors of Old Mutual Insure and Wealth and

Investments, respectively

REFRESH THE - Focused on execution, with protection solutions for Mass and

TECHNOLOGY OFFERING Foundation Cluster and Personal Finance segments expected to be

activated during 2019

- Introduced robotics processes and system automations which have

improved our customer service turnaround time

- Launched MyOldMutual, a new secure customer portal, on cloud

infrastructure

COST EFFICIENCY - In 2018 we saved approximately R750 million of recurring cost

LEADERSHIP

- On track to meet R1 billion target and contain expense growth

within inflation thereafter

NEDBANK UNBUNDLING

We completed the distribution of 158,726,732 Nedbank

shares worth R38.8 billion to our shareholders in the

fourth quarter of 2018. We continue to view our remaining

shareholding of 19.9% as a long-term investment and this ownership

underpins significant commercial benefits we derive from

the continuation of this relationship. During 2018, around

R900 million of insurance premiums arose in Old Mutual

Limited sourced via the Nedbank distribution channels.

OUR ROLE IN SOCIETY

Having entered a new phase in our journey following

the completion of Managed Separation, we continue to

build a business with a conscience. During 2018 we paid

R91.5 billion in claims and benefits. This includes insurance

claims, annuity payouts and investment maturities. We

also regularly review the value our products provided to

customers and assess whether they adequately provide for

the identified need.

Developing our people is crucial to achieving our targets.

As such, we supported our employees through learning and

development activities to the value of c. R165 million.

We remain committed to uplifting the communities in

which we operate. During 2018 we allocated R500 million

to a ring-fenced Enterprise Supplier Development Fund to

support small and black-owned businesses, in recognition of

the commitment made under the Framework Agreement

agreed with the Minister of Economic Development ahead

of the listing of Old Mutual Limited. The Fund's intention

is to generate additional jobs in the Group's ecosystem to

be evidenced by the end of June 2021. By the end of 2018,

R50 million of the Fund had been allocated to the Black

Distributors Trust, an entity that promotes the development

and advancement of black advisers in the tied and

broker segment of the insurance industry. The remaining

R450 million will be allocated in the near term.

The completion of our water filtration plant at our Mutualpark

office will help us save 10 million litres of municipal water

per month. This will help alleviate the water requirement

pressures faced by Cape Town.

We remain committed to transforming our organisation to

reflect the societies we operate in.

For the 2018 period, we maintained a level 2 B-BBEE

contributor status.

As part of our Managed Separation and listing process

we committed to the Economic Development Department in

South Africa to achieve an effective black ownership level

of 25% within three years of listing and to be best in class,

as measured at the time of listing, within five years of

listing. We are formulating a plan to achieve this through

internal and if necessary external mechanisms. This will be

guided by a close review of the shareholder value to be created

by achieving the score and facilitating transformation

in South Africa.

CAPITAL MANAGEMENT, DIVIDENDS AND SHARE BUYBACK

We continue to develop our capital management to support

the delivery of total return to shareholders both in recurring

and sustainable ordinary dividend and one-off capital

returns where appropriate.

For 2018, we have declared a final dividend of 72 cents per

share to be paid on 29 April 2019. In accordance with our

stated dividend policy, consideration has been given to

the Group's underlying cash generation, fungibility of

earnings, targeted liquidity and solvency levels, business

strategic requirements and market conditions. We paid an

interim dividend of 45 cents per share in October 2018 which

brings the total ordinary dividend for 2018 to 117 cents per

share and is covered 2.04 times by AHE per share. This is in line with

our dividend policy. Further details of the timetable for the

exchange rate conversion for dividends payable in currencies

other than Rand will be communicated in due course.

We are also pleased to announce a share buyback

programme. Following a review of all capital available at

31 December 2018, and taking into account capital and

liquidity projections to the end of the 2019 financial year,

we have identified sufficient excess capital available to

conduct on market share buybacks for up to R2 billion.

Going forward, we anticipate future cash inflows from the

completion of the sale of Latin America and further inter

company dividends as we carry on converting Residual plc

net asset value into cash. We will assess the capacity for further

returns when such proceeds are received, taking into account

our solvency capital position and projections at the time.

OUTLOOK

Global growth is still expected to continue for 2019,

assuming trade tensions and equity market risks do not

result in a loss of confidence. This presents the opportunity

for our operations in those regions to grow our consumer

base and develop our product lines.

Source: International Monetary Fund

National elections are planned for 8 May 2019 in South

Africa and elections in several other key markets are also

planned, and in the case of Nigeria, have occurred during

the first half of 2019.

At a segment level we are encouraged by the strong flows

secured in Corporate and operational improvements in Old

Mutual Insure. In Mass and Foundation Cluster and Personal

Finance, we are focussed on driving further growth through

expanding our multi-channel distribution capabilities. We

remain on track to deliver R1 billion in recurring expense

savings in 2019, and grow expenses within inflation thereafter.

Our RFO target of GDP+2% CAGR will become increasingly challenging

to achieve over our three year target period due to negative RFO

growth in 2018. AHE will continue to be influenced by investment returns

in South Africa and the Rest of Africa. Despite the weak growth outlook

in South Africa, the above macroeconomic risks and strong competitive

pressures, we remain confident in delivering our medium term targets.

FINANCIAL REVIEW

(1) Comparatives have been re-presented to exclude Latin America and India (sold in October 2017) as these businesses have been classified as discontinued

operations.

(2) The Group solvency ratio includes our remaining stake in Nedbank and is presented consistent with the disclosure in the pre-listing statement, except for the

use of the iterative risk margin

(3) WANS used in the calculation of Adjusted Headline Earnings per share is 4,815 million (FY 2017: 4,776 million).

IMPACT OF THE CHANGE IN FUNCTIONAL CURRENCY OF ZIMBABWE

(1) Reflects the key financial indicators of the Group before applying the functional currency change.

(2) The application of the change in functional currency has been applied prospectively in our financial results for the 2018 reporting period. For inclusion

in the condensed consolidated income statement of the Group, Zimbabwe results have been translated at the average US dollar exchange rate for the period up to

30 September 2018 and at a RTGS US Dollar exchange rate of 3.3 to 1 for the remaining three months of the financial year. For inclusion in the condensed

consolidated statement of financial position, Zimbabwe results have been translated RTGS US Dollar exchange rate of 3.3 to 1.

ACCOUNTING IMPLICATIONS OF

MANAGED SEPARATION

Managed Separation resulted in the separate listings of Old

Mutual Limited and Quilter. The majority of the shares in

Quilter (86.6%) were distributed to existing Old Mutual plc

shareholders with the sale of 9.6% to new shareholders. The

listing of Old Mutual Limited was effected via a UK court

scheme of arrangement which inserted Old Mutual Limited

as the new holding company of Old Mutual plc, after the

Quilter distribution, by way of a share for share exchange.

From an accounting perspective Managed Separation was

treated as a reorganisation of an existing group. The insertion

of a holding company between shareholders and an existing

group does not result in any change in the economic

substance of the reported group. As such, the condensed

consolidated financial statements of Old Mutual Limited

have been prepared on a predecessor basis. Consequently,

the current period results up to listing and the comparatives

presented for Old Mutual Limited reflect the values from

the financial statements of the previous Old

Mutual plc Group with the exception of the equity structure

that has been adjusted to reflect that of the new entity,

being Old Mutual Limited. Refer to Note A1 in the condensed

consolidated financial statements for additional information.

