Interim Results - Part 1

Old Mutual PLC
12 August 2002

PART 1


Old Mutual plc

Results for the six months ended 30 June 2002

Solid performance in challenging conditions



Highlights



•   Operating profit*: £381m (2001: £455m), a decrease of 16% in Sterling
    R6,059m (2001: R5,195m), an increase of 17% in Rand

•   Operating earnings per share*: 5.8p (2001: 7.2p**), a decrease of 19% in
    Sterling 92.9c (2001: 82.4c**), an increase of 13% in Rand

•   Record life premiums of £2.7bn (2001: £1.4bn) and record life sales of
    £288m annual premium equivalent (2001: £132m)

•   Net fund inflows of $1.5bn for our US asset management business

•   Value of new life business: £58m (2001: £28m**), an increase of 107% in
    Sterling R927m (2001: R319m**), an increase of 191% in Rand

•   Acquisition of BoE Limited by Nedcor Limited successfully completed in
    July and integration now underway

•   Group return on equity of 17%

•   Embedded value: £3,775m (31 December 2001: £3,522m), an increase of 7%
    in Sterling R59,814m (31 December 2001: R61,364m), a decrease of
    3% in Rand

•   Interim dividend of 1.7p (2001: 1.7p) maintained, representing an
    increase of 21% in Rand***



Jim Sutcliffe, Chief Executive, commented:

'These are solid results, given the depressed state of world stock markets. We
are making good progress in our strategy to internationalise the Group. In
particular, our US life operations grew quickly and there were overall positive
cash flows at our US asset management business.



Our South African life businesses showed good new business growth and, at
Nedcor, the acquisition of BoE is expected to bring substantial benefits to
shareholders.



We do not expect market conditions to improve in the second half of 2002, but
the diversity of our operations provides both a defence against difficult
markets and the opportunity to take advantage of growth areas.'

12 August 2002




Wherever the items asterisked in the Highlights are used, whether in the
Highlights, the Chief Executive's statement or the Business review, the
following apply:

* Operating profit is based on a long term investment return before goodwill
amortisation, write-down of investment in Dimension Data Holdings plc and short
term fluctuations in investment return. Operating profit for the six month
period ended 30 June 2002 includes the release of a £25m (R400m) exceptional
general risk provision at Nedcor. Operating earnings per share are similarly
based, but are also after tax and minority interests.

** Operating earnings per share for the first half of 2001 have been restated
(from 7.8p and 89.3c respectively) to incorporate a revised policy for the
recognition of deferred tax in accordance with Financial Reporting Standard
(FRS) 19. The value of new life business in the first half of 2001 has been
restated (from £27m and R310m respectively) in respect of transfers from the
Guaranteed Capital Fund that were not previously categorised as new business
premiums.

*** Indicative only, based on 26.9c, being the Rand equivalent of 1.7p converted
at the exchange rate prevailing on 30 June 2002. The actual amount to be paid by
way of interim dividend to holders of shares on the South African branch
register will be by reference to the exchange rate prevailing at the close on 3
October 2002, as determined by the Company, and will be announced on 4 October
2002.







Media enquiries:


Old Mutual plc
Julian Roberts, Group Finance Director                 Tel: [phone]
James Poole, Director, Investor Relations
Nad Pillay, Investor Relations (SA)                    Tel: [phone]

College Hill
Tony Friend/Gareth David (UK)                          Tel: [phone]
Nicholas Williams/Robyn Hunt (SA)                      Tel: [phone]



Chief Executive's statement

Old Mutual delivered solid results in the first half of 2002, despite the impact
of volatile equity markets. Our increased internationalisation is proving its
worth, as our US businesses in particular performed well, with our US life
business expanding rapidly and our US asset management earnings being maintained
despite the difficult market.

Operating earnings per share were down 19% at 5.8p (2001: 7.2p) compared to the
same period last year, after a 28% decline in the average R/£ exchange rate when
reported in Sterling. In Rand, they were up 13% to 92.9c (2001: 82.4c). Assets
under management fell only 7% from 31 December 2001 to £133bn - a satisfactory
result in difficult markets, particularly in the USA, where 65% of our managed
assets are located. Operating return on shareholders' equity was a very
creditable 17% during the period.

Our embedded value improved to 100p per share at 30 June 2002. Value of new
business reached £58m (R927m), an increase of over 100% compared to the
equivalent period in 2001. 60% of gross life premiums written came from our US
life business, which delivered an excellent result as the market turned in its
favour. Before debt, our embedded value was divided 53% South Africa, 35% USA
and 12% UK and Rest of World.

Our 53% owned banking subsidiary, Nedcor, successfully completed the acquisition
of BoE Limited in South Africa in July - part of our strategy of participation
in consolidation of the South African financial services sector. We sold NWQ in
the USA, the sale being completed on 1 August 2002, as well as two other US
asset management affiliates, as we continued to tidy up our US asset management
holdings.

