8th May 2008 07:01
Old Mutual PLC08 May 2008 Ref: 108/0808 May 2008 Old Mutual plc Interim Management Statement for the three months to 31 March 2008 Strength in diversity • Net client cash inflows of £2.1 billion, 3% of opening funds under management (FUM) on an annualised basis despite volatile market conditions • Funds under management down 6.5% to £260.8 billion • Growth in Life APE sales of 2%* to £426 million o UK down 18%*: single premiums affected by market o Nordic up 36%*: positive sales momentum continues o SA up 12%*: management focus on sales force growth and productivity o US up 37%*: variable annuity sales levels sustained • Mutual fund sales of £1,699 million: strong Nordic (up 103%*) and SA growth offset by market declines in UK and US • Value of new business solid at £55 million • Capital position remains strong; £1.5 billion pro-forma FGD surplus Jim Sutcliffe, Chief Executive, commented: "Old Mutual's diversified business model and international portfolio enabled usto achieve a resilient performance in the first quarter against a background ofchallenging market conditions. Achieving net client cash flows of £2.1 billionin this context is very pleasing although falling markets impacted our level offunds under management. Looking forward, we are tightening our grip on expenses as markets reduce ourrevenue, and optimising our capital allocation. Retirement savings remains agrowth industry for those with good investment performance and we are wellplaced to outpace our competitors." * For the three months to 31 March 2008, with comparisons to the three months to31 March 2007 Enquiries Investor RelationsAleida White UK +44 (0)20 7002 7287Deward Serfontein SA +27 (0)21 509 8709 MediaMatthew Gregorowski UK +44 (0)20 7002 7133Nad Pillay SA +27 (0)21 504 8026Tony Friend (College Hill) UK +44 (0)20 7457 2020 Notes to Editors: A conference call for analysts and investors will take place at 9.00 a.m. (UKtime), 10.00 a.m. (Central European and South African time) today. Analysts andinvestors who wish to participate in the call should dial the followingtoll-free numbers quoting conference ID 45908827: UK 0800 694 0257UK (local) 0844 493 3800Sweden 0200 890 171South Africa 0800 980 759North America +1 866 966 9439International participants +44 (0) 1452 555 566 Playback (available until midnight on 16 May 2008), access code: 45908827#: UK toll-free 0800 953 1533North America toll-free +1 866 247 4222Standard 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 OldMutual plc, are available in electronic format to download from the Company'swebsite. This Interim Management Statement has been prepared in accordance with section4.3 of the Disclosure and Transparency Rules (DTR) and covers the period 1January 2008 to 7 May 2008. The first quarter business update is included inthis Interim Management Statement. A Financial Disclosure Supplement relating to the Company's three month businessupdate can be found on the website. This contains a summary of sales and otherfinancial data for the first three months of 2008 and 2007. Photographs of management are available at the Visual Media websitewww.vismedia.co.uk Forward-looking statements This announcement contains forward-looking statements with respect to certain ofOld Mutual plc's plans and its current goals and expectations relating to itsfuture financial condition, performance and results. By their nature, allforward-looking statements involve risk and uncertainty because they relate tofuture events and circumstances that are beyond Old Mutual plc's control,including, among other things, UK domestic and global economic and businessconditions, market-related risks such as fluctuations in interest rates andexchange rates, policies and actions of regulatory authorities, the impact ofcompetition, inflation, deflation, the timing and impact of other uncertaintiesor of future acquisitions or combinations within relevant industries, as well asthe impact of tax and other legislation and other regulations in territorieswhere Old Mutual plc or its affiliates operate. As a result, Old Mutual plc's actual future financial condition, performance andresults may differ materially from the plans, goals and expectations set forthin Old Mutual plc's forward-looking statements. Old Mutual plc undertakes noobligation to update any forward-looking statements contained in thisannouncement or any other forward-looking statements that it may make. GROUP RESULTS Group Highlights (£m) 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 sales 1,699 1,935 (12%) 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 (£bn) 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%) -------------------------------------- Annualised % of opening Q1 2008 Q1 2007 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 deliveredsolid investment performance compared with the three months to 31 March 2007("the comparative period") in challenging market