Old Mutual Limited (OMU) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today. My name is Langa Manqele, and I'm the Head of Investor Relations for Old Mutual Group. I would like to welcome you all on behalf of our board and the management team and I must add that today is a particularly exciting day for us, which I will not steal the thunder from Jurie, as you have seen on our SEM announcement this morning. On the agenda for the day, as per usual, Jurie will kick us off with a strategic update together with an operational review. Shortly after that, Jurie will hand over to Casper. Casper is our Group CFO, who will then provide the financial review. Shortly after Casper, Jurie will come back on the stage to provide us with this outlook and the concluding message for the presentation. At that stage, I will then call back Casper, who will be joined on stage by Ranen to help answer the Q&A. And with that, may I hand over to Jurie. Thank you.

Good morning, everybody. Great to be with you. Thank you for everybody. That's all our investors that are joining us online. It's great to be with you for the interim results, Old Mutual for 2026. I have been in the job of group CEO now for 15 months. And so this is actually my second set of interims. And I really can confirm to you a growing confidence in the group that we are on track. We are aware I had hoped and as a team we'd hope to be at this point in our strategy. You'll recall that we set out our strategy last year at the Capital Markets Day. And so we've been tracking execution proof points along the way. And so what I'll be doing this morning is taking you through a highlights piece and then going back to strategy and just taking you through how we are executing against that strategy. But before I do that, just to call out on -- Langa alluded to it, an exciting announcement for us this morning, and that is the announcement of Ranen Thakurdin as the CFO -- as the next CFO of Old Mutual. Casper, of course, well known to you, is retiring in April next year. Casper has done a lot of work between now and April next year, but I'm sure -- I'm sure you're also delighted to have Ranen appointed as CFO. Ranen will take over CFO designated from 1 January and then walk alongside Casper really for the end of -- for the sort of year-end and then take over from Casper in April next year officially as CFO when Casper retires. Let me just say that as group CEO, I am delighted to have someone of Ranen's experience and expertise within the group to be able to do this internal succession. I've worked closely with Ranen, both in his finance roles, but also as Chief Risk Officer, more recently. And I really can assure investors that in terms of strategy and execution is concerned, Old Mutual is not going to miss a beat. And so I'm absolutely delighted with this transition. Congratulations, Ranen. So turning back to the highlights and I'm going to give you a sense of sort of highlights of the half and then track it back to what we said what we're going to do. And I would say internally, we're going to become a company that is famous for doing what we say we're going to do. And I think -- we've got growing confidence that these results actually showcase that. So from a highlights perspective, the 2 return metrics, 12.7% RoGEV, you'll know that we brought RoGEV a sort of key metric key value metric last year. That is significantly up on last year. Last year, of course, we had the adjustments to the MFC persistency basis. And so a significant uptick. On RoNAV, also normalized RoNAV also up to 12.6%. Now both of those return metrics, I would reflect to you, they're not yet in the range of, respectively, 14% to 16% and 15% to 17%. But it is the first time when those two return metrics have actually exceeded what we would consider to be our cost of capital, which is about 12.5%. And so we really do believe that we are on track to getting into that medium-term range. The dividend, again, the range of 6% to 9% growth and an 8% increase in the dividend. And our confidence in the value of our business as reflected in the group equity value of ZAR 20.66 for the half is reflected in that additional ZAR 1 billion share buyback that we're announcing this morning. From a sort of sales and margins perspective, a very good performance. Life APE sales up 21%, gross flows up 21%. So that's been a strong performance. We have called out that there are some large gains, particularly the corporate business in there. So that will moderate. But even if you allow for that, it moderates to sort of underlying growth of about 12% for the half. And so that was one of our key proof points, and I'm pleased that we're hitting it. From an RFO perspective, RFO per share up 11%, and that's despite quite a noisy environment from an economic variance perspective. And so they are also -- we are tracking well. We are signaling today, which Casper will do that that, that RFO per share growth of about 10% to 