15th May 2014 08:57
LONDON (Alliance News) - Old Mutual PLC Thursday said its first-quarter gross sales increased by 12%, driven by its wealth arm more than offsetting currency woes for its emerging markets operations, while commenting that its wealth arm could benefit from recent pensions changes in the UK.
Old Mutual, which operates across investments, savings, insurance and banking, said gross sales increased to GBP6.25 billion in the three months ended March 31, compared with GBP5.60 billion a year earlier. Old Mutual's wealth arm made up GBP3.95 billion of the sales, while its emerging markets business, which has operations across Africa, Asia and Latin America, suffered an 8.4% fall to GBP2.30 billion due to currency movements against sterling.
Old Mutual Wealth does not write annuities but provides pension income drawdown products in the UK.
Chief Executive Julian Roberts said the wealth arm, which is focused on the UK and continental Europe, stands to benefit from new changes introduced by the UK government that give individuals more control over their pensions. While the changes prompted a significant downturn in sales for providers of annuities - products which give a guaranteed income in retirement - Roberts signalled that Old Mutual's advice arm in the UK could be one of the benefactors.
"We are very excited about the opportunities for Old Mutual Wealth following the announced changes to the annuitisation rules, and we are well positioned to help customers in the UK meet their retirement needs," Roberts said in a statement.
"In emerging markets, I am delighted with the excellent sales in South Africa despite the challenging environment for consumers, and we are making good progress towards our ambition to become Africa's financial services champion," Roberts added.
Funds under management in Old Mutual's core operations - wealth, emerging markets, majority-owned South African bank Nedbank, and US asset management - increased to GBP297.1 billion from GBP293.8 billion over the course of the quarter. The increase was due to positive market movements in South Africa and the US, partially offset by US Asset Management net outflows. Old Mutual has said it intends to proceed with a minority initial public offering in the US of US Asset Management later this year.
"Following very strong inflows throughout 2013, the first quarter saw outflows in US Asset Management, primarily in the fixed income, US and international equities asset classes. US Asset Management has a strong management team and we continue to look for ways to improve and grow the business," Roberts said.
"Given the recent regulatory changes in the UK, the long-term structural growth trends in Africa, and the resilient South African financial services market, Old Mutual remains well placed to maintain its strong operational performance, notwithstanding the impact of the movement of the rand on our results as reported in sterling," the CEO added.
Old Mutual shares were down 2.3% at 204.60 pence, the fourth biggest FTSE 100 faller Thursday morning.
By Samuel Agini; [email protected]; @samuelagini
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