Old Mutual Limited (OMU) Earnings Call Transcript & Summary

Good afternoon, and welcome to our audience here at 1 Mutual Place in Johannesburg, as well as those joining us via webcast. I am Sizwe Ndlovu. And as most of you all know me, I'm the Head of Investor Relations here at Old Mutual Limited. Thank you for taking the time to join us today. We have attendees from South Africa, the rest of Africa as well as from across the globe, as you can see behind me. A very warm welcome to all of you. I believe that you'll feel as I do that there are some great and exciting things that are happening in the background of our business. And our objective today is to provide you with an understanding of the Old Mutual Group and its constituent parts. This business, beyond its boardrooms, beyond our strategy and execution frameworks, is at its heart, powered by exceptional people. And today, it's about those people telling their stories. And if we don't do it well, I know all of you have my number, I do expect to receive calls. And on that note, I'd love to hand you over to our talented Human Capital Director and your MC for today, Celiwe Ross. [Presentation]

Thank you so much for the introduction, Sizwe, and thank you to everyone who is joining us today for yet another update to our investor community. We do hope that you find today's engagement as enlightening and insightful as many of you found the Capital Markets Day from earlier this year. As a start, I must say, I find it quite surreal that this time, I'm speaking to at least some of you in person. Welcome back to No. 1 Mutual Place. Much has changed since we all last spoke about 5 months ago, in June of this year. Not only has our performance grown and continued to improve, but as some of you can see, I too have grown. We also have some significant events that have an impact on our operating context. One of these is the increasing pressure we're seeing on climate change. Whilst the world moves towards prioritizing the shift to clean energy, developing economies, like South Africa, continue to remain highly dependent on energy sources such as coal. Thankfully, green energy investments have been prioritized by the Old Mutual Investments business for a few years now, but more on that a little bit later. One other operating context we find ourselves in, for example, is the civil unrest that we experienced in South Africa earlier this year. That was clearly symptomatic of a number of deeper issues such as inequality and a growing unemployment rate. Garth Napier will further address this impact and the impact that the riots had on our bottom line. Whilst COVID-19 remains a concern in certain parts of the world, we've started to see them starting to open up, and those economies are needing to find ways to remain resilient in what is now the new normal. Like others, we too have adapted, and we continue to do so as the situation remains uncertain. As a consequence of this new normal, we have recently shifted officially to a hybrid way of working, whereby all our staff will be expected to be in the office for at least 2 days of the week. In order to keep everyone safe and to do our broader part for this country and the continent, we will also be insisting that all Mutualites in South Africa are vaccinated by the 1st of January 2022. It is evident that with this backdrop, we are operating in an increasingly dynamic world. As you heard from our Exco this last June, this is an environment in which our strategy and operations need to have and will continue to require the agility to respond to. To do this, we unveiled to you what we call our Truly Mutual strategy, which is based on the execution framework of rectify, simplify and amplify. In that, we promised to rectify by looking at every aspect of our business and to fix where we needed to. We also promised to simplify by looking at our processes and products and eradicate all waste and duplication. Lastly, we promised to amplify by exponentially increasing the effects and the value that we can launch from our sturdy foundation to deliver to our customers and ultimately to you, our shareholders. We've also shared with you our top line views, strategies and expectations from our business segments. From Mass and Foundation, you heard from Clarence Nethengwe, who outlined how they moved to rapidly transform their distribution with leading-edge technology and how they're training their broker force. Kerrin and Farhad from the Personal Finance and Wealth segments showcased how they are streamlining their business and thereby regaining support from their brokers. Both of these segments were, of course, supported by the work done in technology with Vuyo and Johnson, who spoke a lot of detail around that. The team has also rolled out new technology and consolidated all of our apps and websites to create what we call MyOldMutual; and of course, there's Workday and MyGoals. You will also remember that when we last spoke, we communicated some big ambitions. At that time, Iain mentioned that we are hanging our hats on these, and it's as true today as it was when he said it. Our agility has helped us to deliver results from operations ahead of market expectations in many cases and, in some cases, supporting our own ambitions. I must say that I'm personally very proud of the work that the teams have put in and in what it has meant to business and business performance. Some of the highlights of that include: we remain on track to deliver our ZAR 750 million cost savings by the end of 2022 through our South African insurance and savings businesses. This is in addition to the ZAR 1 billion we previously saved. We continue to simplify our businesses by building digital capabilities and have made significant progress to amplify our employee customer and adviser value propositions and experiences through digital offerings. We are also on track to add the savings and income propositions in South Africa and Namibia, along with the Old Mutual Protect range, utilizing the same core infrastructure we discussed. And we are embarking on initiatives to support growth adjacent to our traditional channels and markets in fintech, insurtech, transactional services and value-added services. We continue to progress to strengthen our position in the market with continued progress to becoming our customers' first choice. We've already made introductions to 1/2 of our businesses. In fact, we felt it's important for you to fully understand and appreciate who we have become. And we think it's time you met the rest. So today, you will see the big picture as we do. Today, you will hear from the leadership of Old Mutual Corporate, Investments, Old Mutual Insure and our Rest of Africa business. They will take you through their businesses, their big ideas, their actions that they've implemented and how they are contributing to our Truly Mutual strategy. Our CFO, Casper Troskie, will share an update on the numbers that give a clear indication of where we are, but also where we are going. Of course, this will be book-ended by Iain, who will be giving us an overview and an update on our overall progress to rectify, simplify and amplify our business. While much of this is us sharing with you, I encourage you, of course, to engage with us. Our role here is to provide you with clarity, so feel free, please, to ask away. I'll be hosting a short Q&A session following each presentation for this exact purpose. For those of you who are online, please make use of our webcast throughout the day. And for those of you in the room today, we will have a roving microphone available to you. Please do raise your hand to catch the attention of our team, and please don't worry. We are making sure that all protocols are observed, and everything will be sanitized before your use. We'll also be taking any questions from our dial-in function in case people aren't able to access our webcast service. Where necessary, and should questions not directly relate to the presentations being showcased today, we do have the entire Exco team available to answer any of your questions throughout this program. We will respond to these during the Q&A breaks between discussions. And where we don't get to respond to you, please be assured that we'll make sure we come back to you in the coming days. Our first speaker of the day today is our Chief Executive Officer, Iain Williamson. Iain spoke to you about our Truly Mutual strategy during the June update. And today, he'll be giving you a reminder of our ambitions and an update on how we are progressing. We're shifting the format slightly, and it will be a discussion this time rather than a presentation. Last time, I introduced Iain by conveying my experience of him as a steady leader with a singular goal of ensuring Old Mutual meets its victory condition to be our customers' first choice. His focus, clarity of vision and drive to execute are ensuring that our goals become our reality, and of course, that what we say is exactly what we do. But conversations need 2 participants at least. So Iain will be joined on stage by Gugulethu Mfuphi, who many of you have either seen on CNBC Africa or heard on Kaya Biz. Gugu needs no introduction to our business or to our markets, and she will be having a discussion with Iain and tease out some of the questions she has had for us in the past as well as some of the questions you have raised with us in due course. We don't expect it to go easy on him though. So with that, I'd like to hand over to you, Gugu, and to Iain.

Thank you very much, Celiwe. Thank you once more to Celiwe for that wonderful introduction. And of course, a very good afternoon to each and every one of you who have joined us here. Wonderful to have some warm bodies, even though we are going, great to have the company and interaction over today's investor update and to those as well who are joining us virtually. Iain, I'm excited for this conversation. I don't think you should be, though. As Celiwe mentioned, it's going to be quite a tough ride. But maybe let's start exactly there. For many members of the investment community, we're sitting back here and perhaps are wondering, we spoke to you just a few months ago at the Capital Markets Day, but now an investor update? Why is today such a critical part of a conversation and engagement with members of the market?

Thanks, Gugu, and welcome, everyone, both here in the room and online. I think it's important to contextualize that in a pre-COVID world where we could get everyone physically in a room, we would probably have done a 2-day event to cover the entire business from front to back in one shot. But with COVID, we felt that asking people, particularly in the early day event that we held, asking people to stay online for 2 days and look at their screens was probably a bit much. So we deliberately shortened the initial event and covered essentially the big businesses in South Africa, but we haven't covered everything. So today really represents a continuation and making sure that we do cover pretty much wall to wall, end to end the entire business. So everyone walks away from today with a very clear picture of the totality of our business, where we're going and hopefully, a greater appreciation of the inherent value in our businesses.

Yes. I find it quite interesting that you're going to give us further detail and further insight into the full overview of the company. And naturally, we want to ask, how does this then speak to rectify, simply, amplify the strategy that we heard of at Capital Markets Day? How is it that these business segments will continue to speak to that underlying theme?

Yes. So maybe just as a reminder to the audience, we set a victory condition in our Capital Markets Day, a true north, if you like, for the business of becoming our customers' first choice. That's essentially it. And rectify, simplify, amplify is the execution framework that goes underneath that. So in a sense, they are an umbrella that sits on top of all the business units, and all the business units are essentially driving towards that same outcome and using the same frame to execute against. And then I think we said that to become our customers' first choice, we need to be excellent in 5 broad areas. That is advice, insurance, investments, lending and transactional capabilities. But the execution framework helped to break down the long-term journey into bite-sized chunks so that we stay focused on what we need to do in the short term to get there.

Perfect. So it sounds as though we have the overview of the road map. We're well aware what it is that we need to change and implement as we go forward within this particular journey. But like with any journey or trip or endeavor, you've also had to prepare yourself. And maybe let's reflect on a few of the most recent announcements that have been made by Old Mutual Group before we take a look at some successes, the Nedbank unbundling. Has this unlocked value for shareholders? And does it maybe give us some insight into some plans that Old Mutual might have to start a bank of its own?

Sure. So yes, in the last 3 months, I think there have been a few specific deliverables that are worth mentioning. One is the completion of the Nedbank unbundling. We've had the regulatory approval. Shareholders have received the Nedbank shares in their hands. I don't think people should read too much into it in terms of mutual strategy, but we had said very clearly in our 5 pillars that transactional banking in particular...

Help us understand what that is, right? You say we shouldn't read too much into it, but does it mean that there's still growth opportunities there?

Yes. So the transactional banking piece, we think, is core. So we have currently what we refer to as money account in the MFC cluster, which is a transactional offering, but it's not as fully developed as we would like. And it's really targeted at one very specific segment of the market. So we are investing in broadening out our capability in that area. We've hired a team that have a lot more expertise in the kind of banking bold space, if I can call it that, then maybe what you would think of as an Old Mutual -- typical Old Mutual employee. And we have started work on essentially a technology book underneath enhancing that transactional offering. So that is a work in progress.

Yes. Let's expand on technology, because I also understand that this is where you've also invested quite heavily, right, in terms of looking to grow and see new opportunities in the market, but help us unpack what's happening from an R&D point of view.

There's quite a few prongs. I think Old Mutual Protect essentially that I think the audience is aware of from the first Capital Market Day was essentially a massive technology project to rebuild the chassis of our life business in South Africa from front to back. That -- I think, that has shot the lights out. We've had a 15% increase in customer applications for policies in that space in quarter 3 versus in quarter 2. And we had over 70,000 cases sold in each month of August and September. And those are record-breaking months for us since we first launched Old Mutual Protect. So that's one area...

I don't think you should say that calmly though, because if it's record breaking, it certainly means that you have the capabilities in order to fulfill these needs, right? So something quite substantial that we do need to be acknowledging and celebrating, I guess, then.

Yes, absolutely. And as I say, it's a technology -- fundamentally a technology project. There's a lot of other stuff that goes around it. But wider than that, we've then got a cloud migration. We're about halfway through migrating our entire IT estate to cloud, the digitization of our business. We've seen a big uptick in our customer Net Promoter Scores from 62% at the half year to 69% now. And I think that's on the back of a focus on essentially process optimization across the business.

So in other words, Gugu, who interacts with Old Mutual as a PF customer or client perhaps, actually has a better experience and then provides positive feedback about that experience.

That's right.

So thumbs up to your team, [ Lena ], in terms of PF and how they've actually been interacting with claims in that regard. I'm keen to build up again, as you say, Old Mutual Protect has seen a lot of growth. Perhaps there a few other nuggets as well and some awards or winnings that you've had in recent months that you can tell us about?

Yes. So in the digital space, there's quite a lot going on in Old Mutual. It's maybe not front of the radar. Many of our investors will know we've had 22seven in our stable for quite some time. It's essentially a financial management tool that empowers consumers to deal with their monthly budget, their spend and understanding where their money is going every month across multiple sources. Recently, we made that data free. So just making it easier for customers to use. So that's been quite a big step. We've launched what we call digital world to the market, which is essentially a platform where people can come in and create and we'll store it and register it there. That's in a few short weeks, actually, since it was launched has had really good traction. And then a couple of weeks ago, we had the annual BCX Innovation Awards hosted by [indiscernible] time. And Old Mutual won 2 of the top 3 awards in the large corporate category. One was for -- something which Garth will talk about later called Comma, which is essentially a pay-as-you-go short-term insurance solution. And the other was for SMEgo, which is a crowd-funding platform for small and medium businesses, which is an entirely digital platform. Small business can come in a platform for funding and funders on the other side of the platform can review their applications and decide whether to support them or not. I think what's really great is that in the last 3 years, the BCX hold these awards every year. In the last 3 years, there's obviously 3 prizes every year. Firstly, as I said, in the large corporate category. So over 3 years, 9 prizes up for grabs, Old Mutual has won 6 of the 9. So...

So if this was the Olympics, I guess, with these kind of technology awards for financial services players, you guys would clearly be sweeping the floor quite clean in terms of the number of awards that you've won. But Iain, this is just reflecting on the methods and ways within Old Mutual has future-proof itself. You mentioned the investment in innovation. You mentioned how all the business segments are really working on driving and are underpinned by the strategy in the 3 pillars of rectify, simplify, amplify. But if we look at the reality of the environment that we're in at the moment, we can't ignore the impact of the pandemic. Help us unpack provisions and, most importantly, the stance that Old Mutual has also taken when it comes to the vaccinations, both for staff as well as to how it might impact your customers going forward.