Other accounting impacts of Managed Separation

include the recognition of a profit of R4,023 million and

R19,152 million in respect of the distribution and sale of

Quilter shares and the unbundling of circa 32% of Nedbank

Group Limited, respectively. The profit on the distribution of

Quilter includes a profit on the recycling of foreign currency

translation reserves of R1,352 million. The profit recognised

on the unbundling of Nedbank has been calculated as the

difference between the market value and the consolidated

net asset value of the Group's shareholding in Nedbank on

the date of distribution. Directly attributable costs incurred

to execute these transactions has been offset against the

profits recognised. Refer to Note G5 in the condensed

consolidated financial statements for additional information.

The share for share exchange and the distribution of Quilter

and Nedbank shares led to an after tax accelerated vesting

charge of R354 million recognised in the condensed consolidated

income statement. This was as a result of the modification

of the underlying share awards subject to the existing share-

based payment arrangements of the former Old Mutual

plc Group.

ACCOUNTING IMPACT OF ZIMBABWE

The continued US dollar shortages experienced in Zimbabwe

have led to the increased use of electronic money through

the Real Time Gross Settlement (RTGS) system, giving rise to

parallel market activities and multiple pricing mechanisms

where bond notes and RTGS balances have been trading at

a discount to the official US dollar exchange rate. Consensus

has developed to apply a change in functional currency for

our businesses operating in Zimbabwe from 1 October 2018,

being the date that the Reserve Bank of Zimbabwe (RBZ)

directed all banks to ring-fence Nostro foreign currency

accounts (FCAs) by separating them into two categories,

namely Nostro FCAs and RTGS FCAs.

During February 2019, a trading mechanism for RTGS

balance and bond notes with international currencies was

established, however before this, authorities maintained

that the US dollars represented in the RTGS system were

at a 1:1 exchange rate. We have estimated a RTGS US dollar

exchange rate of 3.3 to 1 (RTGS rate) by assessing various

inputs that impact inflation. The inputs considered in this

estimate include the relative food and fuel prices and the

official inflation rate. A further observable input taken into

consideration was the premium at which the Old Mutual

and PPC shares trade on the Zimbabwe stock exchange

relative to the Johannesburg Stock Exchange.

The application of the change in functional currency has

been applied prospectively in our financial results for the

2018 reporting period. For inclusion in the condensed consolidated

income statement of the Group, results in respect of

Zimbabwe have been translated at the average US dollar

exchange rate for the period up to 30 September 2018 and

at the estimated RTGS rate for the remaining three months

of the financial year. For inclusion in the condensed consolidated

statement of financial position, results have been translated

at the estimated RTGS rate.

The following table highlights the sensitivity of our key

financial measures to the estimated RTGS rate.

RFO is the primary measure of the business performance

of each of the operating segments. Activities related to the

Group's management of the capital structure and central

costs form part of the Other Group Activities segment, to

the extent that they are not managed as part of operating

segments.

A Central Expenses

Central expenses were R425 million in 2018, a decrease of

16% or R81 million from R506 million in the prior period. The

main driver for the decrease was a change in the central cost

allocation methodology implemented by the Group in 2018.

As part of an increased effort to more accurately measure the

economic contribution of each segment, project costs that

were previously accounted for centrally have been allocated

to segments. This was offset by an increase in costs to establish

and capacitate reporting and management functions for Old

Mutual Limited as a standalone listed entity.

B Shareholder investment return

Shareholder investment return was R2,880 million in 2018,

a decrease of 41% or R2,040 million from R4,920 million in

the prior period. South African equity markets declined by

14% during the year which contributed to lower shareholder

investment return. The majority of the shareholder return

in Rest of Africa is generated by Zimbabwe, where equity

markets have continued to be volatile, with a 40% rise in

the second half of the year, resulting in substantial mark to

market gains. The positive investment returns generated in

Zimbabwe equity markets was impacted by the translation

of shareholder investment return at the RTGS rate for the last

three months of the year.

C Finance costs

Finance costs on long term debt, that supports the capital

structure of the Group, decreased by 3% to R601 million in 2018

(FY 2017: R622 million). Finance costs related to subordinated

debt instruments issued by Old Mutual Insure in November

2017, to the nominal value of R500 million were incurred for

the full period contributing to an increase in finance costs. Fair

value gains earned on interest rate swaps more than offset the

increase in finance costs during the period.

D Income from associates

After the completion of the Nedbank unbundling, effective

15 October 2018, the Group retained a minority shareholding

of 19.9% in Nedbank in its shareholder funds. Nedbank is

managed as part of Other Group Activities and it has been

included on this basis in AHE. An odd-lot offer was executed

by Nedbank on 21 December 2018 which increased the

Group's shareholding to 20.2%. Income from associates, as

reflected in AHE, increased by 13% to R2,593 million (FY 2017:

R2,305 million) as Ecobank Transnational Incorporated

(ETI) returned to profitability which had a positive impact

on Nedbank's headline earnings. Our investment in China,

which is also reported in income from associates generated

a loss of R88 million (FY 2017: R41 million loss).

RECONCILIATION OF AHE TO IFRS PROFIT AFTER TAX

(1) IFRS does not allow the recognition of investment returns on Group debt and equity instruments held by life policyholder funds, however, these returns are

recognised in the valuation of the related policyholder liabilities. This creates a mismatch in IFRS, which is eliminated in AHE. The movement is a function of the

fair value movement for the period.

(2) Represents the elimination of non-recurring expenses or income related to material acquisitions, disposals or a fundamental restructuring of the Group. These

items are removed from AHE as they do not represent operating activities of the Group. Amounts in the current period largely reflect the accelerated vesting

of the IFRS 2 charge as a result of the share for share exchange and the distribution of Nedbank and Quilter shares. Current and comparative period includes

Managed Separation costs.

(3) AHE includes associate income in respect of 19.9% shareholding in Nedbank for the full period as if the unbundling took place on 1 January 2018. Earnings for 9.5 months

are removed as part of this reconciliation as the associate earnings for the 2.5 months post unbundling is included in the IFRS results.

(4) The majority of the profit on disposal of subsidiaries, associated undertakings and strategic investments relates to the profit on distribution of Quilter and Nedbank,

A Discontinued operations

Nedbank

Nedbank delivered a resilient financial performance with

Headline Earnings of R13.5 billion, an increase of 14%, assisted

by the ongoing turnaround in the share of associate income

from ETI. Strong performance was further supported by

accelerated revenue growth in the second half of the year

partially offset by a gradual increase in impairments.

Nedbank was classified as held for distribution and

presented as part of discontinued operations up to the date

of unbundling, effective 15 October 2018. We subsequently

ceased to consolidate Nedbank in our financial results and

have equity accounted our retained stake, in shareholder

funds, as an associated undertaking. The retained portion of

Nedbank shares was recorded at the market value prevailing

on the effective date of unbundling. An IFRS profit of

R19,152 million was recognised as a result of the transaction.

Latin America

Profits of our businesses in Latin America increased to

R318 million (FY17: R7 million loss). We saw continued

good profits as a result of the growth in pension offerings

in Colombia and higher asset based fees in Mexico, and

good expense management. AIVA profits also grew

following reduction in expenses and growth in Funds under

Management.

