Company Data
| Last traded |
R19.23 |
| Change |
R0.32 |
| % Change |
1.69% |
| Cumulative volume |
4.43m |
| Market cap |
R106.96bn |
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Johannesburg - Old Mutual [JSE:OML], South Africa's largest insurer, has finally taken the broom to the group's dysfunctional US-based life and asset management business.
In a move that represents his firm's major swing at restoring Old Mutual's fortunes, CEO Julian Roberts is to sell the Bermuda life business and list its asset management firm.
And in a further signal that the company regained equilibrium, Roberts has resumed the dividend, declaring a final dividend of 1.5 pence for the 12 months. This was after not paying a dividend in the previous year as it sought to conserve capital amid the global financial crisis.
Operating profit before tax rose from £1.136bn to £1.17bn for the year ended 31 December 2009. Embedded value, the measure by which the insurance businesses are valued, rose to 171.0p per share from 117.6p previously.
"We think they are pretty strong results in volatile market conditions," said Roberts in a conference call to analysts. "We have significantly strengthened the capital and liquidity base of the group."
Explaining the move for the restructuring, Roberts told analysts that the operating performance for the US life business had improved dramatically. Old Mutual now saw an opportunity to exit this business, he said.
"During 2009 the focus has been on de-risking, maintaining a stable operating environment, reducing costs, and managing capital and liquidity," said Roberts.
"We have continued to improve our understanding of the liabilities, with all positions monitored and marked to market on a daily basis. Most guarantees remain 'in the money' and the level of redemptions has remained low.
However, if markets continue to rise and the value of customers' contracts move above the guarantee level, we anticipate a pronounced increase in the level of redemptions, which will accelerate the run-off."
Roberts also confirmed that Old Mutual was looking at a partial initial public offering (IPO) for its US asset management business.
This would boost fund growth, enhance market profile and provide valuation visibility as well as improved liquidity in the US capital markets.
- Fin24.com
Finweek's Bruce Whitfield recently wrote on a sad litany of misjudgements and corporate failings at Old Mutual, the country's largest insurer, and why current CEO Julian Roberts is now hoping to change its DNA. Read the story here.
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