Good morning, everyone, and thank you for joining us today for the 2025 annual result presentation for the period ended 31 December 2025. My name is Langa Manqele. I'm the Head of Investor Relations for Old Mutual Group. On behalf of our board and the management team, I would like to extend a warm welcome to you all. I would now just ask that we check our devices, make sure that we are not interrupting ourselves. Happy for you to put them on mute. At this stage, you should be seeing a QR code displayed on the screen that shows you the where you can download our results. All our results are now available, including this analyst presentation, as well as our annual reporting suite are available online.
On the agenda for today, as customary, our Group CEO, Jurie Strydom, and Casper Troskie will take us through the presentation. We will kick off with Jurie giving us the highlights for the results as well as the CEO review. He will be shortly followed by the Group CFO, Casper, who will provide us with a financial review. After that, Jurie will return to the stage to give us his outlook and the concluding message. At that point, I will return here on the stage to facilitate the Q&A session. With that, I now hand over to Jurie. Thank you.
Good morning, everyone. It's great to be with you this morning. It's great to have our investors, our investor community with us. It's my first annual results presentation for Old Mutual. I say this is the last of the first. We did the first interims and the first Capital Markets Day, and now it's my first annual results presentation. Just a great privilege and a joy to be here with you. I want to do a couple of things this morning before I hand over to Casper. Th e first will be, we'll talk about the highlights of the performance for the 25 year.
I want to do a little bit of a recap on strategy to just take you a little bit back to the Capital Markets Day and just to track back so that you can kind of locate the performance of the business and our outlook, in terms of that performance. I'll get into that strategy, and then we'll get into the cluster performances. Before I do that, I just want to acknowledge that this is a very big day for Old Mutual. It's not because this is my first annual results presentation. It's actually that today we announce the retirement of our chairman, Mr. Trevor Manuel, who turned 70 this year. Trevor will be retiring at the AGM on the fifth of June.
We will have lots of opportunity to really pay tribute to the impact and the leadership that Trevor's had in this business. Suffice to say that for me as a non-executive director first working with Mr. Trevor Manuel, and witnessing his leadership and his integrity, and his example and his work ethic, as a non-exec, and then transitioning into an executive position as chief executive with him as my chairman, it's been one of the highlights of my career. We'll have an opportunity to pay tribute and to say the things we need to say, but at this stage, just to pay tribute to him, and also then to turn towards Mr.
Roger Jardine, who's been announced as Chairman Designate of Old Mutual. Roger joined our board in September last year. We've had an opportunity as a management team to sort of start interacting with him in that capacity. Of course, Roger comes to us with an extraordinary pedigree, both as an executive and as a non-executive, and as a chair of some of South Africa's finest companies. It is a great privilege for us. I was reflecting Old Mutual as an institution to be able to have as your chairs, successive chairs, two leaders I think of probably two of the highest caliber leaders in South Africa. I think it is just an extraordinary privilege. We're delighted.
Looking forward to that transition t hat’ll happen over the coming month s, and will culminate in the AGM. Please join me in welcoming Roger into that chairman designate seat. Moving on to results. I wanted to just spend a few moments talking about the most important metrics those that we, in particular, have highlighted in our medium-term targets as the key things we're gonna pin our success on going forward. The value maximization, which is RoGEV and cash generation, dividend growth. You'd see growth in dividend and in the group equity value per share of 2% up to ZAR 19.80. That is, that is 7% up actually from where we were at the half year.
Impacted, of course, by some of the changes that we had, which had an impact on embedded value with the currency change, the cost of non-hedgeable risk, and persistency changes. The persistency assumption changes. What has come through on the positives up to that ZAR 19.80 was the impact of non-covered business, Old Mutual Wealth, and Old Mutual Insure coming through, I mean, that performance. Importantly, on the capital front, we initiated a ZAR 3 billion buyback, which we announced in September. We have announced there that we've covered ZAR 0.7 billion up until the end of 2025. In fact, up until yesterday, we've executed ZAR 1.3 billion.
The outlook for that is, of course, the trading mandate that we have, and the execution of the buyback depends on where we trade as a share, and relative to our GEV. It gets reset on GEV per share. It is extended until the end of the year. We'll be following through on the implementation of that buyback, as market conditions allow. I think just looking at the performance of some of the other areas, particularly efficiency and competitiveness. You can see there 6.8% underwriting margin in Old Mutual Insure. That's within our range that we've set to the market.
If you actually go back and you go and look at the detail, you'll see that there was a once-off exceptional provision in OM Alternative, which of course is our cell captive business, so not really reflective of our core operations. If you allow for that, you get to an underwriting margin of 8.3% for the year. Actually a strong underwriting performance, and I think underscores our thesis that that business has undergone a significant turnaround in operating performance and in actuarial and other controls. I think the big adjustment that we've done this year is the VNB and VNB margin. You see there VNB margin 1.2%. We announced a 1.4% VNB margin in June.
