Anglo-South African insurer Old Mutual Plc (OML.L, ODMTY.PK) Thursday reported a decline in sales for its life assurance and mutual fund segments of 4% and 23% respectively for the nine-month period. The company confirmed that it remains well capitalized with more-than-enough liquidity to face the foreseeable future. Separately, the insurer announced the appointment of Philip Broadley as Group Finance Director, effective November 10.
The London-based company's Life assurance sales, or APE, sales for the nine-month period declined 4% to GBP 1.25 billion from GBP 1.29 billion in the year-ago period. APE sales dropped by 8% and 4% in Europe and U.S., respectively, while increased by 9% in South Africa. Life sales, on an APE basis, dropped by 18% and 6% in U.K. and U.S., respectively, whereas it increased by 35% and 16% in Nordic and South Africa, respectively.
Unit Trust sales/mutual fund sales fell 23% to GBP 4.8 billion from GBP 6.19 billion in the prior-year period. Mutual fund sales in South Africa climbed by 29%, while in U.S., Asia Pacific, and Europe sales dropped by 48%, 47%, and 19%, respectively.
For the period ended September 30, the savings and wealth management company's value of new business, excluding U.S. Life, was down 10% to GBP 125 million from the previous year.
Funds under management, or FUM, for the year-to-date period decreased 9% to GBP 254.4 billion from GBP 278.9 billion in the comparable period of last year. FUM in Asia Pacific declined significantly by 40%. Meanwhile, in Europe, South Africa, and U.S., the declines were comparatively smaller at 13%, 9%, 6%, respectively. The company added that third-quarter performance was "robust."
The company said it posted resilient net client cash flows with good performance in U.K., Nordic, and Europe and Latin America, or ELAM, regions. This was, however offset by outflows in other regions. The company noted that net client cash flows are neutral for the nine-month period, which is a pleasing performance in this economic climate.
The company noted that its capital position continues to be strong with a pro-forma Financial Groups Directive, FGD, surplus of GBP 1.1 billion at September end, with each of its businesses maintaining adequate capital and liquidity to support their individual regulatory and operational needs. Old Mutual further noted that its FGD position has been positively underpinned by the de-risking of its South African shareholder assets last year.
Geographically, U.K. and the offshore region registered "resilient" performance despite the volatile market conditions. The Nordic region continued to deliver strong growth in sales, amid the turbulent financial markets. The ELAM region's focus on customers and innovations resulted in good net client cash flows.
In South Africa, the company registered continuing strong life sales growth despite tightening economic conditions. The company added that it took a conservative stand in the tough macro-economic milieu. In U.S. Life, sales decline was driven by withdrawal of guarantees on Bermuda variable annuities, whereas in U.S. Asset Management, net flows and assets were impacted by market turmoil.
Regarding its intended sale of its shareholding in Mutual & Federal, the insurer said that it is progressing well. The company is currently considering proposals from a small group of bidders and expects to make an announcement before the year end.
Commenting on its year-to-date performance, Chief Executive Julian Roberts said, "We have delivered a resilient performance in what have been extremely challenging market conditions with our South African and Nordic businesses continuing to deliver excellent results. Despite the fall in equity markets and movement in exchange rates we remain well capitalized and we have liquidity which is in excess of our needs for the foreseeable future."
Moving forward, the company said it is confident that overall its remains resilient and that its businesses are well positioned to deal with the challenges, even though market conditions are expected to remain difficult in the remainder of the year.
In addition, Old Mutual said that Bob Head will become Regional Director of Old Mutual Europe, its Skandia branded businesses.
In a separate release, the insurer also announced that it appointed Philip Broadley as Group Finance Director, with effect from November 10. Broadley succeeds Jonathan Nicholls, who is leaving the company to pursue interests outside the life insurance sector. Broadley will also be appointed to the Old Mutual Board as an Executive Director and will also join the Group Executive Committee.
Broadley worked previously as Group Finance Director at Prudential Plc from 2000 to March 2008. Before that, he served as a Partner at the accountancy firm Arthur Andersen from 1993 to 2000.
OML.L is currently trading on the LSE at 57.30 pence, up 3.70 pence, or 6.90%, on a volume of 13.19 million shares.
ODMTY.PK closed last trade on November 5 at $6.61.
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