Old Mutual Limited

Good morning, everyone, and welcome to our half year results for the period ended 30th June 2025. I am Langa Manqele, the Head of Investor Relations for the Old Mutual Group.

Today, we will be taken through our presentation by our new Group CEO, Jurie Strydom, and he will be joined on stage by our Group CFO, Casper Troskie, to present the results. As a reminder, Jurie served in the OML Board as an Independent Non-Executive Director prior to joining the group.

We are pleased to have Jurie on board. As you can see on the screen right now, our results can be accessed directly on our website using the QR code that is presented.

And we are pleased to also announce that we have added some additional disclosures on segmental CSM and EV. Turning into the agenda for today.

Jurie will kick us off with the CEO update, followed by the highlights, which will also include the segmental overviews. Casper will then take over from there to provide the financial review.

After which, he will hand over to Jurie, who will come back on stage to cover the outlook and the concluding message. I will then take over from there to facilitate the questions-and-answer session.

And at that point, I will ask the operator to just remind everyone about the procedure for asking questions over the Chorus Call as per the norm as well as for submitting written questions over the webcast. And with that, I'd like to hand over to Jurie.

Thank you.

Good morning, everyone. It's great to be with you.

My name is Jurie Strydom. My first set of interim results.

I've been in the job for just about 100 days. We're talking the proverbial 100 days, just over.

But what a privilege for me to be here and delighted to present these to you. I think we thought that given the fact that it's 100 days, we would start with just doing a little bit of a CEO update, giving some clarity on some of the things that we've been talking about internally and that we've aligned upon internally from a strategic point of view and to give you a sense of where we're going before we move to the financial highlights.

I think first, just to give a real credit and thanks to the Old Mutual team internally and externally, external stakeholders, staff, leaders just for the warmth that I've received in coming into the group role. And particularly, Iain Williamson, I think just thanking Iain.

Iain, thank you for all those coffees and handover conversations and transitions. So I think because we've had a smooth and effective transition, I think we are in a position relatively quickly to give you some clarity on really what are the key focus areas for us as a group going forward and what are the significant shifts that we're making.

I think the first thing to highlight is a shift towards really understanding what we mean by creating shareholder value and a focus on creating shareholder value. And you will see that we are moving towards a pivot to group equity value, return on group equity value and cash generation as our strategic KPIs.

And those are -- we will give you more detail on those at the Capital Markets Day. We are prioritizing a Capital Markets Day for quarter 4, and we will firm up the date for that shortly.

I think if we start to think about the shareholder value creation, there are a couple of things that immediately stand out. I think earning the right to deploy capital for us as a group is key.

And I think you'll see -- later on when I get to that slide, you'll see a reference to our multiple 3-year capital horizon framework that will give you a good sense of how we think about earning the right to deploy capital. I think the second key element is demonstrating resolve on cost.

I think as you'll see also in our results that there's a real focus on generating margins as a key driver of returns going forward. Now as we move into that, a key element, of course, is in sharpening execution.

And you will see already from the 1st of August that we've made some significant operating model changes. Now these operating model changes are really designed to create a sense of clarity on the role of the group as capital allocator and looking after some -- the deployment of capital and governance and as a result of that, moving towards a leaner corporate center.

But at the same time, moving towards the creation of clusters that are able to operate in the different segments in an empowered and accountable way. We want to create end-to-end value chain to enable the achievement of group targets to be cascaded down into clusters.

We believe that the simplification of the structure for the group is going to go a long way to enable us to be competing better in each of our segments through the clusters. So you'll see the watchwords of accountability, execution, delivery.

I mean, these are the things that we're talking about internally, and that -- you'll see that coming through very strongly, I think, in the conversations we have. Just to confirm then the changes we've made in the operating model from the 1st of August, you'll see the appointment of Prabashini Moodley as the CEO of Old Mutual Life and Savings.

Old Mutual Life and Savings is the cluster of 4 of our largest businesses that are at scale in the South African market: the Mass and Foundation, Personal Finance, Wealth Management and Corporate. And that really is signaling a need for us to simplify our structures and to -- within Life and Savings, really double down on the scale that we've got in those businesses, and we'll talk more about that in a moment.

And then Clarence Nethengwe, of course, the CEO of OM Bank being given executive oversight of Old Mutual Finance and Old Mutual Transaction Services. So those are the initial moves.