conditions. Continued momentumin net client cash flows of £2.1 billion represented 3.0% of opening funds undermanagement on an annualised basis. Delivering on absolute investmentperformance proves challenging in such volatile markets, however our USbusinesses produced inflows of £1.6 billion, while the Skandia businessesachieved £0.8 billion of net inflows. Net client cash flows remained achallenge for OMSA as we go through the transition to establish our boutiquemanagers. Breadth of sales product offering in diverse geographic markets Life sales on an APE basis were solid overall. In Nordic, we continued to seethe 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) drivenparticularly by Bermuda variable annuities. South African life sales were up12% in Rand terms. However UK single premium sales for the period suffered as aresult of market conditions and tax changes and therefore were below the levelof the comparative period. Whilst unit trust sales in Europe, especially Nordic, and South Africa werepleasing, lower sales in the US and UK more than offset this result, with weakerOld Mutual Capital mutual fund sales and OMAM UK unit trust sales directlyimpacted by the more difficult selling environment. Value of new business The value of new business (VNB) remained steady at £55 million, driven byexcellent volumes in US Life and strong sales in Nordic. The APE profit margindecreased slightly overall from 14% to 13%. This was 21% for the US Lifebusiness, compared with 19% in 2007. The UK APE margin of 9% was down slightlyduring the period due to the change in business mix. In Nordic, the APE marginwas sustained at the 2007 year end level of 13%, while in ELAM after exceedingthe margin target in 2007, it fell to 11% due to lower new business volumes. InOMSA, the margin declined to 10% largely due to lower volumes being written in aperiod which included the earlier Easter holiday period and we invested indistribution. Nedbank and Mutual & Federal Nedbank delivered a solid result overall with strong net interest income and animproved cost to income ratio, despite an increasingly challenging environmentwhile gross written premiums were up 6% over the comparative period at Mutual &Federal. Other The Group is in compliance with the Financial Groups Directive capitalrequirements, which apply to all EU-based financial conglomerates. Ourpro-forma FGD surplus was £1.5 billion at 31 March 2008, including current yearprofits. Our £350 million share buyback programme was announced at the beginning ofOctober 2007 and we have so far repurchased approximately 235 million sharesthrough the London and Johannesburg markets at a total sterling equivalent costof £343 million. Outlook Looking forward, we are tightening our grip on expenses as markets reduce ourrevenue, and optimising our capital allocation. Retirement savings remains agrowth industry for those with good investment performance and we are wellplaced to outpace our competitors. UNITED KINGDOM AND OFFSHORE A resilient quarter from Skandia UK Skandia UK attracted positive net client cash flows of £546 million for theperiod, representing 5% of opening funds under management on an annualisedbasis. Despite the positive net client cash flows, adverse market movementsduring the period resulted in a 6% decrease in funds under management since thebeginning of the year to £39.5 billion. Life sales on an APE basis for the quarter were £158 million, down 18% over thecomparative period, when the business benefited from strong offshore portfoliobond sales through UK institutions. These were not repeated in 2008 following atax change implemented in the 2007 budget. In addition the 2008 budget hasconfirmed the new flat-rate of CGT of 18% without any corresponding change tothe treatment of onshore life bonds (which are subject to income tax). For someclients, advisors are therefore more hesitant to recommend a bond when a directinvestment in funds may be more tax-efficient. With its platform approach and afull set of product wrappers, Skandia is better-placed than many competitors tobenefit from this change. However, the shift away from life bonds gave rise toa lower value of new business of £14.5 million, the new business margin was9.1%. Persistency experience remains in line with expectations as customerswishing to switch to more defensive investments are taking advantage of thebroad 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 £415 millionwere down 27% against the comparative period as the volatile markets led to aweak ISA season for the whole industry. Offsetting this, institutional mutualfund business of £107 million was significantly up in the period. Skandia Investment Management Limited's (SIML) range had a good quarter during avery difficult period for markets. The level of volatility has resulted in goodrelative performance from the risk controlled range of funds as the moredefensive oriented managers have had the opportunity to deliver after such along bull market. 