14% is -- that's the RFO growth that we believe puts us in the range on our other medium-term targets. And so we are, at this point, comfortable also in that range. So to go back, I just want to draw you back a little bit to the strategy as we announced at the Capital Markets Day last year. And you'll recall we talked about unlocking value and generating growth as the sort of 2 phases of strategy for Mutual, driving competitiveness in the South African businesses through Oficial Life & Savings, [indiscernible] Insurer and [indiscernible] Investments, deepening market leadership in Southern Africa. So recognizing across the African continent. We have -- in Southern Africa, leadership positions where we've been in those markets a very long time and have -- we are #1 in a number of those. But what we want to do is to convert that scale into better margins and returns so that we can really put a value on those businesses and that value becomes more visible to investors. We want to establish the right to win for OEM Bank. And as I'll talk to you later, we are, in fact, shifting our thinking already from establishing the right to win to actually really contesting the banking profit pool. And then finally, evaluating and pivoting on growth markets. And that's just a recognition that in our African portfolio in East and West Africa, in contrast to some of the other in Southern Africa, where we are already market leaders; in East and West Africa, we really are wanting to build market leadership, but we first have to demonstrate through returns and margins that we can earn the right to deploy capital there. So what we did with these strategic focus areas, and we did this actually in March when we presented to you. We translated that into the medium-term targets and how they relate to what we call an execution proof points. And those proof points where the delivery of cost savings, our persistency variances, our new business volumes, getting traction in OEM Bank and OEM margins and returns. And so it's -- those are the lead indicators that will ultimately get us to the lag indicators of our medium-term targets. And so I want to spend a moment just talking about each of those and where we are in terms of executing against those targets. Let me first say that I am very pleased with -- I think 12 months is a long time, but when I was talking to 12 months ago, I was talking about how we were restructuring the group, we're creating our clusters. We're creating end-to-end accountability, giving people line of sight targets and really creating a management machine that would be driving towards execution. And we have a growing confidence and in fact, a high conviction that we're already seeing that machinery at work. I see it in our quarterly cycles, see it through incentives. We see it through the execution that's coming through in the businesses. So I think a very high degree of alignment around these priorities, and you can see it in the results we're producing. On cost savings, we talked about ZAR 1 billion by the end of this year and ZAR 2.5 billion by the end of next year. We are at ZAR 1 billion already virtually completed by mid this year, so on track for those cost savings. On persistency, a very significant decisive actions that have been taken, actually on -- particularly on new business, but also on collections in MFC on distribution incentives, areas of loss-making business. So we have conviction that we're starting to see those come through. Q1 was -- was still there were some -- we signaled to you in the operating update, still some negative persistency variances but it really came through in line with bases in Q2. And overall experiences variance is healthy. So we are confident that the basis changes we made are going to be appropriate and that actually the management actions we've got in place are starting to work and not getting us to where we need to be. From a new business perspective, we talked about it. I just -- I talked about life APE sales and growth flows, but I'll also call out OMLACSA investments, where growth flows are up 48% and largely within OMIG and future growth. In OEM Bank, we are up to -- at the end of June, it was about 750,000 customers. We will cross the 1 million customer threshold in the next couple of weeks. We had deposit growth to ZAR 1.4 billion. In June, we are at the end of August at ZAR 1.6 billion. And the progress in kind of integrating Old Mutual Finance and OEM Bank, which I'll get in a second, that has progressed well. We really have created an organization that is a much more fully fledged all-rounded banking proposition than what it was a year ago. Finally, in OMART, there have been actions on pricing, on managing the portfolio, on driving sales. And so we are also seeing margins expand there from the underwriting margin, a significant improvement. VNB margin, we know with that VNB number, it is a volatile -- it has been volatile historically. But certainly, the