And I think -- and so the implementation of that is running over the course of this year. And I do believe that being able to move quickly with a smooth and effective transition and to be able to align around these issues is enabling us to actually catch our planning cycle, which, of course, kicks off in Q3 and Q4, and puts us in a position gives us a bit of a head start in terms of mapping out what we want to do for 2026 and beyond.

I think these 4 key focus areas really capture, I suppose, our priority from a competitive and from a capital allocation point of view. As we think about value creation, I mentioned earlier that we really are focused on what value creation means for us.

We see it for Old Mutual in 2 buckets. The one is a value unlock bucket, and the second one is in generating growth.

They are, to some extent, overlapping, but there's also an extent to which it's sequential. And so our first focus area is driving competitiveness of our South African business.

There, it's really about improving margins, delivering efficiencies, executing the basics well. We do believe that creating end-to-end accountability and the cascading of targets clearly and simply down into the businesses is going to make a big difference and going to be able us to both improve margins and also drive market share recovery.

I think when we look at our OMAR region, owned by the Africa regions, we're drawing a distinction between our Southern African businesses where we have been present for a long time, a market like Malawi, we've been in for 70 years. And there, we see ourselves building scale in those markets, really being able to extract value from -- and margin from our key positions and our brand positions in those markets.

So we see that as a particular area for the future. And then as we move -- and we do think that there's a value unlock opportunity there as well.

We do think that we can improve the margins and the returns in those Southern African markets. Then as we move into the space of generating growth, OM Bank is, of course, a key initiative for us.

One of the big pivots you've seen -- will have seen from 1 August is an acceleration of moving towards leveraging our group assets in this space, and I'll talk more about that when I get to that section. And then finally, I think looking at our growth markets, we do -- we acknowledge that getting into growth markets is tough.

It hasn't always been easy for us. You've got to break new ground.

You've got to establish yourself in a new market. And so we're calling out the -- kind of evaluating and pivoting in those growth markets.

That's, of course, referring to East Africa, West Africa and China. And what we're focused on there is really a turnaround in margins and in returns in those space in order to justify allocating more capital.

And so again, earning the right to deploy capital is the key phrase there. I think in terms of capital allocation, I referred to this earlier as giving you clarity around how we think about our capital allocation framework, and we've broken it up into 3 horizons.

And those are really driven by where our returns are relative to targets. So you'll see there, relative to the 15% to the 17% target range, whilst in this half, we have achieved 15.5% return, of course.

That has been buoyed by returns, I mean, in equity markets. If you normalize for that or allow for that, then actually that return is below the target range.

And so our aspiration is to move through these horizons into Horizon 2 and ultimately Horizon 3, where we really are in value-accretive territory from a return point of view. And so our capital decisions will be guided by where we are, in which horizon we're in.

You will see this morning that we announced a ZAR 3 billion capital share buyback. So that is a demonstration of confidence that we have both in our own balance sheet as well as in our business.

And I think you'll see us being determined to be really clear as we deploy capital in terms of how tightly coupled any opportunity is, to our 4 focus areas as well as the economics of each opportunity. Turning then towards the highlights.

I think just reference to the macro environment first. We, of course, have mentioned the role that equity markets have played, most notably the market in Malawi.

And of course, there is an inflationary element to that. But I think if you look through to South Africa and you look at the local environment, we do see what we're calling, I suppose, a constructive outlook.

We think it's constructive in the cycle. There's been an improvement in consumer confidence and also an easing of interest rates.

And so that's constructive. I think we would point though that particularly in the value unlock phase in Old Mutual, we do think that we are not necessarily reliant on macro tailwinds to implement some of the things -- some of the strategies that we're talking about.

So -- and I think we -- our outlook on growth in South Africa, of course, like everyone else, we are concerned about growth and lifting growth levels, and we will continue to play our role as Old Mutual with our partners in what we can do to alleviate the impediments to growth in South Africa. I think the highlights themselves, a few key points to make here.

I think the first is a strong earnings story, and 19% growth in RFO per share, 31% adjusted headline earnings per share. Both of those numbers strongly supported by equity markets and the turnaround at Old Mutual Insure, turnaround in the margin there, which I'll talk about in a second, supporting also a 9% growth in our dividend to ZAR 0.37 per share.

You'll see reference there to ZAR 18.40 is our group equity value per share. Just to call out that with the return on group equity value being a really important metric for us going forward, our primary value creation metric along with cash generation, we really are now focused on that as a base for us to generate returns.

