Final Results (part 1)

Old Mutual PLC
25 February 2002

PART 1

                           OLD MUTUAL PLC

              Results for the year ended 31 December 2001



HIGHLIGHTS





•      Group smoothed operating profit* increased 11% in Rand to R10,601
       million, but decreased 6% in Sterling to £856 million



•      Operating earnings per share*, at 13.2p, were 22% lower than in 2000



•      South African life business operating profit, before long term investment
       return, up 17% to R3,085 million



•      Value of life assurance new business £84 million



•      Nedcor headline earnings up 26% at R3,794 million



•      Best net cash inflows in US asset management since 1993



•      Fidelity & Guaranty Life performance ahead of expectations



•      Gerrard integration complete



•      Final dividend unchanged at 3.1p (up over 40%** in Rand)





'Our South African team continued to achieve world class standards and our new
US life business exceeded our expectations.  We were able to deliver a big
recovery in cashflow from our US asset management affiliates and we completed
the integration of our UK stockbroking businesses.  However, our earnings were
heavily affected by poor stock markets and exchange rates.  We remain well
positioned for the future.'



Jim Sutcliffe, Group Chief Executive, 25 February 2002







*       Smoothed operating profit is based on a long term investment return, and
is stated before tax, goodwill amortisation and impairment, write-down of the
Group's investment in Dimension Data Holdings plc, and short term fluctuations
in investment return.  Operating earnings per share are stated on the same
basis, but after tax and minority interests.



**     The dividend recommended (final 3.1 p per share, making 4.8 p per share
for the year) will be converted, for payment to shareholders on the branch
registers and the Namibian section of the principal register, into local
currency at exchange rates ruling on 4 April 2002.  References in this
announcement to the Rand equivalent of the final dividend have been based on the
exchange rate of R16.293:£1 prevailing on Thursday 21 February 2002 and are for
indicative purposes only.







A full copy of these results and the associated presentation to analysts,
together with photographs and biographical details of the Executive Directors of
Old Mutual plc, are available in electronic format.  Please call the numbers
below, or alternatively they are available for download from the company website
at www.oldmutual.com





                                                                25 February 2002



Further Enquiries:-


Old Mutual plc, London:                               Tel:  [phone]
Jim Sutcliffe, Group Chief Executive
Julian Roberts, Group Finance Director
James Poole, Investor Relations Director              Tel: [phone]


or South Africa:
Bruce Allen, Group Media Relations                    Tel: [phone]
Zoleka Mzimba, Group Media Relations                  Tel: [phone]


College Hill:                                         Tel:  [phone]
Gareth David
Tony Friend
Nicholas Williams                                     Tel:   [phone]












Chief Executive's statement on the results



As Chief Executive since November 2001, I am pleased to present our results for
the year ended 31 December 2001.  Group smoothed operating profit(1)increased 11%
from R9,585 million in 2000 to R10,601 million in 2001, but declined in Sterling
by 6% from £911 million to £856 million.



We saw positive results in 2001 from our most recent acquisition, Fidelity &
Guaranty Life, and from the re-engineering of our US asset management
businesses.  Our South African businesses had a particularly good second half,
and we consolidated our dominant position in financial services there.



Despite this, we have seen a reduction in operating earnings per share(1) (at
13.2p) compared with 2000 (17.0p).  Lower levels of markets in the UK and the
USA, higher taxes and the dramatic depreciation in the Rand all proved heavy
burdens.

(1)  see footnote * in Highlights



The Board has shown its confidence in the future by recommending an unchanged
final dividend of 3.1p, which will represent a substantial increase for more
than half of our shareholders when converted into Rand and other currencies of
payment.



Management

In September, we re-organised the focus of our business into three principal
geographical regions, South Africa, the USA and the UK, to allow for much
clearer management responsibilities, and to recognise the differing requirements
of customers in each area. We introduced a powerful new management team focused
on these lines. We now have a team the equal of any in the world.



South Africa

The South African life business, led by Roddy Sparks, had a very successful
year, delivering operating profit of R3,085 million, representing growth in
smoothed earnings of 17%. The value of new business grew by 19% in Rand, with
margins increasing significantly to 27% as we introduced more modern products.
The Employee Benefits division had a very successful run in the second half,
acquiring some large with-profit annuity premiums. As shown at the interim
results, long term investment return reduced sharply, following the reallocation
of surplus capital to the asset management business for the purchase of United
Asset Management Corporation late in 2000.




Our 53% owned banking subsidiary, Nedcor, led by Richard Laubscher, had another
outstanding year, producing a 26% increase in headline earnings at R3,794
million.  Its underlying earnings rose 18%, with impressive levels of growth
being achieved in both its South African and international operations.
Importantly, it announced the completion of an arrangement with Swisscard to
undertake card-processing in South Africa - turning the weak Rand to advantage.



Our 51% owned general insurance business, Mutual & Federal, returned an
underwriting profit of R62 million and its operating ratio improved to 97.9%, an
enviable level compared to its peer group.  During the year, it paid a further
special dividend to its shareholders, reflecting the surplus capital in the
group, and it also successfully integrated the CGU business, acquired late in
2000.







Nedcor and Old Mutual have also co-operated to develop their burgeoning
bancassurance relationship during 2001, as illustrated by the growing sales of
Old Mutual life products through Nedcor's branches, the launch of offshore
banking through the Gerrard Private Bank joint venture, and the proposed merger
of Old Mutual Banking Services with Nedcor's Permanent Bank.



