Final Results

RNS Number:8427H
Old Mutual PLC
24 February 2003

PART 1

                                 Old Mutual plc

                  Results for the year ended 31 December 2002



                                   HIGHLIGHTS


*     Group operating profit* up 8% in Rand to R11,431 million, but down 15% in
      Sterling to #724 million

*     Operating earnings per share*, at 11.3p, 7% lower than in 2001 in
      Sterling, up 20% to 179 cents in Rand terms

*     Record life sales of #557 million on an Annual Premium Equivalent basis

*     Record value of life assurance new business at #130 million (after tax)

*     Asset management results resilient in difficult market conditions, with
      net positive cash inflows of over $5 billion (including $3.3 billion from 
      our US life operations) in the USA

*     Return on equity 16%

*     Final dividend unchanged at 3.1p**


" 2002 was another challenging year in world stock markets, and the strength of
the diversity of our businesses has been demonstrated in these results. We have
been focused on driving performance from our major acquisitions and realising
synergies around the Group. The economics of the long term savings industry
remain compelling, and we are well positioned to take advantage of opportunities
as they arise."


                                Jim Sutcliffe, Chief Executive, 24 February 2003



*   Operating profit is based on a long term investment return, before goodwill
amortisation and impairment, write-down of investment in Dimension Data Holdings
plc, Nedcor restructuring and integration costs and non-operating items.
Operating earnings per share are stated on the same basis, but after tax and
minority interests.



**  The dividend recommended (final 3.1p per share, making 4.8p 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 3 April 2003.


Old Mutual plc

Results for the year ended 31 December 2002 (continued)



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. Alternatively they are available for download from the Company's website 
at www.oldmutual.com

                                                                24 February 2003



Further enquiries:



Old Mutual plc, London:                           Tel: [phone]
Jim Sutcliffe, Chief Executive
Julian Roberts, Group Finance Director
James Poole, Director, Corporate Affairs          Tel: [phone]
Julie Saxton, Media Relations                          [phone]

or South Africa:
Nad Pillay, Head of Communications, South Africa  Tel: [phone]

College Hill Associates, London:
Gareth David                                      Tel: [phone]
Tony Friend

or South Africa:
Nicholas Williams                                 Tel: [phone]

Chief Executive's Statement



2002 was a year of bedding down for Old Mutual on its path to
internationalisation. Each of our recent acquisitions in the USA and UK made
progress towards its long term goals. Our acquisition of BoE made us the largest
bank in South Africa by some measures, and our core South African life assurance
business had a solid year in tough conditions.



Our results showed the benefits of the diversity that our recent acquisitions
have provided. We struggled with poor equity markets and volatile currencies,
but advanced strongly where the environment was favourable, as in the US fixed
income market. We now have a mix of equity and fixed interest-based businesses,
with a good spread of both retail and institutional clients. With some 60% of
our business in South Africa, 30% in the USA and 10% in the UK, we were able to
produce a resilient set of results.



Group operating profit(1)for 2002 totalled #724m, whilst operating earnings per
share(1) (EPS) were 11.3p (2001: #856m and 12.1p (both restated) respectively). 
A significant increase in US life profit and 10% increase in South African life
profit in Rand offset the impact of poor equity markets, the dramatic fall in
the Rand in late 2001, and currency translation losses at Nedcor. Results in
Rand were better - operating profit increased 8% and EPS 20%. Return on equity
remained very satisfactory at 16%. Our embedded value (adjusted for market value
uplift of listed subsidiaries) increased by 12% to #3.9bn, as the Rand
strengthened during 2002, but reduced in Rand to R54.3bn for the same reason.



We had record life sales of #557m (on an Annual Premium Equivalent basis) and
record value of life new business of #130m (after tax). We had particularly
strong results in the USA (included for a full year for the first time), where
our fixed interest-based annuity business was well positioned. Customers became
more conservative in the face of a downturn in the equity markets and low bank
CD rates, and consequently our product offerings were well received. Sales in
the USA were three times as high as for the year prior to our ownership. The USA
contributed 54% of our total life sales. Our South African sales force (PFA)
produced increased sales, particularly of recurring premium products; and we
were successful with some large sales of high margin group with-profit annuity
(Platinum) business.



Returns to customers have declined sharply in absolute terms, as investment
markets have declined. We are conscious of the implications, but we remain
convinced that the long term savings industry continues to have an attractive
future.



Our asset management businesses showed good relative investment performance for
their clients - over 80% of our US institutional clients had returns exceeding
their benchmarks for 3 year periods. OMAM(SA) was placed second in the AF Large
Manager Watch survey for the year. In the UK, OMAM(UK)'s fund performance
continued to improve, with top quartile performance being achieved over the year
for all recently launched retail funds.



Group assets under management for our retained businesses declined 14% to
#123.6bn. Net cash inflow of $5.1bn in the USA, our emphasis on value investing,
and the considerable fixed interest component produced this creditable result,
which compared favourably with declines of 22% in the S&P 500 Index, 32% in the
NASDAQ Composite Index, and 24% in the FTSE 100 Index.



We made a small profit at Gerrard in very tough conditions as a result of sharp
cuts in expenses. Mutual & Federal delivered its customary tidy profit.





Chief Executive's Statement (continued)



As mentioned above, we expanded our South African footprint by acquiring BoE,
the sixth largest bank in South Africa. This was in line with our stated
strategy of participating in the consolidation in the industry. We plan to
deliver some R900m per annum of synergies in 2006. BoE was under stress when it
was purchased. It has returned results in line with expectations in the first
six months and deposits have been strong, showing that customer confidence has
been restored.



During the year we made substantial progress in increasing the strategic focus
of the Group. In the UK, we sold GNI, Old Mutual Securities and King & Shaxson
Bond Brokers, as they did not fit within our asset management and asset
gathering strategy, and thereby considerably reduced our risk profile. In the
USA we sold NWQ, where we had the opportunity to enter into a distribution
arrangement with the purchaser, Nuveen, and where we had an attractive
alternative as a core holding in Thompson, Siegel & Walmsley. We have sold a
further six smaller US affiliates since the beginning of 2002. Our planned
disposal programme and the consolidation of our 2000 and 2001 acquisitions are
now largely complete.



Our capital position was strengthened during the year by a successful Eurobond
placing, and by an innovative preference share issue at Nedcor. Capital adequacy
remains healthy in all of our  businesses that have formal capital adequacy
requirements. Our US life business required $313m of additional capital to
support its growth, and we constrained its marketing efforts in the fourth
quarter to limit its capital usage.



Our UK businesses are now under the leadership of Hasan Askari. He has been on
the board of these operations for several years and has long experience in the
financial services industry. Hasan also looks after our Indian interests.
Management has been further strengthened by Bob Head, who has joined us as
International Development Director. He was previously Chief Executive of Smile,
the internet bank, and Finance Director of egg plc before that. Bob brings a
wealth of international insurance and banking experience and we expect him to
play an important role in our future growth.



Your Board was sufficiently encouraged by the outturn for 2002 to recommend an
unchanged final dividend of 3.1p per share. This will be converted into Rand for
payment to South African shareholders at the rate ruling on 3 April 2003.



Last year saw some particularly harsh conditions in equity markets around the
world. The diversity we have so far established stood us in good stead in 2002
and we are now considering the next leg of our internationalisation. A bigger
third leg to our portfolio will, we believe, provide further valuable stability.
Returns to shareholders remain our key guide and we will not be rushed.



Outlook

Each of our businesses faces 2003 with some confidence, and each draws support
from the whole. We still have a great deal to do to deliver a good return on
equity from some businesses, but our operating management teams are bedded down
and focused on bringing about the best possible results in their markets. We may
be buffeted by markets and currencies, but the diverse nature of our business
allows us to be resilient in a wide variety of circumstances.



