There have been a few bumps along the road, but Old Mutual’s decision 20 years ago to globalise is starting to pay off in a big way. It is settling into a serious international financial services player – and hundreds of thousands of South African shareholders will have appreciated this fact after the 2013 dividend surged as a result of progress abroad and the weakness in the Rand. But perhaps the most important news in this interview with CEO Julian Roberts is that the “for sale” signs have been removed at SA’s fourth largest banking group and Old Mutual subsidiary Nedbank. Indeed, the bank is being drawn closer into the greater group. Indeed, its executives will soon be incentivised in Old Mutual rather than Nedbank shares. Perhaps a buyout, as per Mutual & Federal, is the next step? Â – AHÂ
ALEC HOGG: Old Mutual Plc has released its full-year results.  We’re joined on the line by Chief Executive Julian Roberts. The big news Julian is that the dividend is up 16 percent in Pound terms, for the year as a whole. You just got out of an analysts’ presentation. Thank you for joining us now. What was their reaction?
JULIAN ROBERTS:  Good afternoon, Alec. We’ve had a very good reaction to the results. I look across my office at the Reuters screen to see the selling price is up four-point-six percent today, so the market here in London and in South Africa has given a tick to the results.
ALEC HOGG: Indeed, in South African terms, that’s a hefty improvement in your dividend. How many shareholders do you have, given that you had hundreds of thousands at one point, after the demutualisation?
JULIAN ROBERTS:  Yes, the retail shareholders have come down quite significantly, so we’re down to a few hundred thousand from…I think at one stage we were over a million. South African shareholders, if you take today’s Rand exchange rate, will get something like between 40 and 50 percent rise in dividends. Hopefully, we’ll have a lot of happy shareholders.
ALEC HOGG: Hundreds of thousands of them, for sure. The other big news to come out today is that you have made progress on the IPO of your US asset management business. You’ve been looking at that for a while.
JULIAN ROBERTS:  Yes, I think…most people say it’s the worst kept secret. Yes, we’ve now decided that the business is in much better shape. The markets look good in the US. Every time that they want to make an acquisition, they hit our surplus capital so with a listing it will enable an alternative means of capital, because that US business… Yes, it can grow organically, but the model needs acquisitions in order to grow, so subject to markets the IPO will take place sometime this year.
GUGULETHU MFUPHI: Â Julian, will tapering have an impact on this IPO?
JULIAN ROBERTS:  It shouldn’t. I think the US markets are pretty robust and in fairness, I think everybody knows the tapering plan so it shouldn’t.
ALEC HOGG: The Budget speech on Wednesday had a little bit of a surprise in it for the life insurance industry. Of course, South Africa is still a very big part of your business. That change in the taxation of risk businesses: is it going to have an impact?
JULIAN ROBERTS:  Look, it’s too early. As with every budget, there are positives and negatives coming out so it’s too early, really, for us to work through. You get a change in the taxation there and then you get taxation benefits of small savings – so, copying the IFA regimes, which will be good and I’m sure will boost savings. It’s a bit early yet, to work through.
GUGULETHU MFUPHI:  Tell us about Africa. Is that your new growth story?
JULIAN ROBERTS:  We have a growth story everywhere. One of the things that you may or may not have picked up, is that we have announced an acquisition in the UK to boost our distribution. We will now have a broader distribution…a bit like South Africa. We will have independent advisors and we’ll have what we call restricted ie tied advisors. That business grew very significantly this year in the UK. Equally so, we’ve had good growth in Africa. People have been critical of our retail-affluent business in South Africa that had growth of 28% in single premiums. Our businesses broadly, bar one – which I’m sure you’ll ask me a question about – have been performing very well and I’m very optimistic about them.
ALEC HOGG:Â Tell us the bad news.
JULIAN ROBERTS: Mutual & Federal still struggles. The sector had a horrendous year for claims in 2012 and they were repeated in 2013. Weather claims, hail claims, started the year with drought, and then we had some fire claims so the industry has been impacted. As well as that our direct business is progressing a little bit more slowly than we want. We know the strategy we want to follow. We’ve boosted the management team and I’m seeing the signs that we’re heading in the right direction, but the performance was poor.
ALEC HOGG: The good news story of course, is Nedbank. Is it now off the block – no longer for sale?
JULIAN ROBERTS: No longer for sale. You can see in some of the things clients are saying…the businesses Nedbank, Mutual & Federal, and Old Mutual have been collaborating more and more over the last year. I think there is a significant amount of value we can get by those businesses working together not just in South Africa, but also in the rest of Africa. I want to expand into Africa as a coordinated financial services group, not as individual businesses. That’s why I’m saying today that part of the remuneration for our executives in South Africa across those businesses will be in Old Mutual shares and Old Mutual Health Services. The details need to be worked through, but at some stage this year, we will roll that out.