Ultimately, our ambition is to achieve a return on group equity value that is value accretive in the sense of above our cost of equity. So calling out again the Capital Markets Day in quarter 4, we will be giving more detail on targets and more substance to this conversation.

But I think to focus on the ZAR 18.40, there have been some assumption and methodology changes that have come through in that, the most notable of which is the adjustment to the assumptions for MFC persistency. Now the pressure on persistency has been present for a number of years.

We have been -- we've taken a look at this half at the extent to which we think there's -- it's a structural change in the market. We do think that there's some significant structural change.

And so the lion's share of that negative variance has been brought in to our assumptions. And that then if I go to competitiveness and efficiency, you'll see is the biggest impact in taking value of new business margin, down to 1.3%.

So I think at that level, 2 stories. On the one hand, in the Life and Savings world, Life APE only up 1%.

I think we've had pressure on that along with many of our peers, particularly a pullback in guaranteed annuity sales in South Africa, which have been strong for the last couple of years. But it's really that margin and that is the thing that we're focused on and on returning that margin from 1.3% back into the range of the acceptable range of 2% to 3%.

And again, further detail to follow on that. I think the positive story for us in these results is the OM Insure outcome, and you can see there, significant improvement in underwriting margin from 0.9% last year in the half to 9.7%.

And I think that whilst we acknowledge that there's a market element to this, and you will see that in our peer group, of course, significant -- also improvements through the cycle, and we think we are in a good place in the underwriting cycle, we do want to call out the operational improvements that have happened in our business that we believe gives us sustainability to our position. So just spending a moment then on each of the clusters.

This is the Life and Savings cluster, the first time I think that we really are presenting it as a business cluster in this form. Just to point out the scale of this business, the largest umbrella fund in South Africa, ZAR 187 billion.

The second largest in-force book by a number of policies. And a very large wealth management business, often an underappreciated scale of that business at ZAR 442 billion, assets under management and administration.

There has been pressure here, as I've said, on new business and in a persistency environment that has been particularly difficult in the Mass and Foundation cluster. So that's where that margin you see in for the cluster margin coming in, VNB margin coming at 1.4%.

But you'll see there -- I mean the real focus here is to be decisive on implementing our new operating model, driving through cost efficiencies as a first lever. Remember, when it comes to VNB margin, there's sort of 3 levers we think about.

The one is the cost efficiency, and the second is persistency, and the third is sales growth. And I think it's almost in that order in the near term and in the medium term that one can drive action.

And so a lot of action in that space, and we will be giving further detail on that in due course. I think in the banking space, we really just want to point out the considerable group assets that we've got in banking in South Africa.

We've got a ZAR 15.5 billion profitable loan book in Old Mutual Finance, a branch footprint of 346 branches through which we are originating credit. We've got ZAR 1.5 billion in money account deposits and almost 400,000 money market account customers.

So if I look at the banking strategy and the milestones, you'll see that in H1 of this year, we have gone live to staff. In H2, what we're doing is going -- we've been going live to -- going through our branches and gone live to the public through that process.

What we're essentially doing is activating our branch network, targeting our money account customers and in the process also have gone live to the public and so are -- able to also onboard new to Old Mutual customers. And so our focus here really is for the balance of H2 and also into 2026, acquiring customers and demonstrating traction in this space.

We have talked about guidance of ZAR 1.1 billion to ZAR 1.3 billion [loss] for next year and setting aside capital of ZAR 1.6 billion for the bank. So that's the guidance that we've given.

We will certainly be giving much more detail on the banking strategy at the Capital Markets Day. But suffice to say for now that the pivot to leveraging our group assets and cross-sell is a key part of our positioning that we believe is vital to our success in what is a competitive market.

Old Mutual Insure is a great positive story in these results. You can see there, the margin, which we've alluded to.

I think we would just point out to -- I've had the benefit of being on the Board actually as a nonexecutive of Old Mutual Insure for the last 18 months. And I think the fixing of business fundamentals, the operational turnaround is something that we would point to as well as obviously the benefit from the market.

And also the successful acquisition and integration of a number of strong businesses that have diversified our income streams in this business. And what we'll be looking for going forward is the sustainability of these earnings.

Old Mutual Investments, these -- I think, a credible 9% growth in RFO. The big standout here is the performance of the alternatives business, ZAR 3.4 billion alternatives capital raise, 33% growth in alternatives revenue.

So very strong and a market-leading business. We, in fact, have a portfolio of excellent businesses in Old Mutual Investments.