75% of the SIML Blend funds are now delivering risk adjustedreturns ahead of sector since launch. UK Strategic Best Ideas has continued toprosper despite the current market volatility, as it is designed to do. Thishas resulted in excellent relative performance, with funds demonstratingsignificantly lower volatility than the market. In most aspects, Skandia UK supports the FSA's revised proposals on the RetailDistribution Review, to have a clear separation between advice and sales, ensurealignment with the potential Money Guidance service and to pursue the aim ofraising professional standards. The proposal for "guided advice" within thesales channel is still being considered. Skandia UK believes this will confusethe consumer and hence will be lobbying against this proposal. NORDIC Strong start to the year with very positive sales performance and strengthenedrelations with distributors Net client cash flows for the first quarter were a pleasing SEK1.5 billion, up114% on the SEK0.7 billion achieved in the comparative period. The positiveperformance was driven by strong net inflows in the life business, benefitingfrom a very good sales performance and reduced outflows. However, a volatileequity market during the beginning of 2008 impacted negatively on asset growthduring the period, with funds under management at the end of the quarter down11% on 31 December 2007 to SEK103.7 billion. Continued market leadinginvestment performance characterised the first quarter in our Nordic business.Skandia's Swedish unit-linked business also achieved the best investment returnof all unit-linked companies in Sweden in a three-year timeframe (according to aRisk & Forsakring survey). Nordic delivered excellent growth in sales during the period. Life sales on anAPE basis of SEK652 million were up 36% on the comparative period continuing thepositive trend from the last quarter of 2007. The internal sales forcecontinues to perform very well with a focus on unit-linked products. We haveparticularly benefited from a more positive attitude towards Skandia amongbrokers in Sweden mainly driven by expanding the fund range and new productlaunches. Skandia returned to the number one position among distributorsaccording to a distributor satisfaction survey in Sweden (2007: third). Beingranked number one in 15 out of 18 areas, Skandia scored highly in areas such asattractive fund platform, best commission model and most interesting insurancecompany for a customer to place their savings. Excellent growth was experiencedin 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 anewly launched hedge fund, both of which are popular in times of volatile equitymarkets. The value of new business of SEK85 million for the period was down 2% on thecomparative period, improved life sales on an APE basis having been offset by achange in business mix and the assumption changes made in 2007. We would expectmargins to improve during the year. New lending at SkandiaBanken developedpositively, up 3% since 31 December 2007, mainly as a result of growth in theNorwegian mortgage loans and in the middle of March a campaign launching a onemonth interest free offering saw the start of an increase of mortgage loans inSweden. The deposit book at SkandiaBanken closed at approximately the samelevel at 31 March 2008 as it was at 31 December 2007. On 24 April 2008 Old Mutual announced that Skandia and Skandia Liv, its Swedishlife assurance company which is run on a mutual basis, are reviewing thepotential benefits to both Old Mutual and to Skandia Liv policyholders ofdemutualising the Skandia Liv business. The review is at a very preliminarystage and a conclusion is not likely before late 2009. Demutualisation wouldalso 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 businessdevelopment particularly with regard to the single premium business lines, whileregular premium business was less affected. Net client cash flows of €287million were a healthy 9% of opening funds under management on an annualisedbasis. Funds under management of €12.2 billion were 6% lower than at 31December 2007 impacted by lower net inflows and by negative equity marketmovements. Life sales on an APE basis of €64 million were 15% lower than the comparativeperiod. Product developments in the latter parts of 2007 continued to createstrong demand for our regular premium business in Austria and Switzerland, whilean overhang effect of year-end sales provided support in Germany, where themarket has been occupied with the implementation of the Insurance Contract Law.Our single premium businesses in Italy and France were most impacted by weakeneddemand as a result of the negative market conditions. The lower sales volumeand change in geographic mix impacted on the post-tax new business margin of 11%for the quarter. The value of new business of €7 million was 53% lower than the comparativeperiod as a result of changes to business mix