Insurer Old Mutual posted a 12% drop in first-half operating profit, missing forecasts as the weak rand and United States dollar and provisions for its US unit dampened the impact of rising sales.
South Africa’s largest insurer said on Friday pretax operating profit, on a European embedded value basis, totalled £782-million, below an average forecast of £850-million, according to seven analysts polled by the company.
On an IFRS basis, operating profit was £757-million, down 2%.
Old Mutual, which bought Sweden’s Skandia last year, had warned of currency headwinds and of the dampening impact of integration costs in Europe, investment in the Nordic division and stronger mortality assumptions in the US.
It said on Friday the US actuarial review was complete and that the business, where it would no longer constrain sales, was on track to return cash to the group by the end of the year.
”The Skandia synergy and development targets are on track,” chief executive Jim Sutcliffe said. ”Our strong capital position and powerful set of international businesses will allow us to grow even if economic conditions continue to be turbulent.”
First-half life assurance sales, on an annual premium equivalent basis, rose 10% to £859-million from a restated year-ago number of £779-million.
Funds under management rose 11% to £263-billion at the end of March, putting the group on track to meet its target of £300-billion by the end of 2008.
Old Mutual raised its interim dividend 10% to 2,30 pence per share.
Shares in the insurer, which trade at one of the United Kingdom sector’s lowest multiples partly because of its South African exposure, are currently trading around the year’s lowest levels on general sector weakness as subprime concerns mount. – Reuters