Okay. So I want to make a couple of comments, but Casper will unpack the COVID provision piece specifically later. As most of our investors know, we set aside an additional ZAR 2 billion as of June based on some assumptions on the progression of the pandemic up to, I think about wave 8, and based on some assumptions around vaccine rollout, et cetera. Now as we know, the rate of vaccine rollout in South Africa has been disappointingly slow. And not because of supply side issues, but because of demand side issues. So we focus a lot of our efforts as a corporate around promoting vaccine awareness, the safety of vaccines and really encouraging people to go and get vaccinated. I mean I went as far as -- and this wasn't an Old Mutual thing, but I went as far as my kids are all on News24 being videoed, getting vaccine, vaccinated and telling people why they went and got vaccine.

The ambassadors clearly know.

So I believe strongly that it's the right thing to do. So that's the one area. The second piece where we've taken concrete action is to get in touch with all of our top customers, try to find out whether they have or not been vaccinated. And if they haven't, to offer them essentially a concierge service, where we will arrive at their house and get them vaccinated. And the take-up is -- first of all, the feedback has been quite encouraging around the rate of vaccination in our customer base. So...

I want to touch on that very briefly because from a start perspective, we get how it is trying to drive efficiencies in operations. But naturally, when it comes to your customers, any concerns as to how the new policy around vaccinations might impact future sales and sales growth there?

Yes. So we -- I don't think the policy on vaccination should have a significant impact. In fact, I would think that for most customers, when they buy something from us, they're interacting with a financial adviser. In many cases, that's one of our employees. And knowing that, that person is vaccinated, I think, will give customers peace of mind in that interaction. So I think that probably helps. And then the final leg to this whole piece is around how we think about pricing. And on new business, as we've said, I think it's been in the media. And Clarence been in some interviews this week around we are differentiating pricing for new business between vaccinated and unvaccinated. And we'll continue to do so until we feel that largely, it's not a differentiating factor anymore for the risk that we take on.

And we'll hear about that a little bit later, if I'm not mistaken, in terms of its positioning and impact on the market. But we focus quite a bit on South Africa and the local dynamics that we've been experiencing. But I'm keen for us to explore opportunities across the rest of the continent. Some might say, "Why go out there when many of your peers are coming back?" So expand on the opportunities that might exist on the rest of the continent, then maybe we can also take a snapshot at what's unfolding in China.

Okay. I think it's useful to first acknowledge that the Rest of Africa is a pretty volatile and risky place. We know that. We've been in this continent, in other countries on the continent for over 100 years. We've been in Zimbabwe for over 100 years. We've been in Namibia for over 100 years. I think we've learned a lot of lessons and paid a lot of school fees along the way in terms of figuring out how we navigate this continent, and we've built some very substantial businesses. But it is where angels fear to tread kind of territory in some ways.

But those are not deterring you at all. You're actually going back and looking for more opportunities.

No. Exactly. And I think right now with COVID, there is, I think, a heightened degree of uncertainty on certain aspects. So we need to proceed with caution and be responsible. Having said that, I think of all the continents in the world, Africa has the most favorable demographics for an insurance-like business and financial services business. And it has a very poorly developed, in general terms, and underpenetrated financial services market. So there's a huge opportunity there. It becomes a question of what's the time frame in which that opportunity can get realized and how does one best navigate execution of that to realize the opportunity. So I think...

So what does that tell us? Is this that you might be pursuing some acquisitions across the continent in partnerships to expand on that?

I think what we say is we will proceed responsibly. We remain committed. We're not ruling out acquisitions, absolutely not. I think...

Break some news, Iain. That's what we're here for. Tell us what you're buying.

No, nothing on the table right now, Gugu, but it is about a bit of discipline around what's appropriate, but equally recognizing that there are certain markets where, to get to the kind of scale and the kind of returns that we would like to be enjoying, we're going to need to proceed both inorganically and organically and just doing that response.

Fair enough. Very briefly on China. We had seen some prospects that are unfolding there. But well aware that that's also a very difficult market to be operating in.

Yes. So I think, again, media headlines at the moment are all about Alibaba and the big technology pushback, et cetera. That's certainly not what we're experiencing. We're experiencing almost the opposite. So from a regulatory perspective, we've got a very good relationship with the banking and insurance regulator in China. They are almost encouraging us, I would say, to do more in the country. And that's partly to do with the fact that we've been there for a long time. So we've got a bit of a track record and some credibility and partly to do, honestly, with the fact that we're a South African company. If we were an American company, I think it would be a very different conversation taking place, but they are very much encouraging of partnerships with Africa at large. So we're quite excited about the -- first of all, the size of the addressable market, and secondly, the fact that we have a business there that built solid foundations. It's worth about ZAR 2 billion on an embedded valued basis today. And it breaks even from a profitability perspective and growing top line at about 20% per annum at roughly 8% VNB margin. So that's quite an attractive set of parameters to deal with.

Can you say that in Mandarin though?

I can talk a bit of Mandarin, but I can't say that.

Iain, to close up with, I don't want a CEO from a guest opportunity to engage with you and ask you even more questions that we have for you, but I'm keen to understand. As we set the theme for the remainder of the day, we'll be hearing from the various segment heads, what should we be looking out for?

Okay. So I think we've got Prabashini up today to talk about Corporate. I think I'm going to pick one thing from each business, just as it's in my head. I think in Corporate, I think the initiatives that the team are taking around the SME market, very exciting stuff. Khaya will be telling us about what we've been doing in Old Mutual Invest. And I think in that case, I would say the rectification part of the journey is finished, and we're into more amplification. So in my head, I'm saying look for the new capabilities and the new opportunities that we're investing in, in seeding or future growth in that business. Casper will be giving us a good idea of how we're supporting the various growth avenues across the group. Garth will talk about the rectification journey, which I think is still a work in progress in Old Mutual Insure, the progress that we've made, which is fantastic, and the work that we still need to do. And I think there is still a bit to do there. And then finally, we've got Clement talking about our rest of Africa business. And there, I would say, I mean, a hone in on the East Africa, West Africa and what our plans are and initiatives are in those areas.

Awesome. Well, we've been taking notes. We'll be looking out for some of those highlights as the various speakers do make their way to the front of the stage to elaborate even further on this strategy. But Iain, I have thoroughly enjoyed engaging with you. I appreciate the highlights that you've given us and looking forward, to evaluating how this full picture view of Old Mutual Group builds up on the strategy announced earlier. Thank you so much. It's back to Celiwe. Celiwe is going to facilitate a few more questions that we do have from our audience members and maybe dig deeper on some of those to break some news gradually.

Thank you, Gugu. It's performance review time at Old Mutual right now. You gave our CEO a good run for his money. We're experiencing it in our conversations. So thank you for doing that for us. We appreciate it. And besides the questions that definitely didn't make it easy on Iain, I thought there were some really interesting perspectives that you also shared and dug in on. I think it's especially telling that our Net Promoter Score has been steadily climbing, and that seems, at least to me, to be a firm stamp of approval from our customers. So before we take in questions, we'll start with the audience. I'm going to ask Gugu to excuse herself. We're going to see each other later when we chat to Casper. I'll just take some questions along with Iain. If I could ask maybe our support team in the audience to see if there's any questions, kindly raise your physical hand up, and we'll come in and get a mic to you. Thank you.

I've just received a question here on WhatsApp from Michael Christelis at UBS. And he's asking, what will you spend to build out a digital banking capability? And does that mean there are no planned banking acquisitions?

Iain, you can go ahead and response to that one.

Okay. Thanks, Michael, for the question. We have gated the spend on the banking initiative. So the first gate is a couple of hundred million rand, which will be spent in essentially proof of concept type stuff. We are not planning any acquisitions in that space.

So thanks. Great response. I'm waiting to see if there's another one on the webcast while we observe what's happening in the room as well. If there is one, Sizwe, I'm happy to take it, and then we'll watch what's happening in the room as well.

Yes, Michael has a second one. Just following up on that. He says, is China core to the group? If so, what strategy do you have there? And how is it different to the last 10 years where seemingly little has been achieved?

Okay. Yes, it is core, in short. I think I tried to allude to the change in strategy in my opening remarks, but probably wasn't clear enough. Essentially, we changed direction, I would say, about 18 months to 2 years ago, fundamentally changed direction. We -- the origins of our China business are that it was a joint venture between Skandia and Beijing State Asset Management Company at the time that Old Mutual plc acquired Skandia. That was the original -- origin of it. And essentially, that business was our high net worth investment platform, open architecture that really just got an admin margin for taking in premiums and allocating them to third-party asset managers. And I would say about 2.5 years ago, we came to the conclusion that while that business had reasonable scale in what was essentially assets under administration, it's going to take a long time to really economically make much progress with that business model. So we fundamentally retooled the business to turn it into a risk business, a life risk business. So today, circa 3/4 of the sales are risk product and only 1/4 investment products. As I said in my opening remarks, the VNB margins are around 8%. And we've -- to do that, we've had to entirely retool the business to build underwriting, to build the ability to collect recurring premiums rather than single premiums to build the ability to deal with recurring premium commission, et cetera. So it was quite a fundamental shift to undertake. But we now have a business that's capable of writing the entire breadth of risk business, whether that's life disability, critical illness, et cetera, through multiple channels as well as its original investment focus. So the breadth is available. And then I think the other thing that's exciting about it is unusually for a foreign company in China, we are licensed in 9 cities and regions. Most companies get a license for a single city or a single region. There's a historical reason for that. We're just grateful for the endowment impact of that decision. But essentially, what it means is we have an addressable population of around 130 million people across those cities that we can go after. And we are tiny in the Chinese market from a market share perspective. So we can afford to adopt fairly new strategies and really secure quite a lot of growth.

I think for a foreign-owned JV, we find ourselves in a very unique position in China. Something certainly that Iain will highlight in the closing around how we plan to leverage that. Sizwe, do we have any more questions from the webcast?

No more questions from the webcast or WhatsApp, unless they are in the room.

Thank you. Are there any more questions in the room? I don't see any, so I'm going to call it. And thank you very much, Iain, for joining me.

Thank you.

Of course, we are going to end off the day together as well. So I'll see you then. We are now going to launch into the presentations from some of our business segments.

Thanks.

I now have the pleasure of welcoming a truly exceptional woman and someone who, to me, embodies what it means to be a Mutualite. As she has been with the business for a while now, working across personal finance, MFC investments and even did a stint in Mexico back in the day, Prabashini Moodley is an esteemed actuary, and she's the MD of Old Mutual Corporate. She runs our second largest division by revenue and has been named 1 of the top 50 women executives across the continent of Africa by Africa.com. You will also get a chance to hear from her colleagues, Malusi Ndlovu and Nobesuthu Ndlovu. Now before you ask, no, Malusi and Nobesuthu are not married, neither are they related to each other or to Sizwe Ndlovu. The Ndlovus are a big clan in South Africa. I'm also excited for this segment because I believe it is a true embodiment of introspection and then innovation. What you'll hear about is an ambitious play by Prabashini that radical adjacent growth that Iain was referring to. It's around targeting parts of the market that we never thought to do before, and it's about getting this organization to really think differently about growth. They have some exciting news to share with you. Iain already dropped a hint in there. So without much further ado, I'd like to welcome Prabashini over to the stage.

Thanks very much, Celiwe, for that very kind introduction, and good afternoon to you all. Today, I have the privilege of taking you through the Corporate business. Corporate is -- so who we are? We are a leading player in the employee benefits market in South Africa with a truly pioneering history. Our clients, our businesses and enterprises of all sizes, who are either employers or sponsors of benefit funds. The business is profitable and delivers healthy returns to shareholders. Way back in the mid-'80s, the team tells me it's '85 or '86, we launched Orion, the very first commercial umbrella fund in the South African market. This was followed by Evergreen and then in 2008, with SuperFund. In addition to our commercial umbrella funds, we have a massive annuity book. And combine that with the retail platform flows into the absolute growth portfolio, we bring in excess -- actually, in excess of ZAR 200 billion in assets to the group for administration and management. According to the latest Swiss Re market survey data, we also have 22% of the group risk market. We've taken solutions to members way ahead of the very member-focused regulation of recent times. In 2007, we launched our financial well-being program and followed this up with member counseling services, offering free financial education and support to all of our members. These are strengthened by a collaborative worksite's advice-based program in collaboration with the retail segments, delivering almost ZAR 3 billion in NCCF to the group last year and almost ZAR 0.5 billion in new business sales in Life APE. It's thanks to this kind of thinking and delivery that we are where we are. This very strong engine of the Old Mutual Corporate business exists, though, in a traditional South African employee benefits markets that is saturated. Consolidation opportunities aside growth is stagnant, especially in the large corporate space. The dominance of our key product lines is slowly being eroded. The effect that COVID had, in addition to really high risk claims and the ravenous competitors, really brought this home to us. So today, we'd like to share with you our view on the future and how we are going to get there. We're simplifying customer engagements, both for our clients and members, while amplifying the use of technology and continuing to innovate simultaneously strengthening our proposition, our business and the market. But first, let's talk about where we are, 20 months into the pandemic in South Africa. Let's start with investment performance, a critical outcome for our clients. The absolute growth portfolio is our flagship investment strategy, offering smoothed investment returns and a choice of guarantee levels. AGP does a truly excellent job of smoothing out volatility and providing protection against extreme downside events. Underlying asset performance, though, is the starting point. And if anyone can go back to pre-COVID times, we had a few years of depressed equity market performance, especially locally, add in the extreme market crash at the end of March last year and AGP performance, and in fact, smoothed bonus funds performance took a dip. And this is evident in the 3-year performance statistics. I can confidently say that where we stand today is in a significantly improved position. Underlying asset performance has improved, and the relative performance of our equity channel is significantly better than where it was. So AGP today has a healthy bonus-smoothing reserve with strong absolute and relative performance already showing in the 1-year results. In addition to this much stronger investment performance, we're also in a much stronger sales position as a business. In 2020, we took a very cautious approach to in-person engagements, despite employee benefits being a highly relationship-based markets. Add in the limited market activity, as businesses were consumed, we're just getting through the various levels of lockdown, and the results was a poor sales outcome in 2020 and a weak pipeline going into 2021. The pipeline going into 2022 is, however -- or we believe, the strongest we've ever had. This is a function of 2 things: a sign of increased activity in the market as well as the strength of our proposition. As many of you know, corporate business is what people like to refer to as lumpy with long lead times. So it's going to be a while before this good news filters through into our net client cash flows. That's a picture that I'd like to unpack a little further for you. To give you a bit of insight beyond the umbrella and pre-retirement flows. For the very first time in 2020, our group assurance products delivered negative net cash flows. That's the thin blue line on the chart. The debt claim impact exceeded our estimates at every COVID wave. And the net effect could have actually been worse had we not ramped up our usage of reinsurance and carefully balanced pricing increases, which averaged some 24% across our book. Risk management through this pricing action and the use of reinsurance has already provided more than ZAR 600 million in downside protection in the first 9 months of 2021. Moving on to annuities. Annuities by their nature, that's the pink bar on the chart, have a very large positive cash flow at inception, followed by regular negative cash flows over the remainder of the term. So with limited new deals coming to markets in the last few years and a very large in-force book, there's a consistent negative NCCF from annuities in our portfolio. Also worth calling out are the retail platform flows. These are the flows from including the absolute growth portfolios on the wealth and personal finance platforms and making it available to individual clients there. The flows are significant. But in those markets, it's sentiment and performance and which tends to drive the flows. So you can see we dipped below 0 in 2019. But in 2021, we're starting to see a small trend upwards. So as I've said, we are the leader in the commercial umbrella space. But can you guess what the problem is with being the leader? It's pretty easy to forget about the competition and to actually start thinking that you will always be #1, stop innovating and give the competitors time to catch up. If we want to keep our #1 spot, we have to do things concurrently. First and most obvious is strengthen our propositions to existing clients, so we can maintain that position. Second is to make those business decisions and choices that will amplify growth into the future. But enough from me, I'd like to introduce Malusi Ndlovu, the Director for our Large Enterprise Markets, to introduce our thinking. Apologies, I should have clicked through that first.