arising largely from lower singlepremium sales. Also, in the comparative period we benefited from exceptionalsales in Poland as a result of a strong market. These sales were atcomparatively higher profit margins, booked prior to us reducing tariffs infavour of clients. We are expecting that the implementation of the InsuranceContract Law in Germany will have a dampening effect on profit marginsthroughout the German market as the year progresses. Mutual fund sales were virtually unchanged on the comparative period at €546million, a solid result in the current market environment. Long-term businessshowed 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 aresult of volatile markets and net client outflows of R3.6 billion. Net clientcash flows continue to be a challenge for OMSA, particularly in the currenteconomic environment, with higher outflows affected by higher bonus declarationsduring 2007 and early 2008 which increased the level of normal benefit paymentsand termination values. For OMIGSA, the negative outcome in net client cashflows was due to restructuring in some client funds, heavy exposure totraditional mandates in two of our boutiques, weak short-term performance andmarket conditions proving unfavourable for our Property and Income Specialistboutiques. We are addressing this through strong sales force growth, innovativeand competitive product offerings and an intense focus on investment performanceafter completing the move to asset management boutiques last year. Sales have continued to show moderate growth supported by our extensive retaildistribution channels and niche boutique offerings. Significant focus has beengiven to driving sales force growth and productivity in both our Retail Affluentand Mass Market businesses. This resulted in total life sales of R1,121 milliongrowing at 10% on an APE basis over the comparative period. We continue tosuccessfully penetrate the mass market where we see further opportunity andwhere the sales run rate improved through the quarter and is expected tocontinue through the year. This was pleasing considering the current economicclimate where the effect of higher oil and food prices and increasing interestrates has had a negative effect on available consumer spend. Life recurring premium sales growth of 5% was moderate. Retail Affluent saleswere driven by continued good sales of investment business, as well as goodcredit life sales due to the acquisition of a book of credit life business andthe extension of a savings offering into a new market, which countered thenegative impact of the introduction of the National Credit Act (NCA) and thehigher interest rate environment. The shift from life wrapped business to otherwrappers continues. This is evident from the performance of the combinedrecurring premium Max Investment savings business (both life and non-lifewrappers), which performed well with significant growth of the non-liferecurring option but off a lower base. New business growth in the recurringpremium area is under increasing pressure as the tougher economic environmentimpacts on our customers. Volumes on our credit life business will remain underpressure 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 comparativeperiod and there was strong growth in life single premiums, which were 22% up onthe comparative period. The value of new business of R110 million was 10% down on the comparativeperiod. The new business margin declined from 11% to 10%. The first quarter of2008 had an abnormally high number of public holidays (Easter falling earlierthan normal) and additional training of the retail sales forces resulting inlost production during this period. We also invested heavily in growing thesalaried sales force in this quarter, which increased initial expenses in theperiod. We anticipate that the investments in new advisors and training willbear fruit later in the year, with the effect on margin of higher investment indistribution 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 March2008, 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 forheadline earnings. Underlying growth in assets and net interest income (NII)remained solid, but impairment levels have now risen above Nedbank'sthrough-the-cycle expectations. Nedbank Corporate recorded good earnings growth. Earnings growth in bothNedbank Retail and Imperial Bank slowed as impairment charges continued toincrease. 