management actions are there, and we've seen an improvement in the margin up to 2% for the half. So I want to spend a moment on OM Bank because I think, clearly, in all of the execution pieces, OM Bank is a major growth initiative for us, and it is a key differentiator for us as we move into that generating growth phase of our business. And so this is just an illustration of the on bank ecosystem and how we're positioning OM Bank, the Old Mutual ecosystem, how we're positioning Old Mutual Bank as as a kind of anchor in that ecosystem. And so it's not just a digital stand-alone banking proposition, but it actually works through the whole system of points of presence where we've got 7,200 retail intermediaries in South Africa, 357 branches that are now integrated -- fully integrated into the bank. We've got 40,000 work sites. We've got opportunities to create integrated propositions across the stack, across Life & Savings and OM Insure into OM Bank, just an illustration there of the opportunity set we have of ZAR 140 billion of inflows and outflows that go through our group through Life and Savings. And then our 3.4 million reward members and increasingly, those redemptions happening through OM Bank. So the clarity that I want to bring this morning is on the -- we've spoken previously about breakeven in 2028 for the Bank on a monthly basis. We are now looking at this as a cluster. And so we're looking at OM banking cluster RFO targeting north to ZAR 200 million in annually in 2028, and giving you a breakdown of what are the key targets that we need to hit to achieve those numbers. And so talked about customers. We haven't changed the target for customers of 2.5 million, 2.8 million. The levers there are -- we've got -- it's ultimately about NIR there, and we've got bundled rewards and bundled products that we can drive, have extended value-added services, our non-advice funeral proposition that we can scale. And so that's the opportunity set there. In terms of growing retail deposits, we are well on track and pleased with our progress in retail deposits, but we're targeting ZAR 8 billion to ZAR 10 billion by the end There, it really is around leveraging Old Mutual distribution, in particular, repositioning our MFC savings proposition, launching fixed deposit products and the like. From a lending point of view, we have a lending business, of course, in Old Mutual Finance, that is largely our lending business as a personal loans business. We want to scale that from the ZAR 16.4 billion currently up to that sort of ZAR 23 million to ZAR 26 billion range. And importantly, we're going to be supplementing our kind of -- that strong personal loans business of about ZAR 15 billion, scanning it also in other areas. So secured lending, investment bank loans, home loans and credit cards. And we want to grow that portion of the lending business. Again, part of the scheme of building out OEM banking as a much more fully fledged all-rounded banking proposition. I want to now turn to the operational review and just spend a moment on each of the clusters and some of the business units before I hand over to Casper for a more detailed financial review. On Mutual Life & Savings, it's a significant part of our group. So pleased there with Life AP sales up 21% and VNB, up 47%. We've spoken about VNB margin and VNB margin, obviously, being under some pressure across the market with reduced guaranteed annuity sales. But importantly, if you look at this VNB actually as a percentage of opening GEV and a percentage of RoGEV actually significantly advancing. If we go into each of the underlying business units, wealth management and corporate standout performers in this half within Life & Savings. Wealth Management, of course, now having 10x investments included in that business, we are delighted with that business, and it really is going to become an important part of our proposition going forward. But sales there growing 21%, VNB margin also ticking up to 1.1%. On the Personal Finance side, and I want to iterate here, Personal Finance sales more muted. You've got to remember that both Personal Finance and Wealth Management are actually -- and this is in line with peers, are part of a unified distribution engine. So we are, overall, in the Personal Finance and Wealth segment, we are pleased with sales in general. There has been a tilt in mix more towards wealth management products, particularly from guaranteed annuities into linked annuities but comfortable with the progress there. If I then look at the other 2 business units within Life & Savings, Mass and Foundation, Life and Funeral sales up 9%, which is good. We are certainly calling out that the management actions that we're taking, and it's particularly primarily on new business is, we are targeting loss-making areas of new business that we do believe will moderate sales somewhat in the second half. But that's all in the -- that is in the pursuit of value accretive