We are well aware of the OMIG fundamental SA equity performance challenge and track record. And so -- and this is a real focus for the team in OMIG in implementing their turnaround plan.

But besides that, also a focus on delivering on the strong credit origination pipeline that we've got. Old Mutual Africa regions.

I think, again, just drawing a distinction between the Southern -- strategically between Southern Africa and East and West Africa, but really just pointing out -- and whilst there's been a 13% growth in RFO and a lot of work has gone into optimizing the balance sheet and the repatriation of cash remittances from these businesses that has improved significantly, there has been significant pressure on top line and on margins. So muted growth in Life APE and on the short-term side, VNB in Namibia has had a difficult time in this half [with] changes in that market and also medical insurance in East Africa.

So a focus really here on cost containment, addressing pricing and underwriting and optimization of the balance sheet. So finally, I think just to highlight our commitment to sustainability has been recognized.

We recognized a leader in the space. MSCI, just to call out, has improved our rating from AA to AAA and also to celebrate our Moneyversity+ platform, our online education platform that's won the Tech Impact Award at the Africa Tech Week Awards.

So with that, I'm going to hand over to Casper to give us a more detailed financial review, and then I'll be back a few moments after that.

Good morning. Jurie, thank you for guiding us through the highlights with such clarity and insight.

I will now take us into the financial review, where we will go through our performance through the lenses of value, capital and earnings. And starting with value.

As Jurie mentioned, we are pivoting to return on group equity value or GEV as our key value metric. We are currently reviewing and refining our methodologies given the focus on return on GEV, ensuring that we have a robust foundation from which to drive growth.

In the current period, the change in GEV was driven by both business impacts and methodology changes. Business impacts included an increase in property and casualty valuations following sustained improvement in Old Mutual Insure performance and a decrease in embedded value following the persistency change in Mass and Foundation cluster.

Valuation and methodology changes included a reallocation of ZAR 3.1 billion in OMAR from covered to non-covered business. This did not have an impact on overall GEV but changed values across the lines of business, a change in the valuation of OM Bank, where we have adjusted the valuation methodology to reflect the unlock of value as we meet critical rollout milestones and embedded value assumption and model changes, which I will discuss later.

Total embedded value decreased due to high capital and dividend outflows of ZAR 7.7 billion and assumption and model changes amounting to ZAR 3.7 billion. Dividend and capital outflows included strong cash remittances from OMLACSA to the group, and which totaled ZAR 4 billion as well as the OMAR reallocations mentioned previously.

Assumptions and model changes included a methodology change of an increase in the non-hedgeable risk capital charge from 2% to 3.5% across the business and a business change following a comprehensive review of persistency experience, which identified systemic shifts in the funeral market in recent years. This has led to an updated long-term persistency basis, negatively impacting financial results for the period.

The annualized return on embedded value was 6.9%, supported by profitable new business, positive experience variances and partially offset by assumption and model changes. As Jurie already mentioned, our South Africa Life and Savings business was the primary driver behind the decline in the group's value of new business this period, resulting from assumption and model changes I just described.

Recovering our VNB and our VNB margin is a central focus area for us, and this is clearly reflected in our group's strategic priorities moving forward. Moving to the contractual service margin, or CSM.

This represents the store of future life profits for the bulk of our Life business. Despite the reduction caused by significant assumption and model changes, the CSM still increased driven by new business value and interest and positive experience variances.

Our annualized allocation to profit was at the upper end of the range at 11.6%. Turning to capital.

We remain committed to our capital management framework, consisting of considered capital deployment, balance sheet efficiency and balance sheet strength as a means of enhancing value and returns for shareholders. Our capital deployment decisions will be guided by horizons linked to our RoNAV trajectory, as Jurie described earlier.

We expect cash remitted to be between 70% and 80% of adjusted headline earnings before optimizations and special dividends. Ongoing optimizations drove strong growth in cash remitted from subsidiaries, representing 115% of adjusted headline earnings.

Our South Africa Life and Savings segment continues to be the leading contributor to cash generation for the group, while Old Mutual [Insure] turnaround in sustainable earnings also resulted in a healthy contribution. Discretionary capital increased by ZAR 2.5 billion after paying ordinary dividends of ZAR 2.3 billion.

This then brings us to our discretionary capital balance. We are expecting to capitalize OM Bank to the amount of ZAR 1.6 billion, which represents their capital needs for 2026.