For decades, Old Mutual has led the South African employee benefits industry. We plan to extend the theme there now. Firstly, we'll continue owning the umbrella category by tapping into mutual scale, its brand, its superior direct distribution capability and our deep and long-lasting customer relationships. Investments into technology should help us to create amazing customer experience and attracting credible clients. Secondly, the turnaround of our [indiscernible] business continues. Risk management will enable us to maximize shareholder returns as we come out of the worst of COVID. And third, we'll improve our asset-gathering capabilities by enhancing our consultant value proposition and building new partnerships to market access. Finally, as we invest in customer insights, we're finding new ways to create value for them and for ourselves beyond traditional employee benefits. We help organizations to do the right and responsible thing for their staff. This is our call. It's what we do, to do it better than anyone else, and we'll continue to do so as we extend our lead in this space.

So thanks, Malusi. Those are certainly the key areas of focus, but let's get into just a little bit more detail. We have been on a journey to simplify customer engagements. SuperFund members, that's our commercial umbrella, now have multiple channels with which they can engage. And those include app, e-mail, WhatsApp, USSD and the call center. We made the decision to go paperless for member benefit statements fortuitously pre-COVID. And this enables access as well as reduction in cost. The Net Promoter Score and net effort score for our digital channels is at world-class levels, and we aim to increase adoption and usage of those. Malusi also talked to supplementing our direct distribution capability with deliberate partnerships as well as looking at opportunities around adjacencies. One such opportunity we took advantage of was the acquisition of Remchannel late last year, a remuneration surveys business, which allows us to deliver improved value proposition to our employee benefits clients while also meeting our shareholder expectations. On the technology front, I feel we've only just started to scratch the surface of efficiency that might be obtained. Just over a week ago, we completed migrating our administration system into the Amazon Web Services cloud. A key or a major client payroll and investment allocation run was already completed in 1/10 of the time that it used to take pre-migration. So that's all really great for our core propositions in business and talks to continuing to lead in that space. But what else are we going to do to grow the business going forward? Allow me to introduce Nobesuthu Ndlovu, our newly appointed Director for the SME Markets.

As an entrepreneur who has run a retail business for the last 13 years, I've come to appreciate the real challenges that SMEs have in growing their business and achieving the most important factor, profitability. With this knowledge, the approach that we have taken at Old Mutual is to understand what are the key jobs to be done that went into profitability for those markets. Through our research, we've identified that these jobs are financial and nonfinancial. And therefore, what this means, we are taking a holistic approach developing our SME strategy. Our strategy focuses on 3 jobs to be done: access to funding, access to markets and efficient business operations. In the funding job, we aim to solve for the ZAR 346 billion credit gap that exist for SME. In the access to market job, we intend to use digital innovations to enable business and consumer market penetration. And in the business operations job, we appreciate that time is an asset that SME business owners do not have. And therefore, the opportunity lies in delivering operational efficiencies. To deliver on these jobs, we will be working with innovative strategic partners who share the same vision and understanding from the magnitude of the opportunity that lies ahead in the SME markets.

So while Nobesuthu only just joined our team a few months ago, we've been providing employee benefits to SME clients for many years. But during the lockdown, we spent time listening to SMEs to understand the very specific pains they were enduring doing hard lockdown in particular. And the topic of funding came through again and again. And then when we did research into the funding that's available in the market, we found a multitude of niche funders. So we went and listened to them also. And from this, the idea of SME goal was born, a digital-only platform that brings lenders and borrowers together, simplifying and streamlining the application process for both parties. A minimum viable product, yes; small, yes. But with the seed a very true customer-led innovation, we believe it has the potential to scale and succeed. The number of funders on the platform has already grown from 13 at the end of 2020 to 18 today, connecting with approximately 4,500 SMEs. We will scale and we will win in this space because we are committed to the hard work of true innovation, growing the economy as we grow our business. We're also incredibly aware that business lending is not a space in which we have experience or the skill set. So our approach will be to utilize a combination of building capability internally, partnering to obtain the capability and then buying but only very selectively where that makes sense. So to sum up, we're working really hard to convert our sales pipeline into an amplified sales delivery going into 2022. We will continue to lead on the commercial umbrella space by continuously strengthening the customer proposition and experience while leveraging technology further for efficiency, while building SME solutions that matter and that grow both our business, the markets and the South African economy at the same time, all the while maintaining #1 profitable market share in the employee benefit space for our investors and shareholders. Thank you very much for your attention. Celiwe, back to you.

Thanks very much, Prabashini, and well done. Please, can you join me on the stage as we prepare to go into Q&A? And Malusi and Nobesuthu are actually here with us in person. And I'm going to ask them just to come around and wait by the podium. Just in case there are any questions for them, they'll be able to socially distance accordingly over there.

One of the things that I heard very much you speaking about is about balancing the growth, right, while developing, in simultaneous time, a new SME proposition that cannot be an easy task. But the SME offering is beyond promising, I think, not only beyond the untapped market that it presents, but because of the role that it plays in our society, creating positive features, which is a very big theme in Old Mutual. I see Malusi representing the strong and solid part of our Corporate business, whilst Nobesuthu, of course, presents the potential for the future, and we're happy we got to hear from both sides. And in fact, we have an actual entrepreneur running that business, whose company incidentally made the outfit I'm wearing today. We know that Nobesuthu has the experience and the insight to really see things and understand them from the perspective of our customers in that segment and also allow us to develop the capabilities in line with their most important need. I'd argue it's an unfair advantage. Let's see what our audience wants to know more about. I'm just going to check in the room if there are any particular questions to respond to. We do have a question right in the middle here. There's a microphone coming to you, sir.

Kevin Harding from Investec. I just want to better understand, I guess, you're bringing this new capability on board with the SME funding. You mentioned the ZAR 300 billion-odd funding gap, but only about 20 players that you've been able to bring on board. I mean, that seems quite slow -- small. What is sort of generally disincentivized funders generally? And why do you think you'll do better in the space? And I guess, in terms of you actually providing funding into that sector, I mean, sort of what is your risk appetite around that? I mean how much of that ZAR 300 billion are you wanting to underwrite?

Okay. I'll start with that last part and say that will be a question for Casper in terms of risk appetite. We do have a clearly defined risk appetite for credit risk. I also mentioned SME Go was an MVP. So it was a minimum viable product, which we're now continuing to build on. So it's with almost no marketing that we've managed to get 18 funders on board. There are, in fact, a few hundred niche funders servicing the SME market. So for us, it's learning from this 1 year. It's been 1 year. We literally went live in August. We developed the concept in around April. So it was a very quick listening, developing a concept, taking a minimum solution out, and now it's to continue to learn and understand what the commercial model will be so that we can scale it up. Currently, in SME Go, we do not have any credit risk exposure. So there are 2 Old Mutual funds on there being the Masisizane fund and the ESD fund, but there's nothing where we participate. So those are the decisions that we have to make now.

Thank you very much for your question. I'm still going to just sweep around the room, see if anything comes up. We have one question, I guess, from the webcast. Sizwe, please can you read it out?

Thanks. I think this is for the other segment. How many large fund annuity deals are left in the market? So how many large fund annuities are left in the market, i.e., how many years new business runway is there in that space?

Malusi, if we can get a microphone to Malusi, I mean, this is a space he knows in and out, so I'm going to ask him to.

Malusi, if I can please ask you to make your way onto the stage. Sizwe, could you kindly read that question again?

Happy to do that, Celiwe. How many large fund annuity deals are left in the market, i.e., how many years new business runway is there in the space?

So we don't really have a good view currently of how big that whole market looks like at this stage. But as the question rightly alludes, it is reducing size of market right now, particularly on the defined benefit side. However, what we've been seeing particularly in the last few months with the economic environment is a lot more of those, that were the last holdouts coming into the market. Where we see the biggest opportunity in the future is around the defined contribution annuities, which is a new space which we're investing in, and we're hoping to get a significant increase in flows going forward.

Thanks, Malusi. There is a second question. Prabashini will decide between the 2 of you. How big of a structural advantage does your scale give you, particularly in the annuity space? It sounds like you may have alluded to it but...

I think there's a number of aspects that give us competitive advantage when it comes to that space. I would say that our experience over the decades of which we have written that business as well as the significantly diversified group of lives that we've got over there are what is our source of advantage. So rather than the scale, it's more the fact that we've got this diversified base of lives and the fact that we are able to price in a superior way and that we're able to structure on the back end on the assets that we use to back those deals that gives us that advantage, particularly when it comes to with-profit annuities where we are #1.

Awesome. That's the end of those questions. Just to acknowledge for everybody who that question was from, it's Michael Christelis at UBS.

Thanks, Sizwe. I also have 3 Chorus Call questions, which I'd like to put forward as well. The first one is from Avior, Warwick Bam asking you, Prabashini, how many SMEs do you have in the umbrella fund and what funding targets, if any, do you have?

So we don't have a funding target today. We've put up ZAR 346 billion credit gap to demonstrate the size of the prize or the challenge or opportunity there is to be solved. Yes, we haven't set those limits yet. We have just over 4,000 SMEs in the umbrella fund. And across just Old Mutual Insure and the Corporate business, we've identified at least 20,000 SME customers.

Awesome. We have some questions as well from Andrew Sinclair of Bank of America Merrill Lynch. Andrew, we do have your earlier question from Iain. I'll put that to him at the end if you don't mind, but your current questions are now coming through. His question is, you mentioned that the annuity market has had a little new business for the last few years. Is there scope for a return to growth here or is it not a focus area for you? Also, a second question, he says, you're the market leader, but what are the reasons why you lose transactions when this happens?

So on the bulk annuity deals, it's very much, I would say the last couple of years has just been around businesses being distracted and focusing on getting through the pandemic, getting through lockdown. We are seeing increasing activity in the market already in the second half of 2022. When we do lose deals, it's competitive. I think we have a massive advantage, as Malusi described. But there are competitors in the traditional space. So we go up against others and then it depends who has the best overall proposition and pricing. Pricing is a critical piece in the annuity space, but I'd say we have a very healthy conversion rate that we're quite comfortable with.

Awesome. Andy did send a clarification point on the second piece. He said, sorry, to be clear, the last question was on umbrella funds. Number one, but why are you losing transactions in that space? I don't know if you'd like to add anything before I go to my next question.

So on umbrella fund, in fact, we've had, the last few years have been incredibly stable. We did have some large client terminations this year. Those were largely investment clients. So where we would lose on umbrella or have an umbrella fund moving, it's perhaps a shift in investment strategy or a shift in appetite. A lot of groups end up consolidating funds of subsidiary companies in their business. Our SuperFund retention has actually been excellent. When a new deal comes to market, we are, I think, in a very good position, and we have excellent conversion rate. There could be some pricing differences. Our competitors don't have as large a book as ours. So our risk appetite for different levels of pricing could be different. There could be some differences in servicing and customer experience, hence, our focus on really strengthening that.

Yes. And we heard a little bit about that in the last Capital Markets Day. Another question for you, Prabashini, and certainly a topic or a theme that would have come through in previous Old Mutual results presentations, which is about retailization, retailization. Yes. Do you see an opportunity to retain assets through a retailization strategy in Corporate?

Yes. I think it's something that's been very topical in the market recently, but perhaps I didn't make the point strongly enough. We've had a retailization strategy, and we've been implementing on it for more than 10 years. So 50% of all members who choose to annuitize when exiting the fund are retained through our retail channels. So we have a retailization strategy. We believe our strategy is working well, and we'll continue to strengthen our retailization strategy.

That's awesome. That was a question from Warwick Bam from Avior. Thank you very much for your questions. I'm just going to check if we have any more questions either on the webcast that I'm not seeing, none whatsoever. I don't see any in the room. So ladies and gentlemen, thank you very much. It was a great Q&A, don't you think, Prabashini?

Thanks. It was. It was great, and thank you so much for my team for being here. It's why it's such a pleasure to be leading the Corporate business at this time.