SOUTH AFRICA

Sales at Old Mutual South Africa were up 21% over the equivalent period in 2001,
and were in line with the level seen in the second half of last year. In
particular, we had much improved regular premium Employee Benefit sales, as more
rational pricing returned to the market. The productivity of Personal Financial
Advisers (our agency force) improved sharply, although the number of our agents
grew more slowly than we had hoped. Bancassurance annual premium equivalent
sales increased 35%, and we continue to expect more growth from this source.
Value of new business was R403m, a gain of 36% on the first half of last year.
New business margins increased to 25%, but were down 2% from the year ended 31
December 2001. We continue to offer our customers very competitive returns on
the back of consistent performance from our South African asset management
subsidiary.

Operating profit was in line with that for the equivalent period last year in
Rand terms. Investment losses, particularly those caused by higher interest
rates, together with higher costs for US$-based computer software both reduced
profits. The underlying return on equity was within our target range, at 21%.



Nedcor produced good underlying growth in its asset base and profit. Its
operating profit was impacted by translation losses on its integrated assets
outside South Africa caused by the strengthening of the Rand during the six
months, but these were partially offset by the release of a R400m exceptional
general risk provision established by Nedcor at 31 December 2001 in anticipation
of currency exchange-related bad debts which did not materialise. Nedcor's
return on equity met our target at 21%. We have written down Nedcor's holding in
Dimension Data Holdings plc further to reflect its market value at 30 June 2002.
Nedcor signed its contract with Swisscard for the provision of credit card
servicing, and this is expected to begin to generate income in the second half.

Our 51% owned general insurance subsidiary, Mutual & Federal Insurance Company
Limited, produced another good set of results with an underwriting profit of
R32m, despite higher reinsurance costs and claims inflation.

USA

Our US asset management results demonstrated the value of our diversified
portfolio of fund managers and our orientation towards value-style investment
management. Assets under management at our retained operations declined by only
3.2%, despite the S&P 500 Index falling by 14% and the Nasdaq Composite Index by
25%. Net client inflows were $1.5bn. Investment performance exceeded the
benchmark for 85% of our clients over 3 years. Particularly good results were
achieved at Dwight, our fixed income manager, Barrow, Hanley, Mewhinney &
Strauss, our Dallas based firm which sub-advises a key Vanguard fund, and
Pacific Financial Research, our Los Angeles based deep value manager. Pilgrim
Baxter's growth-oriented funds struggled, but its marketing efforts for funds
sub-advised by some of our other firms were successful, adding $1.3bn to funds
under management at 30 June 2002. Return on investment remains at about 7%.

Our US life insurance business had a highly successful first half. Single
premium sales for the period topped $2.2bn and annual premium equivalent sales
were $251m, more than triple the volumes at time of purchase and accounting for
60% of the Group's worldwide life sales. Customer conservatism favoured our
bond-based product range over equity mutual funds, and low short term interest
rates favoured our 5-10 year bond based products over bank CDs. Margins expanded
a little, as the growth in volumes spread the fixed expenses of the business
over a bigger base. Further margin improvement through expense cutting measures
was delayed to cope with the high volume of business. Default experience in the
business's bond portfolio remained within the parameters built in at the time of
purchase, and was offset in part by trading gains. Smoothed operating profit
jumped from $19m in the second half of last year (after meeting $13m of
transition costs) to $48m, with the underlying increase being 50%. Most of the
assets of Fidelity & Guaranty Life are now managed by Dwight, and improved
yields were achieved on the portfolio, while maintaining an 'A' average credit
quality. Return on equity was 9%.

UK AND REST OF WORLD

Trading conditions in the UK have been difficult, with the FTSE 100 Index
falling by 11% over the period. Nevertheless, Gerrard made a small profit and
started to implement a profit improvement plan under its new management team.
There was a small outflow of client funds at Gerrard, with expenses running at
an annual rate some £10m less than last year. Old Mutual Asset Managers (UK) was
one of the few firms in the market to attract net new funds, and we continue to
invest in its development. Volumes of business at GNI benefited from volatility
in the market in the second quarter.

FINANCE

Our gearing ratio, at 33%, improved from the 2001 year end level of 35%. We
successfully issued a €400m bond in April, and renewed an enlarged $600m
revolving credit facility in July. As a result our cash position remains strong.
At the end of May we successfully placed the shares in Old Mutual held by the St
Paul group as part of the purchase of Fidelity & Guaranty Life, and raised a
small amount of capital at the same time. This removed a potential overhang from
the market.

The solvency ratios of our key businesses are robust, with excess assets
equivalent to 2.6 times statutory capital at our South African life business, a
capital adequacy ratio of 11.2% at Nedcor, and a solvency ratio in excess of 70%
at Mutual & Federal.

We have also been able to provide the capital required to support the
exceptional growth of our US life business from the proceeds of the share issue
mentioned above and from the sale of NWQ.

