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London - Insurer Old Mutual posted a 12%t drop in first-half operating profit on Friday, as the weak rand and US dollar and provisions for its US business dampened the impact of rising life sales.
South Africa's largest insurer said operating profit, on a European embedded value (EEV) basis, totalled £782m, below an average forecast of £850m, according to 7 analysts polled by the company. On an IFRS basis, operating profit was £757m, down 2%.
Old Mutual had earlier this year warned of currency headwinds and of the dampening impact of integration costs in Europe and investment in the Nordic division.
The group, however, i increased its interim dividend by 10% to 2.3 pence per share.
On sales, Old Mutual reported that South African sales were up 21% as sales force productivity grew. Corporate sales were said to be flat.
It also added that investment performance was strong in the US and Europe, and recovering in South Africa.
Funds under management increased 11% to £263bn.
Chief Executive Jim Sutcliffe said underlying business performance during the first half, driven by high-quality investment management, resulted in strong net client cash flows and growth in funds under management - the key driver of profitability.
"Group earnings, however have been muted by the strengthening of the sterling against the rand and the US dollar, and the provisions following the completion of the actuarial review in the USA.
"Our strong capital position and powerful set of international businesses will allow us to grow even if economic conditions continue to be turbulent."
- Reuters/I-Net Bridge