Jim Sutcliffe
Chief Executive
24 February 2003

Operating and Financial Review



BUSINESS REVIEW



SOUTH AFRICA

Smoothed operating profit for the South African businesses in 2002 of R9,016
million decreased by 5% from R9,536 million in 2001. Translated into Sterling,
the 2002 result of #571 million was down 26% from #770 million in 2001. The
contribution to smoothed operating profit in 2002 from Old Mutual South Africa
(OMSA), Nedcor and Mutual & Federal was R5,855 million, R2,605 million and R556
million respectively.



OMSA has successfully grown and continues to develop its distribution capability
and to strengthen its broker relationships, resulting in improved productivity
and distribution. Customer service has also improved, with the delivery of a
one-stop client service function and the introduction of new product ranges in
both retail and institutional sectors.



The most significant events of the year for Nedcor were its acquisition of BoE
Limited (BoE) and the consequent restructuring of its banking divisions. The
challenge for 2003 and beyond is to implement the merger and integration plans
successfully and to realise the anticipated benefits of the merger synergies.



Mutual & Federal has steadily improved its underlying underwriting profitability
through stringent risk selection and withdrawal from unprofitable business.



The success of bancassurance initiatives in the Group's South African businesses
is integral to their  organic growth and maintaining their position as a leading
financial services group in South Africa.



Black Economic Empowerment (BEE) is a key focus in South Africa and the issues
of ownership and partnership and their financing are being considered. The
financial services industry has been proactive in initiating discussions on a
BEE charter for the industry. The South African companies are actively involved
in this process, and have been finalising their BEE strategies and programmes.





LIFE ASSURANCE

Summary financial performance

The South African life assurance business delivered good results in difficult
market conditions, with the FTSE/JSE Africa ALSI falling 11% during the year.
Operating profit, before long term investment return, was R3,283 million, an
increase of 6% from R3,085 million in 2001. A satisfactory return on internal
capital allocated of 22% was achieved, compared to 24% in 2001, after Capital
Gains Tax was included for a full year for the first time.



The value of life new business after tax was R1,124 million, 34% higher than the
R840 million achieved in 2001, with Annual Premium Equivalent (APE) of R3,705
million, up 18% on the R3,142 million in 2001. The increase in the value of new
business was due to significantly higher Group Business, up from R334 million to
R600 million. This was mainly due to an 80% increase in single premium new
business arising from a few large Group with-profit annuity cases. Individual
new business, at R524 million, was 4% higher than the R506 million reported in
2001, with strong growth in recurring premium business. The average margin on
new business of 30% of APE increased from the prior year average margin of 27%,
but remained stable over the year at the product level.


Operating and Financial Review (continued)



The margin improvement reflects a change in the mix of products, mainly as a
result of high Group Business single premium volumes.



The value of in-force business of R9,419 million at 31 December 2002 increased
by 3% from R9,176 million at 31 December 2001.



The life business cash outflow was disappointing at R4.4 billion in 2002 and
substantially worse than the R2.0 billion in 2001. This result reflects lower
Individual Business single premiums and the impact of blocks of life-wrapped
institutional investment business moving to other managers as part of the
ongoing diversification of investment responsibility by pension fund trustees.



Outlook

While the South African life assurance business is positioned for growth,
recovery in the markets will impact its success. Although new business volumes
have been high during 2002, the business expects a decline in Group Business
sales in 2003 as a consequence of the contracting with-profit annuity market.



Individual Business

Financial performance

Operating profit, before long term investment return, for Individual Business of
R2,352 million was up 9% from R2,152 million in 2001. This increase was largely
the result of an increase in the average level of policyholders' funds in 2002
compared with 2001, and the net positive effect of assumption changes, based on
positive experience variances.



The value of new business after tax of R524 million increased by 4% from R506
million in 2001. The new business APE of R2,670 million was 8% higher than that
achieved in 2001. Single premiums are strongly correlated to the investment
markets and were some 12% lower than in 2001, or 5% after taking account of
investment in the Old Mutual International offshore product range. The
volatility of the Rand and uncertainty in global investment markets adversely
impacted the growth in single premiums.



Following its launch in 2001, the Greenlight flexible range of insurance
protection products attracted good inflows over the year. Recurring premium
business was up 22%, driven by sales of Greenlight, Investment Horizons and the
re-priced funeral product range within Group Schemes.



Business development

The customer segmentation strategy launched in 2001 has brought increased focus
and improved customer service. The reorganisation of the Private Wealth segment
businesses culminated in the re-branding of Mint, which targets affluent
clients, as Private Wealth Management, and the launch of Fairbairn Capital in
July. Dollar and Sterling-denominated life, endowment and investment products
were launched early in 2002 to satisfy the demands for products using investors'
R750,000 offshore investment allowance through the Group's Guernsey operation.
Fairbairn Capital grew its client base during the year by 14%.



Individual Business continued to focus on building its distribution capability
during 2002, particularly in Gauteng province, with a focus on quality of
recruitment and managing under-performers. Improvements in Personal Finance
Advice (PFA) productivity were achieved and resulted in increased distribution
efficiency and have positioned the business favourably to move forward.

Operating and Financial Review (continued)



Bancassurance initiatives and joint ventures with Nedcor now span all major
customer segments, following the acquisition of BoE by Nedcor and the
reorganisation of their collective businesses. New joint ventures between OMSA
and Nedcor, which target high net worth (HNW) customers and which offer credit
protection to Nedcor's customers, have been initiated. The joint venture in the
HNW area completes the range of offerings in the Private Wealth Management
segment, as it now offers fiduciary and discretionary portfolio management
services. The integration of Old Mutual Bank and Permanent Bank was successfully
concluded, with the retention of clients exceeding expectations. Re-branding of
Permanent Bank branches as Old Mutual Bank is underway and the combined
operation is well positioned for the year ahead. Advisor sales of life products
in Nedbank (upper income) and Peoples Bank (lower income) are progressing well,
as are sales in bank branches by bank staff. Total life bancassurance APE was up
by 14% on the previous year.



Outlook

Individual Business is continuing to look at opportunities to develop its
product range in innovative ways. In the Personal Finance middle income segment,
growth in distribution capability, particularly in Gauteng province,
productivity improvements and strengthening broker relationships position the
business for growth. The Private Wealth segment is also now able to offer a
competitive and broad range of investment, fiduciary and advisory solutions as
well as services to meet the needs of affluent and HNW customers.



Bancassurance remains a key channel and OMSA is focused on optimising the
success of its joint ventures with Nedcor.



Group Business

Financial performance

Operating profit, before long term investment return, was R931 million compared
with R933 million in 2001. Notwithstanding higher average asset levels, the 2002
result was impacted by investment in the healthcare business on the development
of the new healthcare product, Oxygen, and in Employee Benefits where there was
significant expenditure on its new administration system (Compass).



The value of new business after tax of R600 million increased by 80% from R334
million in 2001. New business APE increased by 53%, with sales of single premium
business of R7,385 million in 2002, 71% higher than the R4,331 million in 2001,
as a result of several large blocks of with-profit annuity business. New
recurring premium sales were 22% higher than the previous year. The new business
margin of 58% was higher than the 49% margin achieved in the prior year as a
result of an increased proportion of single premium with-profit annuity
business.



Business development

The new retail healthcare product, Oxygen, was launched in the second half of
the year and was favourably received by the market.



Investment in new technology administration systems continued throughout 2002,
with significant progress being made in the development of a new retirement fund
administration platform using the Compass system. The first large client
migrated to the new platform towards the end of 2002 and the focus in 2003 will
be to move remaining clients on to the new platform. This enables improved
customer service and choice, and places Employee Benefits in a strong
competitive position.

Operating and Financial Review (continued)



Following Nedcor's acquisition of BoE, the Symmetry multi-manager offering has
been extended after the inclusion of NIB Investments and Edge Investments. New
structured and preferred risk products have been launched.



