28th Feb 2014 08:51
LONDON (Alliance News) - Old Mutual PLC Friday said its 2013 pretax profits rose by 11% and revealed the acquisition of Intrinsic Financial Services Ltd, a network of 3,000 advisers, as it beefs up its distribution powers in response to recent regulatory changes in the UK.
The life-insurance and investment company also said it intends to spin-off its US Asset Management business this year.
Pretax profits rose to GBP1.53 billion, from GBP1.39 billion in 2012 as the FTSE 100 company, which provides insurance, asset management and banking, said revenues fell marginally and at a slower rate than expenses.
Revenue was down by 1.4% to GBP19.81 billion, whereas expenses were down by 2.1% at GBP18.30 billion.
But Old Mutual said adjusted operating profit, which it said is the best measure of its underlying long-term performance, was flat at GBP1.61 billion, hit by the depreciation of the South African rand. On a constant currency basis, adjusted operating profit rose to GBP1.61 billion from GBP1.40 billion.
"Our strong net client cash flows across all our businesses demonstrate the strength of our client offering, and this has translated into excellent profit growth of 15% to GBP1.6 billion on a constant currency basis, and flat on a reported basis. Gross sales were up 17% to more than GBP25 billion, with funds under management up 19% to GBP293.8 billion," Old Mutual said in a statement. The 19% increase in funds under management was calculated on a constant currency basis. They increased by 12% at actual currency rates.
Chief Executive Julian Roberts said the acquisition of Intrinsic Financial Services Ltd will lay the foundations for Old Mutual Wealth to become "the leading retail investment business in the UK".
"We believe that the provision of advice is of fundamental and growing importance in the retail financial services market and that restricted advice will become more dominant in time. The purchase of Intrinsic is a critical part of our strategy of creating a leading wealth management business that combines financial advice, investment solutions and high quality asset management to deliver first class outcomes for our customers," Old Mutual said in its statement.
The sector has undergone something of an upheaval in the UK, where regulators have introduced a number of changes, known as the retail distribution review, banning the paying of commission to financial advisers by investment funds and increasing pricing transparency.
Old Mutual has been working to strengthen its asset management offering, bringing in a new UK equities team that was boosted by the recruitment of Richard Buxton from Schroders PLC in June 2013. Old Mutual said it will look to strengthen its teams in other asset classes where necessary.
The insurer didn't provide the price it paid for Intrinsic.
Meanwhile, Old Mutual said it intends to go ahead with a minority initial public offering of its US Asset Management business in 2013, subject to market conditions.
"The purpose of the offering is to enhance US Asset Management's financial and operating flexibility to deploy capital to continue to grow and develop further its multi-boutique asset management business. We expect that this offering will broaden US Asset Management's access to capital to pursue future growth initiatives across its business, including collaborative investments in affiliate growth and further penetration of non-US markets through its global distribution platform, as well as strategic partnerships with high-quality boutique asset management firms with complementary investment products," Old Mutual said in a statement.
Old Mutual increased its full-year dividend to 8.1 pence from 7.0 pence.
Old Mutual shares were Friday quoted up 3.9% at 193.50 pence.
By Samuel Agini; [email protected]; @samuelagini
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Old Mutual PLC