Wonderful. Thank you very much, Prabashini. It's been great having you on stage. I'm going to prepare to bring Old Mutual Investments onto the stage. Thank you, ladies and gentlemen. As I have already mentioned, the next presentation is going to be from Old Mutual Investment. I would like to welcome Khaya Gobodo to the stage. Khaya is the MD of Old Mutual Investments, previously known to most as OMLACSA. Khaya joined us in 2018 as the Deputy MD of that business. I must say what I personally admire about him is his clear and distinct commitment to his clients. In fact, many of the times that I've met with Khaya one-on-one has been in his 1 week spent in Joburg seeing his clients here whilst he's away, of course, from his clients in Cape Town. It's a singular focus that I definitely admire, but I've also seen some very exceptional work that we've done in the landscape itself. You will have heard Iain talk about the fact that the rectification is largely done in this business, so lots to look forward to. A lot has changed within this business since it was given its new name, Old Mutual Investments. And it now represents the consolidation of the different boutiques into a model that allows them to focus more clearly on the propositions of equities, fixed income, specialized credit and of course, alternative investments. The affiliate businesses that fall under each of these areas have their own leadership teams, strategies, markets and clients, which is what makes them so competitive. Old Mutual Investments is effectively the delivery partner for our other segments and has helped deliver the positive results we saw in Mass and Foundation Cluster, in the Personal Finance and Old Mutual Wealth segments as well. The business has undergone significant change, but I'm going to let Khaya take you through those, the work that he and his team have done. Khaya, over to you.

Well, thanks, Celiwe. That was very kind of you, and thanks, Prabashini. We really appreciate the ZAR 250-odd billion, by the way. I'm going to spend the next 15 minutes talking about our investment business. In my own mind, in my own assessment, this is a much better business than we give it credit for. If you take out all the noise and all the clutter and you get to the grassroots of what we've built there, you come to realize that actually, some component parts are actually exceptional. So the real question is why the perception that, in aggregate, we're pretty average? So I'm going to spend a little bit of time kind of unpacking the journey to where we've got to, what we've built, what we've done to accelerate the progress and how we are delivering for our clients and as a consequence, for Old Mutual. So the first important question is, have you built something special there? I mean, what makes you competitive? And what we've done over the last 20-odd years, we've built investment capabilities that are very broad. In other words, we touch approximately every single thoughtful asset class that real clients might want to have exposure to, and we'll bring that to bear at scale, right? I mean that's a pretty special place to be sitting in. So the real question is why have we been unable to extract some of the value that sits inherently in being able to have that full breadth of capability, full breadth of asset class exposure and the scale to boot. To understand that, you're going to take a couple of steps back. You're going to go through a little bit of the history. And I'm going to take you back, this looks like a snapshot of 2018, but actually, you've got to go a little bit further back. About 15 years ago, we made what I thought was a very sensible, thoughtful choice of crafting our investment capabilities into boutiques. That's an infinitely sensible way to organize your investment capabilities. I mean, there's global evidence that, in fact, that kind of focus, that kind of specialization is very useful when it comes to generating high-quality outcomes for clients and for shareholders. But actually, the way we executed left a lot to be desired. What we did is we broke up the estate into very, very small component parts, right? I mean, at the height, we had up to 17 individual boutiques. You can see by 2018 that was down to 11. In addition to that, we asked these independent businesses to share a massive shared services platform that included everything from IT, HR and legal, but also those super critical parts that touch the client outcome like brand, like distribution, like the client servicing model. So even though this looks very neat and very beautiful in a spreadsheet, you can see it has some very significant unintended consequences. So what this meant in reality is that you had some bloat in the system because you had very significant number of overlapping capabilities. In addition to that, you had high levels of complexity, and we all know complexity is the enemy of high-quality delivery. In addition to that, you had high levels of confusion, both internally and externally. I mean, if you think about the typical client, given that picture that I just showed you, for that client to try and understand who are you, what do you do well, why should I trust you with my capital, what nature of partner are you, what do you stand for? You can imagine for a client, it's near impossible to decipher what we have put together despite the fact that some of the underlying component parts were truly amazing. Some of them were bits that simply didn't exist in the market at the scale that we're able to deliver them at. But before you can start to get into solution mode, you've got to take a couple of steps back and say, what are you actually solving for? Because if you fail to understand that question, I think you run the risk of making the very traditional kind of error that life-owned fund managers do: knee-jerk reactions and high degrees of change. And clients despise change. So what do we do? We try to understand, like I say, what are we solving for? What's the exam question? What we're trying to solve for is, how do we bring to bear the full breadth of high-quality investment capability to bear across 4 key constituent clients. Number one are the retail investors in our collective investment scheme in Old Mutual Unit Trust. And for them, that's about simplicity of offering, clarity of proposition, high-quality investment outcomes and the ability to plug into the very powerful retail distribution engine that Kerrin and others in the business have built. The other constituent client is OMLACSA. In other words, I'm referring to OMLACSA, the custodian of the policyholder assets that have been accumulated in places like Prabashini's business over a long period of time. The other is the shareholder needs. The shareholder has a balance sheet. The shareholder, in addition to that, has some, let's call it, exposure to guaranteed liabilities on the other side that need to be backed with assets. So what capabilities do we need to bring to bear to solve the shareholder problem? And finally and significantly is the third-party institutional space, which represents an enormous opportunity. So what journey do we traverse in order to solve that exam question? We said, let's take the logical next step, the logical evolution in the boutique strategy, not a knee-jerk change, not a dramatic 180-degree turn. We said, we're going to define our capabilities and house them in 5 easy-to-identify businesses with high degrees of purpose. We're going to give those business high and let's call it, fostering extreme ownership. In other words, this notion that investment businesses do require some level of independence in order to compete with the independent fund managers out there without losing sight of the fact that we're an integral part of the group's overall value chain. We want those businesses to have a crystal clear value proposition to their clients and allow them to communicate with absolute clarity. And then finally and very importantly, we wanted each of those businesses to be able to align their internal value chain. What I'm referring there is the investment engine, the client engine and the operations engine. So what we did, we moved all the levers that drive value for clients and ultimately, for shareholders into the business. So now those 5 businesses operate independently of each other and are the casing that allows us to deliver for our clients. So what does that actually look like in practice? So the first and most significant business in terms of assets under management is Old Mutual Investment Group. This is the piece of our business that looks after traditional listed equity and multi-asset propositions. Now this is the business that's very often used as the reference point to try and understand our broad investment platform. And as you can see, that's one of the, let's call it, averaging errors that I'd like to rectify. I mean, that business is a much better business today than it was a couple of years ago, but it does an injustice to the platform because it doesn't talk about future growth of asset management, which is the largest and most sophisticated fixed income and credit manager in the country that has a massive leaning to development outcomes for their clients, Old Mutual Alternatives, which manages just under ZAR 60 billion of client assets in that alternative space ranging from impact, private equity and infrastructure. So there's nothing about Old Mutual Specialized Finance, which is a critical component, for example, in the guaranteed annuities, just as a typical example in terms of originating high-quality credit assets to back those obligations. And then finally, the little spoken about business called Marriott Investment Managers, which focuses on delivering income solutions for in-retirement to retirement phase retail investors. You can see this is a platform that we can now deliver to clients with absolute clarity. It's easier for a client to understand what value proposition do you deliver. What do you stand for. Who are you. And as a consequence, why should I trust you for the next 5 or 10 years? And we do this in a way that allows us to measure the outcome. What are the key KPIs that are important, not only if you're thoughtful as a shareholder, but very importantly, as a fiduciary, but looking to deliver outcomes to clients. #1, #2, #3, #5 is all about investment excellence. It's about delivering an outcome that is competitive in the clients' mind that meets that promise and that's competitive relative to the peers. It's the client reputation, restoring who we are in the minds of clients as a partner that they can trust for multiple decades. It's about stability, something that, like I said, life insurance fund management businesses have been notoriously guilty of, changing their minds at every turn. It's about making sure that we're able to give our clients stability of strategy, stability of propositions. In other words, keep your promises, don't fiddle with the propositions that you've already put to market, stability of people and stability of leadership. It's about reigniting the innovation engine that made us special in the first place and wrapping all of that in a recognition that the world has moved and that responsible investing, in other words, the true and natural integration of ESG into everything we do and also innovating around the product that we bring to bear. I mean, as a typical example, we manage just over ZAR 30 billion of ESG index funds on behalf of our clients, something we didn't do, call it, 5 or 10 years ago as a reflection of how much the landscape has changed. Now if you do all of that well, you then earn the right for those clients to trust you, for those clients to deliver incremental cash flow to you. And if you do all of those things well, then as a residual outcome, you're able to deliver a credible and meaningful outcome for the shareholder. But we don't start at the shareholder. We start at the client lens. And if you do, as I said, if you do all of that well, you're able to deliver credible outcome. And how do we measure that credible outcome? What I've got up here is a snapshot view of 2 points in time, 2019 and 2021, both kind of year-to-date to September. And we're looking for some of those key KPIs that are easily observable and easily measurable. So number one, net client cash flow. 2019, we saw outflows of just over ZAR 4 billion. That's dramatically turned to positive net inflows of just under ZAR 6 billion. And that's just institutional, independent third-party institutional flow. It says nothing about the partnership that we strike with PF and Wealth where those retail flows are reflected in other parts of our business. The other part is capital committed. If you look at alternatives business, we use a slightly different language. It's not about net client cash flow, but it's about the propensity for clients to commit capital for you to deploy over longer term, over long periods of time. And there, 2019, we raised ZAR 1.3 billion from clients. That's up to just under ZAR 5 billion today. And that's on the back of a record year of just approximately ZAR 7 billion in the prior year. Fee margins are reasonably stable. But actually, what you don't see there is the positive mix change that's underway. So our own expectation is that should trend up over time. We're able to deliver operating margins that I think are pretty good. I mean, if you compare 40% operating margins relative to 37% a few years ago, I mean, you'll know that, I mean, the global averages for top quartile managers ranges between 35% and 45%. So I'd argue 40% is a very credible outcome. But all of that is all far less significant than the fact that we're starting to keep our promises to our clients from an investment delivery point of view. And this is the kind of thing that Prabashini was alluding to, which is the promises we make in places like AGP and others around investment delivery. And you can see, I'm not going to read all the numbers, but all of them are substantially better with respect to the proportion of overall core funds that are above median or above benchmark. So you can see there is credible evidence of some underlying positive momentum across the KPIs, but I'll remind you, success in investment is not a straight line. This is a very long-term game. So some of the exam questions we're asking ourselves is, how do we leverage the progress we're making? How do we benefit from a unique set of competitive advantages? Number one, we're part of the group's value chain. So we have access to group product, group distribution, which is phenomenal and which is very significant from a size point of view. Number two, we have the full breadth of investment capability, like I mentioned, some of which is simply not available in the marketplace at the scale that we're able to deliver it. And the final one, which many of us would have thought was a swear word a few years ago, is the fact that we are actually a life-owned fund management business. Because what that means is that in a partnership with OMLACSA, we're able to seed propositions that in the fullness of time are the kinds of propositions that make a very meaningful difference. So I'm going to give you 2 snapshots. Historic propositions we've seeded and the kinds of things we're doing today in reigniting our innovation engine. So in '99, we seeded the IDEAS fund, which today is the largest infrastructure fund owned by, let's call it, an independent manager. That fund is about to be ZAR 20 billion if you add the ZAR 5 billion of new client commitments for the range of infrastructure investment opportunities that are unfolding ahead of us. A year or 2 later, we seeded the private equity platform, which is now a ZAR 25 billion platform in international fund of funds and local single funds. So how are we reigniting that partnership with OMLACSA, reigniting the innovation engine? We've recently launched the hybrid equity fund, which has now got ZAR 1 billion in commitments, and we're rolling out into the third-party space. That's something that we think we can scale over time. And we recently closed out a JV in the emerging market infrastructure space, where that JV closed its first investment of $175 million in a renewable energy platform in India. So you can see we have the opportunity to really take advantage of the competitive advantages that we have and leverage the very leading kind of propositions that we have in some areas. And this is just a nice reminder before I close out. We are the largest pan-African infrastructure platform. And I say that without fear of contradiction. I mean, it's an amazing position to be in given the rate at which clients are looking for differentiated propositions, exposure to infrastructure. I mean, it's a ZAR 36 billion platform, 26 investment professionals located in 5 countries. So we're on the ground structuring, originating and deploying capital on behalf of our clients. We're in places like Cairo, Cote d'Ivoire, Nigeria, Kenya and indeed, South Africa. We have the largest low-cost investment solutions platform, right? If you look at our ability to either hedge and/or track, whether it's global indices, local indices or liability indices, that's ZAR 175 billion platform. And finally, we have the largest credit platform if you put together what we've done on behalf of the shareholder in terms of the capabilities we've built and what we've done in future growth in terms of the third-party capability we've built. Outside of the banks, that is a phenomenal capability. We have, for example, teams there that are able to originate and structure transactions and not simply be an offtaker of banking transactions where they either looking to offload risk and you have no idea the kind of risk that you're taking on as a manager. And finally, like I've said, we've reignited the innovation engine. We've recently launched or are in the process of launching 6 funds in the unlisted equity and debt space, which we think we can scale in the fullness of time. Like I said, this is not a 1-year game. So please don't ask me, those 6 funds next year are they at ZAR 10 billion? This is a long lead time type of proposition. But we've done the right things, we're seeding propositions that the clients want to see. And I think in the fullness of time, those will deliver very credible value for our clients. So finally, what are the non-deliverables (sic) [ non-negotiables ]? What are we trying to deliver for our clients and what are the promises that we're going to make to you, our shareholders, in terms of what we're trying to do. First and foremost, we're going to stay true to the strategy. We have chosen to refine our boutique strategy into 5 scaled, independent businesses where those businesses own the underlying drivers of value for clients and the shareholder. And we're not going to steer from that. You're not going to arrive in 18 months' time and all of a sudden we've got a brand-new strategy. We're going to focus on top quartile delivery from an investment competitiveness point of view. And I think if we do those 2 things well, our ability to be competitive in a third-party higher-margin space, which can meaningfully contribute to the shareholder outcomes, I think we'll have the right to be competitive in that space. And then finally is the shareholder outcome. If we do those first couple of blocks well, we'll be able to be in a position to contribute incremental low-capital intensity, higher-margin opportunities for the group, allowing us to play a meaningful role in the overall organization. I'm going to leave it there and hand over to Celiwe.