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 netinterest margin reduced as expected to 3.85% for the period from 3.89% for thecomparative period. Average interest-earning banking assets grew by 22.5% overthe comparative period. Advances grew by 24.7% on an annualised basis to R396.9billion since 31 December 2007. Total assets at 31 March 2008 amounted toR534.5 billion, an annualised increase of 37.5% in the quarter. The highergrowth in total assets was largely due to higher derivatives balances andincreased holdings of government stock as Nedbank increased its liquiditybuffers. Increased consumer credit stress and the higher cyclical retail impairmentsalways experienced in the first quarter, resulted in the credit loss ratiocontinuing to increase. Retail credit loss ratios are now above those expectedfor through-the-cycle levels, while wholesale credit loss ratios remain belowexpected through-the-cycle levels, aided by further recoveries. Following the50 basis point increase in interest rates in April 2008, we currently anticipatethat Nedbank's credit loss ratio for the year is likely to move above ourmedium- 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 comparativeperiod to R2,289 million. Within NIR, commission and fee income continued togrow and trading income improved from the low level reported in the firstquarter in 2007, remaining, however, below original expectations. In total nomaterial fair-value gains were recorded on the private equity books as propertyvaluations in Nedbank Corporate reduced in line with market benchmarks,offsetting small gains in the Nedbank Capital portfolio. No commission incomewas recorded in NIR from Bond Choice as the company ceased to be a subsidiary ofthe Nedbank Group from 1 January 2008. Excluding Bond Choice's commission andsundry income, NIR grew by 6.1% on a like-for-like basis. Expenses continue to be well-managed and were contained below budgeted levels inresponse to the more challenging macro environment. Nedbank's efficiency ratioimproved further on that reported at 31 December 2007 as expenses grew moreslowly 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 initialpublic offering (IPO). The profit from non-trading and capital items, togetherwith headline earnings, increased Nedbank's Tier 1 capital ratios. Althoughearnings growth has slowed in 2008, this was not unexpected. Nedbank stillexpects to show positive earnings growth for the first half of 2008, but growthis 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 ended31 March 2008, released on 8 May 2008, can be accessed on Mutual & Federal'swebsite http//www.mf.co.za Gross premiums of R2.6 billion were up 6% over the comparative period reflectingincreases in rates and sums insured in most portfolios, partly offset by thecancellation of certain uneconomical blocks of business where there was noprospect of a return to profitability. The underwriting account was negatively impacted during the quarter by asignificant increase in the frequency and severity of fire losses on thecommercial property account and substantial weather-related claims in thepersonal portfolio. The annualised investment return for the quarter was 8.1%which was satisfactory in light of the highly volatile investment environmentand the solvency margin at 31 March 2008 was 42% which was unchanged from thefigure at 31 December 2007. Old Mutual's discussions with community-based investment group, Royal BafokengHoldings, regarding a potential sale of its controlling interest in Mutual &Federal were terminated during the quarter, as the parties were unable to agreemutually acceptable terms in the current economic environment. Old Mutual istherefore continuing to evaluate various options with regard to its investmentin Mutual & Federal. As the payment of a final dividend in respect of 2007 was deferred in view ofthe above discussions, a 'late' 2007 final capitalisation award with a cashdividend 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 drivenby OM Bermuda variable annuity sales. Funds under management of $23.5 billionat 31 March 2008, were down from the beginning of the year due to a decline infair value of invested assets mainly as a result of unfavourable fixed incomeand equity market conditions. Total life sales were $1.6 billion on a gross basis, up 40% over the comparativeperiod. Total life sales on an APE basis were $172 million, a 37% increase overthe comparative period. Sales by Old Mutual Bermuda were the largestcontributor to the increase. Old Mutual Bermuda increased sales on an APE basisby 127% to $109 million over the comparative period, representing 63% of APEsales in the US Life business. Universal Life sales represent 48% of total lifesales as we shifted from term-life focused distribution to a more balanced lifeportfolio. The launch of a variable annuity in the first quarter for RegisteredInvestment Advisor (RIA) distribution is expected to create traction in USonshore variable annuity sales. We have an attractive and diverse mix ofproduct offerings including variable annuities, fixed indexed annuities, termlife and universal life. The value of new business of $37 million was up 54% over the comparative perioddue to the higher volume of Bermuda variable annuity business. The new businessmargin of 21% was above our expectations. Overall, the business continues tobenefit from good investment performance and enhanced distribution. Ourcoordinated retail distribution strategy continues to make good progress. The investment portfolio's aggregate credit experience is slightly underexpectations but still in line with long-term assumptions. 