DIVIDEND

We have shown our confidence in the Group's prospects by maintaining the interim
dividend at 1.7p per share. The indicative Rand equivalent is 26.9c, based on
the exchange rate at 30 June 2002, but the actual Rand and other overseas
currency equivalents will be determined by the Company by reference to the
exchange rates prevailing on 3 October 2002 and announced to the markets on 4
October 2002. The dividend will be paid on 29 November 2002 to shareholders on
the register at the close of business on 18 October 2002. Further details of the
interim dividend are contained in the Business review attached.

OUTLOOK

Having endured negative equity markets and adverse currency movements in the
last twelve months, the solid results produced so far in 2002 show the inherent
strength of the Group and the benefit of its international strategy as it faces
the future. The bedding down of recent acquisitions is well under way. We do not
expect any significant improvement in conditions in the second half of 2002, but
the diversity of our operations makes us well placed for difficult markets, and
allows us to take advantage of growth opportunities where they occur. We
continue to reduce expenses to help offset the effects of declining markets, and
our South African businesses remain a powerful base for our strategy of
internationalisation.



Jim Sutcliffe
Chief Executive

12 August 2002









Business review

GROUP SUMMARY FINANCIAL PERFORMANCE

The Group's results in Sterling have been impacted by the weakening of the
average Rand:Sterling exchange rate from R11.42 in the first half of last year
to R15.88 in the current reporting period. This has had the effect of reducing
operating profit (after tax and minority interests) for the period ended 30 June
2002 by £71 million. Operating earnings per share of 5.8p decreased by 19% from
7.2p in 2001.

Group value of new business of £58 million increased from £28 million in the
equivalent period in 2001, primarily due to a contribution of £31 million from
our US life business in the first six months of 2002.

The Group's embedded value in Sterling has, however, benefited from a
strengthening in the Rand:Sterling exchange rate from R17.43:£1 at 31 December
2001 to R15.85:£1 at 30 June 2002. As a result, embedded value increased from
£3,522 million at the beginning of the year to £3,775 million (or 100p per
share) at 30 June 2002.

Equity markets throughout the world declined significantly in July 2002,
particularly the FTSE / JSE AFRICA ALSI, which decreased 13% during the month.
This has not affected Group capital, but has decreased our embedded value by 5%
to approximately £3.6 billion, or 95p per share.

TAXATION

The Group's effective tax rate (based on the tax charge as a proportion of
smoothed operating profit) reduced marginally to 27.8% from 28.1%, restated to
incorporate revised deferred tax provisions in accordance with FRS 19.  The rate
benefited from a reduction in Secondary Tax on Companies in South Africa, offset
in part by the greater profit contribution from our US businesses.

DIVIDEND

The Board has declared an interim dividend of 1.7p per share, which will be paid
on 29 November 2002 to shareholders on the register at the close of business on
18 October 2002. The equivalent of this dividend in the local currencies of
South Africa, Malawi, Namibia and Zimbabwe will be determined by the Company on
3 October 2002 and will be announced to the markets on 4 October 2002.  Our
shares will trade ex dividend from the opening of business on 14 October 2002 on
the JSE Securities Exchange South Africa and the Malawi, Namibian and Zimbabwe
Stock Exchanges and from the opening of business on 16 October 2002 on the
London Stock Exchange. No dematerialisation or rematerialisation of shares
within the South African STRATE system may take place between 14 October 2002
and 18 October 2002 (both dates inclusive).

INTERIM REVIEW REPORT BY KPMG AUDIT PLC

The original version of the review report on the interim results signed by our
auditors, KPMG Audit Plc, is available for inspection at our registered office
at 3rd Floor, Lansdowne House, 57 Berkeley Square, London W1J 6ER.

SOUTH AFRICA

LIFE ASSURANCE

Summary financial performance

The total annual premium equivalent (APE) for the period was R1,624 million, 21%
ahead of the corresponding period last year, while the value of new business at
R403 million was 36% higher. The average margin on new business increased from
22% to 25% of APE although it has reduced 2% from 31 December 2001.

Our South African life business operating profit, before long term investment
return, of R1,541 million, was 2% down on the R1,565 million recorded in the
same period last year.

The value of in-force life business of R9.2 billion has reduced by 3% from R9.5
billion at the beginning of the year. This is primarily attributable to negative
net cash flows of R2.3 billion during the period.

The life company's capital has decreased marginally to R34 billion at 30 June
2002, mainly due to small negative returns earned on shareholders' funds. This
capital is sufficient to provide cover of 2.6 times the statutory capital
adequacy requirement of R13.2 billion.

Individual Business

Financial performance

New business volumes for Individual Business have been strong in the first half
of 2002, consistent with those in the second half of 2001. The new business APE
of R1,270 million was 11% above the R1,140 million reported in the first half of
2001. Recurring premium business was up a pleasing 23%, driven primarily by the
sale of Investment Horizons and Greenlight products, launched in November 2000
and May 2001 respectively, and the re-pricing of the Group Schemes business
funeral product range in the second half of 2001. Single premium business was
down 5% (but including South African investment into the Old Mutual
International offshore product range using the R750,000 individual offshore
investment allowance, it was down only 2%). The volatility of the Rand and
uncertainty in global investment markets adversely impacted the growth in single
premiums.


