A “big fix-up job” has taken place at Old Mutual over the past five years and outgoing CEO Iain Williamson hopes to have delivered all the building blocks to set up the group to do a better job for its clients by the time he leaves in August.
Williamson, 55, who announced recently he would take early retirement, said on Tuesday he had been with the group for his entire adult life, studying on an Old Mutual bursary before joining the group, where he has spent 32 years, the last five as CEO.
He was at a point where he wanted a different life experience, as well as the flexibility to spend more time with his children, he said in an interview after the group reported a 14% increase in headline earnings for the year to end-December. “There are a number of things I’m passionate about from an impact perspective … I want to do something meaningful and make a contribution, but it’s not likely to be in a big corporate sort of sphere,” he said.
Williamson’s tenure as CEO came after the group completed its managed separation and returned home to SA in 2018, and after it parted ways with former CEO Peter Moyo following a bitter public battle.
The group has revamped the product suite and advisory capability of the entire life company — on the retail side in particular — over the past five years, delivering on a process begun in 2017, Williamson said. It has fixed its short-term insurance business and got rid of underperforming units. It has got its Africa regions to a place where they are contributing R1bn to earnings and generating cash.
And it has opened Old Mutual Bank, which gained its licence on Friday.
“It’s essentially our integrated financial services strategy coming to life, all the building blocks of it,” Williamson said. “If all goes according to plan we will have delivered all the building blocks by the time I leave. It doesn’t mean they are fully fledged and really humming, but they are all there,” he said.
The group has tended to be compared unfavourably to rival Sanlam, whose earnings growth and share price have outperformed Old Mutual’s over the past five years but Williamson said it was a tricky comparison. Old Mutual’s in-force life and asset management business is larger in SA than that of its rivals and it is more concentrated in SA than Sanlam, which also has invested a lot more on expanding its Africa footprint, as well as expanding its India and Malaysia business over a period in which Old Mutual has “pulled in our horns a bit”.
It has been returning capital to shareholders, partly because it hasn’t been able to find deals that made economic sense. “If I look at the underlying dynamic of the earnings trajectory, like for like we are not actually that different,” he said.
He concedes though that Old Mutual has had the burden of history. It still has to regain the credibility it lost in the years after its 1999 London listing when it went on an international expansion drive which ended up losing huge shareholder value.
“I don’t think we’ve made any irresponsible capital decisions since the managed separation, but we’ve held ourselves to quite a high standard, and that has pros and cons,” Williamson said.
The group’s return on equity (ROE) is now above its cost of equity but not yet in its target range. Williamson wants to push ROE closer to 17% plus, from 15.6% now. “I think if we get there we can declare victory and behave with a bit more freedom,” he said.
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