That was really off the back of those persistency assumption changes and the corner change. It's also been impacted by lower guaranteed annuity volumes, which of course is an industry phenomenon. But really this is the area which is getting the most intense management focus. It is the KPI that we are most focused on in our life and savings business in particular to drive that back up to the 2%-3% range. On RoNAV, 15.2%, but fully acknowledging, of course, as with our peers, that being boosted by market returns, and on a normalized basis, still below that range of 15%-17%.
Before I get into the clusters, I do want to just do a little bit of a recap of where we were at the Capital Markets Day and the progress that we've made as a group since then. I think just to take you back to our strategic priorities, we always start with this. We acknowledge the imperative of unlocking value for the group, that there is a latent potential and a latent value here that needs to be unlocked, and in particular, just driving the competitiveness of our South African businesses and really an execution story, which I'll get to in a second. I think further in South Africa, looking at then generating growth through the establishment of the right to win of OM BANK .
I think one's got to see the two phases as being not just sequential, but actually they are concurrent to a degree 'cause the very things that you're doing to execute well, to drive competitiveness, are the things that ultimately create your growth engines for the future. We are orientated as a group not just to unlocking value, but also to actually simultaneously generating growth, and in particular, regaining some of the market share that we think we're able to recover in South Africa and of course, on the continent. Speaking of the continent, we really divided the content into sort of two. The one was Southern Africa and looking at our imperative to kind of build profitable scale in the Southern African markets.
We've been in those markets for a long time. We understand them well. Our brand is very well represented and understood and a loved brand. Really about building more profitable scale and getting better returns and margins there. Just distinguishing that in East and West Africa, which are growth markets for us, we see the potential in those markets. We think long term, certainly there's a place for Old Mutual to succeed, but we do need to earn the right to deploy further capital there, and that comes from improved margins and returns in each of those markets. Along with the strategic focus areas, we talked about our medium-term targets. I think if there's one slide that almost all Mutualites can talk to, it's probably this slide.
It's one that just has driven a lot of the work that we've done as a group, over the last six months in terms of how we've organized ourselves and then ultimately into our targets and incentives. I'll get back to that in a moment. My outlook slide at the end, I will return to this slide, and I'll give you a sense on where we are, how to understand our numbers for financial year 25 and where we are in terms of executing to getting into those medium-term targets. We have completed our operating model changes. You'll recall, the move towards end-to-end accountability for businesses, bringing together distribution, operations, and product into business units where those trade-offs can be made and competitiveness can be driven. We've completed that.
We've started creating a leaner corporate center where we're much clearer on what our focus is at the center. That focus really is on governance, risk, and in particular capital. Capital being a tight principle. We talked about tight versus loose principles, which define how we work between the center and the clusters. Being clear that while corporate strategy is about the stewardship of capital and where we play, business strategy is how we compete in every segment, and really empowering clusters to compete through a business strategy that's appropriate to where they play. The cost savings target, of course, an important part of that execution, and I'll get back to that a bit later.
Just suffice to say, the ZAR 2.5 billion cost savings commitment that we made, equivalent to 10% of our operating cost for 2024, we've really clarified and internally been through a process of using the structures, using the targeting process to be able to cascade those targets now into the group. I am confident that the ownership of those targets is now much more deeply embedded into the organization. We have made progress in this year. We've saved ZAR 450 million of the 2.5 in 2025. We are well on our way, but of course, 2026 is a year of significant execution of this commitment.
When we do this, we bake in an underlying base contribution from, of course, from all clusters, but we do also look and benchmark where each cluster is against their peer group. On that basis, and I think a very rigorous piece of work, we've now landed on a set of targets that we think are going to be executable for us. On our capital horizons, just again pointing out that we remain, and we'll continue to track this and show you this, we remain on a normalized basis below the 15%-17% range.
That is because even though we're reporting the 15.2, the 12.4 is actually when you normalize for excess investment returns. What that means is while we are in Horizon one, our commitment is just to prioritize shareholder distributions, until we are able to move into Horizon two and three, where other opportunities to deploy capital can be considered. We will only consider deployments of capital in acquisitions that are really tightly coupled to strategy and are time sensitive. Just to kind of be clear with you on the milestones of execution, and you will see a repeat of this when I talk to you at interims and at results next year. You're going to see us tracking these KPIs.
It is essentially around the cost savings. We will be communicating in a very simplified way, the way we've done now as to what we mean by cost savings against the 2024 base. It is net of increases above any other increases in cost and other investments above inflation. We've made the full ZAR 50 million savings of which half of that about was at the center. I'm very pleased with the progress in the creation of the life and savings cluster, and we have made some very significant moves there. I can see already in this year the management team is able to start really taking ownership and executing. I think there's clear accountability. There's work to be done.
