| Thu 8 May 2008, 8:01 | | OML - Old Mutual Plc Interim Management Statement |
|
OML
OLOML
OML - Old Mutual Plc Interim Management Statement For The Three
Months To 31 March 2008
Old Mutual plc
ISIN CODE: GB0007389926
JSE SHARE CODE: OML
NSX SHARE CODE: OLM
ISSUER CODE: OLOML
Old Mutual plc Interim Management Statement for the three months to 31 March
2008
Strength in diversity
- Net client cash inflows of GBP2.1 billion, 3% of opening funds under
management (FUM) on an annualised basis despite volatile market
conditions
- Funds under management down 6.5% to GBP260.8 billion
- Growth in Life APE sales of 2%* to GBP426 million
- UK down 18%*: single premiums affected by market
- Nordic up 36%*: positive sales momentum continues
- SA up 12%*: management focus on sales force growth and productivity
- US up 37%*: variable annuity sales levels sustained
- Mutual fund sales of GBP1,699 million: strong Nordic (up 103%*) and SA
growth offset by market declines in UK and US
- Value of new business solid at GBP55 million
- Capital position remains strong; GBP1.5 billion pro-forma FGD surplus
Jim Sutcliffe, Chief Executive, commented:
"Old Mutual`s diversified business model and international portfolio enabled
us to achieve a resilient performance in the first quarter against a
background of challenging market conditions. Achieving net client cash flows
of GBP2.1 billion in this context is very pleasing although falling markets
impacted our level of funds under management.
Looking forward, we are tightening our grip on expenses as markets reduce our
revenue, and optimising our capital allocation. Retirement savings remains a
growth industry for those with good investment performance and we are well
placed to outpace our competitors."
* For the three months to 31 March 2008, with comparisons to the three months
to 31 March 2007
Enquiries
Investor Relations
Aleida White UK +44 (0)20 7002
7287
Deward Serfontein SA +27 (0)21 509 8709
Media
Matthew Gregorowski UK +44 (0)20 7002
7133
Nad Pillay SA +27 (0)21 504 8026
Tony Friend UK +44 (0)20 7457
(College Hill) 2020
Notes to Editors:
A conference call for analysts and investors will take place at 9.00 a.m. (UK
time), 10.00 a.m. (Central European and South African time) today. Analysts
and investors who wish to participate in the call should dial the following
toll-free numbers quoting conference ID 45908827:
UK 0800 694 0257
UK (local) 0844 493 3800
Sweden 0200 890 171
South Africa 0800 980 759
North America +1 866 966 9439
International participants +44 (0) 1452 555 566
Playback (available until midnight on 16 May 2008), access code: 45908827#:
UK toll-free 0800 953 1533
North America toll-free +1 866 247 4222
Standard international +44 (0) 1452 55 00 00
Copies of this update together with high-resolution images (at
http://www.oldmutual.com) and biographical details of the Executive Directors
of Old Mutual plc, are available in electronic format to download from the
Company`s website.
This Interim Management Statement has been prepared in accordance with
section 4.3 of the Disclosure and Transparency Rules (DTR) and covers the
period 1 January 2008 to 7 May 2008. The first quarter business update is
included in this Interim Management Statement.
A Financial Disclosure Supplement relating to the Company`s three month
business update can be found on the website. This contains a summary of
sales and other financial data for the first three months of 2008 and 2007.
Photographs of management are available at the Visual Media website
www.vismedia.co.uk
Forward-looking statements
This announcement contains forward-looking statements with respect to certain
of Old Mutual plc`s plans and its current goals and expectations relating to
its future financial condition, performance and results. By their nature,
all forward-looking statements involve risk and uncertainty because they
relate to future events and circumstances that are beyond Old Mutual plc`s
control, including, among other things, UK domestic and global economic and
business conditions, market-related risks such as fluctuations in interest
rates and exchange rates, policies and actions of regulatory authorities, the
impact of competition, inflation, deflation, the timing and impact of other
uncertainties or of future acquisitions or combinations within relevant
industries, as well as the impact of tax and other legislation and other
regulations in territories where Old Mutual plc or its affiliates operate.