The OMLACSA special dividend of ZAR 1 billion was approved by the Prudential Authority in August and will increase our discretionary capital balance in the second half of the year. ZAR 3 billion of discretionary capital is committed for the share buyback approved by the Board and the Prudential Authority.

Our current year RoNAV of 15.5% is within our target range, supported by earnings and ongoing balance sheet optimizations. Excluding higher-than-expected market returns, return on net asset value would have been 170 basis points below the target.

Our RoNAV, excluding the bank, was 18.7%. Moving on to earnings.

AHE was up 29%, driven mainly by shareholder investment returns, where equity market performance in South Africa and Malawi was substantially above expected returns. This was further supported by strong operating earnings growth.

Despite the increase in AHE, IFRS profits and headline earnings decreased significantly due to reduced profits from the Zimbabwean business after the transition of its functional currency from Zimbabwe gold to the U.S. dollar.

The impact on net asset value was limited as a result of lower currency translation losses reported in equity. We have seen a continued upward trend in RFO over the last few years, even after our ongoing investment in OM Bank with the following being noteworthy.

The turnaround in Old Mutual Insure, which has seen significant earnings growth, with material contributions to group earnings from OMAR over the last 3 years. And we have seen increased performance from our Life and Savings and Investment businesses.

Turning to segment-specific RFO performance and starting with the Life and Savings segment. Mass and Foundation declined by 15% as a result of the change to the persistency basis, partly offset by favorable economic variances and the one-off impairment on the Old Mutual Finance secured lending book in the previous year.

Personal Finance RFO increased by 40%, off a low base in half 1 2024, impacted by poor mortality experience and was further bolstered by positive economic variances. Wealth Management profits increased by 19%, reflecting the continued growth in average asset levels and positive economic variances.

And Old Mutual Corporate RFO increased by 8%, off a high base, following a [once-off] provision release in half 1 2024, a modeling change in our risk book and positive economic variances. Old Mutual Insure RFO saw excellent growth of 71%.

This segment is now sustainably contributing to group RFO and supported by good top-line growth and outstanding margin improvement. Whilst recent acquisitions have performed well, continued focus remains on expense management.

We continue to see the benefits of our diversified Old Mutual Investments business with consistent strong growth in alternatives, supporting our diversified revenue stream and profit outcomes with RFO increasing by 9%. Non-annuity revenue remains a major differentiator from our peer group.

This revenue is more volatile but provides substantial economic value through the investment cycle. Despite the pressure on VNB in our OMAR business, we continue to see a strong contribution from the Southern region.

This was across all lines of business, except property and casualty, where elevated weather claims impacted earnings. The increase in the Southern region is partially attributable to the inflationary conditions in Malawi.

The losses in our banking and lending businesses in East Africa reduced significantly as we saw the impact of the 2024 restructuring exercise in Faulu contribute to lower interest and operating expenses. Although we continue to see headwinds in our property and casualty portfolio across the regions, we are seeing the benefit from exiting our loss-making Nigeria businesses.

Net results from group activities no longer includes the investment in OM Bank, which is now reported under the Old Mutual Banking segment. Shareholder operational costs includes a restructuring provision of ZAR 440 million, which has been incurred to reduce future spending.

Excluding the restructuring provision, shareholder operational costs decreased by 6%, in line with our previous commitment. Interest and other income increased due to elevated cash balances and favorable fair value movements on financial instruments.

We have delivered a positive set of results and in particular, continued excellent results in Old Mutual Insure. Excluding higher-than-expected market returns, return on net asset value would have been below the target range.

Improving our value and efficiency metrics remains our top priority, including improving group RoNAV and VNB margins to be sustainably within our target levels and improving our RoNAV consistently over the medium term. Our capital deployment strategy remains focused on short to medium value enhancement, thereby maximizing returns on net asset value and investments will be carefully targeted to growth opportunities that directly support our strategic priority areas.

With that, over to you, Jurie.

Thanks, Casper, and thank you for going through those financial results in more detail. We just thought we would spend just a minute recapping on some of the key messages.

I think in essence, it's been a very positive period with a smooth CEO transition. I think it's been smooth and effective.

I think it's fair to say we've been able to move quickly on getting clarity and alignment as a senior team [and] at Board level and also increasingly in the business around the changes we wanted to drive. I think to summarize those sort of key changes, the one is a clear articulation around what it means to create shareholder value and a pivot to return on group equity value and cash generation as our key metrics.

