Old Mutual to flex its muscle in own yard
Dominance at home overturned by Sanlam in the rest of Africa
● With the listing of its new version in Johannesburg by the end of the year, Old Mutual aims to be in a position to even better flex its muscle on the domestic front with a more competitive offering.
Even in its current guise the insurer is dominant in its home market. On the rest of the continent, though, it’s still some way off Sanlam.
Since Old Mutual’s demutualisation and listing in London at the turn of the century, Sanlam has transformed itself from an Afrikaans-focusing middle-market insurer to a continental player with a footprint spanning about 34 African countries.
By contrast, Old Mutual has a presence in 13 African countries.
Sanlam recently upped the ante when it announced the planned acquisition of the remaining 53.37% shareholding in Moroccan firm Saham Finances, which will give it full control of one of the largest insurers in Africa.
So while Old Mutual will maintain its leading market share in South Africa post its local listing, it cannot take anything for granted.
“On average Old Mutual is larger than Sanlam in South Africa but it has a comparatively higher cost base,” said Warwick Bam, insurance analyst at Avior Capital Markets.
“Old Mutual has yet to fully benefit from its scale advantage in the South African market.”
Since its London listing Old Mutual’s share price has grown 215.72%, but Sanlam’s has shot up 1 104.31% in the same period.
Old Mutual had become a lumbering giant. After the global financial crisis conglomerates like it faced more stringent capital requirements. Its London base also meant cash generated from South African operations was fed back to the UK, sometimes to grow foreign businesses, rather than being deployed to boost its South African business.
But all that will now change as the company splits into two standalone companies and becomes more efficient. Quilter will list in London and Old Mutual Limited (OML), made up of Old Mutual Wealth, Old Mutual Emerging Markets (OMEM) and Nedbank, will be listed in Johannesburg by the end of the year.
Old Mutual had initially said OML would list soon after its financials were released this week, but CEO Bruce Hemphill has now declined to provide a specific date for this year’s planned listing, which is subject to regulatory approvals.
“There are quite a few moving parts and until we’ve locked them down and we’re absolutely confident about timing we don’t want to commit to something we can’t deliver on,” he said.
While the battle on the African continent looks set to be difficult, on the local front Old Mutual looks ahead to cementing its dominance.
The insurer’s CEO designate Peter Moyo said the group would maintain its focus on its underperforming businesses. It’s a focus that has resulted in a war for the right skills but the group has declared it will “win the war for talent”.
“We’ve targeted people from banks to lead our digital strategy and we’ve found it easy to attract people from other insurers to join our short-term insurance and asset management businesses,” Moyo said.
Next month Old Mutual, which is currently ranked the best employer in the country, will be joined by a new financial director, Casper Troskie, who used to be in the same position at Liberty.
The appointment continues the trend which has seen Liberty repeatedly lose talent to Old Mutual in the last five years, Bam said.
Old Mutual Investments scored Khaya Gobodo, previously with Investec, as its new head of asset management, but the group has also suffered losses in recent years.
Former OMEM CEO Ralph Mupita was lost to MTN in 2016 and last year Old Mutual said goodbye to superstar investor Richard Buxton, who bought out the UK asset management business he ran.
We’ve found it easy to attract people from other insurers to join us Peter Moyo CEO-designate of OML