USA

In the USA, Guy Barker and his team continued to develop our life assurance
presence by the launch of Americom Life in May 2001 and the acquisition of
Fidelity & Guaranty Life ('F&G') with effect from 1 July 2001.  We welcome them
to the Old Mutual family. They made a promising start, with F&G delivering
operating profit of $45 million (before $13 million of restructuring and
acquisition costs and $13 million of operating loss at Americom) for the part of
2001 for which their results were consolidated.  $121 million of annual premium
equivalent new business was achieved by these businesses for the second six
months of 2001 (value of new business: $18m). This was ahead of expectations, as
F&G benefited from a swing towards its annuity products after September 11.  Net
cash inflow at F&G reached nearly twice the level of the previous year.



In our US asset management operations, led by Scott Powers, we have finalised
our operating structure.  We will operate four sets of businesses - Pilgrim
Baxter, our thriving mutual fund business, OMAM(US), our seven specialist
institutional asset managers with common marketing programmes and incentives,
Old Mutual Strategic Affiliates, a group of eleven alternative asset managers,
which broaden and deepen our style and distribution reach, and the fourth group
- Old Mutual Financial Affiliates - a small group of affiliates which will be
held as financial investments with operational autonomy.  Since acquisition, we
have sold fourteen affiliates for prices in excess of our expectations at the
time of acquisition, despite the difficult market conditions.



Reported operating profit for the US asset management businesses, of $167
million, before goodwill amortisation and tax, were creditable in the context of
the difficult market conditions which prevailed during the year.  Assets under
management for businesses owned throughout the year held up very well in poor
markets, and fell just $5 billion to $150 billion, reflecting the 'value' bias
in the firms. Importantly, we were able to report a net cash inflow of $4.4
billion across all our US asset management businesses, including the F&G funds
now managed by Dwight Asset Management - a remarkable turnaround compared to
prior years.



UK and rest of world

In the UK we appointed Edmond Warner to lead all of our UK businesses.



Business volumes in the private client stockbroking operations of Gerrard were
severely depressed in line with the reduced level of retail share trading across
the whole UK market, with the decline in the UK equity markets over the year
providing an inauspicious backdrop to its activities.  It nevertheless achieved
a major success in integrating the overlapping regional offices of Greig
Middleton and Capel Cure Sharp and their back office functions, which are now
combined in Glasgow.



Gerrard's profit of £2 million, before integration costs of £12 million, was
disappointing, and a key challenge for the new senior management team under
Stephen Clark, announced in January 2002, will be to ensure that it delivers in
the future the greater success of which we know it to be capable.



Elsewhere, our 26% owned life assurance joint venture in India, OM Kotak
Mahindra, developed successfully during the year and now has offices in nine
locations around India.



Overall, our UK and rest of world businesses, which include the results of
Nedcor's operations outside South Africa, our other asset management operations
around the world, our businesses in the rest of Africa and our other businesses
in the UK, produced an operating profit in 2001 of £74 million, compared to £105
million in 2000.



Financial matters

As foreshadowed in our trading statement issued in November, we have carried out
a review of the carrying value of the goodwill acquired as part of Gerrard Group
plc and UAM, and there has been a resultant write-off of a total of £500
million. This puts us on a firmer footing to move forward in the future.



Outlook

As an organisation that is internationalising, we shall always be affected by
changing exchange rates and, indeed, we began 2002 with the Rand at historic
lows.  As an asset management and asset gathering organisation, we will likewise
always be affected by fluctuations in financial markets, but we remain confident
that our core businesses have excellent growth prospects.



The Group's operations are well positioned for the future. We have much to do to
continue our growth in South Africa, to deliver the value potential of our US
businesses and to rebuild our profits in the UK.  We are totally focused on
these goals.





JIM SUTCLIFFE

Chief Executive



25 February 2002







Operating and Financial Review



South Africa Business Review



Smoothed operating profit for the South African businesses in local currency at
R9,536 million, increased 10% from R8,668 million, but translated into Sterling
of £770 million, decreased 7% from £824 million in 2000.



During 2001 Old Mutual South Africa (OMSA) reorganised its business to provide a
greater emphasis on meeting customers' needs.  New product ranges were
introduced in both the retail and institutional sectors. Operating profit,
before long term investment return, for OMSA's life assurance and asset
management operations was R3,543 million, representing an increase of 14% from
R3,114 million in 2000.



The Group's banking operations, principally comprising Nedcor, continued to
produce strong results.  Operating profit from banking, including the
contribution from Nedcor's operations located outside South Africa, was R4,572
million, an increase of 33% from R3,440 million in 2000.



Mutual & Federal returned an underwriting result under UK GAAP of R62 million
for 2001, a significant improvement on the break-even position achieved in 2000.
Its operating ratio improved to 97.9% from 99.9% in 2000.





Life Assurance



Summary financial performance



Good results were achieved by the Group's South African life businesses under
difficult market conditions.  Once again, they produced an excellent return on
internal capital allocated of 24% (2000: 23%).  Operating profit, before long
term investment return, of R3,085 million increased 17% from R2,630 million in
2000.



The embedded value of new life business grew by 16% to R840 million.  The
increase in the embedded value of new business was due to improved sales of
single premium business, particularly Investment Frontiers and Employee Benefits
with-profit annuities, in the second half of the year.  The average margin on
2001 sales rose by 4% over the prior year, reaching 27%.  Embedded value new
business Annual Premium Equivalent (APE) of R3,142 million increased 1% from
R3,122 million in 2000, with APE in the second half of the year 36% higher than
the first half of 2001.





Individual Business



Financial performance



Operating profit, before long term investment return, for Individual Business,
principally comprising Individual Life and Group Schemes, of R2,152 million
increased 24% from R1,736 million in 2000.  This increase was the result of
favourable experience profits, improved investment performance and consequent
increased asset-based charges due to higher asset levels.