We are clear on earning the right to deploy capital, which is linked to return on net asset value and also demonstrating result on cost where improvement in margin is required. I think we've made significant progress in implementing our new operating model that simplifies the group that creates, over time, a leaner corporate center and more empowered clusters to be able to cascade in a simple and understandable way, the key targets that we're driving as a business.

And of course, we have our 4 focus areas that we've spoken about. I think just to point out to the Capital Markets Day in quarter 4, we will be firming up that date shortly.

And there, you will see more detail on our financial metrics as well as the targets that we're looking to those metrics. Just to point out again, return on group equity value and cash generation really being our key value creation metrics and then what we're calling our efficiency and competitiveness metrics, which is new business volumes, value of new business margin and net underwriting margin and return on net asset value.

And I think highlighting, of course, in this set of results, the key role that the value of new business margin will play going forward for us to enable us to be able to move into the aspiration of achieving a return on group equity value that is above our cost of equity. So more detail on that to come.

I think with that, Langa, I'm going to move to you so we can move to questions. Thank you.

Thank you very much, Jurie, and thanks to you, Casper, for covering those 2 sections. We will now turn over to the question and answers.

As per the norm, I would like to start by just saying I will take the questions from the Chorus Calls. The questions will then be fed into the room by those who are already [queued] up on the call.

I'll then move on to take the questions submitted to us via the webcast. At this stage, I would like just to ask the operator to please remind us of the procedure for putting through the questions.

Over to you, operator.

Just a couple for me. First, [ thank you very much for ] the CSM splits, very helpful.

If I just look at the organic CSM growth, so new business plus interest accretion minus the CSM release, it looks like there's really very little growth other than Mass and Foundation, barely anything in Personal Finance and Wealth despite that being the biggest portion of the CSM and Corporate, not much higher. Just really -- what's the scope to accelerate those numbers?

What do you see as sustainable levels of growth over the medium term? That's the first question.

And then the second is, just -- great to hear a focus on expenses and efficiency. Just wanted to know, Jurie, how do you think about expenses and efficiency?

I personally like to think about cost-income ratios, but how do you think about measuring it? We've had a lot of cost [saved] targets in the past, but sometimes it's hard to see kind of objectively from outside that improvement in efficiency.

Thank you, Andrew. You were not as clear.

I will start with Jurie's question, and then I'll ask Casper to just comment on the CSM growth. And if -- Ranen, you can also please add.

Over to you.

Andrew, maybe a couple of comments. I think that there has been pressure on the guaranteed annuity sales in South Africa, which I think you've seen has created pressure across the market, and as you noted, some of that money then flows into linked investments, but that is spread over a wider group of competitors.

I think on your point on targets, I would point you to -- obviously, the Capital Markets Day is a key moment where we're going to be putting down targets. And I think we will also there talk about growth targets and in particular, in a low-growth environment, what are our aspirations around growing market share for Old Mutual, which I think is -- I think one has to assume that South Africa is not going to become high-growth environment.

And so that will be key. I think from an expense point of view, our cost ratios are difficult for a group like us.

I think what we're likely to show you at the Capital Markets Day is more cluster level KPIs for expenses. But what I will say to you is that our North Star is [getting] return on group equity value into value accretive range, which is above cost of equity.

And with that -- likely to achieve that, you obviously have to get your experience variances contributing and you've obviously got to get your value of new business margin into the range of 2% to 3%. And so when we think about expenses, that's a significant way in which we frame it.

Value of new business margin, of course, doesn't only -- it's not only expenses, but it is the most direct short-term controllable lever. Casper, if you want to add to that?

No, I think, Jurie, you've covered the 3 important areas that I would have mentioned, which is increasing our value of new business through both volume and expense management. Looking at improving our variances and making sure that we can improve those.

I think it's also important, I mean, not to just look at the CSM because we have disclosed a lot more -- we've put more disclosure into our booklet, so you can look at what the growth of our [ non-IFRS 17 ] business is also bringing through. So you get a complete picture of the growth in value.

The next question, please.

Can you hear me?

Yes, we can Francois. Please go ahead.

Your Life embedded value statement shows that economic variances added ZAR 1.7 billion after tax to earnings in the period. In the past, you've given us the split and a recon between how much of that was operational and how much of that investment return and capital, and also how much of that is contributed by markets, and how much of that was contributed by economic basis changes, in other words, really interest rate changes.

Can I ask for you to please provide that recon price in future? And for this opportunity, for this question, just if you can split it roughly for me, just give me a sense of how much of that -- and that's a ZAR 2 billion swing on the base period.