The sale of our businesses in Latin America is subject to

required regulatory approvals in the relevant jurisdictions.

All required regulatory approvals have been received. As the

date of this announcement, the sale of businesses in Latin

America remains on track to be completed in the first half

of 2019.

Quilter

As a result of applying predecessor accounting our results

for 2018 includes profit generated by Quilter up to its listing

on 25 June 2018. Quilter's contribution to the Group's

profit from discontinued operations , in addition to the profit on

distribution was R1,275 million (FY 2017: R1,451 million). Refer to

Note G5 in the condensed consolidated financial statements for additional

Information on discontinued operations.

Old Mutual Bermuda

Old Mutual Bermuda was deregistered as an insurer with the

Bermuda Monetary Authority in October 2018 subsequent

to all of the Guaranteed Minimum Accumulations Benefit

(GMAB) reinsurance obligations maturing. Old Mutual

Bermuda contributed R34 million to the Group's profit,

reflecting favourable developments in the run-off of the

book during 2018. The liquidation provision established at

the end of December 2017 has been sufficient to cover all

operational losses incurred during 2018.

B Residual plc

The loss in Residual plc reduced by 52% to R2,349 million

largely due to lower finance costs incurred during 2018. The

purchase of remaining debt securities, at a lower premium

than that in 2017 when previous tranches of debt securities

were repurchased contributed towards lower finance costs in

2018. Higher advisory costs were incurred given the heightened

activity leading up to the listing of both Old Mutual Limited

and Quilter in the first half of 2018. Other income increased

following the release of a deferred tax provision.

IFRS PROFIT AFTER TAX

Profit after tax increased by more than 100% from the prior period largely due the distribution and sale of Quilter shares

and the unbundling of Nedbank shares resulting in the recognition of a profit of R23,175 million in the consolidated results.

Included within this profit is a loss on the recycling of foreign currency translation reserves of R1,352 million.

(1) Includes central areas, Residual plc and our investment in China.

(2) These entries relate to the elimination of inter-company transactions between continuing and discontinued operations.

(3) Discontinued operations includes the results of Nedbank, Latin America, Quilter, Old Mutual Bermuda and India in the comparative period and the profit on the

sale and distribution of Quilter shares as well as the Nedbank unbundling.

(4) WANS used in the calculation of basic earnings per share is 4,815 million in FY 2018 (FY 2017: 4,776 million)

FREE SURPLUS GENERATION AND UTILISATION

(1) Fungibility restriction represents the free surplus generated in Zimbabwe which cannot be remitted.

Operating segments generated gross free surplus of

R8,912 million, representing 101% of AHE, demonstrating

the high level of cash earnings generated by our businesses.

After allowing for capital requirements the free surplus

conversion decreases to 72% of AHE, compared to 82% in

the prior period. The increase in capital requirements

reflects an increase in capital requirements in our Banking

and Lending business in line with the increase in Loans and

Advances. We also increased the levels of capital held in

our Life and Savings businesses during 2018. This increase

in capital held at subsidiary level is to ensure that each of

our operating subsidiaries has appropriate levels of capital

where the risks are managed. In the prior year the amount

of capital required benefitted from a release of capital

related to the Property and Casualty business as a result

of the transition to the Prudential Standards. Nedbank

generates free surplus of 50% of AHE, which is in line with

their dividend policy of 1.75 - 2.25x covered by Headline Earnings. Cash

generated by our business in Zimbabwe is not recognised in

our free surplus measure as it is not fungible. The lower cash

conversion rate of Nedbank earnings and the fungibility

restriction in respect of Zimbabwe earnings reduce the

overall group free surplus generation to 57% of AHE.

(1) Comprises of the net asset value of the operating segments of the Group. This net asset value forms the basis for key balance sheet metrics on which the Group

is managed from a capital perspective, and is the same perimeter on which AHE is presented.

(2) Comprises mostly of the net asset value of Old Mutual plc of R4.9 billion at 31 December 2018 (R15.1 billion at 31 December 2017) and Old Mutual Bermuda of

R50 million at 31 December 2018 (R2.1 billion at 31 December 2017).

(3) Per IFRS requirements, we recorded our remaining stake in Nedbank at fair value on the date of unbundling. For purposes of calculating RoNAV, our stake in

Nedbank is included at net assets value in Closing Adjusted IFRS equity.

(4) Comprises of the net asset value of assets classified as held for sale which includes Latin America. 54% of Nedbank and Quilter's net asset value is included in

the comparative period.

(5) Consolidation adjustments reflect own shares held by consolidated investment funds, which are treated as treasury shares under IFRS.

(6) Average Adjusted IFRS Equity for Rest of Africa, before the functional currency change, is R13.4 billion for FY 2018.

(7) The prior period has been re-presented to better reflect management's view of invested shareholder assets.

(8) Gearing ratios are calculated based on the IFRS equity attributable to operating segments. As such this excludes equity related to non-core entities and assets

held for sale

Capital management

We actively manage the supply and demand of the

Group's capital to maximise shareholder value, within

our risk appetite. In achieving this objective, we balance

the requirements of key stakeholders including investors,

regulators and our customers.

In terms of the supply of capital, we manage debt and equity

levels to minimise the weighted average cost of capital,

within our risk appetite, which allows the Group to maintain

strong interest coverage and an acceptable leverage ratio

post a moderate stress event. Our target gearing ratio is in

the range of 15% to 20%.

In term of capital demand, RoNAV serves as the Group's key

capital efficiency measure for directing capital investments.

We aim to maximize shareholder value by deploying capital

to entities and initiatives that are able to deliver a RoNAV that

supports the Group achieving its target of cost of equity +4%.

The Group has an optimal solvency capital coverage ratio

target of 155% - 175%. The range has been set to ensure

that we maintain a strong balance sheet to protect

policyholders whilst returning excess capital to shareholders.

As at 31 December 2018, the Group had a capital coverage of

170% which is within the target ratio.

All material entities within the Group have solvency capital

coverage targets to ensure that appropriate capital is held

where risks are managed. The risk appetite and requirements

of relevant regulators, customers and other key stakeholders

are considered when determining the level of capital that is

required for the relevant entities.

We target a dividend cover, based on AHE, of 1.75x to 2.25x.

When determining the appropriateness of a dividend, we

consider the underlying cash generated from operations,

fungibility of earnings, targeted liquidity and solvency levels

as well as the Group's strategy.

On 21 February 2019, Standard & Poor's (S&P) affirmed a

South African National Scale Rating of zaAAA for OMLACSA

and zaAA- for its subordinated debt. Further to this, S&P

upgraded the capital and earnings strength rating of

OMLACSA due to continued improvement in OMLACSA's

capital adequacy and management.

A Residual plc

Old Mutual Bermuda has completed its run off process, with

the last reinsurance obligations maturing in August 2018.

Old Mutual Bermuda has been deregistered as an insurer

with the Bermuda Monetary Authority in October 2018, and

surplus capital of R389 million ($27 million) was repatriated

to Old Mutual plc. This brings the total capital repatriated

during 2018 from Old Mutual Bermuda to Old Mutual plc

to R2,127 million ($167 million). The remainder of the surplus

capital is expected to be repatriated following the ultimate

closure and final dissolution of the business during early 2019.