The embedded value of new business of R506 million increased by 27% from R399
million in 2000.  This was strongly supported by improved distribution
efficiencies and increased volumes of higher margin business, particularly
Investment Frontiers business, which attracted new business flows of R6,950
million during the year.  In total, new single premiums of R9,812 million
increased by 16%.  Included in 2001 are new single premiums of R761 million in
respect of transfers from the Guaranteed Capital Fund into Investment Frontiers
policies which were not categorised as new business premiums in 2000.  Excluding
this, the new single premium growth would have been 7%.  Individual recurring
new business premiums for the year of R1,486 million increased by 7%.



The second half of 2001 showed an improvement in both volumes and persistency
that leave this business well positioned for 2002.  Individual Business had an
extremely good year in the very competitive broker market, where it grew new
business by over 20%, and increased the number of its broker consultants by 10%.



The South African government's 'Persal' stop order collection system was
re-opened to new business in July 2001, nine months later than anticipated,
necessitating the increased use of debit order collection on which high
cancellation rates were experienced.  Despite this, Group Schemes' new business
premiums grew by 3%, after allowing for cancellations.





Business development



Changes in the organisational structure of Individual Business to focus on three
distinct customer segments are almost complete, and it is well positioned to
increase its share of the market in 2002.  2001 also saw the launch of two new
distribution channels targeting particular customers, one aimed at the
high-income consumer, and another at the emerging middle market.



Further development of the core product platform enabled the successful launch
of several market-leading products during the year.  Greenlight, an innovative
individual insurance protection product, was launched in May.  In August an
international version of Investment Frontiers was launched to target South
Africans who wish to increase their international savings exposure through the
permitted R750,000 per person offshore allowance.



The Personal Financial Advisers (PFA) agency force restructuring, which Old
Mutual has been driving over the past three years, was completed during 2001.
The restructuring led to significantly improved recruitment, training,
processes, structure and front-line management.  As a result of this process,
the average number of PFA salespeople during 2001 was below that of 2000, which
impacted on sales, particularly in the first half of 2001.  At year end, the
number of sales people was 2,400, an increase of approximately 12% over the
year.  The business is well positioned for 2002, with the intention of growing
the PFA agency force off a sound base.



Bancassurance initiatives progressed well in 2001.  OMSA established joint
ventures with Nedcor to improve sales of assurance products to Nedbank and
Peoples Bank customers.  Nedcor's Personal Financial Planners (PFP) advisory
sales force has grown significantly, leading to increased sales of Old Mutual
product, while more than 100 Group Schemes advisers now operate in Peoples Bank
branches.  Recurring and single premium sales through Nedcor PFP improved by
153% and 59% respectively in comparison to the previous year.





Moving forward



During the year Individual Business benefited from new generation IT systems,
implemented towards the end of 2000, with significant reductions being achieved
in the cost per policy for products running on these systems.  The next stage of
this process will involve the migration of historic business on to the new
systems, which is expected to result in a significant further reduction of the
average administration cost per policy.



The bancassurance channel is growing rapidly and the Group's objective is to
continue to develop this area of business, where it sees significant potential.
OMSA and Nedcor agreed during 2001 to merge Nedcor's Permanent Bank with the
newly launched Old Mutual Banking Services, subject to regulatory approval.  The
resulting entity will sell a full range of banking and insurance products
through intermediaries and a branch network to Old Mutual's customer base.





Group Business



Financial performance



Group Business, principally comprising Employee Benefits and Old Mutual
Healthcare, performed well in a difficult year for the industry.  Operating
profit, before long term investment return, of R933 million increased by 4% from
R894 million in 2000.  This increase was achieved despite significant
expenditure on new IT systems, and a decline in profits from the healthcare
business resulting from reduced membership.



Sales of single premium business of R4,331 million in 2001 represented an
increase of 41% over R3,077 million in 2000 after excluding new business that
arose from free shares in 2000, driven primarily by strong sales of with-profit
annuity business.  This shift in the mix of business towards higher margin
with-profit annuities drove up new business margins from 38% to 49%.



The value of new business of R334 million increased by 8% from R309 million in
2000, after excluding new business that arose from free shares in 2000.
Although new business sales of recurring premium products of R242 million
decreased from R502 million in 2000, sales in the second half of 2001 of R201
million increased significantly on those achieved in the first half of the year.
The decline in new business year on year was also accentuated by a single
large quantum of new risk business written in 2000.





Business development



Significant investment was made during 2001 in new products and administration
systems, which will continue in 2002, placing Employee Benefits in an excellent
position to capture new business in the future.  In 2001 Employee Benefits
launched new structured products, which extend the range of products providing
capital guarantees beyond the smoothed bonus products.  A credit assurance
product was launched in the fourth quarter and is expected to create new
business opportunities in 2002.  The multi-manager administration and management
functions were consolidated under the Symmetry umbrella.





Moving forward



A number of significant single premium contracts are expected to come up for
tender in the year ahead.  Group Business is well positioned to capture a share
of these new flows in the coming months, thanks to significant enhancements in
product capabilities made over the past year, and the strong capital position of
Old Mutual.





Asset Management



Financial performance



Operating profit from the South African asset management businesses of R458
million, decreased by 5% from R484 million in 2000, primarily as a result of
difficult market conditions affecting Old Mutual Unit Trusts and start-up costs
incurred by Fundsnet, the on-line unit trust supermarket launched in late 2000.



Over the year, the total funds managed in South Africa grew by 14% from R230
billion to R261 billion.  Funds under management were affected by disappointing
net cash flows, particularly in the unit trust industry, and by net life fund
outflows, albeit at lower levels than in 2000.  The net cash outflows were
offset by positive market movement, with the JSE all share index increasing 25%
over the year.





Business development



OMAM(SA)'s investment performance across its many mandates was mixed.
Performance improved during the year on third party institutional mandates, but
was variable across the unit trust products, resulting in an average result for
the year as a whole.  Its investment performance on behalf of the Group's South
African policyholders' funds remains good.



