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Johannesburg - Shares in Old Mutual rose on Thursday as the dual-listed financial services group showed it was finally getting the better of its capital and liquidity issues.
Speaking following the release of the group's third quarter trading update, CEO Julian Roberts told analysts: "We have resolved our capital and liquidity issues, we are successfully managing the risks in US Life, and we continue to simplify the portfolio."
Old Mutual's US Life division - a capital-sapping headache for the group after posting an unrealised loss of $2.6bn for the year to end-December - has turned this figure around to an unrealised loss position of $664m at end-September.
The firm's infamous "Bermuda book" of guaranteed investment products, as well as investor concerns about Old Mutual's life operations, contributed to the share being marked down heavily from a 12-month high of 1 411c. It hit a low of 476c in the first quarter of 2009, before bouncing back to just under the 1 400c level at present.
Since being appointed in September 2008, Roberts has been focusing on boosting Old Mutual's long-term savings offering. Earlier this year Roberts elevated Old Mutual South Africa (Omsa) head Paul Hanratty to head of the long-term savings division across the group.
Old Mutual has also refocused its strategical objectives during the year so far.
In October the company announced it was making an offer to the remaining minority shareholders in short-term insurer Mutual & Federal, and completed the acquisition of local financial services firm Acsis. It also divested from its stakes in Skandia Chile and Bankhall.
"We remain focused on managing risk and capital tightly, and on driving further underlying operating efficiencies in order to capitalise on further recovery in our markets," Roberts said.
The company warned that headline earnings per share and earnings per share for 2009 were expected to be between 25% and 35% lower than the 1 401c and 1 558c reported for the comparative period to December 2008.
In an investment note to shareholders, stockbrokerage Barnard Jacobs Mellet (BJM) echoed Old Mutual's positive sentiments. "Capital issues are a thing of the past," it said.
BJM advised clients to buy Nedbank shares from 11 600c. On Thursday the group was trading at 1 378c per share, up 0.7% for the day.
- Fin24.com