activity and value accretive new business. That margin, that's the primary actions to drive the expansion of that margin again. You can see we reported the VNB of 4.5% for Mass and Foundation last year. That has actually what we've done now is we've moved credit life into the bank because credit life along with lending is sort of key profit driver within the bank. And so looking at MFC on its own, that 2.5% for the half, and that's the that's the piece where really we're looking at both persistency and management actions there, but also ultimately expenses to make sure that we have a healthy margin there. Corporate standout performer for the half, and this really is the leading -- the leading operator in its segment and very pleased both with margins and with volumes in this business. We have called out with these large schemes, there is a kind of nonrecurring nature to some of that, but the business is lumpy, but very pleased with progress. Old Mutual Banking, this is now the cluster together. You can see that I've talked about the clients and the deposits. Our loans and advances are flat for the half. You will see there was some additional credit provisioning within Old Mutual Finance. We are looking to grow this business from here and to drive -- increasingly drive lending through the bank and start launching lending through the bank in the second half of this year. And then just pointing you again to that combined RFO picture, where we are moving towards targeting that from breakeven to ZAR 200 million in 2028. And again, just pointing you to those levers that I pointed -- that I showed you earlier. Those are the real markers to see that we are tracking from a revenue and a cost perspective to be able to hit that breakeven. [indiscernible] investments a strong half, gross flows up 48%. That actually excludes alternatives because alternatives capital raises actually are not in gross flows. Alternatives also having an excellent capital raise, 97% up to ZAR 6.7 billion. That is a fantastic business, but also then looking at these gross flows in asset management in OMIG and in future growth, very, very strong. Assets under management, flat over the period in line with markets but RFO up 40% and partly as a result of this growth in non-annuity revenue. And so very pleased with the performance of the investments cluster. [indiscernible] ensure it was a tougher period this half than it was in the prior period from a sort of -- from a large claim perspective. There were floods, flood claim, catastrophe claims that came through I really believe that the 7.6% underwriting margin is a very resilient performance actually in this half. I have been quite bold. I know in my investor meetings telling you that I believe and I -- back in a previous life, I had once run a motor insurance business, I do know what the levers are of success in a business like this and the foundations that have been put in place through data and through operations, both all the way through from pricing and underwriting claims and claims management, I do believe the foundations we've got in place in this business now set us up to be more competitive going forward to be able to grow our business. So while sales were muted at 5% for the half, we are already starting to see underlying growth come through that I believe will have a better outcome and stronger growth in the full year. As it was for this half, we had strong growth coming in through from generic and from One financial services, which has supported the number. But overall -- and this is also the business which has led our group on the implementation of AI where its AI program is actually well 3 or 4 years and its data program 3 or 4 years into implementation. And I think that's part of the results that we're seeing, which notwithstanding a claims ratio going from 47% to 50%. I think a number of years ago, that would have been a very difficult thing to manage through for this business, but we're seeing it come through with resilience. And then finally, Old Mutual Africa regions, sales up by 35%, and this call out on margins being a big focus. So whilst that margin is volatile in Life, we're pleased with the performance there to getting us to 2%. And on the short-term side, that, again, the implementation of focus on margins, pricing actions, looking at renewals, looking at how you manage your portfolio, it did result in some pressure on top line, but we believe well worth it when you look at how -- the impact that will come through in margins. So overall, before I hand over to Casper, I think I'm pleased we are where I had hoped we would be at this half. I'm very confident that as a team, we are focused as a business and there's a growing confidence internally that the machinery, the green machine at Old Mutual is focused on the delivery of the key proof points in our business. And I think that you'll see more of that now from Casper's presentation. Over to you, Casper.