As a result, Old Mutual plc`s actual future financial condition, performance
and results may differ materially from the plans, goals and expectations set
forth in Old Mutual plc`s forward-looking statements. Old Mutual plc
undertakes no obligation to update any forward-looking statements contained
in this announcement or any other forward-looking statements that it may
make.
GROUP RESULTS
Group Highlights (GBPm) Q1 2008 Q1 2007 % Change
Life assurance sales (APE) 426 418 2%
Europe 259 278 (7%)
South Africa 80 75 7%
US 87 65 34%
Unit trust / mutual fund 1,699 1,935 (12%)
sales
Europe 1,017 1,009 1%
South Africa 324 272 19%
US 289 540 (46%)
Asia Pacific 69 114 (39%)
Value of new business 55 58 (5%)
Europe 27 36 (25%)
South Africa 9 10 (10%)
US 19 12 58%
Group Highlights (GBPbn) Q1 2008 FY 2007 % Change
Funds under management 260.8 278.9 (7%)
Europe 58.0 60.6 (4%)
South Africa 34.9 41.7 (16%)
US 161.6 170.1 (5%)
Asia Pacific 6.3 6.5 (3%)
Q1 2008 Q1 2007 Annualised
% of
opening
FUM
Net Client Cash Flows 2.1 4.5 3%
Europe 0.8 1.5 5%
South Africa (0.3) (0.1) (3%)
US 1.6 3.0 4%
Asia Pacific - 0.1 -
Net client cash flows delivered during period of market volatility
During the three months to 31 March 2008 ("the period"), Old Mutual delivered
solid investment performance compared with the three months to 31 March 2007
("the comparative period") in challenging market conditions. Continued
momentum in net client cash flows of GBP2.1 billion represented 3.0% of
opening funds under management on an annualised basis. Delivering on
absolute investment performance proves challenging in such volatile markets,
however our US businesses produced inflows of GBP1.6 billion, while the
Skandia businesses achieved GBP0.8 billion of net inflows. Net client cash
flows remained a challenge for OMSA as we go through the transition to
establish our boutique managers.
Breadth of sales product offering in diverse geographic markets
Life sales on an APE basis were solid overall. In Nordic, we continued to
see the benefits of our investment in the sales channel with strong life APE
sales. In the US we delivered excellent sales (up 37% in US dollar terms)
driven particularly by Bermuda variable annuities. South African life sales
were up 12% in Rand terms. However UK single premium sales for the period
suffered as a result of market conditions and tax changes and therefore were
below the level of the comparative period.
Whilst unit trust sales in Europe, especially Nordic, and South Africa were
pleasing, lower sales in the US and UK more than offset this result, with
weaker Old Mutual Capital mutual fund sales and OMAM UK unit trust sales
directly impacted by the more difficult selling environment.
Value of new business
The value of new business (VNB) remained steady at GBP55 million, driven by
excellent volumes in US Life and strong sales in Nordic. The APE profit
margin decreased slightly overall from 14% to 13%. This was 21% for the US
Life business, compared with 19% in 2007. The UK APE margin of 9% was down
slightly during the period due to the change in business mix. In Nordic, the
APE margin was sustained at the 2007 year end level of 13%, while in ELAM
after exceeding the margin target in 2007, it fell to 11% due to lower new
business volumes. In OMSA, the margin declined to 10% largely due to lower
volumes being written in a period which included the earlier Easter holiday
period and we invested in distribution.
Nedbank and Mutual & Federal
Nedbank delivered a solid result overall with strong net interest income and
an improved cost to income ratio, despite an increasingly challenging
environment while gross written premiums were up 6% over the comparative
period at Mutual & Federal.
Other
The Group is in compliance with the Financial Groups Directive capital
requirements, which apply to all EU-based financial conglomerates. Our pro-
forma FGD surplus was GBP1.5 billion at 31 March 2008, including current year
profits.
Our GBP350 million share buyback programme was announced at the beginning of
October 2007 and we have so far repurchased approximately 235 million shares
through the London and Johannesburg markets at a total sterling equivalent
cost of GBP343 million.