Outlook

Systems and product developments over the last two years have created an
environment where unit cost reduction will be delivered together with increased
product functionality and revenue opportunities. These, together with the strong
capital position, 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 Specialised
Finance (OMSFIN) and Old Mutual Properties (OMP).



Financial performance

Operating profit of R441 million decreased by 4% from R458 million in 2001,
mainly as a result of lower trading profit at OMUT. Contributing positively to
this result was OMAM(SA)'s effective cost management and shift towards higher
margin products. OMSFIN significantly expanded its corporate lending activities,
strong origination and underwriting deal flow and continued to grow its
structured and trading revenues within a conservative credit and market risk
management philosophy. OMP made good progress developing third party revenues.



Business development

OMAM(SA)'s ongoing strategy of broadening its investment capabilities has been
successful, especially in the areas of alternative asset classes and specialist
conventional asset capabilities.

Its absolute return fund products have performed well and have been popular with
clients and intermediaries, as have local and international hedge funds. The
company is well placed to meet continued demand for these products.



OMAM(SA) is the largest manager of infrastructural assets for institutions in
South Africa and manages, directly and indirectly, a total of R1.9 billion in
this asset class.



BEE joint ventures with Setsing and Umbono Fund Managers have continued to
develop and OMAM(SA) remains committed to its role in this regard. Following the
acquisition of BoE by Nedcor, a controlling stake in BoE Asset Management was 
sold to AKA Capital as part of a major BEE deal, with Old Mutual and Nedcor 
taking minority stakes.



OMAM(SA)'s investment performance relative to its peers and to index-related
benchmarks showed considerable improvement over the year. Retirement funds
managed by OMAM(SA) finished the year in second position out of the ten largest
asset managers covered in the Alexander Forbes Large Manager Watch Survey (South
African retirement funds including international assets). OMAM(SA) was also
placed second over five years. OMAM(SA)'s range of Profile Funds (pooled
retirement funds) continued to perform strongly over the year as well as
continuing to deliver consistent and superior (mostly upper quartile) returns
over the longer term. Eight out of ten of its unit trust equity funds achieved
either top quartile or first positions in their peer groups.

Operating and Financial Review (continued)



Outlook

The weakness in the South African and global equity markets negatively affected
absolute return levels in 2002. Whilst the valuation of the South African equity
market is supported by sound economic fundamentals, the country's close links to
the global economy make forecasting difficult in the current uncertain
environment.





BANKING

Summary financial performance

Operating profit from the Group's worldwide banking operations of R3,489 million
decreased by 24% from R4,572 million in 2001. Translated into Sterling, the 2002
result of #221 million was down 40% from #369 million in 2001. Following the
merger of Old Mutual Bank with Permanent Bank's deposit-taking activities and
infrastructure with effect from 1 January 2003, the Nedcor group now represents
the Group's only banking interests. Old Mutual Bank's results were previously
included in OMSA's results, whilst Permanent Bank was part of the Nedcor group.



NEDCOR

Financial performance

2002 has been a challenging and eventful year for Nedcor and for the South
African banking industry. The merger with BoE during the year created the
opportunity for a major restructuring and re-alignment of the Nedcor Group. This
culminated in the merger of four banks to form the new Nedbank Limited (Nedbank)
on 1 January 2003.



Operating profit of R3,489 million is stated before goodwill amortisation (R502
million), write-down of the investment in Dimension Data Holdings plc (R1,080
million) and restructuring and integration costs (R227 million).



Loans and advances of R195 billion in 2002 increased by 33% from R147 billion in
2001, despite a reduction of R9.8 billion in Rand-translated offshore advances.
However, net interest income grew by only 20% (12% excluding BoE) to R6,363
million from R5,316 million in 2001. This was a result of pressure on margins
from the liquidity squeeze in a year of market turbulence, as well as lower
endowment income due to cash injections into BoE and other strategic activities.



Non-interest revenue of R6,931 million increased by 20% from R5,799 million in
2001.



During 2002, the specific and general provisions charged to the profit and loss
account decreased by 5% to R1,390 million, including BoE, from R1,462 million in
2001. The provisions charged in 2002 include the release of the R400 million
general risk provision prudently raised at 31 December 2001. Excluding this
provision raised in 2001 and released in 2002, the provisions charged to the
profit and loss account of R1,790 million in 2002 increased by 69% from R1,062
million in 2001. This increase relates to additional provisions for the
ring-fenced Business Banking small and medium enterprises book and the
micro-loan sector. Following the acquisition of BoE, Nedcor's exposure to
micro-lending, and to retailers active in micro-lending, increased to R972
million from R377 million in 2001. Nedcor's total unsecured exposures to the
micro-loan industry represent only 0.5% of total advances.

Operating and Financial Review (continued)



Operating expenses of R8,573 million, including translation losses of R1,011
million, increased by 63% in 2002 from R5,267 million in 2001. Excluding
translation losses, expenses would have increased by 44%. The efficiency ratio
calculated by Nedcor declined to 55.4% in 2002 from 52.5% on a comparable basis
in 2001, but remained constant at 52.5% excluding BoE.



In 2002, one-off merger and restructuring costs of R204 million after tax have
been charged to the profit and loss account. This figure includes R86 million
for Nedcor's restructuring and integration costs and R118 million for the
closure and restructuring costs of Permanent Bank's deposit-taking activities
and infrastructure, which are being merged with Old Mutual Bank.



The market value of Nedcor's investment in 103 million shares in Dimension Data
Holdings plc has declined further and has been marked to market at its 31
December 2002 price of R4.02 per share, down from R14.50 at 31 December 2001.



Total statutory capital of R27.7 billion (2001: R19.5 billion) represents an
overall capital adequacy of 11.0% (2001: 11.4%), above the statutory requirement
of 10%. Included in statutory capital is new preference share capital of R2
billion, which is disclosed as non-equity minority interests in the Old Mutual
Group accounts.



Business development

The acquisition of BoE and the consequent restructuring of the Group were the
most significant events for Nedcor during the year and fully align with Nedcor's
growth strategy. The challenge for 2003 and beyond is to implement the merger
and integration plans and realise anticipated synergy benefits.



Nedcor has begun to exploit its core processing competence in the international
arena to create a recurring, external income stream. This has progressed well,
with the Swisscard outsourcing contract successfully meeting key milestones
during the year.



Restructuring and integration

The acquisition of BoE was the catalyst for an overall Nedcor Group
reorganisation, which integrated BoE, Nedcor Investment Bank (NIB), Cape of Good
Hope Bank and parts of Peoples Bank with Nedbank with effect from 1 January
2003. Nedcor also acquired the 11.6% of the share capital of NIB which the Group
did not previously own, for R685 million net of costs, with effect from 1
October 2002.



The integration is proceeding well. Senior staff losses have been minimal, asset
growth has been robust, deposit return flows have been strong and liquidity has
been optimised. Recurring synergies net of integration costs, and including
funding and capital efficiencies, are expected to grow from R110 million before
tax in 2003 to R905 million before tax from 2006 onwards.



NIB acquired the remaining 50% of Franklin Templeton Nedcor Investment Bank
Asset Management Limited from Franklin Templeton, with effect from 1 October
2002, for a consideration of R180 million as part of the rationalisation of the
wealth management activities of Nedbank, NIB and BoE. The wealth management
activities were then classified into private client and institutional asset
management. The private client activities, both domestically and
internationally, will continue as a Nedcor business operating under the BoE
brand. Institutional asset management was sold with effect from 1 January 2003
to empowerment partners, spearheaded by AKA Capital and partnered by OMSA and
Peoples Bank.

Operating and Financial Review (continued)



The merged entity between certain Permanent Bank operations and Old Mutual Bank
will operate under the Old Mutual Bank brand as a division of Nedbank with
effect from 1 January 2003. Its primary focus will be to deliver banking
products to South African life clients.