Thank you, Jurie. I will now take us through the financial review, focusing on earnings, value and capital. And starting with earnings. We have seen robust underlying operating growth in results from operations or RFO even after our deliberate to increase investments in OM Bank. We have assessed our forward-looking medium-term earnings profile and the 11% increase in RFO per share is within our target range of 10% to 14% sustainable growth per share based on our 2025 base. The 11% growth was supported by improved operating performance in our mutual investments and Old Mutual Africa regions and reduced shareholder costs in other group activities. . Turning to the class-specific RFO performance and starting with Old Mutual Life and Savings, which was up 4%, Mass and Foundation increased by 19%, which was largely due to the strengthening of the long-term persistency basis on our funeral book in the prior year and was further supported by improved mortality and persistency outcomes, partially offset by negative IFRS economic variances during the first half. Personal Finance RFO decreased by 11%, mainly due to negative IFRS economic variances, partially offset by positive mortality and persistency experience. Wealth Management profits increased by 49% due to stronger revenue from higher average assets under management, a change to the retail margin agreement with wealth retaining 70% of the retail margin previously reported by Old Mutual Investments. This represents the margin on assets managed on behalf of wealth clients, better aligning revenue with the management of those assets. And mutual corporate RFO decreased by 8%, largely due to flat IFRS economic variances in the current period compared to the strong positive contributions from markets in the prior period and was partially offset by positive mortality and morbidity variances. We continue to see the benefits of our diversified Old Mutual investments business with our diversified revenue streams driving strong operating growth. Results from operations increased by 40%, largely due to a significant increase in non-annuity revenue supported by higher preferred returns and fair value gains. A net revenue grew by 6% to ZAR 1.5 billion due to increased fund commitments and portfolio growth. This is a particularly good result in light of the change to our retail margin agreement I mentioned earlier, which impacted annuity revenue. Results from operations in Old Mutual Insure decreased by 25%, reflecting lower underwriting earnings relative to the strong prior period's outcome and a reduction in investment returns on the insurance funds. The insurance service results decreased by 21%, driven mainly by elevated catastrophe losses of ZAR 376 million net of reinsurance due to the severe flooding events in the East and Western Cape in quarter 2. Our net underwriting margin remained resilient at the up end of our target range. Old Mutual Africa Regions RFO, increased by 65%, driven mainly by growth in Malawi and East and West Africa. Our Malawi operations continue to face challenges brought on by high levels of inflation and foreign currency shortages. While exchange rates did influence lari's results, the underlying performance in Malawi remains strong across all lines of business, reflective of management's response to the economic environment. Results from operations in East and West region increased from ZAR 10 million to ZAR 125 million driven by improved performance in all lines of business, except banking and lending. Zimbabwe remains an important business of substantial scale. But due to the inability to access capital, we have ring-fenced their results since 2019. And we have excluded the results from adjusted headline earnings, RoNAV and other group KPIs. We have made material progress in addressing these constraints with improving conditions supporting potential inclusion in our group results, subject to achieving the required capital repatriation milestones. Zimbabwe saw strong equity market performance in the first half of 2026 with higher investment returns being the main contributor to the growth in adjusted headline earnings. We will continue to assess cash generation, fungibility and the macro environments and will provide an update at our 2026 annual results. Shareholder operational costs decreased by 57%, with the prior year, including a ZAR 440 million restructuring provision. Excluding the one-off restructuring provision, shareholder operational costs reduced by ZAR 225 million or 31%, driven by our commitment to a lean corporate center. The reduction of treasury contribution relates to lower interest and cash balances and a once-off impact related to a tax provision unwind in the prior year. In addition, our asset liability program outcomes, although in line with targets, were lower than the prior period. As I outlined in our 2025 annual results, cost savings are being tracked through a two-pronged approach. Firstly, savings will be evidenced through improvements in our key efficiency metrics over time. Secondly, we are tracking to total savings by reconciling our IFRS expense base in the financial statements to our controllable expense base with detailed reconciliations provided from 2024 through to June 2026. As outlined in this waterfall, controllable expenses are then reconciled to our achieved net savings after allowing for inflation, foreign currency movements and one-off costs to save future costs, which are removed in the subsequent year. This waterfall also adjust for business boundary changes to controllable expenses with the only adjustment being the impact of 10x. For the first half of 2026, we achieved savings of ZAR 338 million. This takes our cumulative savings to ZAR 936 million, while on track to achieve savings by the end of 2026 of at least ZAR 1 billion. We highlighted 2025 savings of ZAR 450 million at our 2025 annual results. This was an initial view with actual 2025 savings at ZAR 598 million post completion of our IFRS expense reconciliations. Adjusted Headline Earnings or AHE per share was down 27%, driven mainly by shareholder investment returns being below what we would expect on a normalized basis. Overall, South Africa shareholder investment returns were in line with