OMAM(SA) has been developing its local investment management capabilities in
terms of both conventional asset management skills and alternative asset
management offerings.  This has been in anticipation of the growing demands of
the institutional asset management market in South Africa.  It has also been
working with other asset management subsidiaries in the Group to structure a
broader range of international investment capabilities for the South African
market.





Banking



Nedcor - financial performance



Nedcor continued its sustained performance of excellent returns, with headline
earnings of R3,794 million increasing by 26% from R3,012 million.  Return on
equity increased to 25.1% (2000: 24.0%) and return on assets to 2.22% (2000:
2.16%).  Earnings, excluding all translation gains resulting from the conversion
of integrated offshore banking operations, and excluding the write-down in
Dimension Data Holdings plc, grew by 18%, comprising 15% growth in its South
African operations and 32% growth in its international operations.



Total advances grew by 26%, and contributed to an increase in market share of
0.3% to 17.9% in total assets.  The advances growth occurred at an organic,
acquisitive and Rand-translated level.  Net interest income grew by a more muted
11%.  This resulted from the continuing pressure on margins, the negative
endowment effect of lower interest rates on capital and reserves, lower global
yields earned on externalised capital, and the redeployment of cash to acquire
Imperial Bank and Gerrard Private Bank.



Non-interest revenue of R5,709 million, excluding exceptional items, increased
by 33% from R4,292 million in 2000.  The foundation for this increase was strong
growth of 20% in commission and fees to R3,211 million (2000: R2,684 million),
boosted by good growth in bancassurance revenues, trading income and investment
banking profits.



Expenses increased by 19% due to new acquisitions, the fully expensed start-up
development costs of strategic banking alliances, and the costs of offshore
operations converted into depreciated Rand.  Despite this increase, Nedcor's
efficiency ratio of 49.3% (2000: 50.3%) breached the 50% barrier for the first
time, and this leads the way in South African banking.



The credit climate in South Africa continued to improve in 2001 and reflected
the reduced interest rate environment.  Nedcor is cognisant, however, of its
high advances growth and continues to adopt a conservative provisioning policy.
Consequently, the general risk provision has been prudently supplemented by R400
million to cover unidentified but inherent risks that may result from the
further depreciation in the value of the Rand and the current uncertain business
environment.



Nedcor's overall capital adequacy ratio of 11.4% (2000: 13.2%) remains
comfortably above the statutory requirement of 10%.





Nedcor - business development



Good progress is being made with the integration of Nedcor's strategic banking
alliances, comprising the partnerships with Old Mutual, Capital One, Imperial
Bank, JD Group and Pick 'n Pay.  The proposed merger of Permanent Bank and Old
Mutual Banking Services, which is still subject to regulatory approval, is an
exciting initiative intended to create a powerful presence in the important
middle market.  The Peoples Bank empowerment transaction, whereby 30% of Peoples
Bank has been sold to empowerment groups for R569 million with effect from 1
January 2002, is set to broaden the sphere of Nedcor's operating activities.



Nedcor is in the process of finalising commercial contract terms for its first
European card processing transaction.  This exciting new initiative will utilise
the low South African cost base, and Nedcor's IT processing skills base, and
will bring hard currency earnings into South Africa.  Further opportunities in
the commercialisation of technology and operations are being pursued, with the
aim of leveraging Nedcor's core processing competence in the international
arena.



Nedcor's strategic technology investments also provide capacity and skills which
support its technology and operations commercialisation strategy.



General Insurance



Mutual & Federal - financial performance



Mutual & Federal returned an underwriting result under UK GAAP of R62 million
for 2001.  This represents a significant improvement on the break-even position
achieved in 2000.  The operating ratio improved to 97.9% from 99.9% in 2000.
The strong capital position of Mutual & Federal enabled its Board to declare a
special dividend of 350 cents per share in November 2001.  Despite this
dividend, the solvency ratio remains strong and was in excess of 70% at 31
December 2001.  Mutual & Federal has now declared special dividends in three
consecutive years, returning R1,444 million, R723 million and now R847 million
in capital to shareholders.  This capital reduction forms part of a continuing
critical review of the efficient use of capital by members of the Group.



Each of Mutual & Federal's divisions performed well during the year.  The
Commercial Division grew substantially with premiums increasing from R1.1
billion to R1.8 billion, now representing over 40% of turnover.  Levels of
profitability improved following rating adjustments and renewed focus on
underwriting margins.  The Personal Lines division continued to be the largest
in the organisation.  During 2001 the majority of portfolios returned to
acceptable levels of profitability.  The Corporate Business Division also showed
improvement, with premiums growing to R650 million, a 35% increase over 2000.
The Claims and Services Division continues to provide outstanding levels of
support.





Mutual & Federal - business development



Considerable attention was given during the year to the consolidation of CGU,
the South African business purchased from CGNU, following its acquisition in
late 2000.  All CGU policies have now been successfully converted on to the
Mutual & Federal systems.





Mutual & Federal - moving forward



During the year a number of rationalisations took place, as Mutual & Federal
disposed of its interests in underwriting agencies which did not accord with its
overall strategy.  These disposals will enable management to focus more closely
on the core activities of Mutual & Federal so as to maximise value.





United States Business Review



Operating profit from the Group's US asset management and life assurance
operations of £129 million increased from £44 million for that part of 2000 for
which their results were consolidated.  The increase was attributable to a full
year contribution in 2001 from the US asset management group (purchased in
October 2000), and the commencement of the Group's US life assurance business in
2001.



The US asset management business made strong progress during 2001. Pilgrim
Baxter, Old Mutual Asset Managers (US) and the remaining Old Mutual US asset
management affiliates, overall achieved net fund inflows in a challenging market
environment.  Good progress continued to be made with divestiture activity, and
the Group has identified a number of affiliates which it intends to hold as
longer-term strategic investments.  Old Mutual favours aligning these affiliates
more closely with the Group over the long term, whilst the remaining affiliates
will be held as financial investments, where their status as stand-alone firms
will be maintained.