Outlook

The solid performance of Nedcor's core businesses in 2002 positions it well for
the future, with an improving South African banking environment and the
turnaround in declining interest margins. Following increased technology
investment, the merger with BoE provides the enlarged Nedcor group with
opportunities to leverage advantages of scale and thus increase efficiencies and
reduce cost-to-income ratios.



Nedcor's multi-brand strategy and strategic alliances have led to increased
market share in recent years. This will be augmented by the addition of BoE
products and brands with its new operational structure enabling focus on
outstanding client service.



Nedcor's strategy offers low-risk growth opportunities and focuses on markets
and initiatives that lie within its core competencies. Given continued growth in
its core businesses and alliances, stable credit and interest rate conditions
and a successful integration with BoE, Nedcor anticipates positive results in
2003.


GENERAL INSURANCE



MUTUAL & FEDERAL

Financial performance

Operating profit of R556 million, including long term investment return, from
the Group's 51% owned South African general insurance operation, Mutual &
Federal, represented a decrease of 2% from R570 million last year. This decline
is primarily due to a lower investment return following the payment of a special
dividend of 350 cents per share in December 2001.



Mutual & Federal returned an underwriting surplus of R2 million for the year,
compared to R62 million in 2001, reflecting primarily the creation of additional
provisions and the difficult trading environment.



Gross premium income of R5,603 million was 15% higher than last year as a result
of organic growth in its portfolios. However, net premiums increased only 11%
from 2001, due primarily to increased reinsurance costs. Net claims escalated by
approximately 12%, which reflects the impact of inflation, certain marine and
fire claims, and weather-related losses in the third quarter. The underwriting
ratio, before transfers to statutory provisions, nevertheless improved to 2.4%
from 2.0% in 2001, and this is expected to be some 25% better than the overall
industry average.



The solvency margin, being the ratio of net assets to net premiums, remained
high and was in excess of 60%, well above the minimum required to support
current operations.



Business development

During 2003, Mutual & Federal intends to continue to exploit current
distribution channels and develop further opportunities, including those in the
agricultural sector. In addition, the company will seek to identify additional
cost saving opportunities with a view to improving the long term profitability
of the organisation

Operating and Financial Review (continued)



Outlook

Mutual & Federal expects the improvements experienced during 2002 to continue
during 2003. It is anticipated that the premium rate increases implemented will
continue to yield positive results despite a continued escalation in claims
costs. There are signs that the contraction in the industry during the last four
years has stabilised and there has been a return to more rigorous underwriting
standards.





UNITED STATES

Operating profit from the Group's US asset management and life assurance
operations of $266 million increased by 43% from $186 million in 2001, with a
full year of Fidelity & Guaranty Life included for the first time. Translated
into Sterling, the 2002 result of #178 million increased by 38% from #129
million in 2001. These positive results reflect the resilience to difficult
equity market conditions and underline the benefits to the Group of the
diversity of its US businesses, particularly their diverse range of asset
classes and investment styles. The contribution to operating profit in 2002 from
US asset management and US life was $142 million and $124 million respectively.



Rationalisation of the US asset management group is substantially complete. The
business is focused on attracting new funds through superior fund performance
and through leveraging the strength of its diverse asset mix and distribution
capabilities. In 2002, the US asset management group developed a comprehensive
managed account (wrap) strategy under Old Mutual Investment Partners, developed
its relationship with other Old Mutual Group businesses and continued to target
distribution synergies among the firms, as evidenced by introducing five new
funds sub-advised by Old Mutual affiliates to Pilgrim Baxter's PBHG mutual fund
platform.



The record sales of $4.0 billion achieved by the Group's US life business in
2002 were, to a large extent, attributable to its competitive positioning, the
delivery of new products to the market, its wide distribution network and strong
relationships with key distributors. The Group is committed to supporting the US
life business through the provision of capital to fund growth. The US life
business took advantage of synergies within the Group and awarded a hedging
mandate to, and instituted a bond lending programme with, two US asset
management firms, during 2002.





ASSET MANAGEMENT

Financial performance

Operating profit of $142 million from the Group's US asset management business
decreased by 15% from $167 million in 2001. However, comparing the 2001 results
on a like-for-like basis after adjusting for the impact of disposals, operating
profit declined 5% from $150 million. This was achieved despite challenging
equity markets in which the S&P 500 Index decreased by 22% and the Russell 1000
Growth Index decreased by 29%. Conversely, fixed income markets contributed
favourably to these results as indicated by the Lehman Brothers Aggregate Bond
Index, which increased by 10%. Overall, these positive results were attributable
to the diversity of the asset management styles, the strength in value-focused
styles, positive fixed income markets, positive net fund flows and significant
reductions in head office costs.



Funds under management, including $10.1 billion managed for the Group's US life
business, declined by 15% to $127 billion at the end of 2002 compared to $150
billion at the beginning of the year. However, $15 billion of this reduction was
due to divestitures of certain affiliates. The group gathered

Operating and Financial Review (continued)



significant net fund inflows of $5.1 billion, (including $3.3 billion from US
life), which were more than offset by market-related declines of $13 billion.
Funds under management declined by 6% on a comparable basis.



Overall, the US investment business continued to produce superior relative
performance for its clients. Assets managed for institutional clients
represented approximately 89% of funds under management at the end of 2002. Of
these separate account strategies, the majority outperformed their benchmarks,
with more than 80% of assets outperforming their respective benchmarks for three
and five-year periods on an asset-weighted basis.



Mutual fund assets, excluding sub-advised funds, represented approximately 11%
of funds under management. On an asset-weighted basis, the four and five
star-rated funds managed by the Group's US asset management firms represented
58% of their total mutual fund assets rated by Morningstar.



Business development

The senior management team in Boston works closely with the firms on
distribution initiatives, leveraging best practices and various value-added
programmes for clients. Successful initiatives completed in 2002 included the
expansion of the PBHG mutual fund platform, development of a comprehensive
managed account strategy under the umbrella of Old Mutual Investment Partners,
branding initiatives to better leverage the Old Mutual name in the USA, as well
as growth in relationships with the Group's US life business.



Outlook

The diverse capabilities and product offerings of the Group's US asset
management business place it in a strong position to benefit in most market
conditions and dampen the impact of market downturns.



The suite of investment products will continue to build on the strength of US
asset management institutional capabilities, as well as selective retail growth
opportunities. Enhancing distribution capabilities, together with superior
investment performance relative to peer and benchmark, are the key elements of
the Group's US asset management strategy for 2003.



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

Financial and fund performance

Operating profit from the affiliates within OMAM(US) was $47 million in 2002
compared to $55 million in 2001. Although OMAM(US) benefited from a market
preference for fixed income products and value-style equity investments, the
gains made by these products were more than offset by adverse market movements
as well as the sale of NWQ.



Funds under management at OMAM(US) were $70.9 billion at the end of 2002, a
decrease of 8% from $76.7 billion at the end of 2001, which was mainly due to
the sale of NWQ. OMAM(US) gathered significant net fund inflows of $7.6 billion
during 2002, led by Dwight Asset Management and Clay Finlay, compared to net
fund inflows of $6.9 billion in 2001, a year on year increase of 10%. Inflows
were offset by negative market movements of $6.5 billion, or 9% of funds under
management at the beginning of the year. These funds include $10.1 billion
managed on behalf of the Group's US life business.



As part of its strategy to expand distribution capabilities, OMAM(US) sold NWQ,
a value-oriented equity fund manager with $6.9 billion of funds under
management, to The John Nuveen Company

Operating and Financial Review (continued)



(Nuveen) for $120 million. As part of this transaction, a strategic alliance was
formed to sub-advise future investment products sponsored and distributed by
Nuveen, which should lead to additional revenues of $20 million.



Business development

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 managed or wrap accounts for external financial services
firms. In addition, the Director of Sales, Marketing and Product Development
works closely with affiliates to increase institutional distribution by focusing
on the consultant community.