3.7% of US Life'sgeneral account portfolio of $20 billion has direct exposure to sub-prime debt.Approximately 2.8% of US Life's general account portfolio has exposure tomonoline insurers. The business was not fully immune to the unfavourable creditconditions and recorded impairment provisions during the first quarter with twosecurities written down by $21 million. These write-downs reflect market valuedeterioration and fundamental business changes linked to sub-prime. As marketconditions develop, there may be additional write-downs during the secondquarter including sub-prime and mortgage related securities in common with otherUS financial institutions. Old Mutual's US brand advertising awareness campaign continued to deliver toexpectations. With the first round of consumer research tracking complete just10 weeks into the consumer campaign, significant progress was made toward OldMutual US's awareness goals. 24.2% of consumers now recognise the Old Mutualname among a list of financial services competitors, an impressive 70% increasesince the campaign was launched. US ASSET MANAGEMENT Investment performance continues to be strong, positive net client cash flowsdespite 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% ofassets were ranked above the median of their peer group over the trailing threeyear period. Net client cash flows for the first quarter of $2.6 billion were 3.1% of openingfunds under management during a very turbulent period for global equity markets.Given these conditions the year to date result was encouraging, driven bypositive flows at Heitman, Dwight, Acadian, Analytic and Rogge, partially offsetby outflows at OMAM UK. Our track record of superior investment performancepositioned us well to continue to attract net inflows despite the currentclimate. Funds under management decreased $16 billion (5%) during the first quarter of2008, $18 billion of which was due to negative market returns. Our diversifiedasset mix helped to lessen the impact with fixed income products, which comprise34% of total funds under management at the end of the quarter, being moreattractive in periods of market instability. Old Mutual Capital mutual fund sales and OMAM UK unit trust sales for thequarter were $193 million and $380 million respectively, down a combined $482million (46%) on the comparative period as a result of the dampened sellingenvironment. However, Old Mutual Capital's underlying sales propositioncontinues to strengthen, with 15 funds carrying 4 or 5 star Morningstar ratingsat the end of the period. The first quarter of 2008 saw the launch of the Old Mutual Target Date PlusPortfolios. The products are the first Target Date funds to combine retirementdate horizons with individual risk tolerance. Three risk-specific glide pathsare offered for each Target Date range - aggressive, moderate and conservative -allowing plan sponsors and investors to select the Target Date fund mostsuitable for their plan and individual risk tolerance. We continue to encourage new product development in the institutional space viaan extensive seeding program. With pension plans becoming increasingly underfunded or frozen, an area of growing interest for US defined benefit plansponsors is Liability Driven Investing (LDI). Recognising this, we haverecently seeded fixed income products targeted at the LDI space with two of ourlarger bond managers - Dwight and Barrow Hanley. On 18 April 2008, Rogge announced that it has agreed to purchase high-yieldmanager 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 outof our recently opened regional office in Hong Kong. Throughout the region, cash flows have been impacted by recent marketturbulence. This has particularly been the case in China's immature investmentmarket where stock markets have fallen by between 20% and 30%. Australia At 31 March 2008 funds under management were AUD12.8 billion (£5.9 billion), 12%down from AUD14.5 billion (£6.4 billion) at 31 December 2007. This was made upof 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 andlower 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 fromRMB2.9 billion (£200.4 million) at 31 December 2007 to RMB2.4 billion (£172.3million) at 31 March 2008. We continue to look to expand geographically andbuild our distribution capability by widening our base of distributors andintermediaries. India Kotak Mahindra Old Mutual Life Insurance Ltd (KMOM), our joint venture with theKotak Mahindra Group, in which we have a 26% stake, continues to show steadyprogress. The business now operates in 109 cities and has reached its target of150 branches across India. Gross premiums for the quarter at INR8.1 billion(£102.9 million) were approximately 73% higher than the comparative period. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Old Mutual PLC