Following the listing of Old Mutual Limited, Old Mutual plc

(which was re-registered as a Private Company Limited in

February 2019 under the name of OM Residual UK Limited) is

now a wholly owned, non-operating subsidiary of the Group.

The decrease in net asset value of 68% to R4.9 billion at 31

December 2018 (R15.1 billion at 31 December 2017) is largely

due to the payment of dividends of R4,681 million to Old

Mutual Limited in the second half of the year. The settlement

of certain intercompany loans between Old Mutual plc and

Quilter in anticipation of the listing of Quilter had a negative

impact on net asset value. This decrease was offset by the

cash proceeds received by Old Mutual plc following the sale

offer of 9.6% of Quilter shares to new shareholders.

During 2018, Old Mutual plc settled the final transaction

and advisory costs incurred to execute Managed Separation.

Certain corporate costs continue to be incurred until the

head office wind down is completed. These costs remain in

line with previous guidance.

The realisable economic value of Residual plc at

December 2018 is estimated at R4,052 million (GBP221 million),

a decrease of R3,634 million (GBP203 million) from June 2018.

This decrease is largely due to the dividends paid to Old

Mutual Limited partially offset by a release of R979 million

(GBP54 million) of surplus following the settlement of debt.

Further dividends to Old Mutual Limited will remain subject

to inter alia, the undertaking to the UK Court as described in

the announcement dated 20 June 2018 in respect of Old

Mutual plc. The UK court scheme allows for reviews of the

surplus assets on a quarterly basis that commenced on

1 October 2018. Any potential transfer will need to take

into account the developments and future assessments

by the board of OM Residual UK Limited, at such a point in time,

of liabilities and contingent liabilities and in line with its

fiduciary duties. The final development of economic value

and surplus assets is subject to changes in estimates and

uncertainty.

B RoNAV

RoNAV decreased by 430 bps to 18.6% (FY 2017: 22.9%).

The change in functional currency of Zimbabwe negatively

impacted RoNAV by 150 bps.

RoNAV in South Africa decreased by 320 bps to 17.8%

(FY 2017: 21.0%). AHE attributable to South Africa reduced

by 5% due to reduced investment income and lower

profit in Personal Finance. The increase in average equity of 12%

was a result of the dividend received from Residual plc of

R4,681 million (GBP255 million) and retained profits partially

offset by dividends paid to external shareholders and the

impact of IFRS 9 - Financial Instruments which results in

higher day one provisions for expected credit losses.

RoNAV in Rest of Africa decreased by 910 bps to 22.0%

(FY 2017: 31.1%). Before the application of the functional

currency change for Zimbabwe, RFO for Rest of Africa

increased by R396 million or 37% in 2018 as a result of strong

operational performance. AHE for Rest of Africa increased by

R603 million or 18% mainly due to an increase in shareholder

investment return from strong equity market performance

in Zimbabwe albeit lower than in the second half of 2017.

The increase in operating profits and the weakening of the

Rand against the Kenyan Shilling were the main drivers of an

increase in average Adjusted IFRS equity of 24%(before functional

currency change).

Reported AHE for Rest of Africa decreased by 29% with

a corresponding decline in average Adjusted IFRS equity

of 1% mainly due to the change in functional currency

change that resulted in the translation of Zimbabwe results

at the RTGS rate.

C Invested Shareholder Assets

Invested shareholder assets decreased by 6% to R34.5 billion

(FY 2017: R36.6 billion). The asset base in South Africa saw a

R1 billion or 5% increase over the period, mostly due to net

increase in cash reflecting profits earned less dividends paid

out and continued positive shareholder investment returns.

Despite strong shareholder investment return generated

in Zimbabwe during the period which increased the asset

base, there was a decrease of R3.1 billion or 22% in Rest of

Africa. This was largely a result of the change in functional

currency in Zimbabwe which resulted in the translation of

shareholder asset balances at the RTGS rate.

For the listed equities held in South Africa we aim to

limit capital losses through the use of hedges. The impact

of weak equity markets in 2018 was reduced due to our

hedging strategy. The hedging strategy is executed in the

form of a zero-cost collar where the downside is limited to

5% - 15% whilst capping the upside.

D Gearing

Gearing ratios as calculated for the Group exclude the

equity and debt relating to non-core and assets held for

sale and distribution. The gearing ratio decreased by 50 bps

in 2018 mainly due an increase of R2,698 million or 6% in

equity attributable to operating segments. The increase is

largely a result of a dividend of R4,681 million (GBP255 million)

received from Residual plc in addition to operating profits.

This was partially offset by higher dividends paid to external

shareholders, considering the special dividend of 100 cents

per share, and the impact of IFRS 9 - Financial Instruments

which results in higher day one provisions for expected

credit losses. Interest cover decreased to 25.7 times (FY 2017:

28.3 times) mainly as a result of a decrease of 11% in AHE

from the prior period.

EMBEDDED VALUE

The table below sets out the components of embedded value.

The return on embedded value remained strong at 12.6%,

despite a decrease of 150 bps from 14.1% for FY 2017.

Operating EV earnings decreased by 3% to R7,990 million

(FY 2017: R8,244 million) mainly due to a less profitable mix

of new business sold in Rest of Africa during the year and

lower positive assumption changes when compared to the

prior period.

Positive experience variances, which increased by R253 million

compared to the prior period, coupled with improved

expense variances had a positive impact on Operating EV

earnings. This was partially offset by worse claims experience

in Personal Finance. Persistency experience improved during

the year, but remained negative reflecting the continued

challenges created by the macro environment. Overall claims

experience was positive despite the unfavourable experience

in Personal Finance. Poor group disability experience in

Old Mutual Corporate with some improvement during the

period. Recurring expenses remained lower than assumed,

reflecting continued progress in achieving our cost efficiency

targets across the business. Investment returns on equities

were significantly lower than in 2017, resulting in a negative

investment variances compared to positive variances in the

prior year.

(1) FY 2017 amounts have been re-presented to exclude the use of the iterative risk margin approach in calculating solvency capital requirements.

The Insurance Act came into effect on 1 July 2018 and to

date we have not yet been designated as an Insurance

Group. For OMLACSA we have presented our best estimate

of the solvency ratio based on approvals received from the

Prudential Authority to date. The Group solvency ratio is

presented consistent with the disclosure in the pre-listing

statement, except for the use of the iterative risk margin

approach in calculating solvency capital requirements.

The increase of the Group solvency ratio to 170% at

December 2018, was largely due the remittance of

dividends from Old Mutual plc to Old Mutual Limited and

the change in the functional currency in Zimbabwe. The

change in the functional currency for Zimbabwe reduces

its contribution to the Group, increasing the solvency ratio.

Own Funds of Zimbabwe are deemed non-fungible, and

therefore only an amount equal to its Solvency Capital

Requirement is taken into account for the Group solvency

ratio. As at 31 December 2018, the Group was and is

expected to remain financially sound on a regulatory basis

for the foreseeable future.

DIVIDEND DECLARATIONS

The Board of directors has approved and declared a final dividend of 72 cents per ordinary share.