We have delivered on management actions and are delivering on new business quality collections and system implementations. We're firmly oriented towards regaining market share. This is something which doesn't turn in a matter of three months. It is a piece of work that requires foundational change. We're confident the changes we're making will translate ultimately into those results. On the bank, we're pleased with the progress with the bank. As I said to you know, we talked about establishing the right to win for OM Bank. We went live in September last year. We are gaining traction with customer numbers. It is too early to report revenue numbers to you.
The journey there is about building a customer base and then driving increasing customer activity and traction. We're also well on our way in terms of the integration of Old Mutual Finance and OM Bank. Those businesses are working together, and Old Mutual Finance has already played a significant role in the distribution strategy for OM Bank, as we'll get to in a moment. Finally, stewardship on capital. From an operational point of view, just to touch on a few of the key points, the Life and Savings, the big story of course, impacted on volume, impacted in volumes by the guaranteed annuity, shift in the market as a result of bond yields, which impacted everybody.
We've picked up some good volumes on the non-covered side in Old Mutual Wealth. The big call out is the impact on VNB of those margin changes and of the guaranteed annuity sales. This is the big focus area for us. It's not new news from half year. It's the position as we explained it at that point, but it requires us to take urgent action and is a key KPI for us to returning into that RoGEV into the 14%-16% range. On Life and Savings, J ust calling out from a risk point of view, a good growth in the Mass and Foundation markets, so 15% growth in retail risk sales there.
We're working on quality of new business and efficienciese because persistency is a big piece, but we remain the largest advisor-led model in the market and really a very significant presence in the mass market. On Personal Finance, some early green shoots in risk sales improvements and in the gaining of market share, but really at this stage still somewhat overshadowed by the guaranteed annuity moves. We'll be watching that and driving those operational improvements that'll in turn drive further market share gains in the year ahead. On Wealth Management, calling out this retail APE comparable sales of 14% increase and life APE of 18%. Pleased with that.
Old Mutual Corporate, also just calling out significantly improved retention, both at the member and at the client level, which is a key piece of continuing to build the AUM. In this life and savings engine, you've got these kind of recurring premium, predominantly risk engines in Mass & Foundation and PF. Then you've got these asset-based engines, which are wealth management and corporate. We see those complementing each other into the future. Old Mutual Insure, muted growth in the core operations. Much of the growth, that 7% coming from ONE Financial Services, which was an excellent acquisition, which we did a number of years ago. Significant improvement in margins and in underwriting profits.
There, you can see the growth year-on-year, from 6.2% to 6.8% at the margin level this year and of course, the 8.3% on a normalized basis. We are pleased with the performance of that business. We think it is a business that is poised for market share growth and market share gains. W e're now in the position we believe we've got the operational foundations to be able to drive stronger growth, particularly in the core operations. On the banking side, just pointing out really for the first time, Y ou're starting to see and starting to show the bank numbers with the Old Mutual Finance numbers.
From an Old Mutual Finance perspective, just seeing that gross loan book and really improvement in credit loss ratio and in the net lending margin, which is pleasing. There has been a period of consolidation there in Old Mutual Finance, but we see we're starting to grow in loans and disbursements again. In line with really growing our presence in the banking space. Here you can see that we put the RFOs together at a cluster level, that actually notwithstanding the increased investment in the bank, you can actually see on a net basis a lower loss for 2025, a smaller loss than in 2024. We look at these pieces together as we start to drive cluster profitability. Of course, the bank is the big growth piece.
You can see there we've got a customer run rate now of about 3,000 a day. We have been for now significantly oriented towards Old Mutual customers. You get 46% of customers originated through the Old Mutual Finance branch network. We've had 48% conversion of the active Money Account customer base. That strategy's been working for us. We are in Q2 beginning our above-the-line marketing campaigns to the public. We would expect to see a shift towards new to Old Mutual customers, or greater emphasis there. Pleased with the customer run rate and with the customer deposit numbers. Just to kind of reiterate know, this is a...
The buildup of customer base is one thing, but the driving of activation and revenue, transactional volumes, and credit, that's really the key. Those are the key tests. 2026 and 2027 of course for the bank are key years to be able to really establish that right to win. W e have been well vindicated in our strategy of putting this OM Bank business together with OM Finance. And we certainly are seeing the fruit of that coming through in the business. In OM Investments, I think a shout-out just to celebrate passing ZAR 1 trillion threshold in AUM. And then in particular calling out the alternatives business for another exceptional year.
The private markets business is such an important part of the armory of a group like us, and we have unquestionably the leading franchise on the continent in this space. We're delighted with the performance of this business. Notable investments in a five-year deal flow of ZAR 85 billion, exits of ZAR 31 billion. You can see the CAGRs in AUM and in revenue there, you can see very significant on a five-year basis. Really building a very valuable business in that space. On Old Mutual Africa Regions, just dividing the picture again between life and P&C. Very pleased, the 8% growth in Life APE, but particularly pleased with the pickup in VNB margin.