How much of that swing was operational? How much of that came through the investment return on capital line?

Or can we use the IFRS investment return on capital as a proxy for that? Yes, just trying to get a sense of how much -- how repeatable this Life earnings level is.

How much of it came from the trough of markets? That's the first question.

Second question relates to the positive experience variances. You've made big basis changes.

Is the -- and also it looks like the unwind and the basis changes reflect -- sorry, the unwind and experience variances reflect the basis changes that's taken place already. Is that the case?

Or is the experience variances on actual assumptions that existed at the start of the year? Just can you clarify that for me?

Is it experience variances on the changed basis or on the year-end basis? That's the second question.

Thanks. Francois.

Please just hold it there on those 2. I'll ask Nico to just walk us the high level through.

We do add on the disclosures, and on the one-on-ones, we'll go through too much detail. But if Niko, you could please just cover it at a high level.

Yes, Francois, you can definitely use the IFRS investment information that gets -- given as an indication of what's happening to shareholder investment returns. So there is disclosure on that.

The embedded value was a bit more complicated this time around because there were a couple of method change type items in there, too. So not as material as the ones that have already been mentioned.

And so you can see that information in the system if you look at [ A&W ] versus [ VF ]. Then the question on basis changes, they're all on the opening basis.

But remember that the opening basis already for MFC had a material reserve against weaker persistency in 2025. And so that's why you're not seeing as big a negative variance.

Effectively, the basis change that's been spoken about has a lot more to do with assuming ongoing weaker persistency beyond the first couple of years for the systemic parts of weaker persistency rather than cyclical parts of weaker persistency.

Thank you, Nico. Operator, the next question, please.

Just as a reminder, 2 questions per person.

Thank you. I will now just turn over to some of the questions that were submitted.

The first one came from Baron Nkomo from JPMorgan. Please elaborate on the structural change in the market, which you believe is driving persistency.

That's the first question. The second one, please explain the material decrease in the Rest of Africa embedded value, which contrasts with the positive CSM growth.

Jurie, I would like you to just maybe comment briefly on the first part.

So I think that there's greater competition in the funeral market. I mean that's certainly the case.

I do think that there's macro headwinds South Africa, but I wouldn't overemphasize it. I think actually, there's been a big competitive shift.

And I think if you think about the overlaps between banks and insurance companies, I think that there's a blurring of the lines. There's a moving of banks into insurance and likewise, insurance moving into banking.

And I think what we've -- whilst we certainly have management actions to improve persistency and there are things that we can and are continuing to do, and we do believe those will bear fruit. We do think it's wise to recognize the structural change of higher churn of funeral business than perhaps we had before, and our business must adapt to that.

Thank you very much, Jurie. I'll hand over to Clement, our MD for Old Mutual Africa regions to cover the question on EV and CSM growth.

Okay, thank you. The CSM growth is mainly driven by investment returns, largely in Malawi and also changes that we had in the fees on the guaranteed fund in that market as well.

Then the embedded value reduction, there are 2 things. The first thing is, there was a reallocation of the adjusted net worth between the various lines of business.

So we took quite some -- about ZAR 3 billion from Life to non-covered business. So that's one thing.

And then the next one was an allowance for expected currency devaluation in Malawi. So there is a haircut that we put through there.

Thank you very much, Clement. I will proceed with the next question from Michael Christelis from UBS.

The first question from Michael is, can you explain what have you provided for in the ZAR 440 million corporate center expense provision? It doesn't look like for your FY '26 guidance that has changed.

It remains for FY '22 plus inflation. I will ask Casper to take that one.

But the second one, also from Michael Christelis is, what level of price to give are you prepared to continue buying the share buyback? I'll also ask Casper to comment on that with Jurie, adding a level.

Casper?

Michael, on the price to give, we're not disclosing that externally. We don't want people trading against us.

So I think that's important to understand, that will be kept confidential. The first question on the restructuring provision.

Those relate to 2 components. Those relate to headcount reductions that we finalized where we had a constructive obligation.

So we finalized them by 30 June, where we had once-off costs that will reduce future expenditure. And it's the cancellation of one of our IT contracts where we have upfront settlement, which will reduce future expenditure.

Those are the 2 components.

Thank you very much, Casper. Operator, I would like to come back to the Chorus Call and check if we have a question there.

Sorry.

Sorry. Just to add, Michael, we won't.

We will obviously continue doing buybacks where we feel it's accretive and stop if we feel we're overpaying on the buyback.