Outlook
Looking forward, we are tightening our grip on expenses as markets reduce our
revenue, and optimising our capital allocation. Retirement savings remains a
growth industry for those with good investment performance and we are well
placed to outpace our competitors.
UNITED KINGDOM AND OFFSHORE
A resilient quarter from Skandia UK
Skandia UK attracted positive net client cash flows of GBP546 million for the
period, representing 5% of opening funds under management on an annualised
basis. Despite the positive net client cash flows, adverse market movements
during the period resulted in a 6% decrease in funds under management since
the beginning of the year to GBP39.5 billion.
Life sales on an APE basis for the quarter were GBP158 million, down 18% over
the comparative period, when the business benefited from strong offshore
portfolio bond sales through UK institutions. These were not repeated in
2008 following a tax change implemented in the 2007 budget. In addition the
2008 budget has confirmed the new flat-rate of CGT of 18% without any
corresponding change to the treatment of onshore life bonds (which are
subject to income tax). For some clients, advisors are therefore more
hesitant to recommend a bond when a direct investment in funds may be more
tax-efficient. With its platform approach and a full set of product
wrappers, Skandia is better-placed than many competitors to benefit from this
change. However, the shift away from life bonds gave rise to a lower value
of new business of GBP14.5 million, the new business margin was 9.1%.
Persistency experience remains in line with expectations as customers wishing
to switch to more defensive investments are taking advantage of the broad
choice available through Skandia`s "open-architecture" approach. Skandia`s
platform market share has remained stable in a declining market.
Unit trust sales (excluding institutional investment business) of GBP415
million were down 27% against the comparative period as the volatile markets
led to a weak ISA season for the whole industry. Offsetting this,
institutional mutual fund business of GBP107 million was significantly up in
the period.
Skandia Investment Management Limited`s (SIML) range had a good quarter
during a very difficult period for markets. The level of volatility has
resulted in good relative performance from the risk controlled range of funds
as the more defensive oriented managers have had the opportunity to deliver
after such a long bull market. 75% of the SIML Blend funds are now
delivering risk adjusted returns ahead of sector since launch. UK Strategic
Best Ideas has continued to prosper despite the current market volatility, as
it is designed to do. This has resulted in excellent relative performance,
with funds demonstrating significantly lower volatility than the market.
In most aspects, Skandia UK supports the FSA`s revised proposals on the
Retail Distribution Review, to have a clear separation between advice and
sales, ensure alignment with the potential Money Guidance service and to
pursue the aim of raising professional standards. The proposal for "guided
advice" within the sales channel is still being considered. Skandia UK
believes this will confuse the consumer and hence will be lobbying against
this proposal.
NORDIC
Strong start to the year with very positive sales performance and
strengthened relations with distributors
Net client cash flows for the first quarter were a pleasing SEK1.5 billion,
up 114% on the SEK0.7 billion achieved in the comparative period. The
positive performance was driven by strong net inflows in the life business,
benefiting from a very good sales performance and reduced outflows. However,
a volatile equity market during the beginning of 2008 impacted negatively on
asset growth during the period, with funds under management at the end of the
quarter down 11% on 31 December 2007 to SEK103.7 billion. Continued market
leading investment performance characterised the first quarter in our Nordic
business. Skandia`s Swedish unit-linked business also achieved the best
investment return of all unit-linked companies in Sweden in a three-year
timeframe (according to a Risk & Forsakring survey).
Nordic delivered excellent growth in sales during the period. Life sales on
an APE basis of SEK652 million were up 36% on the comparative period
continuing the positive trend from the last quarter of 2007. The internal
sales force continues to perform very well with a focus on unit-linked
products. We have particularly benefited from a more positive attitude
towards Skandia among brokers in Sweden mainly driven by expanding the fund
range and new product launches. Skandia returned to the number one position
among distributors according to a distributor satisfaction survey in Sweden
(2007: third). Being ranked number one in 15 out of 18 areas, Skandia scored
highly in areas such as attractive fund platform, best commission model and
most interesting insurance company for a customer to place their savings.