When we spoke at interims, we were concerned about that. There were some pricing changes coming through and some portfolio changes in mix. Pleased with that. On the P&C side, still some work to be done. Of course, the premium numbers impacted by Nigeria and Tanzania that we disposed of. In particular the margin, that's where there's been significant corrective action that's been taken already in the year, but we need to see those results coming through in the coming year. With that's my brief cluster overview. I will be coming back a little bit later to talk to you about the outlook, but in the meantime, I'm gonna hand back to Casper.
Thank you, Jurie. I will now take us through the financial review, focusing on value, capital, and earnings. Starting with value, group equity value or GEV per share increased marginally to ZAR 19.80, with growth in value exceeding our distributions. While market performance improved and yields declined, these gains were offset by methodology and assumption changes. Our covered business embedded value was impacted by the reallocation of ZAR 2.8 billion in Old Mutual Africa Regions from covered business to banking and lending business as we refined our methodology. This does not have an impact on total GEV, but changes values between lines of business. The increase in valuations of our non-covered businesses were mainly driven by Old Mutual Insure and Old Mutual Wealth following continued improved performance. On a forward-looking basis, return on group equity value, or RoGEV, is our primary measure of long-term shareholder value creation.
Our RoGEV for 2025 is 4.1%. If we adjust for the impact of material methodology and assumption changes, our RoGEV would have been 10.1%. These impacts were almost entirely related to methodology and assumption changes that we had implemented during the first half of the year. These were the cost of non-hedgeable risk charge, the change in valuation methodology for OM Bank, where we adjusted the valuation methodology to reflect the unlock of value as we meet critical rollout milestones, and the persistency basis change in Mass & Foundation. From 2026, we will be expanding our GEV disclosure with additional cluster level views and reconciliations. Our covered business embedded value reduced by 14% to ZAR 57.3 billion following high capital and dividend outflows, as well as negative model and assumption changes.
This included strengthening persistency assumptions in Mass & Foundation and Personal Finance, and increasing the cost of non-hedgeable risk capital charge. This was partially offset by positive experience variances driven by mortality experience in Personal Finance, Old Mutual Corporate, and Mass & Foundation. Economic variances reduced embedded value earnings with the return on embedded value earnings falling from 9.7% in 2024 to 7.8%. While market performance had a positive impact on embedded value earnings, this was more than offset by the significant reduction in particularly long duration yields beyond the longest straight available instruments. It is also worth noting that we apply a market consistent embedded value approach that uses the Prudential Authority yield curve. As Jurie already mentioned, our South African life and savings business was the primary driver behind the decline in the group's value of new business.
This was largely driven by the assumption and model changes I just described, as well as lower annuity and retirement fund umbrella sales. Recovering our VNB and VNB margin is a key focus area for us, and this is clearly reflected in the group's strategic priorities going forward. Moving to the contractual service margin or CSM. This represents the store of future life profits for the bulk of our life business. Despite the reduction caused by significant assumption and model changes, the CSM still increased, driven by new business value, interest, and positive experience variances. Our actual allocation rate to profits was at the upper end of the expected range at 11%. Turning now to systematic approach to capital management has not changed, and it remains the foundation of our approach to value creation.
Our focus remains on maintaining a resilient balance sheet and strong solvency levels, underpinned by disciplined and efficient capital management. We expect cash remitted to be between 70% and 80% of Adjusted Headline Earnings before optimizations and special dividends. Ongoing optimizations drove strong growth in cash remitted from subsidiaries, representing 123% of Adjusted Headline Earnings with ZAR 6.1 billion contribution to discretionary capital. Our South African Life and Savings cluster continues to be the leading contributor to cash generation for the group, with Old Mutual Insure's turnaround in sustainable earnings resulting in a healthy contribution. This brings us to our discretionary capital balance, which almost doubled year-on-year due to the strong cash remittances mentioned before, net of dividends paid to shareholders.
Our balance of ZAR 6.1 billion includes an expected capitalization of OM Bank in 2026 and 2027 of ZAR 2 billion, in line with our plans, with ZAR 2.3 billion committed for the completion of the approved share buyback. The buyback program will continue for as long as it remains value accretive to shareholders. Deployment of the remaining balance of discretionary capital of ZAR 1.8 billion will be guided by a horizons-based approach to return to net asset value. The group's held solvency ratio of 162% remained well within the target range of 155%-185%. There were two key drivers that reduced the group's solvency ratio. Firstly, there were significant market movements, particularly lower yields and higher prescribed equity shocks due to stronger equity markets. Secondly, we optimized our sources of capital.
