Long-Term Savings Overview

In March 2009 we announced that one of our five strategic priorities was to "Leverage scale in our long-term savings businesses". In order to achieve this objective we announced the creation of the Long-Term Savings Division (LTS), bringing all of the Group's long-term savings businesses together for the first time. The vision of LTS is to be our customers' most trusted partner in helping them achieve their lifetime financial goals, within our selected markets. We intend to achieve this objective through the unlocking of value for customers and shareholders by:

• Leveraging the core expertise and capabilities that we have within our businesses;
• Ensuring more effective deployment of technology and platform; and
• Identifying and exploiting synergies.

The LTS Executive Committee includes the CEOs of all the LTS Business Units (Emerging Markets, Retail Europe, Nordic, Wealth Management and US Life). This structure enables rigorous discussion within LTS and brings to the surface areas where synergies can be gained and capabilities replicated.

What is LTS?

LTS is Old Mutual's long-term savings business. This includes both life and non-life investment products, which we provide to help our customers improve their financial health or to manage their personal finances. Across our various businesses, we have real competitive advantage as a result of the following:

1. Access to customers

We have excellent access to customers through a range of different distribution channels, which are founded on long and trusted relationships.

2. Excellent customer solutions

We have built up a reputation for having excellent solutions which meet the needs of our customers. These are generally tied to the provision of advice, whether by us, or via independent distribution channels.

3. Scale

The scale of our LTS business allows us to achieve significant economies, including process and IT efficiencies, which permit us to deliver excellent customer service at a lower cost.

4. Delivering returns consistent with needs

Across our LTS business we have a common approach to delivering investment returns for customers. This is about delivering value and returns consistent with their needs. Customer focus is the hallmark of the LTS business. We believe it provides us with a competitive advantage as it builds trust amongst customers and can be related back to their specific needs and risk profiles.

The rationale for the business

Within LTS, returns and growth rates are high. It is well-balanced in terms of its financial characteristics, having a mix of high return, cash-generative businesses (OMSA, Namibia and Colombia), high profit growth businesses (Wealth Management and Nordic), and high embedded value growth businesses (European Retail, Africa, Asia and Mexico). The overall result of managing these businesses together is to generate a good cash return coupled with strong profit and embedded value growth over the long-term. In addition, there is a great opportunity to increase returns by identifying and further developing synergies across the Group.

Highlights of the past year

2009 was a challenging, yet exciting, year for LTS. Our goal as we began to develop the strategy for the LTS division was to create more value for customers and shareholders from combining the LTS businesses. As part of this strategy, we exited Australia, Chile and the Eastern European countries where we did not have a meaningful presence. In addition, we restructured our Wealth Management and Retail Europe businesses for optimal performance and combined China, India, Colombia, Mexico, OMSA and the Rest of Africa into an Emerging Markets business unit to leverage the extensive knowledge of emerging markets already in existence in OMSA.

Financial performance

See Group Finance Director's report .

Looking forward to 2010

2010 is going to be a key year for LTS with our focus centred around the delivery of our strategy specifically in relation to the cost and revenue synergies identified, the delivery of the Wealth Management strategy as included in its section below, and continuing to leverage our skills and capabilities. We will prepare each of the businesses in the LTS division for growth and optimal performance in their respective markets, and while the year ahead will be undoubtedly be testing as the uncertainty of the markets continues, we are confident that the LTS businesses will not only exhibit the resilience evidenced by the 2009 financial results, but also produce a strong performance in 2010 as a result of the newly-focused strategy.

LTS Emerging Markets provides innovative financial solutions addressing both protection and savings needs in 10 countries with a combined population of over 2.6 billion in Africa, Asia and Latin America. Our biggest business is in South Africa, where we are the largest financial services company (as measured by assets under management). We also serve other African countries through our operations in Namibia, Zimbabwe, Malawi, Kenya and Swaziland. Under New Markets we provide financial services to Latin America through Skandia Colombia and Mexico, and in Asia through joint ventures Old Mutual Kotak Mahindra in India and Skandia:BSAM in China.Our business comprises asset management, life insurance, banking and short-term insurance. In life insurance we provide wealth management, investment products, retirement savings, life insurance and disability insurance to individuals and groups in all 10 countries in which we operate.

• View the Long-term Savings - Emerging Markets review