The Group commenced life assurance business in the US during 2001 through the
acquisition of Fidelity & Guaranty Life (F&G), and the start-up operation of
Americom Life & Annuity (Americom).  Strong new business sales were recorded
over the period of 2001 for which these businesses were operational as part of
the Group, and Old Mutual is confident that a wider product offering under these
brands will be successful.





Asset Management



Financial performance



Operating profit from the US asset management group was $167 million, compared
to $67 million for the part year for which its results were consolidated in
2000.  During 2001, nearly all categories of US equities declined, particularly
growth stocks, which more than offset strength in fixed-income securities.  The
Standard & Poor's 500 index declined 12% year-on-year, and the Nasdaq composite
index declined 21%.



Funds managed by the US asset management group, including F&G funds, were $150
billion at the end of 2001, compared to $178 billion at the beginning of the
year.  During the year, funds of $23 billion were disposed of through
divestiture activity.  The decline in equity markets reduced assets by $10
billion, partially offset by net cash inflows of $4 billion from new and
existing clients, including the F&G funds, which are now managed by Dwight Asset
Management.  The net client cash flow was a significant improvement over the
prior four years' operating results for these businesses before they joined the
Old Mutual Group, and their first overall positive net cash flow since 1993.



Comparative investment performance by the US asset management businesses
continued to be strong, with a majority of products outperforming their
benchmarks on a one- and three-year basis.  At year end, 22 of the US asset
management group's 51 mutual fund portfolios rated by Morningstar carried four-
or five-star ratings, well ahead of the industry average.  Assets managed by
firms in the four- and five-star funds represented over 79% of the US asset
management group's total mutual fund assets rated by Morningstar at the close of
the year.





Pilgrim Baxter & Associates



Business development



Despite challenging market conditions, which caused Pilgrim Baxter's funds under
management to decline from $17.5 billion to $12.6 billion over the year,
superior investment performance, increasingly diverse product lines, the firm's
excellent client relationships and strong brand enabled it to record positive
net client cash flow of $0.8 billion in 2001.  Equally encouragingly, Pilgrim
Baxter made notable progress in key areas of its long-term growth strategy,
further broadening its product lines and establishing important new
relationships with major distribution partners.


In the product area, the firm has added five new high-quality investment styles
and asset classes to its flagship PBHG mutual fund family - real estate, fixed
income, quantitative equity, intrinsic value and deep value.  All five of the
new portfolios are sub-advised by other Old Mutual investment managers.  This
development reflects the potential synergies inherent in the Group's US asset
management franchise, as well as the depth and breadth of its investment talent.



Pilgrim Baxter established substantial sub-advisory relationships to manage
portfolios for the mutual fund groups of three large financial services
organisations - American Skandia Life Assurance, American Express, and Wachovia
Corporation's First Union Securities.  The sub-advised portfolios encompass both
growth and value investment styles.



Pilgrim Baxter's investment performance, particularly in the value area,
continued to achieve top ratings.  At the end of the year, over half of the
firm's Morningstar-rated portfolios achieved four- or five-star ratings.





Old Mutual Asset Managers (US)



Business development



The seven OMAM(US) firms completed their first full year of operating together.
Funds under management, including F&G funds, increased from $74.9 billion to
$76.7 billion.  Net positive client cash flow of $6.5 billion, offset the
negative impact of the fall in market indices, as well as underperformance in
growth-style equity funds.  Dwight Asset Management, a fixed-income manager
specialising in stable value asset portfolios, brought in substantial net new
business, including over $5 billion from F&G, which was acquired by Old Mutual
during the year.  Clay Finlay, which manages a full range of global equity
mandates, also had strong new business results, driven by superior long-term
performance and client service.



Sub-advisory relationships, particularly for partners with strong distribution
capabilities, remain one of the most attractive avenues to leverage OMAM(US)'s
investment skills and accelerate asset gathering.  Establishing these key
sub-advisory relationships will be a significant component of its strategy in
2002.





Old Mutual Affiliates



For financial reporting purposes, the remaining Old Mutual affiliates have been
analysed into two further groups.  'Old Mutual Strategic Affiliates' are
affiliates that have been identified by the Group as being of longer-term
strategic interest.  'Old Mutual Financial Affiliates' include affiliates that
are now held as financial investments and which will maintain operational
autonomy, and affiliates which were divested during 2001.



Including affiliates geographically located outside the USA, funds managed by
Old Mutual Strategic Affiliates remained constant at $37.5 billion over the
year.  Overall net negative client cash flow offset total positive market
movement of $0.7 billion across these affiliates.



Funds managed by Old Mutual Financial Affiliates of $23.1 billion decreased by
4% over the year when compared on a like-for-like basis, excluding divested
funds of $23.0 billion.  This group recorded $2.1 billion of net negative cash
flow during the year.





Business development



During 2001, eight affiliates were sold, and the principals of two additional
affiliates purchased control of their organisations, with Old Mutual retaining
an equity interest.  Including divestitures already announced in 2002, fourteen
affiliates with approximately $36 billion in funds under management have been
sold to third parties or management.





US Asset Management



Moving forward



Old Mutual's US asset management group will continue to pursue a three-pronged
strategy of organic growth in 2002.  First, it intends to strengthen its
position and accelerate growth in the core US defined benefit plan, mutual fund
and wrap markets.  Secondly, it will aim to source new investors in carefully
defined areas.  Finally, it will look for ways to realise appropriate economies
of scale and cost-effectiveness across the organisation.  These steps should
position the US asset management group to benefit significantly from the
long-term growth of the investment management business in North America and
selected overseas markets.





