Insurer Old Mutual posted a 5% rise in first-quarter operating profit, at the higher end of expectations, but said it still expected exchange rates and infrastructure costs to hold back growth this year.
South Africa’s largest insurer said on Thursday operating profit on an IFRS (international financial reporting standards) basis was £398-million, as life sales in South Africa, United States asset management and growth at unit Nedbank offset the dampening effect of the strong pound.
A Reuters poll of eight analysts had seen operating profit at an average of £378-million, with estimates in a range of £352-million to £400-million.
”While we still expect exchange rates and synergy and infrastructural costs to hold back earnings growth this year, the operating delivery from the group is good and we are well positioned to grow strongly in 2008,” chief executive Jim Sutcliffe said.
Old Mutual, which is reporting first-quarter profits for the first time since it bought Sweden’s Skandia last year, said life-assurance sales rose almost 9% on an annual premium equivalent basis to 421-million in the quarter, above an average forecast of 409-million.
Funds under management rose just over 5% to £249-billion at the end of March and the group said it was on track to achieve a target of £300-billion under management by the end of 2008.
Old Mutual trades at the UK life sector’s lowest multiple — just in line with embedded value against a sector average of almost 1,5 times — largely because of a perceived risk of its exposure to the South African economy, though South Africa now represents only 30% of its group new business profit. – Reuters