The final dividend of 72 cents per share, results in a full dividend cover of 2.04 for the 2018 year which is in line with

Old Mutual Limited's dividend cover target of 1.75x to 2.25x. The final dividend will be paid out of distributable reserves

and is payable on 29 April 2019 to all ordinary shareholders recorded on the record date. The dividend of 72 cents

per ordinary share will be subject to a local dividend tax rate of 20% which will result in a net final dividend, to those

shareholders who are not exempt from paying dividend tax, of 57.6 cents per ordinary share. International shareholders

who are not exempt or are not subject to a reduced rate in terms of a double taxation agreement will be subject to

dividend withholding tax at a rate of 20%.

Shareholders on the London, Malawian, Namibian and Zimbabwean registers will be paid in the local currency

equivalents of the final dividend. In Malawi, Namibia and Zimbabwe these distributions will be made through dividend

access trust or similar arrangements established in each country and will not be subject to South African withholding tax.

Old Mutual Limited's income tax number is 9267358233. The number of ordinary shares in issue in the company's share

register at the date of declaration is 4,942,048,355.

Share certificates for shareholders on the South African register may not be dematerialised or rematerialised between

Wednesday, 27 March and Friday, 29 March 2019, both dates inclusive. Transfers between the registers may not take

place between Tuesday, 19 March and Friday, 29 March 2019, both dates inclusive. Trading in shares held on the

Namibian section of the principal register through Old Mutual (Namibia) Nominees (Pty) Limited will not be permitted

between Tuesday, 19 March and Friday, 29 March 2019, both dates inclusive.

Shareholders that are tax resident in jurisdictions other than South Africa may qualify for a reduced rate

under a double taxation agreement with South Africa. To apply for this reduced rate, non-SA taxpayers should

complete and submit a declaration form to the respective registrars. The declaration form can be found at:

https://www.oldmutual.com/investor-relations/dividend-information/dividend-tax-considerations.

SHARE REPURCHASE

Shareholders are advised that Old Mutual Limited ("OML" or "the Company") intends to commence a share repurchase

programme of the Company's ordinary shares up to a maximum consideration of R2.0 billion. The repurchase of OML

shares will take place on both the Johannesburg and London Stock Exchanges during the period 12 March 2019 until the

next annual general meeting ("AGM") of the Company on 24 May 2019. The share repurchase programme will be effected

in accordance with the General Authority received by way of a shareholder resolution passed at the AGM, held on 6 March

2018, allowing the Company to repurchase up to 247 102 418 ordinary shares, equivalent to 5% of the issued share capital

of the Company. OML has received approval from the Prudential Authority for the share repurchase programme.

The OML Board believes that OML is trading at a discount to its intrinsic value and is of the view that a share repurchase

programme will deliver longer term incremental value to shareholders. The management team remains committed to

following a disciplined trading approach under the share repurchase programme and will only repurchase shares to the

extent that market conditions are favourable. The purpose of the repurchase programme is to reduce the share capital

of the Company.

SEGMENT REVIEWS

MASS AND FOUNDATION CLUSTER REVIEW

DEFEND AND GROW OUR SHARE OF THE SOUTH AFRICAN MASS MARKET

We maintained our leading position in the mass market despite a challenging macroeconomic environment and

increased competitor activity in our market. Consumers remain under pressure with high unemployment rates, VAT

and fuel price increases through 2018 contributing to lower disposable income.

We opened 25 new branches in 2018 increasing our total retail branch network to 348. Improved sales force productivity

has translated into strong life and loan sales growth, even though challenging market conditions persisted in H2 2018.

Old Mutual Money Account remains one of the most competitive transactional solutions in the South African market.

We have opened 1 million Money Accounts since inception of which 0.4 million were during 2018. The number of

active accounts increased by 67% in 2018 with nearly a quarter of accounts opened to date being active. We have

made continuous process improvements to pay funeral claims faster, which led to an improved customer experience.

We have reduced pay out times of qualifying funeral claims from 24 hours to less than 8 hours. Claims initiated via the

Money Account app and call centre are typically paid within 4 hours.

PERFORMANCE HIGHLIGHTS

Gross flows increased by 14% to R13,700 million due to

strong life sales and annual premium increases on in-force

book, combined with good growth in savings flows into

Money Accounts. Life APE sales of R4,579 million showed

strong growth of 12%, despite the expected moderation

that took place in H2 2018 due to continued pressure on

the consumer. The increase in life sales is largely due to

growth in adviser headcount and productivity, premium

increases and higher credit life sales off the back of growth

in loans disbursed, which contributed to a R0.4 billion or

7% increase in NCCF to R6.5 billion. The retail branch

network contributed 30% of Life APE sales and continues to

deliver better persistency and productivity experience than

other distribution channels.

Gross loans and advances increased by 37% to R16,518 million.

Process enhancements in terms of customer take-on

increased consultant productivity and we deployed a more

risk sensitive scorecard that aligned the market offering in

terms of loan size and term to the risk profile of our customer

base. This allowed us to better compete, and achieve

significant growth, in lower risk scored customers while

keeping overall loan approval rates consistent with prior

years. After taking into account growth in disbursements in

2018, we still have less than 10% of the unsecured lending

market and we see opportunities for further market share

growth.

The net lending margin of 13.7% decreased by 250 bps in

line with expectations as good credit experience was offset

by higher financing charges resulting from the growth in

our book.

RFO of R3,129 million marginally increased by 3% with flat

Life and Savings profits and 29% growth in Banking and

Lending profits. Life and Savings profits were affected by a

12% reduction in credit life profits following price cuts for

lower risk rated customers giving better customer value

for money. The remainder of Life and Savings profits were

impacted by positive growth in the book and good cost

management which was partially offset by less positive year

end assumption changes and lower new business profits.

Banking and Lending profits mostly benefited from the

decrease in amortisation of acquired intangibles related

to Old Mutual Finance compared to 2017. The provision for

loans disbursed following the implementation of IFRS 9 -

Financial Instruments was R90 million higher than it would

have been under the previous applicable IFRS standard. This

was more than offset by the unwind of R214 million of the

day one transitional adjustment provision recorded in equity

as a result of excellent collections experience and improved

behavioural scores during 2018. The current year provision

release is in line with a prior year release that related to the

alignment of provisioning models to payment behaviour in

anticipation of IFRS 9 - Financial Instruments.

The credit loss ratio of 5.9% was 90 bps worse than 2017,

mainly due to a decrease in the collections experience of

previously written off bad debts and is influenced by both

the size and the pace of growth of the loan book. The ratio

remains well within our expected range. Whilst we plan to

grow our market share, the pace of growth could moderate

in future periods.

VNB of R1,222 million decreased by 1% but remains healthy

at a margin of 10.3% despite the decrease of 30 bps during

the year. This is due to the margin mix of risk products sold

during the period driven by sales promotions. An increase

in the portion of debit order sales versus payroll deduction

further negatively impacted VNB.

OUTLOOK FOR 2019

The start of the year is seasonally slow from a sales perspective with the added backdrop of a strained consumer

environment. High levels of competitor activity in our market means we will need to drive our business to maintain

our market position.

We will continue to grow our retail branch network and gradually add to the number of Old Mutual branded ATMs.

One Financial Plan, an advice enablement tool, is being rolled out to our tied agent force, further strengthening our

advice value proposition to customers. We remain vigilant on collections experience on both insurance and lending,

actively supporting customers during the tougher economic times. We will do this by highlighting appropriate

features in our product solutions, like premium holidays and premium cashback benefits, and promoting our

affordable transactional account with fully accessible savings functionality.