Life Assurance



Financial performance



Americom commenced operations in May 2001 and F&G has been consolidated with
effect from 1 July 2001.  Together these businesses have contributed $19 million
to operating profit for that part of 2001 for which their results were
consolidated, after incurring $13 million of one-off transition and
restructuring expenses.



New business sales for the periods since acquisition have been extremely
encouraging at $871 million (Annual Premium Equivalent basis: $121 million).
The value of new business of $18 million, at a margin of 15%, has provided 16%
of the total value of new business for the Old Mutual Group in 2001.  Embedded
value profits were $23 million, and the embedded value of the US life businesses
was $788 million at the end of the year.





Business development



The focus of 2001 was on the creation of the US life organisation.  Americom
commenced operations with four regional sales offices and the creation of a
broad portfolio of life, fixed annuity and equity-linked annuity products for
sale via independent agents.




As part of the F&G ownership change, management of most of its $6 billion
portfolio was passed to OMAM(US)'s Dwight Asset Management, enabling the Group
to extract synergies from its existing US resources.  Dwight Asset Management
has undertaken a review of F&G's portfolio and has realigned the portfolio to
increase yield within acceptable risk parameters, while also bringing a more
active investment process to bear on the assets.





Moving forward



In January 2002 the closure of Americom's Kansas City office and the
consolidation of certain head office functions to Baltimore, Maryland were
announced.  The Group is well positioned to widen the product offerings
available under the F&G and Americom brands.  With the support of the Group, the
US life businesses intend to expand these brands by various marketing
initiatives during 2002.







United Kingdom & Rest of World Business Review



Operating profit, before long term investment return, from the Group's UK and
Rest of World asset management, life assurance and banking businesses of £74
million has decreased from £105 million in 2000.





Asset Management



Private Client



Financial performance



Gerrard operating profit of £2 million, before integration costs of £12 million,
decreased significantly from £26 million in 2000, principally due to declining
commission levels and reduced fee income when compared to 2000.



Retail volumes through the London Stock Exchange reduced dramatically during
2001 as retail customers cut back on trading activity and, in line with other
private client stockbroking firms, Gerrard's business suffered as a result of
this.  Consequently, commission income reduced by approximately £34 million, a
30% decrease when compared on a like-for-like basis to 2000.



Funds under management at 31 December 2001 were £17.4 billion, a decrease of 17%
from £20.9 billion at 31 December 2000.  The FTSE 100 index fell 16% over the
same period.  Fee-based revenues reduced by approximately £9 million, a 13%
decrease when compared on a like-for-like basis to 2000.



The management systems and compliance processes within the Capel Cure Sharp
operations have been strengthened, following £0.7 million of regulatory fines
incurred during 2001 in connection with bank account reconciliation and pension
mis-selling issues from prior years.



Gerrard - business development



A new Chief Executive and a number of other senior appointments have been made
to build the expertise and capability of the management team.  Gerrard will
continue to strive for efficiencies in operations and build revenues, taking
advantage of its scalable platform.  The integration is complete in all Gerrard
offices, enabling it to build on its current position to take advantage of more
favourable market conditions ahead.  Technology investment, made in 2001, will
now be directed toward building on existing client relationships and developing
new ones.



Gerrard's core proposition is a personalised investment solution, delivered to
the client through a direct relationship with a trusted adviser.  Gerrard is the
UK's largest private client investment manager and, with a single administrative
platform, client managers will now be in a position to focus increasingly on
growth opportunities.  By augmenting the core proposition with additional,
carefully selected and targeted products and services, the business is
positioned strongly to take advantage of market opportunities in wealth
management in the affluent and high net worth segments.



In conjunction with Nedcor, Fleming Offshore Banking was acquired in 2001 and
re-branded Gerrard Private Bank (GPB).  Initially operating offshore from the
Channel Islands and the Isle of Man, GPB will seek opportunities to extend its
offering onshore, giving the Group's UK businesses an opportunity to provide a
broader private banking service to their clients.





Fund Management



Financial performance



Operating profit from the Group's UK and Rest of World fund management
businesses of £6 million, decreased by 57% from £14 million in 2000.  Included
in these results are Old Mutual Asset Managers (UK) (OMAM(UK)) and Old Mutual
Asset Managers (Bermuda).  The Bermudan operation provides investment management
services to South African clients investing internationally, where the funds are
generally sub-advised by OMAM(UK), and to international clients investing in
South African funds.





OMAM(UK) - business development



OMAM(UK) continued to make good progress during the year and achieved net new
funds of £92 million in a difficult environment.  It has been focused on
increasing market share in the UK unit trust sector, which, despite market
downturns, maintains underlying growth.  The announcement in October 2001 of the
merger of the retail fund businesses of OMAM(UK) and Gerrard Investment Funds
under the management of OMAM(UK) was an important step in this process.  This
integration is expected to yield substantial benefits in terms of improved
client service, broader product scope, and meaningful savings through the
elimination of duplication.



The UK Select Smaller Companies Fund, launched in the first quarter, was one of
the industry's most successful fund launches during the year, raising a total of
£26 million when launched and reaching £99 million by the end of 2001.  The fund
obtained a AA rating from Standard & Poor's.

Other Financial Services



Financial performance



Operating profit from the Group's UK and Rest of World other financial services
businesses of £1 million decreased from £8 million in 2000.  Included in these
results are GNI, GNI Fund Management, Old Mutual Securities and the central
management and service costs associated with the UK businesses.  An operating
loss from Old Mutual Securities, UK property provisions, together with central
management and service costs, were the main contributors to the decrease in
operating profit.





GNI - business development



GNI produced operating profit before tax of £9 million, compared to £7 million
in 2000.  Whilst all areas of the business, with the exception of foreign
exchange, showed strong growth in revenues, financial futures had an exceptional
year, buoyed by interest rate volatility.  Volumes in margined equity products
grew steadily during the year, regardless of general equity market volumes, as
GNI's hedge fund client base expanded.