Thank you very much, Casper. Question from the Chorus Call?

Maybe if you can give us a bit of color on the reduction in the regulatory solvency ratio from 170% to -- well, 180% to 170%? And how does that gel with the strong cash generation and the increased excess capital that you disclosed as well?

And just around that, maybe just discuss your -- whether there's been a reduction therefore in your targeted solvency ratio for the long term as well? And then the second question just on Old Mutual Insure.

I think last time I asked this question, you suggested that 5% is unlikely to be exceeded this year in terms of underwriting. Maybe if you can give us a sense of how long you think the strong cycle will be with us and whether you are considering changing your band -- your target band long term for Old Mutual Insure?

Thank you very much. I will ask Jurie to take the OM Insure and ask Casper to just comment on your first question, Francois.

If there is a need, Nico, you may just overlay Ranen there. Thank you.

Jurie, over to you.

Yes, I think we will -- at the Capital Markets Day, you'll see -- in those targets, we talk about underwriting margin as one of our key targets going forward. So we will update that for our medium-term target.

I think we do all recognize that we are in a good position in the cycle. And so it's very hard to call exactly where that cycle goes.

But I would point you to the Capital Markets Day probably for more detail in that conversation.

Francois, just to remind you that we have to accrue for our dividends and the actual buyback in our capital ratio at the period end, if we've announced that because it's a firm commitment. We also saw quite a big increase in markets during the period.

So what that does is it increases the prescribed equity shock that we're required to hold. So that would not just impact on equities that we held, it will also impact any subsidiaries, the shock that we apply to the net asset values of those subsidiaries where they're not regulated in terms of either -- where they fall outside of the sort of normal insurance solvency provisions.

Thank you very much. There are no more questions from the Chorus Call.

I will just maybe read 2 more questions and then bring it all to a close. From RMB Morgan Stanley, that's Warwick Bam.

Warwick asked, improving the performance of MFC looks like one of the biggest opportunities for the group. What needs to happen in the core insurance business of MFC?

And what time line are you looking to achieve that? I will ask our CEO for the cluster, Prabashini, to take that question.

Thanks, Langa. Thanks, Warwick, for the question.

So in our MFC business, we continue to take action on persistency. We've taken some management actions this year already to make it easier for customers to actually pay any missed premiums, and that's already giving us some very early green shoots.

Then when it comes to the market and addressing the shift in the market, I think from a proposition perspective, there is some work that we can do. And we do have building blocks within the Mass and Foundation business where we can put together, for example, through our Two Mountains acquisition and improve the differentiation of the proposition that we take out.

Productivity and the management of our distribution channels remain really, really good. And it's just giving those advisers the right solutions to take out and improving our premium collections.

And I think we will see improvements. Thanks.

Thank you very much. I think just to close off, there's -- 2 set of questions, I'll sort of combine them, if, Casper, you could just address these 2.

They are related to costs. The first one is from [ Allan Grey ].

He has asked, may you please give us more color around the ZAR 440 million restructuring provision? What was allocated to that?

And how will it fall -- how will it fall away going forward? There's also another similar question from [ Patricio ] that is asking, where do you see the biggest opportunity to reduce costs across the group?

And can you talk around the guidance of cost reductions going forward?

So just going back to the ZAR 440 million restructuring provision. As I said earlier, this relates to headcount exits that were finalized at 30 June.

So where you have upfront costs. So the future salary costs, we won't be carrying.

So that will be a reduction in costs. And as I said, the software costs that we accrued for that -- for stopping that software agreements, there will be no future payments, so you have upfront cost on that.

So that will also reduce our expense payments going forward. We communicated to you over the last 2 years that there are a number of areas certainly in the central functions where we are looking at cost reductions.

We communicated that we're running elevated costs in the center and that we're targeting to get back to 2022 plus inflation on the center line. I think the further cost reduction opportunities comes through the fact that we've rearranged our operating model, as Jurie took you through, as well as the fact that we'll be running a leaner center function.

So those are the biggest opportunities. Thanks.

Thank you very much, Casper, and thanks, Jurie, for all the clarification as well as to the MDs for helping us conclude the Q&A. So that concludes our Q&A session.

We look forward to engaging you at our upcoming Capital Markets Day, as Jurie has already mentioned, where we'll give you more color on our strategic priorities as well as targets. Once again, on behalf of our Board and the management team, I'd like to thank you all for joining us.

Have a good day further. Thank you.