Pilgrim Baxter & Associates

Financial and fund performance

Operating profit of $26 million from Pilgrim Baxter decreased by 38% from $42
million in 2001, primarily due to market-driven declines in growth-oriented
investment products.



Funds under management of $6.8 billion at the end of 2002 decreased 46% from
$12.6 billion at the beginning of the year. Market declines reduced funds under
management by $3.9 billion, or 31% of funds under management at the beginning of
the year. The firm also experienced net fund outflows of $1.9 billion, or 15% of
funds under management at the start of the year.



In March 2002, the Group renegotiated 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. This
restructuring strengthens the Group's position in the sizeable US retail asset
management market and further aligns the Group's interests with those of Pilgrim
Baxter in maximising future growth and profits.



Business development

In 2002, Pilgrim Baxter opened up its PBHG platform to include products offered
by other affiliates of Old Mutual in order to create a best of class mutual fund
platform. Pilgrim Baxter attracted total assets of $1.4 billion for these
portfolios during 2002, gathered primarily in the PBHG IRA Capital Preservation
Fund and the PBHG Clipper Focus Fund.



Old Mutual Affiliates

Financial and fund performance

Operating profit from the firms that comprise Old Mutual Affiliates amounted to
$69 million for 2002, compared to $70 million in 2001. After normalising the
2001 results for the impact of disposals in 2001, operating profit in 2002 has
improved on 2001 by some 20%.



Funds under management declined by 18% to $49.4 billion at the end of 2002, from
$60.6 billion at the end of 2001. Divestitures of four affiliates accounted for
$7.5 billion of this decline. Market-related declines reduced funds by $2.9
billion, with the remaining decline resulting from net fund outflows of $0.6
billion and the transfer of $0.2 billion of funds from US asset management to
other areas of the Group.



Operating and Financial Review (continued)



Business development

Throughout 2002, the senior management team in Boston worked with many of the
Old Mutual Affiliates to restructure economic agreements in order better to
align shareholder and management interests. Transactions with the firms that
were targeted for disposal have either been completed, or are expected to be
substantially complete by 31 March 2003. The resulting organisation will be
better positioned to increase market share by leveraging the strength of its
diverse asset mix, whilst benefiting from the power of the focused manufacturing
capabilities of the affiliates. This sharpening of focus and aligning of
interests are key to the future success of the Group's US asset management
business.





US LIFE ASSURANCE



Financial performance

Operating profit in 2002 of $124 million includes a full year contribution from
Fidelity & Guaranty Life and compares favourably with $32 million (which
excludes $13 million of transitional items related to the purchase of Fidelity &
Guaranty Life) for the six months for which its results were consolidated in
2001.



The Group's US life business saw unprecedented sales in 2002, totalling $4.0
billion (APE: $451 million). These levels reflected strong industry-wide sales
of fixed annuities and also demonstrated US life's improved competitiveness.
Taking advantage of US life's competitive positioning, the Group injected $313
million of capital to support the influx of profitable new business. This
financial support enabled US life to expand profitably and preserve its relative
rating position. At the end of 2002, A.M. Best confirmed its financial strength
rating of "A" for Fidelity & Guaranty Life.



Value of new business after tax was $84 million, at a margin of 19%. The capital
constraints impacting the industry, together with active management by Dwight
Asset Management (Dwight), enabled US life to sell products at a return of
capital of 12%. The increase in the margin reflects the lower discount rate used
as a consequence of the fall in interest rates.



The value of in-force business of $549 million in 2002 increased by 39% from
$394 million in 2001.



During the year, $3.3 billion of net policy cash inflows were invested with
Dwight. Taking advantage of the synergies within the Group, a dynamic hedging
mandate was awarded to another US asset management firm, Analytic Investors, and
a bond lending programme was instituted with eSecLending. Funds under management
now total $10.5 billion, an increase of 61% over last year.



As part of the improved positioning of US life, Old Mutual is able to bring a
more active investment management approach to the bond portfolio through
Dwight's active investment process. Whilst, in common with other US life
companies, various bond impairments and write-offs were suffered in 2002, US
life was able to work closely with Dwight to manage these risks. Over 2002, net
realised gains amounted to $44 million without impact on margins. Under US
statutory accounting, not all these gains are eligible to be treated as capital
and the impact of defaults and impairments on capital was $48 million.



During 2002, an additional $30 million net of tax was recorded against goodwill
arising on the acquisition of Fidelity & Guaranty Life. This adjustment reflects
the revised estimate of costs involved in exiting an onerous contract, the
liability for which was underprovided at the date of acquisition.

Operating and Financial Review (continued)



Business development

Record sales in 2002 can be attributed to the competitive positioning of the
business, the speed with which new products were delivered to the market, and
the breadth of the distribution network through multiple channels, together with
strong relationships with key distributors. The provision of capital by the
Group to US life enabled it to thrive in a year that saw the position of some of
its key competitors eroded due to capital constraints.



Changes to support both agent and policyholder services took place during the
year. An additional sales support centre was created in Lincoln, Nebraska,
whilst life underwriting capacity was enhanced through the creation of a new
underwriting facility. These steps form part of a transition that will be
beneficial to US life's agents and to overall profitability.



Outlook

At the close of 2002, US interest rates fell to historically low levels and the
yield curve flattened. These factors are expected to have a negative effect on
the fixed annuity sector. This, along with the number of new competitors
entering this sector from the ailing variable annuity sector, means that 2003
will be a challenging environment for selling US life's core products. In
response to these challenges, US life has recently launched a new range of
equity-linked annuity products that are designed to offer customers an
attractive median between fixed and equity investments. Despite the broader
product range, a lower level of sales is anticipated in 2003.





UNITED KINGDOM & REST OF WORLD

Operating losses, before long term investment return, from the Group's UK and
Rest of World asset management and life assurance businesses were #1 million in
2002, compared to losses of #5 million in 2001.



The Group's UK business has experienced significant change in 2002, with the
continued re-engineering of Gerrard and the sale of three non-core businesses,
GNI, Old Mutual Securities and King & Shaxson Bond Brokers.





ASSET MANAGEMENT

Private Client UK

Financial and fund performance

Gerrard's operating profit of #4 million in 2002 compares with a loss of #10
million in 2001, the latter including integration costs of #12 million. This was
a positive result in the face of fierce bear market pressures. Significant cost
savings more than offset the 18% reduction in revenue year on year compared to a
fall in the FTSE 100 Index of 24% over the same period. The 2002 result includes
one-off profits of #6 million following the sale of current investments, the
proceeds of which have been used, in part, to fund restructuring costs of #5
million resulting from planned redundancies and branch closures.



Fee revenues of #43 million reduced by 28% as a result of the market downturn
and the transfer of some assets to Old Mutual Asset Managers (UK) (OMAM(UK)),
and commission and other income of #70 million reduced by 10%. Adverse markets
and the exit of unprofitable client relationships were largely responsible for
the reduction in closing funds under management from #17.4 billion at 31

Operating and Financial Review (continued)



December 2001 to #12.0 billion at 31 December 2002. Included in this reduction
is #1.1 billion of funds transferred from Gerrard Investment Funds (GIF) to OMAM
(UK) at the beginning of 2002.



Business development

Gerrard has undergone considerable structural change in 2002. Cost savings
anticipated from integration have been realised, with back office operations
restructured and positioned in low cost locations. The business has also
undergone a branch rationalisation programme, which has reduced the number of
offices from thirty-one to twenty. Employment-related costs have reduced by 20%,
with headcount approaching 1,200 compared with 1,400 at the beginning of 2002.



Outlook

Gerrard will continue with its wealth management strategy by improving the
investment choices and stockbroking services available to clients, and
developing distribution through complementary financial planning and private
banking offerings.