PERSONAL FINANCE REVIEW

DEFEND AND GROW IN THE SOUTH AFRICAN PERSONAL FINANCE MARKET

Consumer confidence remained subdued in the second half of the year due to a continued weak economic

environment. Lower than inflation average salary increases and VAT and fuel price increases have had an adverse

impact on consumer disposable income, customer acquisition and retention especially in the middle income market.

Intense competition remains a characteristic of this market.

A number of management actions and initiatives were taken during 2018 to drive flows and sales in the tough

economic environment. These included the re-pricing of guaranteed annuity products and tactical improvements to

the pricing of disability and severe illness to improve competitiveness. We launched the Old Mutual Rewards loyalty

programme in an effort to strengthen our penetration in the middle income market. In the fourth quarter of 2018 we

extended our risk product proposition with the launch of Greenlight Sickness Benefits to support recurring risk sales.

Our distribution channels performed well, generating gross flows of R69.2 billion in 2018 with a contribution of

R37.2 billion to Wealth and Investments and R6.5 billion to Corporate. Good growth was seen in new digital channels

with saving sales up 29%, and Life APE sales sold through iWYZE was up more than 300% albeit off a low base. Our adviser

force in Old Mutual Finance branches grew by 67% to 315 advisers and we now have presence in over 181 branches country wide.

In line with our vision to become life time financial partners to our customers through meeting their core needs every day,

we have been able to meetn3+ needs of 33.3% of our customer base. In the Black Middle Income group, a key growth market segment for us, nearly

half of our customers have 3+ needs met with Old Mutual.

PERFORMANCE HIGHLIGHTS

Gross flows increased by 5% to R26,165 million mainly

due to 9% increase in single premium sales and positive

growth in recurring flows across Life and Savings and Asset

Management businesses.

Despite improvement in mortality and morbidity claim

levels in the second half of the year, NCCF for the year was

adversely affected by poor claims experience and higher

disinvestments. Negative NCCF of R3.6 billion was recorded for

the year, a decrease of R0.8 billion from the prior year.

Legacy NCCF was recorded at negative R9.8 billion (R0.4 billion lower

than the prior year) while NCCF related to new generation products was

R6.2 billion, R0.4 billion lower than the prior year. NCCF

outflows and the decline in the South African equity

markets contributed to a decrease of 6% in FUM to R181.4

billion at 31 December 2018.

Life APE sales grew modestly by 2% to R2,556 million

due to good growth in single premium savings sales and

guaranteed annuity sales due to improved pricing. Growth

was partially offset by slightly lower recurring premium sales

on savings and risk products reflecting pricing competition

in the market.

RFO of R2,021 million decreased by 36% when compared to

the prior period. Net positive reserve releases that occurred

in 2017 were not repeated and had a negative impact on

the year on year profit growth rate. Higher than expected

death and disability claims, with a number of larger death

claims which fell below the reinsurance threshold during

the first half of 2018 negatively impacted profit levels. Claims

experience was approximately R300 million higher than

expected as a result. Claims levels returned to expected

levels in the second half of the year. Several management

actions have been put in place in response to the negative

claims experience including an analysis of causes of death,

non-disclosure trends and a review of medical testing

practices.

VNB increased by 14% to R418 million mainly due to

higher sales in annuity products at improved margin. This

was partially offset by lower margin due to mix on other

products which negatively impacted VNB. The VNB margin

increased by 20 bps to 2.6%.

OUTLOOK FOR 2019

Although we saw some improvement in mortality experience in the second half of 2018 we will continue to monitor our

claims experience carefully during 2019. The actions we are taking in response to the mortality experience will only have

impacts on our financial results in the second half of 2019.

We expect a constrained environment for our customers if the challenging economic climate and political uncertainty

persists in South Africa. This may reduce their ability to make investment decisions and could therefore have an adverse

effect on our growth.

We are on track to launch a new protection proposition, a technology enabled advice model, in the first half of 2019. This

will provide enhanced product features and will simplify and digitise journeys for the intermediaries and customers to

improve overall customer experience.

WEALTH AND INVESTMENTS REVIEW

IMPROVE THE COMPETITIVENESS OF WEALTH AND INVESTMENTS

We delivered a good set of results in the context of a challenging macroeconomic environment, declining equity

markets and high levels of competition. Strong retail NCCF was supported by an improved Wealth proposition and

solid investment performance in our core funds. This outcome demonstrates a strengthened market position in tough

industry conditions. The institutional flows in our Asset Management business held steady with marginally positive

NCCF, despite absorbing approximately R5 billion of net outflows relating to index funds that were internalised

by the relevant fund providers in line with industry trends. Record high transaction activity in Specialised Finance

and the benefit from our continued participation in South Africa's renewable energy sector through Alternatives

demonstrate the diversification benefits of our segment. Khaya Gobodo was appointed as Managing Director, effective

1 January 2019, succeeding Dave Macready who retired at the end of December 2018.

(1) AUM comprises FUM as defined for the Group, as well as funds managed on behalf of other entities

in the Group, which is reported as FUM in respect of segments. Assets under administration that are

managed externally are not included in AUM.

(2) AuMA is AUM including Assets under Administration.

PERFORMANCE HIGHLIGHTS

Gross flows of R89,214 million increased marginally by 1%

due to strong sales in Old Mutual International and the

retail Wealth platform, partially offset by lower institutional

inflows to Asset Management. Positive NCCF of R10.8

billion was supported by strong flows into the retail Wealth

platform, up 35% from prior year, and good flows in the

institutional Asset Management business resulting from

improved investment performance. Outflows were higher

due to mandate terminations by certain multi-managers

following their decision to internalise indexation capabilities

and asset realisations in Alternatives. AUM was slightly

down from the prior year, with the positive impact of strong

retail and institutional inflows offset by outflows in the form

of asset realisations, and weak equity market performance

during 2018.

Total revenue increased by 3% to R5,013 million. Annuity

revenue increased by 3% compared to the prior period

supported by an increase in average AUM compared to the

prior period despite closing AuM ending 2% lower than

2017. This growth was pleasing in an environment which

exhibited some margin compression, primarily in the retail

business. Non-annuity revenue has been at exceptional

levels in 2017 and 2018. For 2018, development fees earned

on renewable energy investments in Alternatives and

strong gains in the credit portfolio of Specialised Finance

combined with origination income contributed to non-

annuity revenue. Non-annuity revenue is down 3% as result

of high non-recurring investment returns in the Alternatives

boutique in the prior period.

RFO was R1,611 million, an increase of 8% from the prior

year. The increase is largely attributable to acquisition-

related intangibles being fully amortised in 2017 and higher

asset based fees on the 7% higher average AUM during the

period. The diversified asset base of the Wealth and Asset

Management businesses, which include bonds, cash and

offshore equities, supported growth in RFO.

RFO for the Wealth and Asset Management business

increased by 3% compared to 2017. The diversified nature of

assets it manages mitigated the impact of poor performance

of South African equities. However, the industry margin

pressure, primarily in the retail space resulted in some drag

on the earnings growth.