The value of new business was up 19% from R219 million to R261 million as a
result of higher new business volumes.

Operating profit, before long term investment return, of R1,096 million was 1%
up on the same period last year. Operating profit for the period was adversely
affected by less favourable investment performance than in the first half of the
prior year.

Business development

The customer segmentation strategy launched in 2001 has brought increased focus
and improved customer service. Significant progress has been made in the product
offerings to the mass affluent market during the first half of the year, with
the reorganisation of the Private Wealth management business and the launch of
Fairbairn Capital in July 2002. Dollar and Sterling denominated life, endowment
and investment contracts were launched to satisfy the demand from Private Wealth
clients using their R750,000 offshore investment allowance, through our Guernsey
operation.

Distribution capability has continued to grow across all income segments, with
the total sales force up by 10% from the first half of 2001. Productivity has
also improved in the first half of the year, which has resulted in increased
distribution efficiency and has positioned the business favourably to move
forward.

Further progress has been made in bancassurance initiatives with Nedcor. A
Nedbank branded life-wrapped savings product was successfully developed and
launched, and sales in bank branches by bank staff are progressing well, as are
the advisor sales in Nedbank and Peoples Bank. Total bancassurance APE was up
35% on the same period last year.

Outlook

Individual Business is leading the way in product development, and additional
product launches are expected to take place during the second half of the year.
Broker sales relationships are expected to continue to develop and the agency
sales force to increase, with a strong focus on productivity and growing the
business in South Africa.

Group Business

Financial performance

The new business APE of R354 million for Group Business was up 77% from R200
million in the first half of 2001, driven by substantially higher recurring
premiums, and with single premiums up 19%. The value of new business at R142
million was 84% up on the R77 million reported in the same period last year. The
average margin of 40% is slightly above the 39% for the equivalent period last
year.


Operating profit, before long term investment return, at R445 million was 7%
down on the first half of 2001, mainly due to the additional costs of
implementing a new administration platform and due to lower investment returns
on the portfolio backing the risk business.

Business development

During the first half of the year good progress has been made towards securing a
number of significant pensioner liability outsourcing arrangements. Investment
in new information technology systems has continued during 2002 and, with the
implementation of the new administration system, Group Business is in an
excellent position to capture new business and retain existing business.
Development work to date has created the opportunity to move several significant
existing clients on to new platforms offering additional functionality and
product features, and two major full-service clients are currently being
migrated.

Outlook

The systems and product development of the last two years have created an
environment where unit cost reduction can be delivered together with increased
product functionality and revenue opportunities. These, together with the strong
capital position of the life company, should enable Group Business to continue
to target new clients, as well as leveraging its existing client base.

ASSET MANAGEMENT 

Fund management

Fund management operations in South Africa include Old Mutual Asset Managers
(South Africa) (OMAM(SA)), Old Mutual Unit Trusts (OMUT), Old Mutual Properties,
Galaxy Portfolio Services and Old Mutual Specialised Finance.

Summary financial performance

Our South African asset management operating profit was R207 million, compared
to R206 million in the same period last year. The negative impact of changes to
industry guidelines and practice in relation to trading activities in the unit
trust industry has been offset by higher asset levels.

Total funds managed in South Africa grew by 2% from R261 billion to R266 billion
over the six months.

Business volumes through our web-based unit trust dealing system, Fundsnet, were
disappointing, and the decision to close this operation took effect in the first
half of this year.

Investment performance

OMAM(SA)'s investment performance relative to its peers and to index-related
benchmarks showed considerable improvement during the first half. OMAM(SA) was
placed second out of the ten major asset management firms in the Alexander
Forbes Large Managers' Watch survey for its returns on third party discretionary
balanced-fund clients. Performance for the general life funds for the year to
date remains above benchmark and ahead of peers.

Outlook

Recent weakness in the global and South African equity markets has directly
affected absolute return levels. The institutional asset management industry
remains competitive, but despite this OMAM(SA) has seen increased activity in
new business.

BANKING

Financial performance

Operating profit from our banking operations of R2,035 million increased by 6%
from R1,918 million in the first half of 2001. Nedcor's contribution to these
results was R2,080 million (2001: R1,970 million), offset by a R45 million
(2001: R52 million) loss from Old Mutual Banking Services.

Following a turbulent and unsettled period in the earlier part of 2002, the
South African banking industry has recently shown a return to stability. Nedcor
made a significant contribution towards this by successfully concluding a merger
with BoE Limited with effect from 2 July 2002. In these difficult market
circumstances Nedcor performed well at core level, while the development of key
alliances continued. Core earnings, excluding all translation gains and losses
and exceptional general risk provision movements, grew by 18% to R1,560 million
(2001: R1,317 million), comprising a solid 21% growth in South African
operations and 8% growth in international operations.

Nedcor's headline earnings were again significantly influenced by the volatility
in the Rand exchange rate, with the large translation gains of last year
becoming translation losses this year. Notwithstanding this, headline earnings
grew by 3% to R1,524 million (2001: R1,485 million), including translation
losses of R436 million (2001: translation profits of R168 million), but offset
by the release of the R400 million exceptional general risk provision prudently
raised at 31 December 2001.