Our subordinated debt level reduced by ZAR 1.8 billion during 2025 as part of our strategy to smooth the debt maturity profile. We initiated the ZAR 3 billion share buyback, which is fully recognized in the solvency ratio. The target range is set to ensure that we maintain sufficient solvency levels to withstand a 1 in 200-year stress event. The lower end of the target range serves as a point at which management increases monitoring and considers operational actions to support the solvency levels if the future outlook indicates downward pressure on coverage ratios. These ranges are set with suitable margins of safety, allowing us to manage our balance sheet efficiently across the cycle.
This is evidenced by our announced share buyback and dividend growth well within our new medium-term target range of 6%-9%, with continued strong capital remittances from our MLACs during 2025. Our strong capital position is supported by a gearing ratio of 14.2% at December 2025, below our target range of 15%-20%. This indicates capacity to raise further debt with our balance sheets supported by diverse sources of liquidity. We will continue to optimize our capital stack and gearing ratio to ensure the efficiency of our balance sheet. Our current year return on net asset value, or RoNAV, of 15.2% is within our new medium-term target range of 15%-17%, supported by earnings and ongoing balance sheet optimizations.
Excluding higher than expected market returns, return on net asset value would have been 12.4%. Going forward, we are planning on adjusting our RoNAV targets to a more normalized target in line with our 2026 remuneration targets. RoNAV will be normalized for shareholder investment returns, adjusted for the difference between actual and expected market returns. This aligns with our value creation metrics as RoGEV uses adjusted GEV earnings, which removes economic impacts and our. Moving now to earnings. AHE was up 26% per share, driven mainly by shareholder investment returns, where equity market performance in South Africa and Malawi were substantially above expected returns. Our 2025 earnings are significantly impacted by the elevated returns and performance in Malawi. We have provided detailed sensitivity analyses on the impacts of the Malawi business in our financial statements and results book.
Assuming a devaluation of the Malawian kwacha of between 50% and 30%, the increase in adjusted headline earnings would have been between 11% and 16%. We continue to exclude our Zimbabwean business from adjusted headline earnings due to restrictions on accessing capital by way of dividends. Year-on-year IFRS profits was impacted by the reduction in earnings from Zimbabwe following the transition of Zimbabwe's functional currency from Zimbabwe gold to the US dollar in 2024. IFRS profits benefited from the non-recurrence of 2024 losses related to the impairment of our China business and the loss on sale of our Nigeria and Tanzania businesses. We have seen a continued upward trend in RFO even after our ongoing investment in OM Bank. RFO per share increased by 15%, supported by improved operating performance in Old Mutual Life and Savings and Old Mutual Insure.
Turning to the cluster-specific RFO performance and starting with Old Mutual Life and Savings. Mass and Foundation declined by 8%, largely due to the strengthening of long-term persistency basis on our funeral book, which was partially offset by higher annual premium and cover increases on the in-force book. Improved persistency outcomes against a stronger basis, growth in the risk in-force book, and higher investment returns. Personal Finance RFO increased by 28% off a low base in 2024, primarily due to improved mortality and annuity longevity experience and better market growth and yield movements. This was partially offset by the impact of assumption changes, which included a persistency basis change. Wealth Management profits increased by 12%, driven by the improved annuity revenue from increased average asset levels and non-commission expense growth below inflation.
Old Mutual Corporate RFO increased by 23%, supported by strong market conditions and underwriting experience that continues to be positive and remains a significant contributor to the results from operations. Old Mutual Insure RFO saw excellent growth of 14% and is now contributing sustainably to the group RFO and is supported by good top-line growth, margin improvement, and tight expense management. The underwriting margin and results from operations were both negatively impacted in the second half by the one-off impact of an exceptional provision related to a third-party sale in our Old Mutual Alternative Risk Transfer. We continue to see the benefits of our diversified Old Mutual Investments business with consistent strong AUM growth supported by diversified revenue streams. Results from operations was down 8%, largely due to lower non-annuity revenue.
This was driven by the prior year, including exceptional fair value gains in our alternatives business and higher market movements on the credit portfolio and equity exposures in our specialized finance business. Non-annuity revenue is more volatile by nature, but provides significant economic value through the investment cycle and is a major differentiator from our peer group. Old Mutual Africa Regions results benefited from elevated returns and performance in Malawi, with Malawi RFO more than doubling to over ZAR 1 billion. Results from operations in the East and West region increased by 54% due to improved performance in the non-insurance lines of business, with banking and lending results from operations improving by 51% due to the non-recurrence of the costs incurred to rightsize the Faulu business and the consequent reduction of operating expenses in the current year.
RFO also benefited from the exit of our loss-making Nigeria business in 2024. The net result from group activities no longer includes the investment in OM Bank, which is now reported under the OM Bank cluster. Going forward, cost savings will be tracked through a two-pronged approach. Firstly, savings will be evidenced through improvements in our key efficiency metrics as set out on the left of this slide. This includes RoGEV as the ZAR 2.5 billion expense savings target is incorporated into our December 2025 group equity value base. Secondly, we will track total savings by reconciling to our IFRS expense base in the financial statements from 2026. We will track and disclose net savings after allowing for inflation and other costs to save future costs which are removed in the subsequent year.