GNI's margined equity products continued to grow in 2001, with expansion driven
by the introduction of Contracts for Differences to European and US markets.
The transfer of the residual Gerrard & King business into GNI, as well as
increased activity in European equity markets, enhanced stock lending and repo
income growth at GNI.  Foreign exchange experienced reduced market volatility,
leading to reduced levels of customer interest.  A number of cost saving
measures and process efficiencies are being implemented at GNI in 2002.





Old Mutual Securities - business development



Old Mutual Securities (OMS) was adversely affected by the slump in market
volumes which was particularly marked in the small cap sector, its area of
strength, and which fell 36% in volume terms from 2000.  This was partly
mitigated by an increase in market share of OMS in the small cap market.  Income
from corporate financing activities fell 30%, as demand for services fell
sharply as a result of declining equity markets and a slowing economy.



OMS was involved in a number of corporate finance transactions during 2001,
which raised a total of £208 million of new capital for corporate clients.  In
addition, it acted as adviser on transactions with a value of £350 million.  OMS
took on a number of new brokerships during the year, including Business Post,
Synstar and Chorion.





Life Assurance



Financial performance



Operating losses, before long term investment return, from the Group's UK and
Rest of World life businesses of £7 million compared to an operating profit of
£7 million in 2000.  Excluding the start-up costs of £19 million in 2001
associated with the new UK life business, Selestia, the operating profit from
these businesses was £12 million, an increase of 71% over 2000.





United Kingdom - business development



The Group has continued to extract value from its UK life businesses, as
demonstrated by the post-year end disposal of its Isle of Man business for £36
million.



On 1 November 2001 the Group successfully launched Selestia, an IFA distributed
retail investment solution which is unique in the UK in bringing the disciplines
of institutional investment to the private investor.



Selestia has demonstrated the power of leveraging the Group's South African
resources and expertise.  Its core system has been taken from OMSA's successful
Investment Frontiers business in South Africa, and OMSA's South African
technology team was largely responsible for the delivery to market on time of
the UK enhanced proposition.





Rest of Africa



Included in the Group's results are operating profit, before long term
investment return, from its operations in Zimbabwe, Namibia, Malawi, Kenya and
Botswana of £6 million, which increased from £2 million in 2000.





India - business development



The Group's 26% owned joint venture life insurance company in India, OM Kotak
Mahindra, continued to make satisfactory progress during the year.  By the end
of the year, OM Kotak Mahindra had an agency force of approximately 1,000
agents, with offices in nine cities.  In 2002, it intends to increase its agency
force further, open an additional four offices, and substantially diversify its
product range.





Banking



Operating profit from the Group's UK and Rest of World banking operations of £79
million have increased by 36% from £58 million in 2000.  These results
principally reflect the international and offshore banking activities of Nedcor,
which include Gerrard Private Bank.





Group Financial Review





Operating profit and earnings per share



The reduction in the average Rand:Sterling exchange rate from R10.52 in 2000 to
R12.39 in 2001 has had a significant impact on the strong contribution of the
Group's South African businesses.  As a result of this factor, the encouraging
underlying performance of the Group's South African businesses has not been
reflected in the operating results on a Sterling basis.  Group smoothed
operating profit(1) of £856 million has decreased by 6% from £911 million in 2000.


(1) see footnote* in Highlights




Operating earnings per share(1) of 13.2p decreased 22% from 17.0p per share in
2000, largely due to the reduction in operating earnings and the increase in the
effective tax rate.

(1) see footnote* in Highlights



Goodwill



A review has been carried out of the carrying value of the Group's UK private
client and US asset management businesses acquired in 2000 to assess whether
there has been an impairment in value.  As a result of this exercise, the Group
has reduced the carrying value of its unamortised goodwill asset by £500
million, reflecting the impact of declining equity markets.  This item has not
been presented within smoothed operating profit but, along with goodwill
amortisation, forms part of statutory operating profit.



As noted in the trading statement issued by Old Mutual plc on 8 November 2001,
the Group has been in negotiation with Pilgrim Baxter's management to buy out
the remaining revenue share in this affiliate.  Old Mutual had an option to buy
out this revenue share for a total of $420 million, which expired, unexercised,
on 31 December 2001.  Consequently, an adjustment has been made to reduce
goodwill to remove the net of tax cost of this option.  Any renegotiation of the
purchase of the revenue share is likely to result in further goodwill.





Write-down of investment in Dimension Data Holdings plc



In the second half of 2000, an exceptional gain of £356 million was recognised
following the exchange of Nedcor Limited's 25.1% interest in Dimension Data
International Limited for the current holding in Dimension Data Holdings plc.
Following significant market movements during 2001, an exceptional write-down in
the carrying value of the Group's investment in Dimension Data Holding plc of
£269 million has been recognised, reflecting a market value of R14.50 per share
as at 31 December 2001.  Although both events are exceptional in the context of
their significance to the Group, the current year loss will form part of banking
operating profit in the statutory financial statements, while the prior year
gain has been classified as non-operating in accordance with Financial Reporting
Standard 3.





Acquisitions



With effect from 1 July 2001, the Group completed the acquisition of F&G, a life
assurance business based in the USA.  The total consideration of $635 million
was financed through the issue of new shares to a value of $300 million, and
through the utilisation of existing debt facilities for the balance which was
paid in cash.  £67 million of goodwill resulted from this acquisition.  The
Group acquired Americom in March 2001 for $23 million, giving rise to goodwill
on acquisition of £7 million. The Group also acquired Imperial Bank on 1 January
2001, and Fleming Offshore Banking on 1 June 2001.  The total consideration for
these acquisitions was £104 million, giving rise to goodwill of £69 million.
Fleming Offshore Banking was renamed Gerrard Private Bank during the year.