Total advances grew by 14%, despite a reduction of R7 billion in Rand-translated
offshore advances. Net interest income grew by a more muted 10%. Non-interest
revenue, excluding translation gains and exceptional items, grew strongly by 26%
to R2,690 million (2001: R2,141 million). The foundation for this increase was
pleasing volume-driven growth of 16% in commission and fees, which rose to
R1,761 million (2001: R1,520 million).

The credit climate held steady during 2002, despite increased interest rates,
and the arrears trend has again shown an improvement. At 31 December 2001, as a
consequence of the substantial depreciation in the value of the Rand and the
then prevailing uncertain business environment, the general risk provision was
prudently supplemented by R400 million to cover unidentified but inherent risks
that may have resulted from these exceptional events. This provision has been
reversed in full at 30 June 2002, given that the Rand has strengthened and
economic conditions have stablilised.

The market value of Nedcor's investment in 103 million shares in Dimension Data
Holdings plc, listed on the London Stock Exchange, has declined further and has
been marked to market at its 30 June 2002 price of R6.45 per share, down from
R14.50 at 31 December 2001. The net write-down of R690 million after taxation
includes related translation losses and the release of a deferred tax credit of
R140 million provided last year against corresponding translation gains.

Business development

In addition to the merger with BoE, Nedcor continues to develop and invest in
its key growth strategies. Good progress continues to be made with the
integration of its banking alliances. These include the partnerships with
Capital One, Imperial Bank, JD Group, Old Mutual, Pick 'n Pay and the
empowerment groupings in Peoples Bank. Over the past five years its strategy has
enabled it to increase its domestic market share in total banking assets from
15.7% to 18.3% prior to the merger with BoE, and to 23.3% including BoE.

Another strategic objective is to leverage Nedcor's core processing competence
in the international arena and so create a recurring low-risk external income
stream. Good progress has been made and the Swisscard outsourcing contract is
expected to begin generating income in the second half.

BoE

The merger with BoE has been the most significant recent event at Nedcor. All
requirements and conditions precedent relating to the merger were successfully
met, and BoE Limited became a wholly owned subsidiary of Nedcor with effect from
2 July 2002. This followed unanimous BoE management and board support, and 98%
shareholder support, for Nedcor's R7.5 billion offer, which was partly funded
from the raising in July of South Africa's largest private sector bond issue of
R4 billion. The merger with BoE fits ideally into Nedcor's growth strategy and
most of BoE's business units align well with those of Nedcor. In addition,
Nedcor's scalable technology platforms will benefit from the volume increases
introduced by BoE, and there is potential for significant cost synergies from
the merging of duplicated services.

The merger with BoE is also the catalyst for achieving a Nedcor groupwide
restructuring and realignment. Management is highly cognisant of the integration
risks flowing from the merger and has reorganised responsibilities and resources
to ensure that some are dedicated solely to the merger process, while most
continue to devote their full attention to ongoing operations. Integration
milestones are being set and will be announced to the market in the near future.

Outlook

The solid performance of Nedcor's core business positions it well for the
future, given an improving South African environment and the long awaited arrest
in the decline in interest margins of the last few years. The BoE merger is
being structured to enhance these prospects. Following many years of significant
technology investment, the merger with BoE provides the enlarged Nedcor Group
with even better opportunities for leveraging advantages of scale to increase
efficiencies and reduce costs.  Furthermore, offshore processing is poised to
build its contribution of recurring income to meaningful levels over the medium
to long term. Nedcor's strategy and alliances have assisted it in gaining market
share in recent years. This will now be augmented by the addition of BoE
products. Given continued growth in its core business and alliances, stable
credit and interest rate conditions and a successful integration with BoE,
Nedcor anticipates positive results for the remainder of 2002 and beyond.

GENERAL INSURANCE

Mutual & Federal

Financial performance

Operating profit, including long term investment return, from our 51% owned
South African general insurance operation, Mutual & Federal Insurance Company
Limited (Mutual & Federal), of R308 million, represented an increase of 12% from
R274 million in the first half of 2001.

Mutual & Federal returned an underwriting result of R32 million under UK GAAP
for the period, compared to R11 million for the equivalent prior year period.
This was an excellent result in a difficult trading environment, and reflects
the improvement in the operating ratio from 98.7% to 97.7%. Gross premium income
of R2.6 billion was 11% higher than in the first half of last year, while net
premiums earned increased 9% from the equivalent period in 2001, reflecting
higher levels of reinsurance and increased reinsurance costs.

Underwriting profitability was improved through stringent risk selection and
withdrawal from unprofitable business. As a result premium growth has been
modest, although positively affected by the consolidation of the premium book
following the CGU acquisition in 2000. Management focus on control over claims
and expenditure has also contributed to the improved result. The solvency
margin, being the ratio of net assets to net premiums, remained high and was in
excess of 70% in Rand terms at 30 June 2002.

