Old Mutual’s results for the year to March 2021 may have been hamstrung by the pandemic and economy, but still, the company saw fit to deliver a 35c dividend from strong capital reserves. Now shareholders have something else to smile about.

A Nedbank branch in Sandton, Johannesburg. (Photo: Gallo Images/ Papi Moake) / Signage sits on display outside the offices of Old Mutual Ltd. bank in Johannesburg, South Africa. (Photo: Waldo Swiegers/Bloomberg via Getty Images)
Old Mutual shareholders have seen more share price action in the past day than they have in the past year.
The share surged by 8% to R13.96 following the news that the investment and insurance group planned to unbundle most of its remaining 19.4% stake in Nedbank to shareholders.
This means that an unexpected windfall of R10-billion will be unbundled to about 450,000 shareholders at a ratio of 1.3 Nedbank shares for every 100 Old Mutual shares held. 
This step follows the conclusion of Old Mutuals managed separation process of 2018 which, among other steps, saw it reduce its stake in Nedbank from over 50%.
This minority relationship was sufficient to ensure the two companies could maintain their commercial relationships, support the capital structure of the Old Mutual Group and ensure that Old Mutual had a seat on the Nedbank board.
However, life has changed considerably since those days, not least of which was the appointment of Iain Williamson as permanent CEO of the group in July 2020. 
While keeping a steady hand on the wheel, he initiated an internal review of the Nedbank stake. The boards conclusion was that reducing its Nedbank stake would simplify the group further, allow investors to focus on the core operations of Old Mutual, allow shareholders to choose which entity they preferred to be invested in, and lastly, to provide a decent return of capital to shareholders.
This move was always on the cards, given that there is no longer any strong cooperation between the two, says Neville Chester, a portfolio manager at Coronation Fund Managers.
Bancassurance, a partnership that sees a bank using its sales channel to sell insurance products to its client base, is no longer as strategic as it was 15 years ago. 
The banks have realised that they can do the simple insurance products themselves. They sell credit life and mortgage protection policies, and funeral policies on the unsecured side. These are tick-box policies. Anything that requires complex advice does not suit their sales channel, he adds.  
The remaining stake in Nedbank, about 7.2% of ordinary shares, will continue to be held by Old Mutual Life Assurance Company SA in support of its capital structure.  
Simplification remains a key theme for Old Mutual. 
2020 was one of the most challenging years our organisation has ever faced, Williamson wrote in his annual letter to shareholders. 
We have made good strides operationally and simplification remains a key focus to enhance efficiencies across the business with areas of progress including the consolidation of debt programmes and acceleration of digital enablement.
At the same time, the group is attempting to put a more human face to what to many may seem a monolithic giant. This strategy is underpinned by five interconnected pillars: customers and community; always present; rewarding customer engagement; engaged employees and solutions that lead.
The focus on customers and keeping customers is important given the drubbing many of them have experienced in the past year. In its results for the year ended December 2020, Old Mutual reflected a significant drop in earnings, impacted by market volatility and a difficult economic environment. 
The group said its customers had less disposable income in 2020 and noted a rise in claims as a result of the pandemic. DM/BM