Other shareholders' income/expenses



Other shareholders' income and expenses of £29 million have decreased 15% from
£34 million in 2000.  Included in this amount is a long term investment return
of £12 million (2000: £17 million) earned on shareholders' funds in South
Africa, offset by net corporate expenses of £41 million (2000: £51 million).
Included in net corporate expenses are foreign exchange losses incurred on the
translation of unsold South African Rand dividends received in the final quarter
of 2001.





Taxation



The Group's effective tax rate (based on the tax charge as a proportion of
smoothed operating profit) of 24.4% (2000: 20.4%) is 5.6% lower than the UK
standard tax rate.  This is primarily due to the positive effects of tax-exempt
and low based income earned by the Group's life assurance and banking businesses
in South Africa.  The increase in this rate over the prior year reflects a
combination of the introduction of Capital Gains Tax in South Africa from 1
October 2001, the reduced impact of brought forward tax losses in the South
African life business, and the downturn in performance from the UK businesses.





Dividend



The Board recommends a final dividend of 3.1p per share, which, if approved at
the Annual General Meeting, will bring the total dividend per share for the year
to 4.8p, an increase of 2% from 4.7p per share paid in relation to the year
ended 31 December 2000.  Dividend cover is 2.7 times operating earnings per
share (2000: 3.6 times).



The dividend, which is subject to shareholder approval at the Annual General
Meeting on 17 May 2002, will be paid to shareholders on the register at the
close of business on 19 April 2002 for all the exchanges where Old Mutual plc's
shares are listed.  The shares will trade ex-dividend on the African exchanges
from the opening of business on 15 April 2002 and on the London Stock Exchange
from the opening of business on 17 April 2002.  The local currency equivalents
of the proposed dividend for shareholders on the South African, Malawi and
Zimbabwe branch registers and Namibian section of the principal register will be
determined using exchange rates on 4 April 2002 and be announced by the Company
on 5 April 2002.





Capital



Shareholders' capital has been affected during the year by a number of factors.
Firstly, capital has been reduced by £500 million as a result of the write-down
of our investment in our UK private client and US asset management businesses.
Secondly, capital has been increased through the acquisition of F&G, the
purchase of which was partially funded through the issue to the vendor of 190
million shares at approximately 107p per share.  Thirdly, shareholders' capital
has been negatively affected through Rand:Sterling exchange rate translation, as
a large proportion of shareholder capital is invested in South African
operations.  The Rand:Sterling exchange rate at the end of 2001 was R17.43:£1, a
decrease of 35% when reported in Sterling, from the 2000 closing rate of R11.31:
£1.  This, together with changes to the debt structure of the company, has
resulted in a gearing ratio (debt over capital plus debt) of 35% (2000: 25%) at
31 December 2001, or 34% (2000: 23%), net of cash and short-term investments,
which are immediately available to repay debt.





In November, Mutual & Federal returned R432 million to Old Mutual's
shareholders' funds through payment of a special dividend totalling R847
million.





Debt and debt facilities



Old Mutual plc is the principal funding vehicle for the Group.  During 2001 it
launched a $650 million convertible bond, rated A2 by Moody's Investor Service,
syndicated a £900 million five year revolving credit facility and launched a
£300 million Euro commercial paper programme, rated P1/F1 by Moody's Investor
Service and Fitch Ratings respectively.  These facilities, together with
existing substantial internal resources, greatly enhanced the Group's financial
flexibility.





Foreign exchange



Substantial proportions of the Group's operations are accounted for in
currencies other than Sterling.  As a result, fluctuations in the relative value
of Sterling to those currencies may be significant.  Where possible, the Group
seeks to reduce its balance sheet translation exposure by borrowing in
appropriate currencies.  As a result of the lack of liquid markets for the
African trading currencies, the Group does not currently hedge its translation
risk with respect to its holdings in that region, although it does sometimes
hedge specific forecast cashflows, such as the payment of dividends from South
Africa.  The 35% reduction in the Rand:Sterling exchange rate when reported in
Sterling, has therefore had a significant impact on Group equity shareholders'
funds which have reduced by 32% over the year, closing at £2,470 million, and on
Group embedded value, as discussed below.





Long term investment return



Having considered past experience and future expectations with regard to equity
investment performance, the long term investment return rate assumption used in
calculating the smoothed earnings of the Group's South African insurance
businesses for 2001 has been left unchanged at 14%.  The return earned by
assets, mainly bonds, backing F&G's liabilities have been smoothed with
reference to the actual yield earned by the portfolio, which translates into a
long term rate of return of 7.04%.





Embedded value



Embedded value is the sum of the shareholders' net assets, adjusted to reflect
listed subsidiaries at market value, and the present value of the future
after-tax profit from the life business written and in-force at the valuation
date, adjusted for the cost of holding appropriate solvency capital.  The change
in the embedded value over the period adjusted for any capital raised and
dividend provided for, gives an economic measure of performance.



Embedded value of £3,522 million at 31 December 2001 decreased 37% during the
year from £5,553 million at 31 December 2000, as positive growth in Rand terms
was offset by a 35% depreciation in the Rand when reported in Sterling, a
goodwill write-down and a 27% decline in the Nedcor share price.





Embedded value per share of 94p reduced by 40% from 156p in 2000.  The value of
in-force life assurance business increased 17% in Rand, excluding the US life
business acquisitions, due to good investment returns on South African
policyholders' funds, a 16% increase in the embedded value of new South African
life business and the effect of changes in some of the assumptions used to
calculate the embedded value.  Actual life profits earned have continued to
exceed those implicit in the embedded value assumptions, giving rise to positive
experience variances.







                      This information is provided by RNS
            The company news service from the London Stock Exchange

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