Excellent growth was experienced in mutual fund sales of SEK1,004 million, up
103% on the comparative period. The increase was mainly due to deposits in
Skandia`s interest based funds and a newly launched hedge fund, both of which
are popular in times of volatile equity markets.
The value of new business of SEK85 million for the period was down 2% on the
comparative period, improved life sales on an APE basis having been offset by
a change in business mix and the assumption changes made in 2007. We would
expect margins to improve during the year. New lending at SkandiaBanken
developed positively, up 3% since 31 December 2007, mainly as a result of
growth in the Norwegian mortgage loans and in the middle of March a campaign
launching a one month interest free offering saw the start of an increase of
mortgage loans in Sweden. The deposit book at SkandiaBanken closed at
approximately the same level at 31 March 2008 as it was at 31 December 2007.
On 24 April 2008 Old Mutual announced that Skandia and Skandia Liv, its
Swedish life assurance company which is run on a mutual basis, are reviewing
the potential benefits to both Old Mutual and to Skandia Liv policyholders of
demutualising the Skandia Liv business. The review is at a very preliminary
stage and a conclusion is not likely before late 2009. Demutualisation would
also require approval from the Swedish Financial Supervisory Authority.
EUROPE AND LATIN AMERICA (ELAM)
Difficult start to the year, regular premium business holding up
In ELAM, the challenging market environment placed pressure on business
development particularly with regard to the single premium business lines,
while regular premium business was less affected. Net client cash flows of
Euro287 million were a healthy 9% of opening funds under management on an
annualised basis. Funds under management of Euro12.2 billion were 6% lower
than at 31 December 2007 impacted by lower net inflows and by negative equity
market movements.
Life sales on an APE basis of Euro64 million were 15% lower than the
comparative period. Product developments in the latter parts of 2007
continued to create strong demand for our regular premium business in Austria
and Switzerland, while an overhang effect of year-end sales provided support
in Germany, where the market has been occupied with the implementation of the
Insurance Contract Law. Our single premium businesses in Italy and France
were most impacted by weakened demand as a result of the negative market
conditions. The lower sales volume and change in geographic mix impacted on
the post-tax new business margin of 11% for the quarter.
The value of new business of Euro7 million was 53% lower than the comparative
period as a result of changes to business mix arising largely from lower
single premium sales. Also, in the comparative period we benefited from
exceptional sales in Poland as a result of a strong market. These sales were
at comparatively higher profit margins, booked prior to us reducing tariffs
in favour of clients. We are expecting that the implementation of the
Insurance Contract Law in Germany will have a dampening effect on profit
margins throughout the German market as the year progresses.
Mutual fund sales were virtually unchanged on the comparative period at
Euro546 million, a solid result in the current market environment. Long-term
business showed a solid performance while institutional business was more
volatile.
LONG-TERM BUSINESS & ASSET MANAGEMENT - OLD MUTUAL SOUTH AFRICA (OMSA)
Solid sales growth despite tightening economic conditions
Funds under management were R433 billion, down 3% on 31 December 2007, as a
result of volatile markets and net client outflows of R3.6 billion. Net
client cash flows continue to be a challenge for OMSA, particularly in the
current economic environment, with higher outflows affected by higher bonus
declarations during 2007 and early 2008 which increased the level of normal
benefit payments and termination values. For OMIGSA, the negative outcome in
net client cash flows was due to restructuring in some client funds, heavy
exposure to traditional mandates in two of our boutiques, weak short-term
performance and market conditions proving unfavourable for our Property and
Income Specialist boutiques. We are addressing this through strong sales
force growth, innovative and competitive product offerings and an intense
focus on investment performance after completing the move to asset management
boutiques last year.
Sales have continued to show moderate growth supported by our extensive
retail distribution channels and niche boutique offerings. Significant focus
has been given to driving sales force growth and productivity in both our
Retail Affluent and Mass Market businesses. This resulted in total life
sales of R1,121 million growing at 10% on an APE basis over the comparative
period. We continue to successfully penetrate the mass market where we see
further opportunity and where the sales run rate improved through the quarter
and is expected to continue through the year. This was pleasing considering
the current economic climate where the effect of higher oil and food prices
and increasing interest rates has had a negative effect on available consumer
spend.