Business development

The full integration of the CGU business with that of Mutual & Federal was
completed successfully by December 2001, and the synergy benefits and savings
from increased staff productivity are currently being realised. Integration and
conversion work in respect of the acquired Sentrasure and FGI Namibia operations
are progressing positively and these businesses are expected to be substantially
integrated by the end of the year.

Outlook

Looking ahead Mutual & Federal is cautiously optimistic about the prospects for
the balance of the year. Although certain portfolios remain underrated further
corrective action is planned and, together with other improved underwriting
measures, are expected to yield a profitable result. Effective control of
expenses and improved productivity following the integration of CGU continued to
benefit the organisation and will be a positive factor in the period ahead.

UNITED STATES

ASSET MANAGEMENT

Financial performance

Operating profit of $88 million from our US asset management business decreased
by 5% from $92 million for the equivalent period in 2001. A strong focus on head
office costs, overall robust fund performance and positive net fund flows were
offset by negative market performance in the period under review. The securities
markets remained challenging, with a 14% decline in the S&P 500 Index and a 25%
decrease in the Nasdaq Composite Index during the first six months of 2002.

Funds under management, including funds managed for Old Mutual's US life
business, were $141 billion at the end of the period, compared to $150 billion
at the beginning of the year. During the six months, although net fund inflows
of $1.5 billion were received, this was offset by the divestiture and transfer
of funds of $5.4 billion and market-related declines of $4.8 billion. The
resilience to difficult equity market conditions reflected in these results
underline the benefits to the Group of the diversity of its US asset management
operations, as well as the contribution of value-oriented funds and fixed-income
products.

Superior relative fund performance continued to be a hallmark of our US
investment management business, with a majority of products outperforming their
benchmarks over one- and three-year periods. At 30 June 2002, eighteen of the
group's forty-four mutual fund portfolios rated by Morningstar carried four- and
five-star ratings. On an asset-weighted basis, the four- and five-star funds
managed by our US firms represented more than 65% of their total mutual fund
assets rated by Morningstar at the close of the period.

Business development

The senior management team was significantly strengthened in April with the
addition of a Chief Operating Officer and a Head of Sales, Marketing and Product
Development. Both are experienced and well-respected industry professionals who
aim to build on the Group's broad investment capabilities to increase market
share. Branding initiatives involving website improvements and mutual fund
administration were also successfully completed in the first half of the year.

Outlook

The US asset management firms offer an exceptional breadth of high quality
investment products to a diverse client base. Their strategy for the remainder
of the year is to continue to reduce overhead expenses and reallocate resources
to support planned marketing and distribution synergies. These include
sub-advisory relationships using the Pilgrim Baxter retail platform, the new
centralised wrap entity and managing assets for our life assurance business.
Financial results in the second half of the year will continue to be affected by
trends in the equity and fixed income markets.

Old Mutual Asset Managers (US) (OMAM(US))

Financial and fund performance

Operating profit from the seven affiliates within OMAM(US) of $31 million
compared to $32 million for the equivalent period in 2001. Overall, these firms
benefited from a market preference for fixed income products and value-style
equity investments, offset by adverse market movements.

Funds under management of $78.1 billion at the end of the period have increased
by 2% from $76.7 billion at the beginning of the year. These funds include those
managed by Dwight Asset Management on behalf of the Group's US life business.
Fund performance during the period was impacted by negative market movements of
$1.7 billion, or 2% of opening funds under management. OMAM(US) recorded net
fund inflows of $3.1 billion.

Outlook

As part of its strategy to expand distribution capabilities, on 1 August 2002
OMAM(US) transferred ownership of NWQ, a value-oriented equity fund manager with
$7.4 billion of funds under management, to The John Nuveen Company (Nuveen) for
$120 million and entered into a strategic alliance to sub-advise future
investment products sponsored and distributed by Nuveen. NWQ contributed $6.5
million to operating profit and $1.1 billion in net fund inflows during the six
months ended 30 June 2002.

OMAM(US)'s multi-style, multi-product offerings have potential attractions for
other financial services organisations that have broad distribution but need to
supplement their existing product lines. To leverage its asset management
capabilities, OMAM(US) has established a centralised marketing and service
entity focused on 'wrap accounts' for external financial services firms. Led by
the Head of Sales, Marketing and Product Development, the team is working
closely with the OMAM(US) firms to generate new business.

Pilgrim Baxter & Associates

Financial and fund performance

Operating profit from Pilgrim Baxter of $16 million decreased by 45% from $29
million in the equivalent period in 2001, primarily due to market-driven
declines in growth-oriented investment products.

Funds under management of $8.9 billion at the end of the period decreased 29%
from $12.6 billion at the beginning of the year. The firm recorded net fund
outflows of $1.2 billion, or 10% of opening funds under management during the
period, and market declines further reduced funds under management by $2.5
billion.

Business development

Pilgrim Baxter is the primary distribution platform for the Group's mutual fund
business in the USA, including recently established funds sub-advised by other
firms within the asset management group. Pilgrim Baxter attracted assets of $1.3
billion for these portfolios during the first six months of 2002.