Wonderful, Khaya. Well done. I'm going to ask you to come and join me here. And one thing I loved as I was listening to that is just the focus on clients. Delivering value to our clients, stays true to a comment that I said about you at the start. We are, ladies and gentlemen, already running overschedule, largely attributable to the Q&A that we did in Corporate, which was quite lengthy. Important questions, I think, so we're going to keep that going. We are going to cut our break a little bit short, but we're going to allow Old Mutual Investments to deal with the questions that have already started coming through. I'm told, Khaya, we have someone on the line who wants to ask you a question directly. Let's start with that question, please. Operator, if you could please bring them through.

We have a question from [ Thomas Silva ].

The question is, I'm trying to see where the Old Mutual multi-manager business is sitting. Can we get some clarity on that? I saw the 5 businesses, but I was trying to see where Old Mutual multi-manager is sitting. And I'm keen also to find out what's the current AUM of that business. That's my question.

Thank you. That's Thomas on the line, Khaya, for you.

Thomas, I can take half the question and the other half I'll hand over to Prabashini. I don't recall the assets under management. That business sits in Old Mutual Wealth. In fact, I'll hand it over to Kerrin, sorry, Kerrin. It sits in Old Mutual Wealth. Old Mutual Investments are all the underlying single manager propositions that sit in the group, and so the multi-manager piece sits in Wealth.

I'm going to ask for a mic for Kerrin just to respond directly to the multi-manager question.

Yes. So it's sitting at about ZAR 100 billion in AUM.

Thank you. Khaya, I have another question for you from Andrew Sinclair of Bank of America Merrill Lynch. His question is, for your 5 businesses, you gave an AUM split today, currently dominated by OMIG, more than half of that AUM, but how do you think the distribution will work in 5 to 10 years' time? And then he's got a follow-up question. Let me ask you to respond to that 5- to 10-year window. How do you see the evolution of AUM under all of those 5 distinct businesses?

Yes. I mean, the truth is if you look at the available size and opportunity that exists in South Africa, listed multi-asset and equity will continue to dominate. So my expectation is that business will continue to be the larger business from an assets under management point of view. That says nothing about, let's call it, value or profitability contribution. Having said that, I think the higher levels of growth will come from our credits and alternative spaces simply because incrementally, that's where clients want to allocate and that's where the growth is likely to be relative to prior years.

Another question from Andy. He says, how do margins differ then between these 5 different businesses?

Andy, I'm going to give you kind of market averages as opposed to distinctly kind of our own distribution. You can think of the range of fees, let's say, in a typical institutional equity multi-asset being somewhere between 40 and 65 basis points. And you can think of the typical infrastructure closed-ended private equity type fund being in that 2% and 20% zone. So depending on size, depending on pedigree, you can work out for yourself where each of those business is likely to stack out.

Awesome. I'm going to take another question again from the Chorus Call and then check in the room what we've got left. This is a question from Warwick Bam from Avior. He says, how do you think about providing retail clients with access to alternative assets using the Old Mutual balance sheet to manage liquidity?

It's an exam question, Warwick, that we are engaged in very significantly in the organization. I don't want to preempt where our product development cycle is likely to take us, but that's what I mean that we're engaging with rate, distribution, our part of the business is trying to solve. What I will say is that liquidity is expensive. So you've got to think carefully about how you construct that proposition for clients and not disintermediate what makes private market exposure very significant. Because if you think about it, what are you trying to do? You're trying to access that, let's call it, liquidity risk premium. So you don't want to give it away in the overall return outcome by paying it away in liquidity, call it, facilitation fee. So it's a balancing act that we're trying to work out. We're not quite there yet.

Awesome. Thanks a lot, Khaya. I'm going to check in the room if we have any questions from those joining us live in person. I don't see any. Any other questions on your side, Sizwe? I find that the questions do tend to delay. So we will get some coming in during the break, and we will deal with those in the last Q&A of the day with the rest of ExCo. For now, I'm going to say thank you very much to you, Khaya. We're going to take a 5-minute break, ladies and gentlemen. I'm going to ask that all of us take a bit of a comfort break, grab a coffee, go and refresh ourselves, come and interact with our executive team. And we'll see you in 5. Thank you. [Break]

And welcome back, ladies and gentlemen, to our investor update today. I hope in those short 5 minutes, you were able to take care of everything you needed to take care of. You will shortly be hearing from Casper and then followed by Garth and Clement for our Old Mutual Insure and our Rest of Africa businesses. And as I mentioned, Iain will be bookending today, so he will return to close off today's proceedings. Our next speaker is Casper Troskie, who is our Chief Financial Officer. His content usually used to close the day is right in the middle of our session today, as Casper is right at the heart of our business. He will once again be joined by Gugu Mfuphi, who will go through the details that follow the successful unbundling of our shareholding in Nedbank and the progress we've made against our value drivers. Those are, of course, revenue growth, operating margin, competitive strengths and execution and delivery. We'll also hear about how these are leaving our balance sheet in a substantially stronger place. So without much further ado, let me welcome back Casper Troskie and Gugu Mfuphi.

Thank you very much, Celiwe, really appreciate that introduction and of course, the overview that you provided. I trust the sugar levels are better now, so the excitement has returned. And even to those who are joining us virtually, if you do have any questions, to avoid having any delays, we do want to encourage you to type out your questions to make sure that by the time we do get to the Q&A with Casper, we're able to moderate them and facilitate them in order to make sure that you can hear us quite clearly. So that's the overview that we do want to provide. Casper, we've heard quite a bit, especially from Khaya as well as Prabashini, regarding the performance of the business segments. We will hear more from Garth and of course, Clement a little later. But I guess, if we take a look at the overview of where we are regarding Old Mutual Group, are you comfortable with the current progress as well as the financial performance that we see so far?

Gugu, yes, I am. We have seen an acceleration in growth with our APE sales improving to 18% relative to the prior period, up 13% from June. Our gross flows have continued to carry on with the momentum we saw at the half year and are up 7% after 9 months. We've also seen a substantial improvement in the value of new business, which is at 2.3% compared to 1.1% in December 2020. Gross written premiums in Old Mutual Insure were up nicely at 8%.

So some fantastic number that you've highlighted, and I guess anything in comparison to 2020 is already an up that we need and need to celebrate. But I'm keen to understand which additional levers do you believe we need to pull in order to maintain this upward trajectory that we've seen in performance.

Yes. Gugu, before I get into that, just to remind also investors that we've seen strong progress in recovering sales and simplifying the balance sheet, which has also supported our share price performance with investors seeing a very strong return of 39% since the start of the year. The things that we need to work on, to continue working on is on execution and landing some of the big projects like the savings and investment implementation and the migration for Old Mutual Protect and savings in the next 18 months. We need to continue to focus on being competitive in the market, especially in our sales channels in order to address past market share losses, and we need to increase the visibility of capital and cash generation.

Just to jump in there, naturally, we're all quite aware that the economic climate in South Africa is not too positive. So these growth prospects, driving sales, achieving growth, is it still attainable, particularly within the South African context, if you look at the economic backdrop?

Well, I think the evidence is in the numbers that we've seen in the first 9 months. And we just need our teams to continue doing what they're doing.

Keep doing what they're doing. So Khaya, Prabashini, Clement and Garth, we are certainly holding you to high levels of performance here. But I guess let's also touch on another theme that we discussed earlier with Iain, which is certainly around the Nedbank unbundling. Provided much value, help us unpack the numbers here further.

Yes. So just to remind everyone why did we continue the unbundling. We had explored extending our strategic relationships with Nedbank to include a transactional offering. This was discontinued because of client confidentiality and competition issues. The benefits from a relationship from Nedbank are based on arm's length commercial arrangements, which don't warrant holding such a big holding. So in addition to that, the holding in Nedbank was creating complexity for investors. And so we saw a conglomerate discount on our share price. We completed the unbundling of 12.2% of Nedbank early in November, exactly in line with the time lines we had communicated. The unbundling released a significant amount of capital to our shareholders, resulting in our share price adjusting to reflect the amount distributed. Overall, this decision allow us to become really focused on our own transactional offering to the Mass and Foundation market while still letting us work closely with Nedbank as a partner which is mutually beneficial to both of us.

Yes. Well, I certainly hope that does address some of the questions we had around banking earlier and of course, the opportunities that might exist there. But maybe I'll even push it further with you slightly. Is there any capital that will be unlocked in order to facilitate and assist with the transactional opportunities in the company?

Gugu, I'll go into that a bit later. So I'll talk about what we are thinking of using our capital for, so happy to talk about that.

Okay. We're keeping it a bit of a surprise. That's fine though. We'll accept that. Maybe there is something to hold on to towards the end, but perhaps also reflecting on this Nedbank unbundling, it has certainly had an impact on the group's solvency ratio. Help unpack that further for us.

The group capital ratio has remained extremely strong with the OML ratio increasing by 7.5% to 184%, which sits in the upper end of our OML target solvency range of 165% to 195%. The Nedbank unbundling is expected to marginally decrease our solvency ratio to just below 182%. In OMLACSA, the ratio has increased from 206% to 225% in September and is now above our target range of 175% to 210%.

Yes. Looking at those numbers on the slide, it's certainly not something to scoff at. And I think that clearly leads to us understanding and wanting to know what has driven the stronger coverage ratios that we witness here today.

As we previously communicated, we put a collar on the residual, the majority of the residual stake in Nedbank, which helped our cover ratio. We also issued ZAR 1.5 billion in subordinated debt in quarter 3, which improves the group cost of capital. We saw a reduced equity stress in our prescribed capital calculation from the regulator. And we saw some profits in the quarter. Those were the 4 big drivers of that ratio.

You say profits. We like profits. That also means we have additional capital. Can we go into the capital question now as to what that will be used for?

Yes. Obviously, we monitor our capital levels on an ongoing basis, and we consider the capital actions that are required for business needs, and we also look at the level of uncertainty in the environment. In terms of business needs, we have earmarked some capital for further investments in the business, and this includes enhancing our digital and data capabilities, automation, our transactional offering, risk product sales in Mass and Foundation Cluster as well as digital finance and some acquisitions and partnerships. Garth will give you a bit more detail on some of the things we've been working on. Where these initiatives do not meet our hurdle of generating returns in excess of the cost of equity, we will remit capital to shareholders as we said before. In terms of the environment, we are still seeing a heightened level of uncertainty relating to COVID with infections and COVID deaths being higher than expected and the level of vaccination and vaccine hesitancy being worse than we had anticipated. So at this stage, we are, therefore, still operating at the higher end of our target ranges.

Yes. Not too bad. And I guess, looking at the audience reaction, we're well aware that, okay, we've got some capital. We're investing it in the right channels. There might be great dividends for investors going forward. But of course, as you mentioned, ongoing uncertainty. And let's address the issue regarding the COVID-19 pandemic. Just looking at the sales announcement that was released earlier today, very clear that there's ongoing concerns about the fourth wave and of course, the impact it might have on your provisions. How is Old Mutual prepared and positioned when it comes to provisioning?

So wave 3 was a lot worse than anticipated, and we saw a double hump that extended well into September. As the CFO, this level of uncertainty...

You clearly didn't sleep much with that wave 3.

It's not good for the heart. The net impact on results from operations after the release of provisions that we held at the half year has been ZAR 3.5 billion, which is up from the ZAR 2.5 billion at June. So at 30 September, we still had a remaining provision of ZAR 1 billion.

That would make anyone feel rather uncomfortable because it's quite clear that the environment got a lot worse, right? Why?

This has been largely due to the worse-than-expected experience in our Personal Finance and the Marine businesses. And in Personal Finance, we've continued to experience excess risk with a larger average claim size, which has impacted the life cover payments relative to the provision. So claims were bigger than what we had modeled. In Namibia, saw very high infection rates and the associated mortality and claims in June to August has obviously elevated claims in Namibia. And then within our Corporate business, group life insurance underwriting experience suffered due to a high number of claims, and most of this can be attributed to the slower rollout of vaccines in the country. Our Mass and Foundation business has remained within our expectations.

Yes. Casper, this might leave us slightly concerned, right, because it paints a very bleak reality, but help us understand if you will need to increase your provisions for COVID-19-related claims.

It largely depends what happens in the next few months, and we are busy with that assessment at the moment. And as Iain mentioned, we are running models to prepare us for any further waves and any potential changing views to the 30% vaccination hesitancy assumption that we said at the half year. Given the experience to date, we will likely be relooking at our provisions at the year-end, and we'll communicate the outcomes as part of our 2021 results. There's just too much uncertainty in the system to provide guidance at this stage.

Uncertainty has definitely been the theme for the last 20 months and unfortunately, still continuing, as you say. Let's also focus then on the non-life claims, business interruption claims, which we're also well aware also took a significant mark.

At this stage, our provisions are adequate to cover expected losses. We continue to engage our reinsurance to conclude on settlements, and Garth will go into more detail here in a few minutes.

Well, that certainly does clear up some of the headwinds and concerns that we have perhaps in the short to medium term, but we want to see you smile, Casper. I know that might not happen often for a CFO, especially during such difficult times. But help us unpack if there are some positives, particularly when it does come to sales?

Yes. We've seen an acceleration in the life APE sales trajectory. And at half year, our growth was 13%. It's currently up to 18%, and that does make me smile. In fact, life APE sales for most of our segments are almost back to 2019 pre-COVID levels, and we expect them to continue improving. The current sales growth has been underpinned by risk sales in Mass and Foundation Cluster, higher risk and guaranteed sales in Personal Finance, and fixed bond sales in the Wealth business.

Important that you mentioned that because what we are looking for is, of course, understanding what we've seen from a VNB point of view, volumes of new business and if that's also been impacted by COVID at all.

Our value of new business is up over 300% from quarter 3 last year to just over ZAR 1 billion.

Base effects or clearly showing that your team is doing something right?

We're doing something right. And we are approaching our 2019 levels. And the value of new business has grown both because of the higher volumes and the sale of high-margin products. So value of the business margin has improved to 2.3% and is well within our target range of 2% to 3%.