Fund Management

Financial and fund performance

Operating losses from the Group's UK and Rest of World fund management
businesses of #2 million compared to an operating profit of #6 million in 2001.
Included in these results are OMAM(UK), Old Mutual Asset Managers (Bermuda) and
GNI Fund Management (GNI FM). The decrease in operating profit contribution
arose primarily from market-related declines in funds under management, and
one-off costs of integrating the GIF business into OMAM(UK).



OMAM(UK) - business development

OMAM(UK) continued to make good progress during the year, particularly in the
difficult market environment, and achieved net fund inflows of #82 million from
external clients. OMAM(UK) launched the UK Select Mid Cap and Large Cap Funds in
2002, following the success of its Smaller Companies Fund launched in 2001.
Between them, these three raised #156 million of new funds in 2002. OMAM(UK)
also had considerable success with its Corporate Bond Fund, which raised #100
million of new funds during the year and has been top in its sector since its
launch in 2000. Performance in the three equity funds mentioned above exceeded
their respective index benchmarks, resulting in top decile performance relative
to their peer group.



During 2002, OMAM(UK) successfully integrated the retail fund business of GIF
under its management and is currently in the process of rationalising the
combined fund ranges of the two businesses. OMAM(UK) has significantly reduced
its cost base and has shifted its sales focus away from advertising, brand
building and promotion, and closer to the point of sale.



GNI FM - business development

Following the sale of GNI, GNI FM has restructured its business, including the
purchase of a new risk management system, and now has a solid platform from
which to build funds under management. Fund performance in 2002 was strong, with
all products showing positive returns.







Operating and Financial Review (continued)



Other Financial Services

Financial performance

As part of the Group's strategic focus on asset gathering and asset management
operations, the UK broking businesses of GNI, Old Mutual Securities (OMS) and
King & Shaxson Bond Brokers were all sold in the second half of the year, for a
total consideration of up to #114 million. The loss on these disposals totalled
#61 million. These businesses contributed #2 million of operating profit in
2002, compared to #7 million in 2001.





LIFE ASSURANCE

Financial performance

Operating losses in 2002, before long term investment return, from the Group's
UK and Rest of World life businesses of #7 million was the same as in 2001.



United Kingdom

Selestia has made a positive impact on the market in its first year since launch
and obtained a life company licence in May 2002. In November 2002, the company
was awarded the Best Online Investment Provider award at the 2002 Incisive Media
Online Finance Awards, which will further establish it as a leading IFA business
solutions provider. Selestia achieved its plan to expand its IFA network in 2002
and will focus its efforts on generating substantial business volumes from those
accounts in 2003.



Rest of Africa

Operating profit, before long term investment return, from the Group's Rest of
Africa operations was #5 million in 2002, compared with #6 million in 2001.



India

The Group's 26% owned joint venture life assurance company in India, OM Kotak
Mahindra, has continued to make satisfactory progress in 2002. OM Kotak Mahindra
increased its agency force to approximately 3,500 agents in 2002 from 1,000 in
2001, expanded its product range and now operates a total of twenty-seven
offices.





Operating and Financial Review (continued)



GROUP FINANCIAL REVIEW

Operating profit and earnings per share

The Group delivered solid results in 2002, despite turbulence in the equity
markets and currency volatility. Significant movements in both the average and
year end exchange rates impacted operating earnings and embedded value per
share. Operating profit on ordinary activities before tax of #431 million in
2002, increased significantly from #81 million in 2001, the latter including
goodwill impairment of #500 million. Basic earnings per share were 4.3p in 2002
compared with a loss per share of 7.4p in 2001. Operating profit(1) of #724
million decreased by 15% from #856 million in 2001. Operating earnings per
share(1) were 11.3p compared with 12.1p (restated to reflect Financial Reporting
Standard 19) in 2001. The weakening of the average Rand:Sterling exchange rate
from R12.39 in 2001 to R15.79 in 2002 is the principal factor that adversely
affected the Group's results, reducing operating earnings per share by 3.4p. The
impact of the strong year end rate for the Rand benefited Sterling achieved
profits shareholders' funds, although it has also generated translation losses
in the Group's banking subsidiary, Nedcor.



Achieved profits

The Association of British Insurers (ABI) issued guidance for achieved profits
reporting in December 2001. The Group has adopted achieved profits for
supplementary reporting in these results, replacing the embedded value
information provided in previous years. The basis of preparation and reporting
within the primary financial statements, and the actuarial assumptions within
the supplementary reporting for prior periods, are unchanged.



The Group's achieved profits before tax and minority interests of #862 million
decreased by 18% from the #1,048 million in 2001. Achieved profits per share of
14.1p declined from 15.4p. The achieved profits shareholders' funds of #3,426
million at 31 December 2002 increased by 12% during the year from #3,067 million
at 31 December 2001. Embedded value (adjusted for market value uplift of listed
subsidiaries) of #3,928 million at 31 December 2002 also increased by 12% from
#3,522 million at 31 December 2001.



The achieved profits for 2002 are presented in these results as supplementary
information, commencing on page 45.



Acquisitions

Nedcor acquired BoE with effect from 2 July 2002. The total consideration of
#485 million (R7.7 billion) was financed with cash of #391 million (R6.2
billion) and equity of #84 million (R1.3 billion), with additional costs
directly associated with the acquisition of #10 million (R0.2 billion). After
fair value and accounting policy alignment adjustments, goodwill arising on the
acquisition of BoE was #214 million (R3.4 billion), giving a price to book ratio
of approximately 1.8. Pre-tax integration costs of #14 million (R227 million)
have been accounted for in the Group's profit and loss account for the year
ended 31 December 2002.



Disposals

In the USA, the Group sold NWQ for cash proceeds of #77 million ($120 million)
on 1 August 2002 and, in accordance with its planned disposal programme, a
further four small US affiliates were

Operating and Financial Review (continued)



disposed of during 2002. The total consideration received was #125 million ($197
million), resulting in an after-tax loss on disposal of #3 million ($5 million).
The disposal of a further two affiliates in 2003 has been announced. Although
these sales were earnings dilutive, they strengthened the Group's capital
position, allowing it to focus on core businesses.



The Group also disposed of its non-core UK businesses of GNI, Old Mutual
Securities and King & Shaxson Bond Brokers for a total cash consideration of
#106 million. The consideration for the sale of Old Mutual Securities excludes a
deferred amount of up to #8 million to be determined on an earn-out basis over
three years. The loss on sale of these businesses totalled #61 million.



In January 2002, the Group disposed of Old Mutual International (Isle of Man)
Limited, an offshore life assurance business, for a cash consideration of #36
million, resulting in a profit on disposal of #20 million.



Capital

Shareholders' capital has been affected during the year by a number of factors.
In May 2002, capital of #39 million was raised through an issue of new shares
made at the same time as the St Paul group placed its shares in Old Mutual,
acquired as part of the purchase of Fidelity & Guaranty Life. Secondly,
shareholders' capital benefited by #457 million from a strengthening, from
R17.43 to R13.81 between 31 December 2001 and 31 December 2002, in the Rand:
Sterling exchange rate.



The Group continues to manage its capital position prudently, ensuring that
capital allocated to subsidiaries is strictly monitored. The Group has accessed
debt and credit markets to secure an attractive funding structure with gearing
(debt(2) over debt(2) plus equity shareholders' funds) at year end of 30%, an
improvement over the 2001 year end level of 35%.



The solvency ratios of the Group's key businesses are as follows: excess assets
equivalent to 2.3 and 2.5 times statutory capital at its South African and US
life businesses respectively; a capital adequacy ratio of 11.0% at Nedcor and a
solvency margin in excess of 60% at Mutual & Federal. In all cases, these are
comfortably above the minimum statutory requirements.



At the end of 2002 a review was undertaken of the carrying value of the UK and
US asset management businesses that were purchased in 2000. Despite the
reduction in the levels of equity markets worldwide, the directors were
satisfied that no further write-down of these assets was required.