strategic asset allocation return benchmarks with the additional reduction below the benchmark return being driven by active bond positions taken to increase bond duration and reduce solvency volatility. Year-on-year, IFRS profits reduced, impacted by the reduction in adjusted headline earnings, which was partially offset by a substantial increase in Zimbabwe's IFRS profits due to higher investment returns. Now moving to value. Group equity value, or GEV per share increased to ZAR 20.66 with grossing value exceeding distributions and the per share GEV is supported by the completion of our share buyback. We saw solid growth in our covered business and in our Property & Casualty business reflecting the resilient underlying underwriting performance in Old Mutual Insurer. Banking and lending was flat, reflecting continued pressure on consumers and the deliberate focus on sustainable risk-adjusted growth in Old Mutual Finance as well as the reallocation of our mutual specialized finance to the other lines of business. The reduction in other is mainly due to the completion of the remaining ZAR 2.3 billion of the share buyback. Our RoGEV for the first half was 12.7%, improving from 4.1% in December. This was driven by strong growth in covered EV being offset by lower growth in non-covered banking earnings. Total embedded value operating earnings was ZAR 4.8 billion, resulting in a strong annualized return on embedded value of 15.3%. This was driven by higher expected existing business contributions and the higher new business contributions, positive risk experience across the business and the one-off impact of mass lapse reinsurance in our mutual corporates, at the end of 2025. Our group value of new business increased by 32% to ZAR 569 million, whilst our value of new business margin increased to 1.4%. As you will see in the graph on the left, our margin improvement was driven by strong sales volumes, particularly in Old Mutual Corporate, Wealth Management and Old Mutual Africa regions and was further supported by more profitable new business mix. These positive impacts were partially offset by the negative impact of lower opening yield curves during the period. Moving to the Contractual Service Margin, or CSM. This represents the store of future life profits for the bulk of our Life business. New business written in the first 6 months of 2026, increased the contractual Service Margin by ZAR 1.7 billion and was further supported by interest on the CSM and positive experience variances. The allocation rate to profit was 5.9% for the first half at the upper end of our expected range of 8% to 12% annually. Now turning to capital. Our horizon-based approach guides decision-making as we seek to optimize RoNAV in the shorter term and generate growth and value in the longer term. Capital allocation decisions are based on our RoNAV delivery aligned to the 2 value creation phases. On a normalized basis, we remain in Horizon 1, below the 15% to 17% target range, and we will continue to prioritize shareholder distributions and only consider deployments of capital that are tightly coupled to strategy and are time-sensitive. As RoNAV improves into horizon 2 and 3, our focus will shift towards generating growth where other opportunities to deploy capital will be considered. We expect cash remitted to be between 70% and 80% of adjusted headline earnings before optimizations and special dividends. We have seen sustained cash generation in line with our target ratio during the period, with the prior year benefiting from significant optimizations. The comparative reduction in OMLACSA was due to a lower capital ratio reported at December 2025, resulting in lower dividends. This then brings us to our discretionary capital balance, which reduced to ZAR 3.1 billion driven mainly by the completion of the ZAR 3 billion share buyback with the balance of ZAR 2.3 billion being settled during the period. Our discretionary capital balance of ZAR 3.1 billion includes an expected capitalization of OM Bank in 2026 and 2027 of ZAR 2 billion, in line with plan and ZAR 1 billion has been earmarked for the Board-approved share buyback. Looking forward to the end of the year, the discretionary capital is expected to remain robust, driven by cash remittances from subsidiaries and we expect at least 50% of the declared ZAR 4 billion OMLACSA interim dividend to add to discretionary capital in the second half of the year. This discretionary capital balance will be available to return to shareholders, all fund growth opportunities in line with our horizon-based capital application framework, and we will provide an update on this at our 2026 annual results. Return on net assets really was supported by robust underlying growth and results from operations and the completed share buyback. As we signaled at our 2025 annual results, we will now target normalized RoNAV, which adjust for the difference between actual and expected returns. OML shareholder solvency remains within our target improving by 10% from December to 172% at the end of the June -- at the end of June. The improvement was driven mainly by the issuance of subordinated debt and and further yield curve movements. The ratio also benefited from weaker equity market performance, which resulted in a reduction in the prescribed equity stress. These positive impacts were partially offset by the allowance for foreseeable dividends, which include the OML interim dividend and the announced ZAR 1 billion share buyback. Following the issuance of ZAR 1.8 billion of debt in half 1, 2026, the OML gearing ratio ended at 16.9% and within range. We will continue to optimize our capital profile and gearing ratio to ensure the efficiency of our balance sheet. Whilst we have updated our solvency ranges, the interim dividends for OML and OMLACSA were based on the old solvency ranges. For OML, the lower bound of the range decrease from 155% to 150% and the upper bound from 185% to 180%. And for OMLACSA, the range changes from 165% to 200% to 150% to 180%. The width of the range caters for interest rate volatility as we saw during the course of the last 9 months. We will report again, against these new ranges for our 2026 annual results. And with that, over to you, Jurie.