Life recurring premium sales growth of 5% was moderate. Retail Affluent
sales were driven by continued good sales of investment business, as well as
good credit life sales due to the acquisition of a book of credit life
business and the extension of a savings offering into a new market, which
countered the negative impact of the introduction of the National Credit Act
(NCA) and the higher interest rate environment. The shift from life wrapped
business to other wrappers continues. This is evident from the performance
of the combined recurring premium Max Investment savings business (both life
and non-life wrappers), which performed well with significant growth of the
non-life recurring option but off a lower base. New business growth in the
recurring premium area is under increasing pressure as the tougher economic
environment impacts on our customers. Volumes on our credit life business
will remain under pressure due to the impact on new credit by the NCA and
higher interest rates. However, unit trust sales of R4,372 million were 19%
higher than the comparative period and there was strong growth in life single
premiums, which were 22% up on the comparative period.
The value of new business of R110 million was 10% down on the comparative
period. The new business margin declined from 11% to 10%. The first quarter
of 2008 had an abnormally high number of public holidays (Easter falling
earlier than normal) and additional training of the retail sales forces
resulting in lost production during this period. We also invested heavily in
growing the salaried sales force in this quarter, which increased initial
expenses in the period. We anticipate that the investments in new advisors
and training will bear fruit later in the year, with the effect on margin of
higher investment in distribution likely to be offset by higher sales
volumes.
BANKING - NEDBANK GROUP (NEDBANK)
Delivering earnings growth in tough macro-economic environment
The full text of Nedbank`s business update for the three months ended 31
March 2008, released on 7 May 2008, can be accessed on Nedbank`s website
http//www.nedbankgroup.co.za
The results for the first quarter were broadly in line with expectations for
headline earnings. Underlying growth in assets and net interest income (NII)
remained solid, but impairment levels have now risen above Nedbank`s through-
the-cycle expectations.
Nedbank Corporate recorded good earnings growth. Earnings growth in both
Nedbank Retail and Imperial Bank slowed as impairment charges continued to
increase. Nedbank Capital experienced a slowdown in certain business lines
and, as expected, lower private-equity earnings.
Net interest income (NII) grew by 21.9% to R3,871 million, although the net
interest margin reduced as expected to 3.85% for the period from 3.89% for
the comparative period. Average interest-earning banking assets grew by
22.5% over the comparative period. Advances grew by 24.7% on an annualised
basis to R396.9 billion since 31 December 2007. Total assets at 31 March
2008 amounted to R534.5 billion, an annualised increase of 37.5% in the
quarter. The higher growth in total assets was largely due to higher
derivatives balances and increased holdings of government stock as Nedbank
increased its liquidity buffers.
Increased consumer credit stress and the higher cyclical retail impairments
always experienced in the first quarter, resulted in the credit loss ratio
continuing to increase. Retail credit loss ratios are now above those
expected for through-the-cycle levels, while wholesale credit loss ratios
remain below expected through-the-cycle levels, aided by further recoveries.
Following the 50 basis point increase in interest rates in April 2008, we
currently anticipate that Nedbank`s credit loss ratio for the year is likely
to move above our medium- to long- term target range of between 0.55% and
0.85%.
Non-interest revenue (NIR) for the period increased by 0.7% over the
comparative period to R2,289 million. Within NIR, commission and fee income
continued to grow and trading income improved from the low level reported in
the first quarter in 2007, remaining, however, below original expectations.
In total no material fair-value gains were recorded on the private equity
books as property valuations in Nedbank Corporate reduced in line with market
benchmarks, offsetting small gains in the Nedbank Capital portfolio. No
commission income was recorded in NIR from Bond Choice as the company ceased
to be a subsidiary of the Nedbank Group from 1 January 2008. Excluding Bond
Choice`s commission and sundry income, NIR grew by 6.1% on a like-for-like
basis.