We will also adjust for business boundary items where we incur costs to generate future revenue. An example of this would be the acquisition of 10X. For the 2025 year, we achieved savings of ZAR 450 million on our total 2024 group expense base after accounting for inflation and ZAR 440 million of restructuring costs. Excluding the ones of restructuring costs, shareholder operational costs reduced by ZAR 246 million or 15% in 2025. Our NEXT176 costs increased due to the restructuring of the business in 2025. Going forward, NEXT176 will be managed as a portfolio by Futuregrowth, and costs have been significantly rationalized. With that, over to you, Jurie.
Thanks, Casper. I wanted to just close by returning to this, which I said is my favorite slide, becoming our favorite slide. Which is really just anchoring everybody back towards our group targets, and the achievement of those medium-term targets by KPI. What we've got here is we've got the medium-term targets themselves, then we've got our financial year 2025 reported numbers. And then what we've done is we've just normalized and we're not creating a new normalized KPI, but what we just want to do is point out where we are from a run rate perspective in terms of the financial year 2025 numbers, and then what are the leading KPIs of delivery. I...
Let me first say I'm confident that as we have restructured our business, we've driven the right accountabilities, we've created incentives and targets that cascade. 2026 really is the year and into 2027 of delivery on what we're doing becoming famous as we say internally, becoming famous for doing what we say we're going to do. If you look at those RoGEV numbers, you see, yes, the 4.1% is what Casper reported, but also alluded to that 10.1% normalized, which is for those three very specific adjustments. Dividend per share, we're within range. RoNAV is the other area that we are still outside of range at 12.4% when you allow for excess investment returns, and VNB margin, the other area we're outside of range.
If you look at those where we're tracking, you can see the ground that needs to be covered in each of those KPIs where we are below target, and particularly in RoGEV, RoNAV and VNB margin. Now, the leading KPIs are really the things that we're signaling to you are the internal measures that we're using to track leading indicators of progress, and which we're also going to be reporting to you as we go to milestone the execution of these priorities. Delivery of the cost savings is clear, and we'll be reporting on that on a net of inflation basis relative to 2024.
Persistency variance is really key to see the importance to see the impact of the operational changes that we've made. Of course, we've changed our basis, but relative to that basis now, what we want to do is to start generating a positive persistency variances as a result of the actions that we're taking. New business volumes, of course, and the regaining of market share. As I said earlier, generating growth is not something that we're postponing to after the unlocking of value. Generating growth starts now, and the very same things that improve competitiveness in unlocking value are often the things that also will then drive your new business volumes. Finally, the traction with the OM Bank customer base.
These are the things which we're going to be driving internally, and which we're signposting, will be the kind of cadence of reporting to you, certainly starting at interims. With that, Langa, I'm going to hand back to you to take some questions.
Thank you. We will now move straight into the questions and answer session. Just as a reminder, I will first, this time around, take the questions that have already been submitted over Eclipse, our webcast link. I will start there, read those questions, and I'll move back into the room. We'll also just keep our devices still on flight mode so we don't interfere with the questions, so we can hear everyone quite clearly. When we get to the Q&A taking calls over the call, I will be taking calls over the call.
I will take just two questions per person, checking the time to make sure that we all finished up efficiently. One more reminder.
For the cluster CEOs, when there is a question directed to you, may I kindly ask that you come up on stage. There is a roving mic, take the question, and then you may go back to your seat. Thank you very much. The first question came from Bonga Mbanga . That's J.P. Morgan. Bonga would like to know, Jurie, how quickly can you move from the normalized RONAV, the one that we've mentioned of 12.4 towards the target of 15-17? What are the top levers that you have to move the dial in the capital structure? Thank you.
Thanks, Bonga. Th e levers that I highlighted last slide really are, I mean, cost savings obviously is a key element. It drops straight through to RoNAV. Persistency also helps in the sense that you keeping your business on the books, and that then results in over time as RoNAV. There's also a capital and NAV piece which I think we can talk to, and maybe I'll suggest, Casper, you talk to that.
No, not to forget that in the prior year, we disclosed a RoNAV which excluded the bank costs. That number includes the full bank cost. As the bank recovers, you'll see quite a big uplift in the RoNAV, you know, as we try to move the bank to profitability. Just to add that point and also to add that we then are continuing to work on the balance sheets to make sure that RoNAV. Once we've concluded the buyback, you know, that's really a big reduction in the NAV that we have. Reduction in the NAV that we have as a base at this point.