Our Alternatives business had an exceptionally strong year

in RFO, up by 89% from 2017 due to high non-annuity

revenue, largely contributed by development fees in the

unlisted infrastructure space. The goodwill amortisation

in 2017 was not repeated in 2018 and contributed to the

increase in RFO. Annuity fee income held up well during

the year in line with average AUM, despite closing AUM

ending slightly lower at year end as a result of distributing

value to investors through asset realisations in one of the

infrastructure funds.

The Specialised Finance business performed well during

2018 benefitting from higher asset origination levels. The

quality of the balance sheet portfolio reduced the impact of

market wide credit spread contraction. The RFO decreased

by 8% largely due to increased funding cost as a result of

the implementation of a revised Group funding approach.

Our core funds continue to show strong investment

performance. Retail funds performed well with 75% of

core funds above median over three years and 88% over

five years. Institutional funds also performed well with

75% of core funds above median over three and five years.

Our multi-asset funds performed strongly in 2018 with all

eight core retail and institutional offerings above median

over 3 years. The Flexible Fund remains top quartile over

three and five years with our flagship retail Balanced Fund

top quartile over three years. All four core retail multi-asset

funds are 4* Morning star rated.

OUTLOOK FOR 2019

During 2018, our business generated high levels of annuity revenue that contributed 90% of the total revenues.

In particular our Wealth and Asset Management businesses contributed 80% of the annuity revenue. The outlook

remains challenging for 2019 given increasing pressure on revenue margins in the industry, despite some recovery in

equity market levels during the early part of the year.

Our business is geared to equity market levels which are influenced by the broader economic environment and

investor confidence, We anticipate some challenges ahead with limited GDP growth forecast for the near term. The

Alternatives business, which is the biggest contributor to the non-annuity flows, is likely to experience limitations

around deal flow and fund raising if these conditions persist.

OLD MUTUAL CORPORATE REVIEW

DEFEND AND GROW OUR SHARE OF THE SOUTH AFRICAN CORPORATE MARKET

After more than 50 years of delivering value to our customers, we are pleased that members of retirement funds can

continue to invest in our industry leading smoothed bonus investment offering subsequent to the introduction of the

new default investment portfolios regulations 37.

We continue to invest in improving the customer experience of the Old Mutual SuperFund umbrella with the launch

of a new self-service portal in 2018. The SuperFund umbrella continues to attract good flows from both converting

standalone schemes as well as customers moving from competitor umbrella funds. OMCC OnTrack is our new

consulting tool that measures the health of retirement outcomes at member level and promotes awareness of

retirement goals and planning. This will be a valuable tool to improve retirement outcomes.

Management actions undertaken to improve Group Risk underwriting experience gained good traction. These actions

included income protection re-pricing and the launch of the new Well4Work range of four flexible Group Income

Protection benefits that allow clients to tailor the desired balance between benefits and price. Management actions

continue to be taken to further improve Group Income Protection underwriting margins to expected long-term levels.

We continued to strengthen our industry profile and thought leadership credentials by winning in three categories

at the 2018 Imbasa Yegolide Awards. These awards recognise service providers in the employee benefits industry who

meet the needs and expectations of retirement fund members by delivering excellent service. In addition, the Institute

of Retirement Funds awarded Old Mutual Corporate with two best practice certificates for "Financial Management

and Reporting" and "Stakeholder Engagement and Education".

PERFORMANCE HIGHLIGHTS

Gross flows increased by 20% to R42,669 million due to

a combination of improved Life APE sales and strong

institutional multi-manager flows. Life APE sales achieved

growth of 15% to R3,133 million, despite a large recurring

premium SuperFund deal in the prior period, with good

growth across all major product lines except annuities.

Strong inflows from new mandates together with improved

termination experience contributed to a significant

improvement in NCCF of R9.1 billion to R2.0 billion. FUM of

R254.6 billion remained flat with the growth in NCCF being

more than offset by the impact of declining equity markets.

At R309 million, VNB grew by 22% largely as a result of sales

growth and a change in capital allocation across products

and segments to align with the new regulatory solvency

system. The VNB margin improved by 10 bps to 1.1%.

RFO of R1,703 million increased by 8% from the prior year

due to significantly improved Group Risk underwriting

experience, underpinned by lower Group Life Assurance

claims volumes and improved Group Income Protection

pricing. In addition, active management and a resolution of

risk exposures resulted in a net one off release of provisions

of approximately R85 million.

OUTLOOK FOR 2019

We continue to invest in Old Mutual Superfund to improve customer experience and drive growth of the umbrella

offering. We have a good pipeline of deals we are working on. It is important to note there is a time lag between the

recognition of the recurring premium flow (in respect of future service contributions) and the single premium flow

in respect of the related asset transfer on these types of deals due to the section 14 transfer process. Management

actions continue to be taken to further improve Group Disability underwriting margins to expected long-term levels.

Earnings will continue to be impacted by market levels during 2019

OLD MUTUAL INSURE REVIEW

CONTINUED TURNAROUND OF OLD MUTUAL INSURE

Old Mutual Insure reported a solid underwriting result for the year, through a deliberate focus on improved service to

brokers and disciplined underwriting. The absence of catastrophe events and improved weather conditions in South

Africa supported the result. In addition, claims cost control initiatives and the ongoing remediation of the large risk

pool have led to a reduction in attritional claims for intermediated businesses.

Organic growth continued to be muted by tough market conditions and slower than anticipated new business

volumes. Inorganic growth was targeted through a significant focus on building pipeline opportunities and specific

initiatives, including strategic partnerships with four underwriting manager agencies during 2018 to support our

diversification strategy. These partnerships are expected to contribute to growth in 2019.

We have made significant improvement in our digital service channels to continuously improve customer experience

during the claims process. The rollout of MyOMInsure, a digital platform for claims registration and scheduling

appointments with approved auto body repairers, is a key initiative in growing our digital business. We appointed

Garth Napier as Managing Director of Old Mutual Insure in October 2018. His focus will be on the reconstruction of the

portfolio and further improvement of the underwriting and claims processes.

PERFORMANCE HIGHLIGHTS

Gross written premiums increased by 6% to R13,218 million

in challenging market conditions. The increase from the

prior year is a result of pricing increases and strategic

partnerships with underwriting manager agencies to

generate new business. Strong growth was delivered by

iWYZE, pursuing a profitable growth strategy that leverages

operational efficiencies, strategic partnerships and focused

marketing. CGIC reported good top line growth, despite the

low real annual GDP growth rate which is directly linked to

CGIC's GWP performance. This was partially offset by lower

growth in commercial and agriculture portfolios as a result

of specific remediation of the loss-making risk pool, tough

market conditions and the impact of weather conditions

delaying planting season for farmers.

RFO was R670 million, an increase of 28% compared to

2017, largely due to an improved underwriting margin,

as a result of improved claims process efficiencies, and

procurement optimisation, especially in the Personal lines

portfolio. Profit growth was also supported by the general

environment with a relatively benign claims environment

and with lower significant catastrophe losses. This was

partially offset by the cost of a financial liability relating to

strategic partnerships that was recognised for the first time

in 2018, and the increased cost of reinsurance following the

adverse large loss and catastrophe experience of 2017 in

South Africa.