Thanks,Cas. I think just moving on to some -- the outlook and some reflections. I think to emphasize to you, I think we have a growing confidence internally. I have growing confidence around the traction we have towards implementing our strategy, and our execution proof points. What we've got here in this final slide is just a summary of where we were on those key targets for financial year '25 for the full year versus the half year 2026. And you can see there a traction and progress on those key metrics, the RoGEV going from 4.1% last year to 12.7%. The dividend continuing a healthy growth rate, 8.1% growth, normalized RoNAV going up to 12.6%. Both RoGEV and normalized RoNAV not yet in the ranges that we've set for them, but we do believe that we are tracking along in our where we had hoped to be at this point. VNB margin was going from 1.2% to 1.4%. Clearly, there are headwinds in lifting VNB margin and guaranteed annuity sales, which is an industry-wide phenomenon is part of that. So there's lots of more work to be done to lift VNB up to that VNB margin, up to that 2% to 3% range. And then finally, net underwriting margin of 5% to 8% and despite what was a tougher half actually coming in at 7.6%. Our execution proof points, we will be coming back to those half after half until we have fully achieved what we set out to do. And the message for this morning is that we are on track with each of those as we set out in the slides earlier. I do want to just emphasize a couple of things that were part of Casper's presentation. The sustainable RFO per share growth of 10% to 14% that we're targeting of the 2025 base and that we are in range at 11% for this half. The ZAR 1 billion share buyback that we've announced this morning, which reiterates our confidence in the value of where our share is currently trading relative to GEV. then looking forward, the ZAR 4 billion OMLACSA dividend in the second half, of which ZAR 2 billion at least will contribute to discretionary capital. And then finally, also forward-looking, the reduction in solvency ranges in OMLACSA and in OML, which will further support our efforts around capital efficiency. So I think to summarize, we are progressing, we have a growing confidence and we are where we'd hope to be. But of course, the work continues. I am confident that the Old Mutual execution machinery that we've put in place is starting to progress and that we're seeing traction. So with that, I'm going to hand back to Langa, I think, Langa for Q&A.

