Old Mutual boosted by strong sales in Africa

By By Jemima Kelly

　

Anglo-South African financial group Old Mutual posted a 24 percent rise in gross sales of its products ranging from insurance to investment funds, helped by a strong performance in Africa.

In a trading statement on Thursday, the company - a member of Britain's FTSE 100 index - said gross sales in the first quarter reached 6.2 billion pounds ($10.4 billion), ahead of a consensus forecast of 6 billion, helping funds under management expand 2 percent on a constant currency basis to 297.7 billion.

The company said it was well placed to benefit from recent changes to UK pensions, which will effectively remove the need for any retiree to buy an annuity from insurers and will allow them more flexibility in how to invest their money.

"We expect to be a net beneficiary from the radical changes to the UK pensions system," said Chief Executive Julian Roberts on a conference call. "We have no exposure to annuities but are a leading provider of pension income drawdown."

Sales in emerging markets were up 18 percent on a constant-currency basis at 1.9 billion pounds, helped by strong retail sales. "We are making good progress towards our ambition to become Africa's financial services champion," said Roberts, who said sales in Africa were up 27 percent excluding South Africa, and added that the group had signed new bank distribution agreements in Nigeria and Ghana.

Old Mutual, founded in Cape Town in 1845, had said in January it planned to increase the share of profits generated by its African business to 15 percent by the end of 2015, up from 10 percent. [ID:nL5N0L32GF] The group reiterated its intention to list a minority stake in its asset management business in the United States, USAM, which suffered cash outflows of $3.6 billion in the quarter - a performance which analysts said was disappointing.

"We reiterate our 'hold' recommendation but highlight the continued excellent progress the group is making at the underlying level, especially as a regards asset accumulation, and its positioning in the UK post the Budget changes," said analyst Eamonn Flanagan at brokerage Shore Capital in a note to clients.

Old Mutual shares were down just over 1 percent at 0745 GMT, having hit a near 12-month high last week.

Roberts also said Old Mutual had regulatory approval for the disposal of its Skandia Poland unit, after having already sold the Austrian and German businesses of its wealth management arm for 220 million euros. [ID:nL5N0MO2G5] The weakness of the South African rand and U.S. dollar, which flattened the group's profits in 2013, wiped 50 percent off the group's gross sales on a reported currency basis, but Roberts remained upbeat.

"I believe that the results we are announcing today, despite the currency headwinds, are evidence of the strength and appropriateness of our business model," he said.($1 = 0.5960 British Pounds)

Source Reuters