Debt and debt facilities

During 2002, the Group continued to diversify its sources of funding and
successfully launched its first Eurobond issue, raising Euro400 million. Its Euro
commercial paper programme, rated P1 and F1 by Moody's Investor Service and
Fitch Ratings respectively, was increased in size from #300 million to #600
million. In addition, the Group negotiated new committed syndicated and
bilateral bank facilities totalling $660 million.



These actions, together with existing internal resources, provided the Group
with improved financial flexibility.

Operating and Financial Review (continued)



Foreign exchange

Substantial proportions of the Group's operations are conducted in currencies
other than Sterling. Where possible, the Group seeks to reduce its balance sheet
exposure the by borrowing in appropriate currencies directly or through currency
hedging transactions. This was the case with the Group's Euro400 million Eurobond
issue, which was immediately swapped into a $349 million fixed rate debt
liability. In total, 90% of the Group's debt is US Dollar denominated, which
helps to hedge the Group's US Dollar assets.



Taxation

The Group's effective tax rate (based on the tax charge as a proportion of
smoothed operating profit) of 26.9% represents a decrease from 29.2% (restated
for the adoption of FRS 19) in 2001. The rate is 3% lower than the standard tax
rate in the Group's primary business regions of 30%, mainly due to the
continuing positive effect of low taxed income earned by the Group's businesses
in South Africa. The rate also benefited from a reduction in Secondary Tax on
Companies in South Africa. The Group expects the rate to trend upwards in the
coming year, reflecting the impact of high US tax rates, additional South
African Secondary Tax on Companies, and a reduction in Nedcor's proportion of
low taxed income.



Long term investment return

In accordance with the UK ABI Statement of Recommended Practice and, 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 life and general
insurance businesses for 2002 is unchanged at 14%. The return earned by assets,
mainly bonds, backing the Group's US life business's liabilities has been
smoothed with reference to the actual yield earned by the portfolio, which
indicates a long term rate of return of 6.5%.



Dividend

The Board recommends a final dividend of 3.1p per share, which will bring the
total dividend per share for the year to 4.8p. The proposed dividend is covered
2.4 times by operating earnings per share (2001: 2.5 times), reflecting the fall
in operating earnings compared to the prior year.



The dividend, which is subject to shareholder approval at the Annual General
Meeting on 16 May 2003, will be paid on 30 May 2003 to shareholders on the
register at the close of business on 22 April 2003 (the record date) for all the
exchanges where Old Mutual plc's shares are listed. The local currency
equivalents of the proposed dividend for shareholders on the South African,
Malawi and Zimbabwe branch registers and the Namibian section of the principal
register will be determined using exchange rates on 3 April 2003 and will be
announced by the Company on 4 April 2003. The Company's shares will trade ex
dividend on the African exchanges from the opening of business on 14 April 2003
and on the London Stock Exchange from the opening of business on 16 April 2003.





Julian Roberts

Group Finance Director

24 February 2003


The financial information in this document does not constitute the Company's
statutory accounts for the year ended 31 December 2002 but is derived from those
accounts. Statutory accounts for 2001 have been delivered to the Registrar of
Companies, and those for 2002 will be delivered following the Company's Annual
General Meeting. The auditors have reported on those accounts: their reports
were unqualified and did not contain statements under Section 237 (2) or (3) of
the Companies Act 1985.



Summary Consolidated Profit and Loss Account
for the year ended 31 December 2002

The following table summarises the Group's results reported in the profit and
loss accounts. This summary does not form part of the statutory financial
statements. The directors' view is that operating earnings per share derived
from operating profit or loss based on a long term investment return and before
goodwill amortisation and impairment, write-down of investment in Dimension Data
Holdings plc and Nedcor restructuring and integration costs, provides a better
indication of the underlying performance of the Group.
                                                                         #m                      Rm
                                                                Notes    Year to  Year to        Year to Year to
                                                                         31 Dec   31 Dec         31 Dec  31 Dec
                                                                         2002     2001           2002    2001
                                                                                  (Restated)             (Restated)

South Africa
    Technical result                                                     208      249            3,283   3,085
    Long term investment return                                          135      148            2,131   1,830
Life assurance                                                  3(b)(iii)343      397            5,414   4,915
Asset management                                                3(c)(i)  28       37             441     458
Banking                                                         3(d)(i)
    Acquired                                                             32       -              503     -
    Continuing                                                           133      290            2,102   3,593
General insurance                                               3(e)(i)  35       46             556     570
                                                                         571      770            9,016   9,536
United States
    Life assurance                                              3(b)(iii)83       13             1,310   161
    Asset management                                            3(c)(i)  95       116            1,500   1,437
                                                                         178      129            2,810   1,598
United Kingdom and Rest of World
    Life assurance                                              3(b)(iii)(3)      (2)            (47)    (25)
    Asset management                                            3(c)(i)  2        (3)            31      (38)
    Banking                                                     3(d)(i)  56       79             884     979
                                                                         55       74             868     916
                                                                         804      973            12,694  12,050
Other shareholders' income / (expenses)                         3(f)     (22)     (29)           (347)   (359)
Debt service costs                                                       (58)     (67)           (916)   (830)
Write-down of strategic investments                                      -        (21)           -       (260)
Operating profit based on a long term investment return before           724      856            11,431  10,601
goodwill amortisation and impairment, write-down of investment
in Dimension Data Holdings plc and Nedcor restructuring and
integration costs
Goodwill amortisation and impairment                                     (120)    (632)          (1,895) (7,832)
Write-down of investment in Dimension Data Holdings plc         4        (68)     (269)          (1,080) (3,334)
Nedcor restructuring and integration costs                      3(d)(ii) (14)     -              (227)   -
Short term fluctuations in investment return                             (91)     126            (1,439) 1,561
Operating profit on ordinary activities before tax                       431      81             6,790   996
Non-operating items                                             6(b)     (6)      -              (88)    -
Profit on ordinary activities before tax                                 425      81             6,702   996
Tax on profit on ordinary activities                            5(a)     (224)    (319)          (3,535) (3,948)
Profit / (loss) on ordinary activities after tax                         201      (238)          3,167   (2,952)
Minority interests                                                       (44)     (26)           (695)   (322)
Profit / (loss) for the financial year                                   157      (264)          2,472   (3,274)
Dividends paid and proposed                                              (176)    (172)          (2,556) (2,606)
Retained loss for the financial year                                     (19)     (436)          (84)    (5,880)

Earnings per share                                                                   p                       c

Operating earnings per share after tax and minority interests   2        11.3     12.1           179.0   149.1
based on a long term investment return before goodwill
amortisation and impairment, write-down of investment in
Dimension Data Holdings plc and Nedcor restructuring and
integration costs
Basic earnings / (loss) per share                               2        4.3      (7.4)          67.4    (92.2)
Diluted earnings / (loss) per share                             2        4.3      (7.4)          67.4    (92.2)

Dividend per share (Rand dividend per share indicative only for          4.8      4.8            69.6    72.3
2002)
Weighted average number of shares - millions                             3,670    3,550          3,670   3,550

Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 December 2002
                                                                   #m                       Rm
                                                                   Year to   Year to        Year to   Year to
                                                                   31 Dec    31 Dec         31 Dec    31 Dec
                                                                   2002      2001           2002      2001
                                                                             (Restated)               (Restated)

Proft / (loss) for the financial year                              157       (264)          2,472     (3,274)
Foreign exchange movements                                         295       (964)          (5,110)   4,697
Total recognised gains and losses for the year                     452       (1,228)        (2,638)   1,423
Prior period adjustment                                            (41)                     (503)
Total recognised gains and losses recognised since last annual     411                      (3,141)
report







Reconciliation of Movements in Consolidated Equity Shareholders' Funds
for the year ended 31 December 2002