In March 2002, we negotiated terms to acquire the residual 20% revenue-share
interest of Pilgrim Baxter through the payment of $175 million plus an earn-out
over five years if profit growth exceeds 7.5% per annum. The restructuring
strengthens our position in the sizeable US retail asset management market and
further aligns our interests with Pilgrim Baxter's principals in maximising
future growth and profits.

Old Mutual Strategic Affiliates

Financial and fund performance

Operating profit from the eleven firms that comprise Old Mutual Strategic
Affiliates amounted to $25 million for the first half of 2002, compared to $14
million in the same period last year. Transaction fees on property-related deals
boosted revenues by $7 million during the period. Highly rated funds managed by
Pacific Financial Research (PFR), a well-regarded value manager, contributed
significantly to these positive results recording positive net fund inflows of
more than $2.5 billion for the period. Funds under management for this group as
a whole of $36.6 billion at the end of the period decreased by 2%, compared to
$37.5 billion at the beginning of the year.

Business development

The Old Mutual Strategic Affiliates firms provide high quality breadth and depth
to product offerings, and economic agreements with many of the affiliates are
being restructured in order better to align mutual interests. For these firms,
the advantages of working with Pilgrim Baxter and OMAM(US) are significant.

Old Mutual Financial Affiliates

Financial and fund performance

Operating profit of $17 million in the first half of 2002 compared to $18
million in the equivalent period in 2001.

Funds under management of $17.6 billion at the end of the period declined 24%
from $23.1 billion at the beginning of the year. The opening balance included
$5.3 billion of funds managed by Suffolk Capital Management and CS McKee &
Company, both of which were divested at the beginning of the year. Market
performance during the period reduced funds by $0.7 billion, which was offset by
net fund inflows of $0.5 billion.

Business development

The firms in Old Mutual Financial Affiliates are held as financial investments
with operational and investment autonomy. These affiliates have a range of
options, including remaining indefinitely within the group or aligning with an
external organisation. The process of working with the affiliates is
collaborative, keeping in mind the needs and interests of each firm's clients,
principals and employees.

LIFE ASSURANCE

Financial performance

Our US life group's new business APE of $251 million was up by 107% from $121
million in the second half of 2001, driven by significantly higher fixed annuity
sales. On a gross basis, sales increased to $2.2 billion in the period from $871
million in the previous six months.

Operating profit at $48 million was 50% up on the second half of 2001 ($32
million before transition items related to the purchase of Fidelity & Guaranty
Life (F&G)). The business written was profitable, with the value of new business
at $45 million compared to $19 million in the second half of 2001. US life has
contributed 53% to the Group's total value of new business in the first half of
2002. New business margins increased from 15% in the second half of 2001 to 18%
in this period. The value of in-force life business of $432 million increased by
10% from $394 million at the beginning of the year.

On a funds flow basis, our US life business attracted $1.9 billion in net
policyholder cash inflows in the first half of 2002, up 166% from the preceding
six months. Total invested assets increased from $6.4 billion at 31 December
2001 to $8.3 billion at 30 June 2002.

The US life investment portfolio has suffered, along with other bond investors,
due to write-offs and impairments. Write-offs totalled $29.2 million in the
period. US life is working closely with our OMAM(US) asset manager, Dwight Asset
Management Company, to manage these risks. Our US life business makes allowance
for anticipated bond defaults in pricing its products.

The US life group has benefited from our ownership, which is perceived in the
market as giving it a secure future. The key insurance rating agency, AM Best,
has this year reaffirmed F&G's 'A' credit rating, and removed it from review
status.

Business development

First half sales reached record levels. A portion of the increase reflects a
general market shift in consumer preference to fixed annuity products and an
increase in life assurance sales. Additional success can be attributed to
confidence in F&G's competitive positioning and secure future, leading to an
increase in market share. F&G has deepened its relationships with many agencies
and recruited a record number of new agents during the period.

Sales volume was also enhanced through multiple distribution channels. The
relatively new channel of bank-distributed products sold $675 million, while F&
G's core brokerage channel sold $1.3 billion in the period. Our Americom Life
brand continues to progress and recruit new agents.

The first half of the year saw our US life business' operations and servicing
teams expand to include new partners to assist our agents. This included the
creation of an additional sales support centre located in Lincoln, Nebraska.
Underwriting capacity was also enhanced through a new underwriting facility to
support increased life volumes. In June 2002, F&G saw the successful launch of
its first product under Old Mutual's new outsourced administration environment.

Outlook

Our US life business aims to continue to capitalise on current economic
conditions and consumer attitudes toward conservative investing that lean
towards fixed interest products and life assurance. As stock market volatility
continues, fixed interest products will remain a strong component in the US life
product portfolio. US life will continue to design and sell products that allow
competitive positioning as the US economy changes. To that end, the Group has
committed additional capital for US life to take advantage of current favourable
conditions. In the first six months of the year, it injected $65 million to
support increased sales.