Okay. So the number is working in line with our expectations there. So certainly some good news that needs to be celebrated. But another challenge that Old Mutual has struggled with is certainly Old Mutual Insure, right, as well as the underwriting targets here?

Yes. The Old Mutual Insure group margin has improved to 2.6%, which is moving towards our medium-term objective of 4% to 6%. And the Old Mutual Insure team has been working incredibly hard since 2018 to fix the book. And we've seen improvements in gross written premium, improved claims experience and strong profits in our credit guarantee business as well as good cost management from the team. Garth will give you a bit more detail later in the presentation.

Garth is coming up next. So we're looking forward to hearing some of those details from Garth and digging deeper into those opportunities that exist and of course, the repositioning, which speaks to rectify being one of the pillars that Iain had highlighted earlier on. But another element that we're quite keen on is the focus on cash flow. How are we positioned here?

Our net client cash outflow was ZAR 2.6 billion. On the upside, we saw, as Khaya explained, we saw strong flows in the Old Mutual Investment business as well as in the Wealth business. The net client cash flows have however been negatively impacted by higher COVID-related mortality payments. And we've seen some client terminations in our Old Mutual Corporate business.

Yes. Looks like the business is managing to navigate these ever challenging times, but I'm keen for you to perhaps just to give us a quick good overview of the summary of the numbers and I guess, any other elements that we need to be cognizant of as investors.

Obviously, I am disappointed by the slower-than-expected rollout of vaccines and the higher-than-expected deaths and claims that we've seen. We are also seeing some additional costs from COVID such as working from home, technology costs and rental concessions on our own buildings, which has increased our central cost line. And then Iain, obviously, holds me accountable for that. That's the uncomfortable part.

At least you're not paying for their lunch anymore so that helps.

What I am pleased about is the work being done by our segments to increase competitiveness. And the strong increase in our sales and value of new business margins is excellent and as well as the good management of costs in the segments. Also, our capital levels remain robust, allowing us to confidently execute and setting us up well for the future.

Yes. Well, I don't want to ask you and hold back on some of the questions that you might have from some of our audience members and participants. But Casper, you've really painted a quite important overview of the numbers. As we know, you help to unlock the capital that assist with the strategies that the segment heads have to follow through, so really appreciate your time. And I guess to assist us in facilitating even more of the questions that we have from our audience members, Celiwe, it's back to you. Hopefully, they have typed in, pressed enter and of course, shared some of their important questions with us today.

They have, Gugu. I'm happy to report. Thank you so much for participating during the day. Some of the questions that you asked of Casper, I did notice Iain taking voracious notes. I told you it's performance review time at Old Mutual. It is going to come up. I guarantee you. So thank you so much for spending the day with us and for your contributions, so we'll see each other at other results presentations and the like. Thank you for your contribution. I'll help Casper deal with the Q&A from here on. Thank you very much.

And we do actually have a number of questions that have come through either on the Chorus Call or on the webcast, which Sizwe is managing. I'll take a few and then give some back to Sizwe as well to handle. The first question I'd like to take for you, Casper, is from Thomas. He is asking a question around dividend policy. He says, can you provide us an update on that, please?

So our dividend policy hasn't changed. So we pay out the percentage of adjusted headline earnings, and that's not going to change in the near future. Does that ever mean that in normal circumstances, we do generate more cash than what our dividend policy allows, and that allows us to accrete additional capital over time, which will either be used for investment in the business or be paid back to shareholders.

Awesome. Another one for you here before we go to questions coming through on the line is from Andrew Sinclair. He is asking you, to what extent will you consider preventing COVID payouts in 2022 by restricting coverage for non-vaccinated customers? You may want to allocate that as well. Casper, I'm going to read it again, to what extent would you consider preventing COVID payouts in 2022 by restricting coverage for non-vaccinated customers?

Nico, do you want to take that?

The gentleman in the burgundy tie, that's it. Thanks, Nico.

I could have guessed, but I don't want get it wrong.

Not yet. There we go. The truth to be told on new business stage, we probably prefer pricing for risks than to avoid them. And on the in-force book, we have either the ability to reprice periodically, in which case we can price for the risk or we don't have the ability to reprice until the end of a guarantee term, which means then you can't restrict the payout because you're still bound by the guarantee you offered the client at the point that you gave them the guarantee in return for the cost of that guarantee.

Wonderful. Thank you. That's Nico van der Colff. He is our Group Actuary. Sizwe, I'm going to ask to take some questions from you before I close off with the others that I have.

Thanks, Celiwe. This question is from Michael Christelis again. Is it fair to say that your provision only covers you for 1/3 of the impact of wave 3, i.e., does it only cover ZAR 1 billion versus the ZAR 3.2 billion excess claims since the end of June?

Is that another one? It's a question for Nico. I'm going to ask for the mic for him again. It's just being sanitized.

The answer is yes, but I think it's fair if you've been following news on this, there is an expectation with all viruses that as time goes by and more of the population ends up having been infected, that you get a shrinkage, which was the pattern we were also seeing when we were doing provisioning in interims. We were providing for multiple future waves being smaller than wave 3, so it was an aggregation over multiple waves. And it's a similar situation now. That's the assessment that we're having to do currently to figure out how that adds up across the future waves from wave 4 to wave 8. But yes, in size, it's saying future waves aggregate to about 1/3 of wave 3.

I think the level of claims in future is directly dependent on how we're able to drive vaccination. And obviously, one of the key management actions we've been driving is to look at our higher cover clients and trying to get those clients to vaccinate, and we've had some good success in being able to do that. So to the extent we are able to build on the success we've had, Michael, we'll start seeing a lot lower claims from that high claims population.

Awesome. Sizwe, before we take your next question, I'm told we have someone on the line. So operator, if you can just please bring that question through. We are still not getting the question on the line. I'm going to ask that we take a question in person in the room. Sizwe, I'll take a question from you thereafter. If I can please ask for a microphone for the gentleman in the white shirt from Investec.

Casper, just maybe if you could elaborate or if you're able to share how much of your policyholder book has actually been vaccinated, if you have a view on that? And then the second question is, given the fact that we've seen such a massive decline in sort of preventative screenings across the hospitals, how is that shaping your thinking in terms of pricing going forward and how you're sort of monitoring the behavior of the book going forward?

I want to ask Kerrin just to -- so we're really concerned about the personal finance book, which is where we've seen a lot of the additional plans. We did speak earlier about what we're doing in the corporate book and with reinsurance. We are exposed for a period of time, but I think Kerrin can just give an update on what they're doing and sort of the level of vaccination we have in certain mobile cohorts because we really have to look at the high-risk client population and be really granular about that.

Yes. So we've been focusing on our clients with covers about 5 million, and really doing them in 2 cohorts of 5 million to 10 million cohort and then above 10 million cohort. What we are seeing so far is that the vaccination rate skews with income or cover actually, so the higher the cover, the higher the percentage vaccinated. So to date, in the above 10 million, we're running at just over 80% vaccinated. In the 5 to 10, slightly below 80%. That said, we are not -- we've only done a portion of the book. So we still have quite a lot to go. It could change. We also -- on the below 5 million covers, we're not actually, at this stage, able to tell. So we're just really assuming sort of South African statistics by age.

Sizwe, I'm going to take a question from you then. We've lost the call on the telephone line, but we still have quite a few questions to cover.

So the next question is, how are you thinking about extending credit in the MFC business given the current macroeconomic environment?

So in the MFC business, we've actually seen a reduction in sales, and that's because of the fact that last year, we increased our credits risk scores for advancing new loans, so we're actually seeing that book decrease. But we've also seen less footfall in our branches, in our Mutual Finance, which has also led to lower sales. We are actually now trying to see if we can accelerate the loan book. Our credit loss ratios currently have dropped to the best I think we've seen in that book, and we're making very good profits in that business. So we are trying to increase sales.

Awesome. Thank you very much, Casper. I do have a question here from Andrew Sinclair as well. He says that capital is looking very comfortable against targets, but how should they be thinking about liquidity? How do you think about the holdco cash level today? And where you would like to see it in the longer term?

So I think we're comfortable with both our capital and liquidity projections. And as I said earlier, barring any big unknown risks, and we want to see this COVID period through. We do generate cash that's in excess of our dividend policy. So we actually -- we for -- we think that we'll be generating strong cash flows going forward. Liquidity, we have a risk. We have a really strong liquidity management process. So I'm also comfortable with the liquidity in the business, but that is one of the factors that we look at when we think about capital payments or additional dividend payments.

Excellent. I have another question from Warwick. His question is, is there any limitation on accessing the capital in excess of your desired target range due to liquidity constraints? Is there any limitation on accessing the capital in excess of your desired target range due to liquidity constraints?

Obviously, the picture will change from time to time, but we should be able to access capital that's above our target range without having any liquidity constraints. So I think I can be fairly positive on that point.

Awesome. On that positive note, I'm going to call the questions. [ Sarin ], I do you see your question on persistency. We'll take that at the end when we deal with all of the segments and place that question to some of our segment MDs. I think we should go on to Old Mutual Insure now, so Casper, thank you very much.

Thank you.

As I mentioned, up next, we have Garth Napier, who is the Managing Director of Old Mutual Insure. Old Mutual Insure is the oldest and third largest short-term insurer in South Africa. Garth himself joined us in 2018. In fact, he's just celebrated his 3-year anniversary with us. And at the time of joining, he was tasked with the not-so-easy job of running 5 distinct businesses, whilst driving a single strategy across the piece. He has hit the ground running and made significant inroads that you will hear about today. It was not an easy task, as I mentioned. And in Garth's own words, he says he has learned more in the last 3 years than his combined 10 years in the retail industry. In fact, I thought it apt that I share a quote that he used in the summation of his time with us thus far, where he quotes Franklin D. Roosevelt in saying that "Smooth seas don't make great sailors." This talks to his views on the importance of having purpose in his approach to leadership as well as teamwork, and how these have helped to navigate very challenging waters and change. Garth's work is a big part of what -- delivering what we see as a light at the end of the tunnel now. And without further ado, ladies and gentlemen, I'm going to hand over to Garth Napier.