Thank you very much, Casper. Staying with the theme on capital stack, Senamile from Standard Bank Group Securities would like to know, can you please provide an update on the share buyback? Jurie, you touched on it briefly, if you may just maybe voice over it again.
Just to reiterate. We had at 31 December implemented ZAR 0.7 billion of the ZAR 3 billion. As of yesterday, that number was ZAR 1.3 billion. How it works is that we execute on that depending on where the share price is trading over time relative to GEV. It resets. It's dependent on that, the ability to execute. We reset that based on published GEV. Today's number will of course be then factored in. That program runs until the end of the year.
Thank you very much, Jurie. Another question related to the capital stack. This one is coming from Michael Christelis, UBS. Michael is asking, could you please comment on the group solvency position, the sensitivity thereof to the equity market stress scenario? Casper.
Obviously the biggest sensitivity comes through from LACDT. There are also what we call non operating entities. Any cash, even if it's cash that's sitting in these subsidiaries, those entities are treated as an equity shock. We are quite sensitive to the equity risk premium, the systemic adjustment. That's sitting at the maximum at the moment. Michael, I'm not expecting further because we are at the max. In fact, what we should be seeing is that equity's systemic risk premium coming down with the recent fall in markets.
Thank you very much, Casper. I'll now shift a little bit, take Brad Moorcroft from Peregrine. Brad would like to know, it's a technical question, this one. It says, please explain the rationale for the new Mass and Foundation reinsurance treaty. What impact did this have on our own solvency ratios? What is the annual cost of implementing this treaty? Casper would like to take that.
Sure. Maybe let me just talk through the rationale. W hat we're seeing is that the actual prudential shocks that we're required to apply are very onerous. Therefore, when you take reinsurance, you get relief at quite a good return on value. Our shock reduces, but it doesn't cost us a lot, is the short answer.
Thank you very much, Casper. We now shift to segments. Michael Christodoulis submitted a question, and he's asking specifically about Old Mutual Insure. Mike's question, let me get it right. Says, could you please give more color on Old Mutual Insure underwriting margin in the second half, which seems well below the target at 6.44%, seems to be correlated with an implied expense ratio above 46. Jurie would like to hand over to Charles. Yes. Charles, if you may please step over the podium. Thank you. Yes, please.
Thanks for the question. Is live mic live? Thanks for the question, Michael. Your analysis is correct. In H2, we have already spoken about the impairment that we needed to take in our cell captive business, and take a precautionary provision there in line with group accounting policies. That was the bulk of the impact on. It's in the non-attributable expenses line that you see there, some 40% there. There was another
Three items. There was some technology project costs that we decided to expense, particularly some of our investments in Gen AI. Never quite sure what the long term benefit of these things is going to turn out to be. We've taken a conservative view there and taken out certain expenses and written them off in H2. The third most material item is as ONE Financial Services transitions out of a cell captive outsourced type of arrangement into its own license, it needed to build out certain capacities and staffing and that has, you know, given us a one-time uplifting cost as we prepare for that new license migration. Thank you.
Thank you very much. Charles, you can take the mic with you. Yes. Staying with this segment, I will now move on taking Harry Mateer from Bank of America. Harry would like to know, the question is on the Life and Savings cluster. First, in the cluster, says, "Could you please provide more color on Personal Finance new business sales?" That's the first part. Where are you seeing green shoot? What is your view on the sustainability of the corporate RFO?
Sorry, just introduce him.
I would like to just mention that Matt, most of you may have not seen Matt. Most of you may have not seen him. Matt Bregman is the Chief Financial Officer of the Life and Savings cluster working with Prabashni. Over to you, Matt.
Thank you. Langa, and thanks for the questions. I think on Personal Finance, the green shoots we are seeing are on the risk side of sales. We actually saw some quite pleasing growth in risk sales over the year and green shoots also in terms of regaining market share on the risk side. Risk is obviously an important contributor to our VNB margin, so that's very important from a Personal Finance perspective. Guaranteed annuity sales were down. That was an industry-wide rotation as we know, but we saw some benefit of the shift to living annuities in the wealth business. In terms of Corporate, RFO, obviously there were some benefits from economics in the year.
We also still see, you know, relatively strong mortality profits on the group risk business. T hose are the things to think about on a forward-looking basis. Thanks.
Thank you very much, Matt. Let me just take that with you. I'm now going to shift and take Marius Strydom. He submitted a number of questions. Four. Marius, I'll take two out of your four questions that you submitted. The first, it says, "Thank you for the opportunity to ask the question. The first one is on liability matching losses impact. The question is, to what extent did the liability matching losses impact your earnings, and where has this been reflected?" And the second one, we'll go over to Zureida Ebrahim , Marius would like to know, why has OMIG Asset Management segment not grown in RFO over the past three years? I'll start with the liability mismatch. If you'd like to comment on it, Casper, or maybe ask for input from-
I'll start and then Renan Thakurdin can add. In our IFRS results, you're not seeing any liability mismatch results. We effectively hedge those liabilities on our balance sheets. What we have seen some impact on EV is where we are unable to hedge elongated exposures. In our EV, we use the prudential curve, and the Prudential curve had a much lower profile post elongated tradable assets. That's where you're seeing the impact on EV. On IFRS, you're not seeing any mismatch. In fact, we had mismatch profits.