The latter part of the year will see all distribution channels able to offer the
products of both F&G and Americom Life. This will allow agents to select from
the full range of US life's product portfolio.

UNITED KINGDOM AND REST OF WORLD 

ASSET MANAGEMENT

Private Client UK

Financial and fund performance

The integration benefit of operating from a single operating platform from
January 2002, together with renewed management focus on expense savings, has
reversed the losses incurred by our UK private client business, Gerrard, in the
second half of 2001. Gerrard's operating profit of £3 million represents a solid
performance against a background of lower commission levels and lower fee-based
revenues.

The average number of daily bargains was 6% lower in the first half of 2002 than
in the same period of 2001. This, coupled with a slight decrease in the average
commission per bargain, has resulted in a 9% decrease in commission revenues
compared to the first half of 2001.

During the period, the management of the £1.1 billion Gerrard Investment Funds
portfolio was transferred to Old Mutual Asset Managers (UK) Limited (OMAM(UK)).
Total funds under management reduced to £14.6 billion, after reflecting this
transfer of funds and also market-related movements.

Fee-based revenues, which are primarily driven by the value of funds under
management, have decreased by 11% when compared to the equivalent period of
2001, after adjusting 2001 revenues for fees earned on the funds now transferred
to OMAM(UK). This compares favourably to the decline of 17% in the average FTSE
100 Index between the first half of 2001 and the first half of 2002.

Business development

Following the successful integration of the UK private client business in the
latter half of 2001 and the appointment of a new executive team, Gerrard is
focused on positioning the business as the leading UK wealth manager,
particularly in the affluent and high net worth segments.

Fund management

Financial and fund performance

Operating profit from our UK and Rest of World fund management businesses was £3
million, compared to £1 million in the same period last year. OMAM(UK) has
benefited from managing the additional Gerrard Investment Funds since the
beginning of 2002, but the decline in equity markets has also affected financial
performance.

Business development

Following the successful launch of the UK Select Smaller Companies Fund in 2001,
OMAM(UK) launched the UK Select Mid Cap Fund and UK Select Large Cap Fund in the
first half of this year. Both launches were successful in achieving significant
fund inflows despite difficult market conditions, and have contributed a total
of £35 million of net new funds in the period. OMAM(UK)'s main area of focus for
the remainder of the year is on the retail market, predominantly through the UK
intermediary channel, and the hedge fund arena through increased products and
capabilities, while maintaining its superior performance philosophy.

Management is also carrying out integration programmes to consolidate both the
funds range and funds administration following the transfer of Gerrard
Investment Funds. The fund administration programme is expected to be completed
by the end of 2002 and fund rationalisation by mid 2003.

Other financial services

Financial performance

The Group's UK and Rest of World specialist financial services businesses
incurred an operating loss of £1 million, compared to a £3 million operating
profit in the first half of 2001. Included in these results are GNI, GNI Fund
Management, Old Mutual Securities and the central management and service costs
associated with the UK businesses.

GNI has benefited from a strong performance in its contracts for differences
(CfDs) and structured equities, which has been partly offset by lack of
volatility in the mature foreign exchange and financial futures markets. Its
operating profit of £5 million was in line with the equivalent period in 2001.

Business development

At GNI, good progress was made in developing growth opportunities in margined
equities businesses with the introduction of European CfD market products during
the period. Overall there has been an increase in the size and profitability of
its CfD business. Management is focused on developing GNI's structured equity
product range, while also implementing a number of cost saving measures and
process efficiencies.

Discussions regarding the possible sale of Old Mutual Securities to Beeson
Gregory plc were terminated during April 2002, following the latter's receipt of
a takeover approach. We remain committed to finding the appropriate means to
secure Old Mutual Securities' continued development, whether that is within Old
Mutual or as part of another group.

LIFE ASSURANCE

Financial performance

Operating losses, before long term investment, return from our UK and Rest of
World life businesses were £5 million compared to a loss of £1 million in the
first half of 2001. Excluding start-up costs of £6 million associated with the
new life business, Selestia, the operating profit from these businesses was £1
million.

Business development

Selestia offers multi-manager retail investment solutions to the UK market using
sophisticated investment tools based on a client's individual attitude to risk.
Selestia's fully online business operation represents a prime example of a
straight through processing operation, benefiting from the IT skills and
resources originally developed in our South African life company.

The business development of Selestia continues, following the successful launch
of ISA, PEP and unit trust products in November 2001. While market conditions
are difficult for the launch of a new business and the sales environment remains
challenging, the Selestia proposition has been well received within the market.
In the period, Selestia received FSA approval for its life assurance subsidiary,
launched a UK life bond and commenced the distribution of an offshore life bond
underwritten by Old Mutual International (Guernsey).



Independent review report by KPMG Audit Plc to Old Mutual plc

Introduction

We have been instructed by the company to review the financial information set
out on pages 24 to 53 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/
4: Review of interim financial information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit opinion
on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.

KPMG Audit Plc

Chartered Accountants
London
12 August 2002




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

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