Thank you, Celiwe. The environment has been somewhat turbulent over the last few years. And I believe what I'm about to tell you will leave you with a better understanding of how we have navigated these choppy waters and are poised to improve the performance of Old Mutual Insure. Good afternoon, everyone. The business I'm about to introduce you to is one that is vastly different to Old Mutual Insure of the past. We're still in a transition phase between rectifying and simplifying our business, but we are seeing signs that all the efforts that has gone into our planning has now been realized. The first thing I think is critical is, let me tell you a little bit about who our mutual insurer is, tell you a bit about the journey we've been on, and I guess, more importantly, where we are going. Old Mutual Insure is made up of 5 distinct businesses. We have iWYZE, which is our direct personal lines and SME commercial player. We have our Specialty business, which focuses on corporate and niche products. We have MFRF, which is our finance -- risk financing cell captive insurer, offering first- and third-party insurance facilities. And then we have CGIC, which is a leading trade credit insurer on the African continent. And lastly, and the most largest part of our business is our Retail business, which offers short-term insurance solutions for personal and small businesses through over 2,000 intermediaries. Old Mutual Insurer makes a meaningful contribution to the broader Old Mutual Group. We contribute about 15 billion in GWP, or close to 80% of our total P&C business. In addition to that, we have -- we play in the top 3 in all the product categories we play in. CGIC is the market leader in trade credits. We're close to 80% market share. And through CGIC, we finance about 200 billion in trade credit transactions a year, which is equal to about 11% of GDP flows. We've also been focusing on our customers over the last few years, and I'm proud to say that we started to see this pay off. In the most recent SA-sci Awards, we've been recognized as a leading intermediated short-term insurer. We have the highest NPS score, the highest perceived quality score, the highest customer satisfaction score, the highest customer loyalty score. And lastly, we've also been recognized at the Sunday Times Brand Awards as a leading short-term insurer in South Africa. So whilst we made good progress, I think it's only fair for me to be candid and to say this business isn't where it should be just yet. Over the last 10 years, we've lost market share, we have grown at an average of about 3.5% versus the industry average in excess of 7. We haven't delivered consistent underwriting result during this period. In addition to that, COVID, which none of us had foreseen has had a significant impact on our 2020 results. As a leadership team, we've stepped back and we've learned some key lessons from this experience. Firstly, I think we underestimated the growth of the direct insurers over the last 10 years. Secondly, we grew our expense base significantly faster than our top line, which has put pressure on our underwriting results. And then thirdly, we didn't invest as significantly and as quickly as we should have in technology and innovation as we have seen in the rest of the markets. And then I guess, lastly, we've also seen some key leadership shifts and changes over this period, which meant, firstly, we lost some key underwriting skills. And I guess ultimately and unsurprisingly, during this period, we lost business and customers. So where are we going? We have always had a conviction that despite some of these challenges, this business has a great brand, a very strong market positioning and a significant growth potential if we do the right things. Our turnaround journey started in 2018, and we have launched our 2025 strategy. We have set ourselves some very specific targets. Those targets are: firstly, we want to continue to grow our top line in excess of 7%; we want to reduce our cost to 10% expense ratio; we want to deliver an underwriting margin of between 4% to 6%; and lastly, we want to continue to maintain our #1 position in the intermediated market because as our customers being satisfied with our products and service, we won't be able to achieve any of our other targets. How are we going to get there? We've already started to achieve some of these targets which I'll speak about later. But more importantly, we are focusing on rectifying and simplifying our business. And we believe that by laying a strong foundation, we can then amplify the growth for the business going forward. So let me share with you some high-level plans on what we're going to do under each of these pillars before I go into more detail. Under Rectify, the first thing we've done with our business is we've developed a new business model for each of our business segments that is very specific to meet these customer needs and their partner needs. We're driving cost efficiency across our business to ensure that we can price correctly for the markets. We're also looking at repairing our large-scale commercial business. And lastly, under Rectify, we want to create a compelling employee environment as they are ultimately responsible for delivering on our strategy. Under Simplify, we want to use technology to reduce complexity in our business. We want to leverage data to both improve our pricing and improve our customer retention. And we also want to ensure that we optimize our reinsurance structures to retain more profitability and deliver more consistent results. We believe that if we can deliver on our Rectify and Simplify, we'll be well poised to Amplify our business. We've already developed and launched some new products and channels, which I'll go into a little more detail later. We want to maintain our market-leading position in trade credits. And over and above this, we believe there are exciting inorganic growth opportunities in the markets, specifically in some of our niche product segments, which I'll address a little later. So if we look at some of the details under Rectify, the first thing we've done is developed a focused operating model. We have split our business into 2 main areas: our retail business, which is focused on personal and SME commercial customers; and our corporate and niche business, which targets our large corporates and larger commercial business. Within retail, we have the retail intermediated business, we have direct class and our iWYZE offering. We believe that this segment is all about operational excellence and delivering customers a great price with great customer service. The needs of our corporate and niche segments under CGIC, specialty and MFRF are very different. Let me talk briefly about each of those. Specialty focuses on ensuring corporate property, marine and engineering and liability. And we believe, here, we need to add scale to our business. Mutual and federal risk finance provides world-class risk financing solutions to underwriting managing agents, as well as providing niche insurance products to a captive client base. This also serves innovative startups and insurtechs, companies with the ability to build self-insurance capabilities. As I've said, CGIC is a leader in trade credits. And I think our journey on CGIC demonstrates our ability to take one of our businesses through rectification, simplification and amplification. Last year in CGIC, we had to reunderwrite our business given the impacts of COVID. We had to reduce our exposure in the market by over ZAR 110 billion, this is a 30% reduction in our exposure in the markets. In addition to that, we have to put through 2 price increases. Where do we find ourselves now? CGIC is delivering a significantly higher underwriting margin. In addition to that, despite the 2 price increases, we've retained over 97% of our customers in CGIC. As I mentioned at the beginning, our internal management and staff shifts hindered our ability to plan for and address both external and internal challenges. In 2019, the Old Mutual Insure Board formed a People, Customer and Transformation Committee to ensure that we were placing adequate attention on our people as they are ultimately the ones that need to drive our strategy. We've refreshed our people strategy to focus on operational excellence and create a workforce with future-fit skills in the field of data, technology and actuarial science. I'm glad to say that our efforts are starting to pay off. In our latest internal staff surveys, we've seen significant increases in employee engagements and satisfaction scores, and we now have a strong pipeline of internal successes for key roles across our business. Concurrently, we've also been simplifying our business and what they offer, driven and assisted by technology and fast track our work-from-home policies, which were implemented during the COVID-19 crisis. Simplification is often the most complicated part of any journey, and not often is it easy. We still have some work to do here. In retail, we're focusing on simplifying and digitizing our processes. We're also driving increased levels of automation. And in our previous Capital Markets Day, Vuyo and Johnson spoke through our glass way through processing, which means minimal human engagements when a customer needs to repair a windscreen. We're also leveraging data to improve our pricing across our retail business. On our specialty business, we are reviewing and optimizing our risk retention as well as reunderwriting our large commercial business. As mentioned, our loss ratio is at the lowest it's been in 5 years, which means these rectification initiatives are delivering on their objectives. There's still much to be done going forward. In retail, we need to continue to trim costs, which we plan to do by simplifying and digitizing our business. In specialty, we need to continue to focus on improving our underwriting performance and optimizing our risk retention for marine insurance perspective, and we will leverage our data and technology to ensure we can price better and be more competitive in the markets. As we start to see benefits of the hard work, we are already seeing amplifying -- the amplifying pieces of our strategies paying off. We've launched some channel innovation. Over the last 12 months in our retail business, we implemented a new alternative channel called Digital Plus, which is already contributing over 20% of our new business volumes. The new channel rolls together our call center and broker offering in one, allowing us to provide tailored advice for our customers. This also allows us to better compete against the direct insurers in the market. We've also launched a number of product innovations. We've partnered with fintech or insurtech Pineapple through iWYZE, where we provide all the pricing, underwriting, claims and customer service to them. In addition, we strengthened our partnership with the Old Mutual ESD Fund, purchasing a 15% stake in Pineapple. Overall, the iWYZE business is closing the gap to MiWay, Telesure and OUTsurance. We've also launched other new product innovations. We've partnered with SwiftVEE, which provides the first agri auction digital solution in South Africa. The purchase of livestock on the SwiftVEE app, can now ensure their purchase with a touch of a button with Old Mutual Insurer. In addition to that, we've launched Comma Insure, which Iain spoke to earlier. Comma Insure recently won second place in the BCX Innovation Awards. And let me play a video just to introduce it to what Comma Insure is. [Presentation]

So in summary, Comma Insure offers customers the ability to ensure a specific asset for a specific period of time, as seen in the example. We are excited about a number of other things happening in our business. Firstly, I'm proud to announce that we've taken a 51% stake in one insurer, which is a 1.8 billion GWP insurer in the South African markets. As I mentioned earlier, our Direct+ channel is already contributing about 20% to new business, and we believe that by the end of next year, will be one of our biggest channels. From a technology point of view, we will roll out straight-through processing to other areas of our business, as for example, cell phones. We'll also be introducing a telematic solution for vehicles in the first half of 2022. In addition, we made some key appointments in key roles across our business and believe we have a strong team to take the business forward. So in closing, I think the direction is set. We're very clear on what we want to do. I think for the year-to-date, we've delivered some strong performance. We've seen strong growth across specialty, CGIC and MFRS. We have seen that our loss ratio in 2021 is the lowest it's been in 5 years. Our non-commission expense ratio is down to 13.3% as a result of us unlocking ZAR 150 million in cost savings this year. So as we look ahead, we believe that we are on track to deliver on the key metrics I outlined earlier. We're on track to deliver on our 7% compounded annual growth rate in GWP. We're on track to get to our 10% non-commission expense ratio. Our underwriting margin for the year-to-date is well within the 4% to 6% range, and we believe that we must continue to focus on delivering our being #1 for our customers in the market. On that note, I'd like to say we believe we're on track. We know we need to drive consistency in our business going forward. But I hope that you can see that the Old Mutual Insurer of the future is very different to that of the past. Thank you.

The Old Mutual Insure of the future is certainly different to the Old Mutual Insure of the past. Garth, if you would join me for your Q&A. Ladies and gentlemen, I do want to say that we are overrunning on time, so I'm going to keep it really tight with the questions that we have that have already come through. And I'm going to start with some questions that we've gotten on the Chorus Call line. I'll take the question from Foord Asset Management. Pravarshan is asking, "For Old Mutual Insure how much of the underwriting margin improvement is expected to come from the pricing of new and existing businesses versus the change in mix versus the cost efficiency?" So I'll ask that again. How much of the underwriting margin improvement is expected to come from one of the new and existing businesses or the changes in mix or cost efficiencies?

Yes. I think, Celiwe, for us, the majority of it is going to come from the cost efficiencies. One of the things we recognize in the retail business is customers are very price sensitive. So we actually want to take some of these savings we're going to make on the cost savings. And if anything, try and reduce our prices on our personal lines and SME commercial business. So a large part of it is driven by cost efficiencies. The second part is actually driven by better underwriting. So being very selective around which types of risks we take more specifically in our commercial, specialty and CGIC businesses. So we think, on the retail side, it's cost savings. On the corporate and niche sector, it's about smarter and better underwriting.

Awesome. We've got another question from [ Jonathan Naidoo ]. He asks about competitors and how you're going to regain your position against him. He says, "Is there a goal to overtake your competitors and become the leading insurer in terms of market share? And if that is so, what is your time line to achieve this?"

Yes. I think we've always said our objective not to be the biggest, but to be the best. So we are not chasing market share to be the biggest from a market share point of view. We want to be the best in terms of delivering underwriting results, and that's where our focus is. As I said, I think it's driven by cost efficiencies, it's driven by better underwriting, and as we've demonstrated, where one of the acquisitions we've done to date, we think there are potential opportunities in the market to consolidate on some of our more profitable product lines.

Thanks, Garth. I'm going to check if we have one more question that comes through from the webcast. Nothing online on our Chorus Call. Anything -- there's one on the telephone line, if I could ask the operator to bring that call through.

We have a question from [ Thibeau Homofil ].

From my side, just a quick one on the corporate and lease side. How big is property in relation to that cluster? And what is the thinking with work from home is probably a [ demagrowth ] prospects for that business line? What is the thinking around that progression on that line? And then secondly, in terms of your cell captive business, what has been the persistency there? And in terms of market share, funeral product, how does the market share for the cell captive business compared to Old Mutual Group or funeral business? If you can just give us the trends there.

Thanks [ Thibeau ], Garth?

Thanks, [ Thibeau ]. I think the first one around corporate property. In our specialty business, about 80% is corporate property insurance. However, I want to highlight that's not the property group. That's the -- one of our clients is the Old Mutual group themselves, ensuring a large corporate like Old Mutual's property portfolio or any one of the other top 100 companies in the JSC. We haven't seen any drop-off in that product line given work from home so far, but it's something we continue to monitor. Sorry, I didn't get the second part of the question.

[ Thibeau ], your second question was on specialty, if I'm not mistaken?

The second question was on cell captives, the persistency trends on the likes of funeral insurance within there and market share of funeral insurance versus within the group insurance business.

Yes. So MFRF is only a short-term cell captive business. It doesn't include [indiscernible], which falls under probation, so we don't have any funeral products in that space. From a market share point of view in the short-term cell captive markets. We are a similar size to Centriq, but I guess both of us are significantly smaller than Guardrisk.

Awesome. Ladies and gentlemen, I'm going to call it there. As I mentioned, we are going to still take a few questions towards the end. This gives us sufficient opportunity to go into our last presentation of the day, which is on our Rest of Africa operations. Garth, thank you very much for joining me on stage. And thank you for your presentation. We'll see you hopefully a bit later.

Ladies and gentlemen, our final speaker for the day is Clement Chinaka, who is the MD for our Rest of Africa operations. Clement actually has a long-standing relationship with Old Mutual, which dates back to his high school days when he participated in the Old Mutual Math Olympiad, an initiative that we continue to support to this day. He was so good at his studies then, we decided to offer him a [ versary ] and put him through university and it has been a pretty rewarding investment for all of us, I'd argue. Of course, he has experience in South Africa, but also in Zimbabwe, and he previously ran our corporate business handing over what has been a great platform for Prabashini. We firmly believe that the long-term strategic growth of our business and growing shareholder returns requires substantial and evolving portfolio of businesses in the rest of Africa. And it takes hard work. It takes patience and time and Iain did discuss some of this in his opening. Clement, please come over and join me on stage as you discuss your story.

