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OUR VISION AND STRATEGY
Our Vision
To become the international long-term savings and investment provider of choice and the premier financial services provider in South Africa.
Our Strategy
To focus on leveraging our strongest businesses (South Africa and Long-Term Savings), to streamline the Group, and to drive value creation within, and between businesses.
Our Priorities
1. Maintain and strengthen our capital position
We continue to closely monitor our capital and liquidity position, with uncertain markets making it increasingly important to consider the impact from each management action to overall Group capital position. Our FGD surplus has increased to £0.9 billion as at 31 March 2009 and we have strong capital surpluses in our individual business units. Continuing to manage our capital/liquidity responsibly is our top priority.
2. Streamline portfolio over time
We recognise that our portfolio of businesses is too broad. We operate in too many geographies, have too many lines of business and some of which are sub-scale in their respective markets. This is a strong focus of our attention and we recognise that our portfolio requires simplification.
However, in the current environment, major rationalisation of our portfolio of businesses would be extremely difficult and, if achievable, would almost certainly destroy value for our shareholders. At this stage, we have therefore concluded that it will take some time to achieve our optimal business structure. That said, we have already taken some actions where it has been sensible to do so, namely:
- Completed the sale of our Australian business.
- Rationalised our businesses in continental Europe, creating two hubs based in Berlin and Paris for the mass market and affluent markets respectively.
- Exited Portugal.
- Scaled back our aspirations in the Far East, and have closed our office in Hong Kong and have terminated the acquisition of the Chinese Asset Manager TEDA.
We will look for opportunities to make further changes as market conditions allow creation of value for our shareholders. The important point is that we do not need to sell any asset in order to raise capital. Therefore any streamlining activity will be based on enhancing efficiency and improving our strategic focus.
3. Leverage scale in our Long-Term Savings businesses
We have consolidated all our long-term savings businesses into a single operating structure, including Skandia, Old Mutual South Africa (OMSA), US Life and Asia Pacific. We believe that there is a significant amount of value that can be unlocked by these businesses working more closely together. For example, by deploying the distinctive technology and capabilities that exist within our South African, UK and Nordic platform businesses more effectively across the Group.
4. Drive value creation in South Africa
We have already created significant value through co-operation between Nedbank and OMSA delivering synergies in excess of R1 billion in annual pre-tax profits. We remain firmly committed to all our South African businesses and in line with our focus on maximizing the value of each individual business, believe that there is more value that can be achieved through their closer co-operation.
We believe greater synergies can be delivered between Nedbank and OMSA, e.g. in the area of IT and procurement as well as agreeing and delivering on revenue synergies from cross-selling, distribution agreements, etc.
Mutual & Federal will focus on increasing profitability, strengthening its balance sheet and driving greater cooperation with Nedbank and OMSA.
5. Strengthen governance and risk management
In 2008 we started to invest in additional risk resources (people and systems) and, as a result, our risk and governance processes have been significantly strengthened. The next priority is to embed those processes firmly across the Group. One consequence of these initiatives is that we are rolling out a business level risk appetite, which sets the mandatory risk levels each business must adhere to.
We have also launched an 'integrated Capital, Risk and Financial Transformation' (iCRaFT) programme that aims to implement best practice in the way that we measure and manage risk, capital and financial performance. This programme will also ensure that we become fully compliant with Solvency II, the new regulatory regime being introduced for all European-domiciled insurers.