Thank you very much, Jurie Strydom, by moving us through the position so efficiently together with Casper. Casper may I kindly ask you to please join Jurie on stage for the Q&A. As usual, we will start by taking the questions on the quarter's call. We will permit just 2 questions per pain. If I may ask those who are online who have queued up to take the calls to please introduce themselves, mention the name of the firm. And if you may kind of just direct the question to either Jurie,,Casper or Ranen here on stage. If the question is not so clear, I will handle it. I will take 2 rounds of these questions. And if we still do have time, we may have a bonus one question per person. We will see where we land with the questions. At this stage, if I may ask the operator to just please remind us on the procedure to take the questions.

[Operator Instructions] We have a question from Harry Botha of Bank of America Securities.

Well dome on the bank's customer growth, I think in the '25 results, you gave active customer numbers or percentage, I think it was 62%. So are you able to share what percentage of the 784,000 are active? And just to, I guess, confirm have all the 500,000 existing customers transferred over? Could you also possibly share any details of the new customers that you're adding within that customer base? And then second question is just on the 10x impact in the second quarter, please, if you could possibly share the impact on our RFO, please?

Thank you. I will ask Jurie to start and Ranen, if you may jump in.

Yes. So I mean there's a there's a couple of questions around customers in there. We are acquiring about half our customer acquisition is new to Old Mutual, and about half is existing. And I think that activity rates, clearance that's in our 2028 numbers, is it a 35% to 38% activity rate. And I think we're sort of tracking -- we're tracking with a rapid customer acquisition, I think we're tracking just below that, but I think we're on track. I think on 10x, maybe I'll ask Casper to comment.

We haven't disclosed the 10x. We will look at whether we disclose that on a forward-looking basis. .

Thanks. Next question, please.

At this time, we don't have any other questions in the queue.

Okay. I will take some questions that have come through online in the meantime. We have a question from Thapelo, Investec. Thapelo likes to know, are you able to quantify the level of cat losses in the short-term insurance so we can get a better understanding of your additional performance.

We do have, I think, [indiscernible] on the line. [indiscernible] if you are able to come through to just give a comment on that question.

We've had ZAR 376 million in catastrophe losses from the storms in May and yes, that effectively translates to our attritional performance being better in H1 2026 than in H1, 2025. So actually, the business's underlying performance has improved materially. That ZAR 376 million translates to about a 3% underwriting margin delta, if the storm didn't occur.

Thank you very much,[indiscernible]. I will also just continue with the questions. The next question is from Baron from JPMorgan. He says, in all mutual investments, how should we think about the durability or sustainability of the alternatives, non-annuity revenue.

Zulfa, please.

Thanks, Baron. I was going to stand on that side. But I'm happy to stand on this side. We do have the benefit of the [indiscernible] business delivering a non-annuity revenue and the level of non-annuity revenue. It is, of course, lumpy. The way we plan for that is that effectively, we look at the potential fund life cycle that we have in our existence when they look effectively are paying out and what the performance is. So we do anticipate a level of some non-annuity revenue. The timing of that, of course, is dependent on when those funds exit. And this year, we did have some exits earlier than we anticipated. So I'm expecting some of that to taper off just where we are in some of our funds at the moment. But we do continue to see a level and expect a level of non-annuity revenue.

Thank you very much, Zulfa. We'll continue with the questions coming in. We've got a question from [indiscernible] from Standard Bank. Firstly, she says, congratulations Ranen and congratulations for the operational performance of the business. The questions, may you please give us more insight on which specific line of business in Malawi contributed positively to RFO increase? That's the first question. I will throw that to you, Casper. Second question is on -- still on OML. Clement, th GWP increase of 3% is relatively modest. Is there a view to grow the market share. Three, may you please give us insight on what makes up the central cost and how we should think of this going forward. So there are 2 questions for you, Casper, and one d1 for Clement. .

There's some color on Malawi, we did see [indiscernible]. So we saw a slight deterioration in what we see as our management view of the exchange rates, and that's the rate we can express cash from Malawi. We saw markets down actually about 12% in the first half. But as I said, we saw improved performances from all our businesses. So the Life business in particular, and the banking business performed very well.