OLD MUTUAL PLC - UPDATE ON FIRST QUARTER TRADING
OLD MUTUAL PLC
ISIN CODE: GB0007389926
SHARE CODE: OML
ISSUER CODE: OLOML
Update on First Quarter Trading
Old Mutual"s trading in the first quarter of 2004 was in line with management
expectations, with profitability at an improved run-rate from the full year
2003. The continued comparative strength of the Rand over the quarter boosted
the Sterling value of our South African results, offsetting the negative effect
of dollar weakness on the results from our US businesses.
Life assurance sales in the USA at an Annual Premium Equivalent (APE) were $103
million (2003 - $99 million), but the promising start to the year in South
Africa was not sustained with total APE at R655 million (2003 - R803 million).
In South Africa, individual recurring premium sales were up by 7% for the
quarter, although total single premium sales fell by 29%.
Net cash flow was healthy around the world, with $2.3 billion in the USA, R1.1
billion at Old Mutual South Africa and GBP110 million in the UK.
Nedcor has completed its rights issue and its three-year recovery programme is
on track, but with a long way to go. It has announced headcount reductions of
1,742, and has also continued the process of de-risking its balance sheet
through the repatriation of dollar assets. The migration of BoE"s business
banking clients on to Nedcor"s platforms has now been completed, with minimal
loss of clients.
The underwriting results of Mutual & Federal Insurance Company Limited ("Mutual
& Federal") remained at the cyclical highs seen last year thanks to low levels
of claims. Our overall stake in Mutual & Federal is now 88.1% following our
purchase of Royal & Sun Alliance"s 37% stake.
Embedded value per share, at approximately 109p per share at 13 May 2004, has
improved from 107p at the beginning of the year.
The Group has renewed its bank facilities by negotiating a GBP1.1 billion
syndicated revolving credit facility, strongly supported by our core
relationship banks.
Outlook
We expect to progress steadily over the coming months, although our results will
be affected, as usual, by currency and market levels. Nedcor will progress its
recovery plan and drive it into all parts of the business. We are also taking
action to bolster our South African life sales position. In the USA we
anticipate continued growth in assets under management at both of our
businesses, subject to market conditions remaining favourable. In the UK our
start-up businesses are continuing to develop according to plan.
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