The strong improvement in the net underwriting result in

2018 led to an improved net underwriting margin of 5.3%

which is at the upper end of the Group's target range of

between 4% and 6%. The insurance margin improved by

130 bps to 7.4% as a result of an increase of 60 bps in the

return on insurance funds due to an increase in interest

rates compared to the prior period.

We had exceptionally good claims experience in Personal

and Commercial lines in the first half of the year following

favourable weather conditions and no catastrophe claims.

Attritional losses and the volume of larger losses increased

during the second half of the year across all of our core

divisions in line with normal seasonality trends.

Personal lines reported an excellent underwriting profit for

the year of R320 million, an increase of 101%. This was a

result of a favourable claims experience in the market with

claims efficiencies across the division which led to lower

attritional losses. No significant catastrophe losses have

been reported in the period. Solid year to date results were

reported by iWYZE with a profit of R60 million, more than

100% increase from the R20 million in 2017, due to improved

claims management, a favourable claims environment and

benefits arising from a review of technical reserves.

The net underwriting result of the commercial lines portfolio

was negatively impacted by large fire claims reported

for the year, with a largely adverse experience in the last

quarter of the year. The agriculture portfolio was negatively

impacted by the adverse hail claims experience in the first

half of the year.

Both the Specialty division and CGIC took strain from

large claims reported during the period with losses mostly

incurred in CGIC's bonds portfolio, constituting only 2% of

the total CGIC book. The core trade credit business of CGIC,

however, delivered strong underwriting results in poor

economic conditions, well above results reported by peers

in the market. In the Specialty division, losses reported

in 2018 exceeded both the 13-year average as well as the

prior year.

Attritional losses across our core divisions reduced in 2018

when compared to 2017 and 2016. This was due to the

remediation performed on the large risk pool over a three

year period, improved weather conditions in South Africa

and claims process efficiencies implemented which has

started to have a noticeable positive impact on the overall

underwriting performance.

OUTLOOK FOR 2019

Despite 2018 being a year characterised by a relatively benign claims environment, the economic climate remained

challenging for the short-term insurance industry. Continued low real annual GDP growth and volatility in the Rand

had a negative impact on policy unit growth as well as claims costs. The construction industry in particular has been

under pressure, with an increased number of businesses entering into business rescue arrangements.

We will continue to focus on first class service delivery, a modernised distribution strategy, product upgrades and the

continuous improvement or enhancement of our claims processes. We expect headwinds in 2019 if a normalised

claims environment returns, but remain confident in the delivery of 2019 targets.

REST OF AFRICA REVIEW

TURNAROUND EAST AFRICAN BUSINESS AND IMPROVE RETURNS

ACROSS THE REST OF AFRICA

During the first half of 2018 we completed a staff reorganisation to optimise staffing levels and eliminate duplication

across our East African businesses. This reorganisation was facilitated through the automation of several processes and

the merging of disparate IT systems within the business. The reorganisation cost approximately R70 million, which is

expected to drive ongoing savings despite the impact to profits in 2018. In our property business we have actively increased

occupancy levels across our portfolio of properties. Our Banking and Lending business has focused the majority of its

lending on lower risk loan portfolios and this had a positive impact on non-performing loans.

Southern Africa continues to be the key contributor to Rest of Africa results. The strong performance is despite the continued

recession in Namibia and the currency challenges faced in Zimbabwe. The continued US dollar shortages in Zimbabwe during

2018 has led to the increased use of electronic and plastic money through the Real Time Gross Settlement ('RTGS')

system. During February 2019, a trading mechanism for RTGS balance and bond notes with international currencies was

established, however before this, authorities maintained that the US dollars represented in the RTGS system were at a

1:1 exchange rate. We have estimated a RTGS: US dollar exchange rate of 3.3 to 1 by assessing various inputs that impact

inflation. The application of the change in functional currency has been applied prospectively in our financial results for

the 2018 reporting period. For inclusion in the condensed consolidated income statement of the Group, Zimbabwe results have been

translated at the average US dollar exchange rate for the period up to 30 September 2018 and at the estimated RTGS rate

for the remaining three months of the financial year. For inclusion in the condensed consolidated statement of financial position,

Zimbabwe results have been translated at the RTGS rate.

In Nigeria, following the delayed Bancassurance license approval in May 2018, we now have a presence in 113 Ecobank

branches across the country. Our Property and Casualty business experienced significant oil and gas claims in the first half

of the year which adversely impacted underwriting results. Management actions have been taken in the second half of the

year to limit further exposure. We appointed a new Managing Director in West Africa in November 2018, who will focus on

developing an executable and credible business plan to support the capital that we deploy in the region.

(1) Reflects the key financial indicators of the Group before applying the functional currency change.

(2) The application of the change in functional currency has been applied prospectively in our financial results for the 2018 reporting period. For inclusion in the condensed

consolidated income statement of the Group, Zimbabwe results have been translated at the average US dollar exchange rate for the period up to 30 September

2018 and at a RTGS:US Dollar exchange rate of 3.3 to 1 for the remaining three months of the financial year. For inclusion in the condensed consolidated statement of financial position,

Zimbabwe results have been translated at a RTGS:US Dollar exchange rate of 3.3 to 1.

(3) Results from Operations for Rest of Africa includes central regional expenses of R91 million (H1 2018: 57 million, H1 2017: R82 million, FY 2017: R188 million).

(4) Includes Faulu in Kenya, CABS in Zimbabwe and OMF Namibia.

(5) Net interest income plus non-interest revenue minus credit losses, as percentage of average loans and advances over the period.

(6) Underwriting margin is calculated with reference to Results from Operations.

PERFORMANCE HIGHLIGHTS

Life and Savings RFO increased by 28% from the prior year

mainly driven by the reversal of a stamp duty provision raised

in the prior year and the securing of a large government group

life assurance (GLA) contract in Malawi. Zimbabwe and Malawi

delivered strong Life APE sales as a result of strategic focus on

growing retail sales through increased advisor productivity.

This was supported by improved expense performance in East

Afica. Asset Management RFO grew by 73% from the prior year

driven by higher fees on the back of growth in funds under

management in Zimbabwe and good inflows into money

market funds in Malawi. Banking and Lending RFO increased

by 8% due to good growth in loan books across our regions on

a lower risk portfolio driving higher non-interest income and

net interest income. Property and Casualty RFO decreased by

360% mainly due to significantly lower top line growth across

all regions, higher expenses and negative claims experience in

Zimbabwe, East and West Africa.

OUTLOOK FOR 2019

Elections are planned to take place in Namibia, Malawi, Botswana and Nigeria but we expect 2019 to be politically

stable. In Zimbabwe, monetary policy reforms are contributing to continued uncertainty whilst the peace deal signed

recently in South Sudan is expected to result in an improved economic environment. Despite challenging operating

conditions experienced in 2018, we believe the markets we operate in present attractive growth opportunities. Real

GDP growth is expected to be muted in our dominant Southern Africa markets as both Namibia and Zimbabwe face

economic headwinds. Strong GDP growth is expected in both our East and West African markets.

We have begun to see positive results from the continued turnaround of the East African businesses. We will continue

to drive profit growth predominantly through enhancing our customer value propositions in our Property and

Casualty business, expanding our Banking and Lending offerings and improving occupancy levels in the property

portfolio. In West Africa we will focus on the remediation of our business by right-sizing the cost base and growing

our business through strategic partnerships in these markets.