| Thu 18 Nov 2004, 10:26 | | Old Mutual grows assets to R297bn |
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Old Mutual grows assets to R297bn
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Financial Services Editor
POSITIVE equity markets and a growing demand for unit trusts have helped offset a dip in sales in life products at Old Mutual`s South African operations.
In a trading update released yesterday, the financial services group said assets under management in SA had grown 10% over the past year, reaching R297bn at the end of September.
Rising equity prices were behind the rise, supplemented by a small net positive cash flow coming from clients.
Sales of unit trusts were 27% higher in the nine months to September compared with the first nine months of last year.
Recurring premium sales for individual life products picked up in the third quarter of the year, but year-to-date they were still slightly lower than last year. Individual life single-premium sales were 10% higher, however.
`That`s quite critical for me,` said one analyst. `These had been on a decline for the past couple of years but I think it`s now turnaround time.`
He said overall the results had been in line with his expectations .
`Management has given good guidance. On the whole, there were no material surprises.`
On the downside, group business was still under pressure, with group single-premium business 60% lower than last year.
Old Mutual group finance director Julian Roberts said the drop included a R240m group scheme lost to Metropolitan.
`They were willing to write it at a much lower rate than we were,` he said.
The group`s US business performed strongly, with assets under management growing 18% in the nine months to September to $168,4bn.
This was due to investment performance as well as positive net inflows of clients` assets. Funds at Old Mutual`s US life business were 29% higher at 16,3bn, with total sales amounting to $366m in the first nine months of the year, up from 279m last year.
The group said it would inject a further £110m into its US life business, adding to £55m already invested this year to cover new business strain.
Roberts said that this would strengthen its capital base and bring it in line with other US life companies.
`On the whole, I`m optimistic, but it`s still a very challenging environment,` the analyst said.
Roberts said the UK multimanager Selestia had had a record year so far, attracting net assets of £301m. This brought total assets under management to £590m, up from £208m in the first nine months of last year. The group was still looking for a UK acquisition to supplement its businesses there.
The announcement of an empowerment deal for its South African assets, including Old Mutual SA, Nedcor and Mutual & Federal, would also be delayed. T he group had been `a bit optimistic` in thinking it could announce a deal this year.
