Old Mutual Limited (ODMUF) Analyst/Investor Day Transcript

Old Mutual's Capital Markets Day unveiled a strategic plan focused on value creation and growth, targeting ZAR 2.5 billion in cost savings by 2027 and new financial goals including a 14-16% RoGEV and 6-9% dividend growth. The company announced the ZAR 2.2 billion acquisition of 10X, a leading direct-to-consumer passive investment platform, to bolster digital offerings. Updates on Old Mutual Bank highlighted rapid customer acquisition (150,000 active, 5,000 daily sign-ups) leveraging the group's extensive network, with a goal of monthly breakeven by 2028. This strategy, supported by a new cash-generation-based dividend policy and a horizon-based capital allocation framework, prioritizes shareholder returns (including a ZAR 3 billion share buyback) in the current value unlock phase, alongside strategic investments.

Analysis

Old Mutual Limited (OTCPK:ODMUF) presented a focused strategy at its 2025 Capital Markets Day, targeting ZAR 2.5 billion in cost savings by 2027, including ZAR 1 billion by 2026, a 10% reduction from its 2024 base. New medium-term financial targets include a 14-16% Return on Group Equity Value (RoGEV) and a 6-9% rolling three-year dividend per share growth, underpinned by a new cash-generation-based dividend policy. This aims to enhance transparency and address historical shareholder value underperformance.

Key growth initiatives include the ZAR 2.2 billion acquisition of 10X, a direct-to-consumer passive investment platform, bolstering digital offerings and capturing market share in a high-growth segment. Old Mutual Bank is showing strong early momentum, reporting 150,000 active customers and 5,000 daily sign-ups, leveraging the group's extensive distribution network. The bank targets monthly breakeven by 2028, driven by a low-cost, technology-first approach and a "land and expand" customer acquisition model.

The company's horizon-based capital allocation framework prioritizes shareholder returns, exemplified by a ZAR 3 billion share buyback, during the current "value unlock" phase (Horizon 1). Operational focus for the Life & Savings cluster includes recovering VNB margins, particularly in Mass and Personal Finance, through proposition enhancements, cost efficiencies, and improved persistency. The integrated Old Mutual Rewards program is expected to drive cross-selling and customer stickiness across the banking and insurance segments.

Key Decisions for Investors

• Monitor execution of the ZAR 2.5 billion cost savings and the achievement of the 14-16% RoGEV target, as these are critical for long-term value creation.
• Evaluate the integration and performance of the 10X acquisition and the Old Mutual Bank's customer growth and path to profitability by 2028, given their strategic importance to digital and market expansion.
• Assess the impact of the new cash-generation-based dividend policy and the horizon-based capital allocation framework on future shareholder distributions and capital deployment decisions.
• Watch for improvements in VNB margins within the Life & Savings cluster, particularly in Mass and Personal Finance, as a key indicator of operational efficiency and profitability recovery.