Expenses continue to be well-managed and were contained below budgeted levels
in response to the more challenging macro environment. Nedbank`s efficiency
ratio improved further on that reported at 31 December 2007 as expenses grew
more slowly than income.
During the period Nedbank recorded a profit from non-trading and capital
items, mostly attributable to the profit on sale of Visa shares from the Visa
initial public offering (IPO). The profit from non-trading and capital
items, together with headline earnings, increased Nedbank`s Tier 1 capital
ratios. Although earnings growth has slowed in 2008, this was not
unexpected. Nedbank still expects to show positive earnings growth for the
first half of 2008, but growth is expected to be at lower levels than
originally anticipated.
GENERAL INSURANCE - MUTUAL & FEDERAL
Challenging trading conditions
The full text of Mutual & Federal`s business update for the three months
ended 31 March 2008, released on 8 May 2008, can be accessed on Mutual &
Federal`s website http//www.mf.co.za
Gross premiums of R2.6 billion were up 6% over the comparative period
reflecting increases in rates and sums insured in most portfolios, partly
offset by the cancellation of certain uneconomical blocks of business where
there was no prospect of a return to profitability.
The underwriting account was negatively impacted during the quarter by a
significant increase in the frequency and severity of fire losses on the
commercial property account and substantial weather-related claims in the
personal portfolio. The annualised investment return for the quarter was
8.1% which was satisfactory in light of the highly volatile investment
environment and the solvency margin at 31 March 2008 was 42% which was
unchanged from the figure at 31 December 2007.
Old Mutual`s discussions with community-based investment group, Royal
Bafokeng Holdings, regarding a potential sale of its controlling interest in
Mutual & Federal were terminated during the quarter, as the parties were
unable to agree mutually acceptable terms in the current economic
environment. Old Mutual is therefore continuing to evaluate various options
with regard to its investment in Mutual & Federal.
As the payment of a final dividend in respect of 2007 was deferred in view of
the above discussions, a `late` 2007 final capitalisation award with a cash
dividend alternative of R1.35 (2006: R1.35) has now been declared.
US LIFE
Excellent sales in international variable annuity business continues
Net client cash flows were $0.4 billion for the period and were primarily
driven by OM Bermuda variable annuity sales. Funds under management of $23.5
billion at 31 March 2008, were down from the beginning of the year due to a
decline in fair value of invested assets mainly as a result of unfavourable
fixed income and equity market conditions.
Total life sales were $1.6 billion on a gross basis, up 40% over the
comparative period. Total life sales on an APE basis were $172 million, a
37% increase over the comparative period. Sales by Old Mutual Bermuda were
the largest contributor to the increase. Old Mutual Bermuda increased sales
on an APE basis by 127% to $109 million over the comparative period,
representing 63% of APE sales in the US Life business. Universal Life sales
represent 48% of total life sales as we shifted from term-life focused
distribution to a more balanced life portfolio. The launch of a variable
annuity in the first quarter for Registered Investment Advisor (RIA)
distribution is expected to create traction in US onshore variable annuity
sales. We have an attractive and diverse mix of product offerings including
variable annuities, fixed indexed annuities, term life and universal life.
The value of new business of $37 million was up 54% over the comparative
period due to the higher volume of Bermuda variable annuity business. The
new business margin of 21% was above our expectations. Overall, the business
continues to benefit from good investment performance and enhanced
distribution. Our coordinated retail distribution strategy continues to make
good progress.
The investment portfolio`s aggregate credit experience is slightly under
expectations but still in line with long-term assumptions. 3.7% of US Life`s
general account portfolio of $20 billion has direct exposure to sub-prime
debt. Approximately 2.8% of US Life`s general account portfolio has exposure
to monoline insurers. The business was not fully immune to the unfavourable
credit conditions and recorded impairment provisions during the first quarter
with two securities written down by $21 million. These write-downs reflect
market value deterioration and fundamental business changes linked to sub-
prime. As market conditions develop, there may be additional write-downs
during the second quarter including sub-prime and mortgage related securities
in common with other US financial institutions.