                                                                      #m                   Rm
                                                                      Year  Year to        Year to Year to
                                                                      to    31 Dec         31 Dec  31 Dec
                                                                      31    2001           2002    2001
                                                                      Dec
                                                                      2002  (Restated)             (Restated)

Total recognised gains and losses for the year                        452   (1,228)        (2,638) 1,423
Dividends paid and proposed                                           (176) (172)          (2,556) (2,606)
                                                                      276   (1,400)        (5,194) (1,183)
Issue of new capital                                                  39    -              619     -
Issue of new capital in connection with the acquisition of Fidelity & -     203            -       2,690
Guaranty Life
Shares issued under option schemes                                    1     5              16      61
Proceeds from sale of shares previously held to satisfy claims and    -     3              -       37
errors on demutualisation
Net increase / (decrease) in equity shareholders' funds               316   (1,189)        (4,559) 1,605
Equity shareholders' funds at the beginning of the year               2,470 3,618          43,045  40,937
Change to shareholders' funds resulting from change in accounting     -     41             -       503
policy
Equity shareholders' funds at the end of the year                     2,786 2,470          38,486  43,045



Consolidated Balance Sheet
at 31 December 2002
                                                                               #m                Rm
                                                                        Notes  At     At         At      At
                                                                               31 Dec 31 Dec     31 Dec  31 Dec
                                                                               2002   2001       2002    2001

Intangible assets
Goodwill                                                                7      1,598  1,580      22,075  27,537

Insurance and other assets
Investments
Land and buildings                                                             600    586        8,288   10,213
Other financial investments                                                    18,902 16,714     261,114 291,301
                                                                               19,502 17,300     269,402 301,514
Assets held to cover linked liabilities                                        4,317  4,415      59,635  76,947

                                                                        3(h)   23,819 21,715     329,037 378,461

Reinsurers' share of technical provisions
Provision for unearned premiums                                                21     9          290     157
Long term business provision                                                   305    421        4,213   7,337
Claims outstanding                                                             44     33         608     575
                                                                               370    463        5,111   8,069
Debtors
Debtors arising from direct insurance operations                               179    147        2,472   2,562
Debtors arising from reinsurance operations                                    12     6          166     105
Other debtors                                                                  238    8,024      3,287   139,847
                                                                               429    8,177      5,925   142,514
Other assets
Tangible fixed assets                                                          97     102        1,340   1,778
Cash at bank and in hand                                                       565    475        7,805   8,279
Investment in own shares                                                       115    85         1,589   1,481
Present value of acquired in-force business                                    255    325        3,523   5,664
Other assets                                                                   378    308        5,222   5,368
                                                                               1,410  1,295      19,479  22,570
Prepayments and accrued income
Accrued interest and rent                                                      128    99         1,768   1,725
Deferred acquisition costs                                                     284    66         3,924   1,150
Other prepayments and accrued income                                           153    100        2,114   1,743
                                                                               565    265        7,806   4,618

Total insurance and other assets                                               26,593 31,915     367,358 556,232

Banking assets
Cash and balances at central banks                                             1,202  630        16,607  10,980
Treasury bills and other eligible bills                                        1,085  653        14,987  11,372
Loans and advances to banks                                                    1,228  649        16,963  11,313
Loans and advances to customers                                                12,854 7,797      177,566 135,884
Debt securities                                                                1,061  725        14,647  12,648
Equity securities                                                              965    225        13,331  3,921
Interest in associated undertakings                                            124    118        1,713   2,057
Tangible fixed assets                                                          158    111        2,182   1,935
Land and buildings                                                             131    80         1,806   1,392
Other assets                                                                   2,095  62         28,941  1,080
Prepayments and accrued income                                                 474    259        6,548   4,517
Total banking assets                                                           21,377 11,309     295,291 197,099

Total assets                                                                   49,568 44,804     684,724 780,868





Consolidated Balance Sheet
at 31 December 2002 (continued)
                                                                      #m                     Rm
                                                               Notes  At        At           At        At
                                                                      31 Dec    31 Dec       31 Dec    31 Dec
                                                                      2002      2001         2002      2001

Capital and reserves
Called up share capital                                               378       374          5,222     6,517
Share premium account                                                 552       516          7,625     8,993
Merger reserve                                                        184       184          2,542     3,205
Profit and loss account                                               1,672     1,396        23,097    24,330
Equity shareholders' funds                                            2,786     2,470        38,486    43,045

Minority interests
Equity                                                                783       565          10,816    9,847
Non-equity                                                            144       -            1,992     -
                                                                      927       565          12,808    9,847

Subordinated liabilities                                              18        22           249       383

Insurance and other liabilities
Technical provisions
Provision for unearned premiums                                       79        54           1,091     941
Long term business provision                                          17,241    14,154       238,169   246,684
Claims outstanding                                                    335       272          4,628     4,741
                                                                      17,655    14,480       243,888   252,366
Technical provisions for linked liabilities                           4,317     4,415        59,635    76,947
Provisions for other risks and charges                                486       341          6,714     5,944

Creditors
Creditors arising from direct insurance operations                    326       401          4,503     6,989
Creditors arising from reinsurance operations                         7         7            97        122
Other creditors including tax and social security                     1,456     10,078       20,110    175,646
Amounts owed to credit institutions                            8      767       897          10,596    15,633
Convertible loan stock                                         8(a)(i)404       439          5,581     7,651
                                                               
                                                                      2,960     11,822       40,887    206,041
Accruals and deferred income                                          184       234          2,542     4,079

Total insurance and other liabilities                                 25,602    31,292       353,666   545,377

Banking liabilities
Deposits by banks                                                     2,110     1,862        29,148    32,454
Customer accounts                                                     12,070    6,802        166,735   118,550
Debt securities in issue                                              2,266     986          31,303    17,183
Other liabilities                                                     3,149     501          43,487    8,729
Provisions for liabilities and charges                                105       84           1,450     1,471
Subordinated liabilities                                              521       220          7,197     3,829
Convertible loan stock                                        8(a)(ii)14        -            195       -
                                                               

Total banking liabilities                                             20,235    10,455       279,515   182,216

Total liabilities                                                     49,568    44,804       684,724   780,868

Memorandum items
Commitments                                                           754       431          10,415    7,514
Contingent liabilities                                                1,382     798          19,091    13,908



Consolidated Cash Flow Statement
for the year ended 31 December 2002
                                                                     #m                        Rm
                                                                     Year to    Year to        Year to   Year to
                                                                     31 Dec     31 Dec         31 Dec    31 Dec
                                                                     2002       2001           2002      2001

Operating activities
Net cash inflow from insurance and other operating activities        858        851            13,537    10,545
Net cash inflow from banking operating activities                    349        13             5,510     163
Net cash inflow from operating activities                            1,207      864            19,047    10,708

Net cash outflow from returns on investments and servicing of        (93)       (183)          (1,468)   (2,268)
finance
Total tax paid                                                       (132)      (269)          (2,084)   (3,334)
Net cash outflow from capital expenditure and financial investment   (26)       (152)          (411)     (1,884)
Net cash outflow from acquisitions and disposals                     (160)      (316)          (2,526)   (3,916)
Equity dividends paid                                                (175)      (167)          (2,763)   (2,070)
Net cash inflow / (outflow) before financing activities              621        (223)          9,795     (2,764)
Net cash inflow from financing activities                            260        676            4,108     8,377

Net cash inflow of the Group excluding long term business            881        453            13,903    5,613


Cash flows relating to insurance and other activities were invested
as follows:

Increase in cash holdings                                            41         63             647       781
Increase in net portfolio investments                                483        543            7,631     6,729
                                                                     524        606            8,278     7,510

Cash flows relating to banking activities were invested as follows:

Increase / (decrease) in cash and balances at central banks          357        (153)          5,625     (1,897)

Net cash inflow of the Group excluding long term business            881        453            13,903    5,613



The cash flows presented in this statement exclude all cash flows relating to
policyholders' funds for the long term business.






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