Thank you very much, Celiwe, and very warm African greetings to all of you in the room and in the airwaves. The last time we made a similar update to the market was in November 2017, when we were preparing to list the Old Mutual Limited on the Johannesburg Stock Exchange. That is, therefore, an appropriate point of departure for today's conversation. I'd like to start by recapping a few promises that we made then to the market. We promised that we were going to firmly anchor on the African continent. That has not changed. We had mature and highly cash-generating businesses in Southern Africa and promised to defend our established market positions. We have succeeded in this effort and have grown market share in some of them. Our Zimbabwe business was the largest contributor to profits, accounting for 79% of our profits in the Rest of Africa, and it was a case study of operational success in a challenging environment. It remains a business with strong foundation and fundamentals. However, its results are no longer consolidated due to the hyperinflation in the country. Consequently, the Rest of Africa results that we talked to today exclude that significant part of the portfolio. We were also on a path to turning around our East African businesses with promising signs then. We have been on this journey for longer than anticipated. I will discuss this more later in my presentation to you. Since last year, our business has been adversely affected by the impact of COVID-19. Sadly, we lost 6 of our staff members. We have seen worsening insurance and mortality risk, particularly in Namibia as well as deteriorating credit quality, particularly in Kenya. There has been a silver lining though to the dark cloud of COVID-19 pandemic. We accelerated digitizing our operations and remote working, which means we are more proficient at exercising oversight remotely. Much of what you will hear from me today is centered around 3 themes: firstly, the rest of Africa business that we have today; an update on the turnaround of the East and West Africa businesses; and finally, key initiatives that will drive the growth of the portfolio. But before I get into that detail, I want to remind you of the magnitude of our Rest of Africa business. We have a presence in 12 African countries outside South Africa with at least 27 operating entities across 4 lines of business. These are life insurance, property and casualty, asset management, banking and lending. The majority of these countries are among the continent's fastest-growing economies and they have low penetration of financial services and also have got attractive demographics. 20 out of 27 of our businesses are among the top 3 competitors by market share in their domains. Of the 20, only 6 market shares north of 25%, suggesting there is lots of potential for growth within these markets. The improving market regulation and expected industry consolidation driven by higher capital requirements in a number of these markets pertain profitable future industry growth and deepening penetration of financial services. We run our businesses as a portfolio with strategic guidance and operational oversight from the Old Mutual Africa Holding Center. The Old Mutual brand is very strong on the continent. It was ranked by brand finance in the top 10 strongest brands as well as the top 100 most valuable insurance brands globally. We are the African -- the only African insurer in that authoritative annual report. As noted earlier, we have spent the last few years working hard to defend our established market positions in Southern Africa, driving turnaround efforts in our newer markets in East and West Africa, and more recently, navigating our business through COVID-19 pandemic. It is always helpful to understand scale through visualizing some of the numbers. I therefore want to share with you some of the notable figures over the period from 2017 to 2020. As a reminder, this excludes the Zimbabwe contribution. The results from operations grew from 223 million to 400 million, representing a compound annual growth rate of 22%. The 2020 number is normalized for about 200 million COVID impact in 2019 -- in 2020, sorry. The life gross flows grew from ZAR 5.2 billion to ZAR 5.9 billion, a compound annual growth rate of 3%. The muted growth in life sales is driven by Namibia, our largest contributor. The economy of Namibia is contracted year-on-year over this period, except for a modest 1% growth in 2018. Loans and advances grew from ZAR 2.7 billion to ZAR 4.3 billion, which is a compound annual growth rate of 16%, reflecting impressive growth in our Namibia book. Clearly, notwithstanding some of the challenges, the business has demonstrated steady growth over the years. I must say I am disappointed that the business is not where we want it to be and has not delivered the shareholder returns envisaged in 2017. The integration of the UAP and Old Mutual in East Africa faced many headwinds, but I'm happy to say we are making progress and are at the tail end of that integration. In East Africa, we appointed a new regional CEO in 2020, and they've also included a few more key senior appointments to support these efforts there. The major of UAP Life and Old Mutual Life in Kenya is almost complete following the receipt of key regulatory approvals. We have made progress in restructuring the property portfolio and occupancy has increased significantly. For example, UAP Tower in Nairobi had a lower occupancy of 31% in 2017 and has improved to 98% as of the end of June 2021. The Nakawa Office Park in Kampala, the occupancy has increased to 88% at the end of June 2021, while the Equatoria Tower in South Sudan, occupancy has increased from 22% in 2017 to 64% now. The asset management businesses in Kenya and Uganda are profitable. Our businesses present themselves externally as Old Mutual UAP or UAP Old Mutual across East Africa. We want to consolidate this under one brand, Old Mutual. And they have commenced the requisite rebranding process. In West Africa, we have made significant progress in rightsizing and turning around the Ghana business. A lot of work remains to be done in building on the progress we have made in Nigeria. And we have made a capital injection in that market to meet the new capital requirements that became effective at the end of September. We plan for turnaround to be materially complete in 2023 with at least 24 of the 27 entities expected to be profitable from 2024. Now let me take you through the key initiatives that we are executing to deliver profitable growth on the continent. I will talk to them through our Rectify, Simply, Amplify execution framework. In East and West Africa, our focus is on driving operational excellence. The main initiatives are: pivot the smaller life businesses to focus on the corporate market. We have other smaller life companies to pivot to corporate to grow scale so that they can become profitable sooner. We believe that these small operations can use the profits that they will generate from their corporate customers for -- to fund the retail expansion over time. We are seeing gains from this already in East and West Africa, with the corporate life sales accounting for 51% of the total APE, up from 42% last year by the end of quarter 2 this year. We are also seeing early signs of improvements in the new business margins, particularly in Ghana. We will improve offering in the life companies. These improvements include the performance of existing products and introducing new innovative solutions to our customers. We recently launched an annuity product in Ghana. We will improve distribution productivity. Currently, retail productivity is weak in East Africa relative to what we see in other regions. We are rolling out reforms and improvements in our value proposition to our distribution. The property and casual, the underwriting margins are negative in our businesses and are generally very low to negative in the industry across East and West Africa, with profits coming mainly from investment returns on insurance float. We are going to drive a number of initiatives on our part to turn this picture around. Shocks from weak controlled environment have led to volatility in results over the years. We are tightening controls and risk management to be able to deliver more predictable results. In East Africa, specifically, in addition to these initiatives that I talk about, we will focus on growing the loan book in Faulu profitably and then strengthening our balance sheet by reducing debt in UAP Holdings. While we have seen promising signs, we know that we need to make a bigger shift if we want to see the growth we are aiming for. A key part of our simplified strategy is digital innovation. Since last year, we have invested substantially in building digital presence and improving the associated user experience. In addition to improving customer experience, we are leveraging digital to acquire customers. This is a fast-moving space where a lot is being done by many players. At the Old Mutual Limited group, we are putting our oar into the water here, and the rest of Africa space offers a lot of opportunity for these initiatives. We have simplified our presence. And as at the end of quarter 3, we had over 900,000 visits across all our businesses. Also in 2021, -- in 2020, we introduced new economic channels to service customers and sell. This channel did over 0.5 million active users in the last 3 months. Digital sales have increased 145% this year off a low base. We have the ambition to be a major growth driver for Old Mutual Limited Group. I will now talk about the additional initiatives that will amplify growth from the foundation set by the Rectify and Simplify initiatives that I have discussed. Under integrated financial services, for our 4 big -- our 4 big markets, which is namely the Zimbabwe, Malawi, Namibia and Kenya, we are driving initiatives to integrate the various lines of business we have there to improve cross-selling and operational efficiencies. We are expanding our offerings into adjacencies such as funeral services, which already have launched in Malawi and Zimbabwe, and alternative investments, which are already operational in Zimbabwe, Malawi and Namibia. Additionally, we are planning to roll out all mutual rewards to drive customer engagement, starting with Namibia. On strategic partnerships, to meet our evolving customer needs, we will need to support faster to exploit emerging revenue pools. This requires new capabilities which may not -- which we may not currently have. We will seek strategic partnerships to access such capabilities. We are going to strengthen our business through acquisitions. We have some offering gaps in select markets and where appropriate, we will responsibly make bolt-on acquisitions to fill these gaps. We will exit markets where we do not see a clear path to meeting our objectives. And then finally, on these initiatives, our business in Zimbabwe is solid and remains the largest in flagship operation outside of South Africa. The business carries significant option value for the Old Mutual Group. And we believe that can be lowered once the economy turns and they can start to remit dividends to the group. While the environment remains very challenging, our operations have been resilient. They are being run under a clear framework that seeks to ensure that the businesses enhance their market position. The significant capital in the business is being reinvested into expanding our offerings and digitizing the business. In closing, I'd like to leave you with the following in mind. We are firmly anchored on the continent and seek to consolidate our presence in current geographies. We are in good markets mostly. And most of these markets have -- we have good market positions. We are at the back end of integration in East Africa and expect the turnaround to be materially complete in 2023. At least 24 of our 27 operations will be profitable from the year 2024. We are set to deliver growth for the group through turning around businesses that are currently loss making and enhancing our strong market positions through broader, innovative and relevant solutions supported by effective distribution to access more of the underserved customers on our continent. I will pause here to take questions. Thank you for your attention.

Thank you so much, Clement. I'm going to ask you to join me here for our Q&A session, whilst I also have a look at the questions that have come through. It seems like your plan to leverage off of shared group capabilities is starting to pay off, with already 414,000 digital users in just 1.5 year. And as you mentioned, in your positioning as off a lower base, but growing at a significant pace. Thank you for that, Clement. Whilst I still wait for questions, I just want to see if there are any in the room for you. I don't see any at the moment. Sizwe, we've got some from the webcast, and we'll see if we've got some over the phone as well. I'll take 3, please.

Thank you, Celiwe. Are there any countries except Zimbabwe where capital restrictions hamper your ability to draw dividends? So question one, and I'll answer this, the second one and final one. What have you learned from the UAP acquisition that can be used to prevent similar mistakes in other African operations?

Clement, 2 questions, one on dividends and then the UAP acquisition.

Okay. Yes, in terms of dividend, extraction or rather payment or remittance to the group, Zimbabwe is the only one where because of the strategies of foreign currency, it's not actually prohibited. It's such that they don't have the foreign currency. So it's a question of foreign currency access that limits the ability to pay dividends. We don't have any markets where we are prohibited from paying dividends. Our job, as I say in the presentation, is to make sure those companies become profitable and then they can be able to remit dividends.

Other question on the UAP acquisition, lessons learned from that?

Okay. Yes, the lessons learned from the UAP acquisition, they are varied. I think some of them talk to the quality of the due diligence that you need to do. That's the first thing because I think, yes, we were surprised by what we found eventually. After we bought, we found, we bought mainly -- there were a lot of things, including properties that we needed to finish up and we had to borrow and lend quite a lot of money to finish up those properties. And you heard me talk about that focus area of making sure that they are actually occupied and they start to generate some revenue. The other one is also around how you deal with the various partners that you go into bed with post the acquisition because some of the issues that we are facing, the headwinds that I was talking about was around multiple negotiations we needed to do with the various partners to get the initiatives going. I think those are the 2 main ones. But right now, I think we are very happy with where we are now, and we are well aligned and executing on the integration. And I'm waiting really, 2023, we will be seeing most of these businesses vary.

Certainly, when I speak to Clement, he talks about his business as a portfolio of businesses rather than one homogenous business, so they have different focuses. Your last question, Clement, can you comment on the cost-to-income ratios across the African businesses? And if you see any improvement opportunities from a reduction of OpEx perspective? That's a question from [ Homozon ].

Yes. I think most of our businesses actually suffer from lack of scale. So the more important question to improve our cost-to-income ratio is to actually grow those businesses. There will be opportunities for cost savings, but the most important thing is actually on the growth side, and that will bring our cost-to-income ratios down.

Awesome. Ladies and gentlemen, thank you so much for your interaction. That's the MD of Rest of Africa, Clement Chinaka. Clement, thank you for joining me on stage. I'm going to shortly be joined by Iain Williamson. As he makes his way on to the stage I just thought we'd talk a little bit about what we've heard today in summary. We've heard about Old Mutual Corporate, for example, and how they're going to maintain their lead but also create future markets through an exciting SME initiative. And we also found out about the investments business, what they're doing to drive profits, amplify transformation and maintain that sustainability going forward. Old Mutual Insure was interesting, clear and distinct focus on managing and achieving our victory condition there. And now that, that ship is facing the right direction, how we continue with that journey. And overall, of course, we aligned on why the African continent is such a fertile opportunity for Old Mutual now and in the future. Iain, thanks very much for joining me on stage. I thought we'd cover some summary questions before we close today. Just want to -- hello. This always happens, cool, let's do it this way. There were a number of questions and concerns around Old Mutual's recovery to pre-COVID levels. Overall, how would you say that's progressing?

I think bearing in mind the residual uncertainty we spoke about earlier, I think it's going very well. At a top line level, I think we've had MFC sales volumes recovering well and the lower credit loss ratios as well. Personal Finance, we had a slightly slower start at the beginning of this year, a significant recovery in the second quarter. The third quarter, we -- in PF in particular, we had a little bit of an impact from the things we saw in [ Kazeden and Harting ] in July, and that's had a little bit of a lingering impact. But I don't think that can any longer be ascribed to COVID. And then the investment and wealth business have really benefited strongly from the recovery in markets and also from -- as Khaya mentioned in his presentation, good strong inflows this year. And then finally, in corporate, a slow recovery, a much slower recovery in just general activity in the employee benefits market. But as Prabashini showed us, that pipeline is improving. The prospects are looking better. So I would say -- and then Old Mutual Insure, I think, is already in a much better position than it was in pre-COVID with CGIC having gone through a dramatic dip and recovery courtesy of challenges in the credit market. And then equally, obviously, we have the business interruption issues last year, and I think those are largely behind us from a provisioning perspective. I think the main remaining uncertainty really remains around the provisioning on the life side in Personal Finance and then on the Rest of Africa business, where, obviously, across the rest of the continent vaccine rollout has been slower, supply has been slower to come on stream. And we will continue to work in country with the various governments and authorities to try and drive the vaccine rollout and take-up rates as fast as we can.

Awesome. Iain, we have a question from Andrew Sinclair and he asks, "You mentioned that you'll look to grow inorganically as well as organically. What areas do you think need inorganic acceleration? And how would you compare M&A versus share buybacks?"

Okay. Thanks, Andy. I think the main areas where I think we will look at inorganic. One is in gas business. He spoke about the one acquisition earlier today. And I think one of the things that got -- didn't explicitly reference, but I think is an important data point is when we talk about Old Mutual, it shows historical growth rate at 3-and-some-change-percent versus the market at 7%. The striking contrast between Old Mutual Insurer and the competition is the lack of acquisitions over a very long period of time. They're not necessarily big things. They're a series of small bolt-ons. But I think we did an analysis compared to one of our biggest competitors. And over a period of a number of years, they had done 42 acquisitions and we have done none. And that's just a useful historical perspective as to not being on the lookout, specifically for those bolt-on small opportunities that roll up over time. So I think that's one category, I would say, a small bolt-on roll-up acquisition where the -- either the capability or the piece of the market that's been accessed or complementary. And then I think the other main bucket would be in our Rest of Africa businesses, where there is a significant benefit to accelerating the path to scale because, particularly for life businesses, running a small life business and particularly retail, which is why Clement spoke about the pivot to corporate has a very long drag on your P&L. And the time to achieving a sensible return on equity is just too long to be palatable. So I think those are the 2 main areas. And then finally, sorry, just on the share buyback point. Now, I wouldn't say that we would necessarily do a direct comparison in a sort of a black and white categorical way. Obviously, we would assess what we believe the incremental uplift in earnings per share would be as a consequence of a share buyback and make that comparison. But I think we also think about our business as a portfolio where share buyback is one opportunity in a portfolio of opportunities and trying to balance those kind of things as we think about it.

Thanks, Iain. Would you say that you're happy overall with the progress and the news that this team has shared today?

Oh, absolutely. I think what we've been told by the various businesses got in Old Mutual Insurer about teeing us up with a ship, as you put it, sailing in the right direction. Clement had been clear about our commitment to the continent, but also clear about the responsibility we have to execute against that commitment carefully and responsibly. And I would hope that what people have walked away with from today with is a level of insight into some of the detail and the need that we can't always share in a typical results presentation or investor meeting, in a Q&A, I think the detail has been a very helpful addition to people's understanding.

No, certainly, Iain. And in closing, I'd like to share our comment that came through during the course of the day from [ Rajan ], where he says, "Great performance, great insights, great future view, well done, Old Mutual." What a great ending to the day's proceedings. Thank you very much, ladies and gentlemen, for your interaction with us today, all of your fabulous questions. The ones that we did not get to today, as we mentioned earlier, along with Sizwe, who's going to join us on stage is that we will get back to you in the coming days in writing. We will not be doing the ExCo Q&A because of time constraints, we need to respect your time as well. We thank you for joining us today. Thank you very much, Iain.

Thanks, Celiwe. And thank you, everybody.

Thanks so much, Iain and Celiwe. That was a really insightful discussion. And with that, we've come to the end of our Investor Day. I'd like to extend a huge thank you to all our presenters for today and everybody who worked hard behind the scenes to make all of what you saw today possible. But most of all, thank you to our investors, shareholders and other stakeholders who have really partnered and walked with us on this journey. I hope you benefited at all from the presentations you saw today as well as the innovative thinking behind how growth will emerge in Old Mutual. And it's my job to say to you, sorry to those that we didn't answer the questions. I have them on hand, and I will be getting back to you shortly. Thank you to everyone for your time and engagement for today.