Old Mutual`s US brand advertising awareness campaign continued to deliver to
expectations. With the first round of consumer research tracking complete
just 10 weeks into the consumer campaign, significant progress was made
toward Old Mutual US`s awareness goals. 24.2% of consumers now recognise the
Old Mutual name among a list of financial services competitors, an impressive
70% increase since the campaign was launched.
US ASSET MANAGEMENT
Investment performance continues to be strong, positive net client cash flows
despite depressed conditions
Our member firms continue to deliver strong long-term investment performance.
At 31 March 2008, 63% of assets had outperformed their benchmarks and 58% of
assets were ranked above the median of their peer group over the trailing
three year period.
Net client cash flows for the first quarter of $2.6 billion were 3.1% of
opening funds under management during a very turbulent period for global
equity markets. Given these conditions the year to date result was
encouraging, driven by positive flows at Heitman, Dwight, Acadian, Analytic
and Rogge, partially offset by outflows at OMAM UK. Our track record of
superior investment performance positioned us well to continue to attract net
inflows despite the current climate.
Funds under management decreased $16 billion (5%) during the first quarter of
2008, $18 billion of which was due to negative market returns. Our
diversified asset mix helped to lessen the impact with fixed income products,
which comprise 34% of total funds under management at the end of the quarter,
being more attractive in periods of market instability.
Old Mutual Capital mutual fund sales and OMAM UK unit trust sales for the
quarter were $193 million and $380 million respectively, down a combined $482
million (46%) on the comparative period as a result of the dampened selling
environment. However, Old Mutual Capital`s underlying sales proposition
continues to strengthen, with 15 funds carrying 4 or 5 star Morningstar
ratings at the end of the period.
The first quarter of 2008 saw the launch of the Old Mutual Target Date Plus
Portfolios. The products are the first Target Date funds to combine
retirement date horizons with individual risk tolerance. Three risk-specific
glide paths are offered for each Target Date range - aggressive, moderate and
conservative - allowing plan sponsors and investors to select the Target Date
fund most suitable for their plan and individual risk tolerance.
We continue to encourage new product development in the institutional space
via an extensive seeding program. With pension plans becoming increasingly
under funded or frozen, an area of growing interest for US defined benefit
plan sponsors is Liability Driven Investing (LDI). Recognising this, we have
recently seeded fixed income products targeted at the LDI space with two of
our larger bond managers - Dwight and Barrow Hanley.
On 18 April 2008, Rogge announced that it has agreed to purchase high-yield
manager ING Ghent from ING Investment Management Americas, a unit of ING
Group.
ASIA PACIFIC
We continue to focus on growing our businesses in the Asia Pacific region.
Steffen Gilbert is now in place as Regional Head of Asia Pacific operating
out of our recently opened regional office in Hong Kong.
Throughout the region, cash flows have been impacted by recent market
turbulence. This has particularly been the case in China`s immature
investment market where stock markets have fallen by between 20% and 30%.
Australia
At 31 March 2008 funds under management were AUD12.8 billion (GBP5.9
billion), 12% down from AUD14.5 billion (GBP6.4 billion) at 31 December 2007.
This was made up of institutional funds of AUD7.7 billion and retail funds of
AUD5.1 billion. The downturn reflects sales reductions in line with the rest
of the industry and lower market levels.
China
In China we are experiencing increasing competition in the unit-linked
market. The impact of reduced market sentiment, reduced funds under
management from RMB2.9 billion (GBP200.4 million) at 31 December 2007 to
RMB2.4 billion (GBP172.3 million) at 31 March 2008. We continue to look to
expand geographically and build our distribution capability by widening our
base of distributors and intermediaries.
India
Kotak Mahindra Old Mutual Life Insurance Ltd (KMOM), our joint venture with
the Kotak Mahindra Group, in which we have a 26% stake, continues to show
steady progress. The business now operates in 109 cities and has reached its
target of 150 branches across India. Gross premiums for the quarter at
INR8.1 billion (GBP102.9 million) were approximately 73% higher than the
comparative period.
08 May 2008
Sponsor
Merrill Lynch
Date: 08/05/2008 08:01:03 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