Thank you, Casper. Over to you, Zureida Ebrahim.
Thank you, Marius, for the question. The way we report is potentially leading to some of that question. We report our cluster in a very specific way. We consolidate our asset management businesses into one report effectively. In that consolidation, we actually have three affiliates. We've got the Marriott business, we've got Futuregrowth, as well as OMIG. Actually, on the OMIG side, which is our listed equity multi-asset and LDI business, we actually have seen quite significant growth in our RFO over the last few years, particularly for 2025. Marriott was muted and flat. Where we've seen a drop, which is resulting in the flat growth, is actually in our Futuregrowth side.
We had a number of expenses, once-off expenses last year, which did impact the RFO number that related to a bad debt provision in our agri business and some double executive costs as well that came through in 2025 as we transitioned new leadership into that business. Overall, OMIG positive, Marriott muted. Futuregrowth was down relative to last year.
Thank you very much, Zureida, for that. I will now move back and take one more question, and then we'll come back to the Chorus Call if there are any. Bradley from Peregrine again. This question is related to GEV. Says, "Please expand upon why there's a ZAR 808 million negative expense assumption change that was made on GEV." That's the first part. The second part: which segment this applies to. The third part of the question is how this ties up to the cost savings target. I think you may just maybe voice over again on the cost savings target. Casper, would you like to-
No, Rohan, will you take that one? Thanks.
Thank you very much. Over to you, Renan.
Thank you. So the ZAR 800 million basis change that we've taken is actually a short-term expense basis change. What it's reflecting is that over the short term, we actually have to incur costs to take out costs, and we still have the elevated costs. We are recognizing that short-term expense provision. In our embedded value, when we reach a point where our maintenance expenses are at a point where we're getting positive variances, we actually don't capitalize that into our embedded value. It's recognizing the short-term trajectory. Thanks.
Thank you. Maybe, Jurie, if you cover it. Thank you very much. I would like to check if we have any questions on the Chorus Call.
At this stage, there are no questions on the conference.
Okay, I'll go back through the submitted questions. Take one from Jared Aarse . Jared is asking the question of: What are the expectations for losses in Next176 in 2026? Jurie, it may be helpful to just voice over that first.
What we've done is there's been a strategic change in Next176, where we've transitioned from really a significant operational cost on that portfolio to that portfolio being managed by Futuregrowth. Futuregrowth is a sort of center of excellence in the group for managing venture capital. That transition has taken place. You would have seen an escalation of Next176 cost in the 2025 numbers. Going forward with that change, there will be some one-off rationalization costs, but those costs are gonna be very significantly rationalized going forward.
Thank you very much, Jurie. Clarence, you are not off the hook. There is a question for you. Here is James Starke from Morgan Stanley. He would like to know. Firstly, he says, welcome the progress on the credit loss ratio in the lending business. Please can you elaborate on how the prevalence of gambling among South African consumers has affected your credit underwriting process, and how have you adjusted for this in your origination stages? Over to you, Clarence. While you're here, there's a second one for you.
Sure. That's a very difficult question, but the reality of the matter is that we have seen elevated levels of gambling. In OM BANK in particular, what we have seen is we do provide value-added services, and one of those is vouchers. We have seen that vouchers have actually taken off in such a high way. We understand that people are using those vouchers for gambling purposes. It does impact customers from a, you know, disposable income perspective. We have seen some of our customers who normally, you know, will pass our credit assessment failing this time around. We have taken precautions to make sure that, you know, we bring extra data or alternative data in order to make sure that we assess for that type of risk when it comes to credit.
We have seen that some of them have also had challenges from a persistency perspective because it does also impact persistence.
Yes. Thank you. Now you're off the hook. The next one is banking, but not OM BANK or OMF. I will ask Casper, maybe you may voice over on this one. It's from Marius. Marius would Could you please explain the large increased contribution from Malawi Banking?
Yes. In Malawi we have in that business, an investment in an associate called FDH. That associate had a significant increase in earnings during the year, and what you're seeing coming through is the associate earnings that we're accounting for in Malawi.
Thank you very much. That brings us to the close. I think we've covered pretty much all the questions. There are no questions that are being sent through over the Chorus Call. At this stage, I would like to thank Casper, Jurie, the management team for joining us here. Also most importantly, thanks to all of you who've dialed in to listen to our presentation and to those who submitted questions. I would like to thank you on behalf of our board and the management team. This brings the presentation to a close. Thank you very much. Enjoy the rest of your day.