Old Mutual became the latest casualty of weak equity markets after adjusted profits - on a market consistent embedded value basis (MCEV) - fell 40 per cent to £978m in the period. The life assurer and wealth management business also axed its final dividend.
A collapse in investor confidence and equity values led to funds under management falling from £278.9bn to £264.8bn, while net client cash inflows of £23.4bn in the previous year turned into a net outflow of £1.2bn. Old Mutual also saw last year's adjusted operating profit of $195m in the US turn into a loss of $679m - a failure to fully hedge its exposure to falling equity prices, when offering guaranteed annuity returns, meant a further $126m of provisions there. There was also $436m in additional mortality reserves, as well as other adjustments of $295m. And the US asset management side suffered a net outflow of $5.2bn in client funds against a $35.2bn inflow in 2007, with unit trust and mutual fund sales falling from $3.78bn to $1.89bn.
Trading elsewhere provided more cheer, however - especially in South Africa, where life and unit trust sales rose 14 per cent and 33 per cent respectively. Nordic life sales were up 30 per cent at SKr2.6bn (£202m).
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| OLD MUTUAL (OML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 38p | MARKET VALUE: | £2.0bn | |
| TOUCH: | 38-39p | 12-MONTH HIGH: | 135p | LOW: 37p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 147p | EMBEDDED VALUE: | 99.7p | |
| Year to 31 Dec | Gross life premiums (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 4.11 | 1.04 | 16.3 | 5.25 |
| 2005 | 4.47 | 1.61 | 25.1 | 5.50 |
| 2006 | 4.03 | 1.58 | 15.8 | 6.25 |
| 2007 | 5.57 | 1.75 | 19.2 | 6.85 |
| 2008 | 5.16 | 0.59 | 8.60 | 2.45* |
| % change | -7 | -66 | -55 | -64 |
*Half-year dividend only | ||||
