Update on Proposed Sale of Nordic Business
Ref 15/12
8 March 2012
Old Mutual plc
Update on Proposed Sale of Old Mutual's Nordic Business
Old Mutual plc ("Old Mutual") announced on 15 December 2011 that it had entered into an agreement to sell its Nordic business, comprising Old Mutual's long-term savings and banking operations in Sweden, Denmark and Norway, to Skandia Liv (the "Disposal").
Old Mutual welcomes the announcement this morning of regulatory approval for the Disposal from the Swedish Financial Supervisory Authority. Danish regulatory approval for the sale was confirmed on 2 March 2012.
Completion of the Disposal now remains conditional only on approval by Old Mutual shareholders at the General Meeting on 14 March 2012. Subject to that approval being given, completion of the sale is expected to occur on or around 21 March 2012.
We have today also announced a trading update on the Nordic business, which confirms that it has continued to benefit from its product depth and good operational performance. The trading statement is set out in the Appendix to this announcement.
As previously indicated, Nordic will be treated for accounting purposes as "held for sale" in our 2011 preliminary results, which will be released tomorrow. It will thus be excluded from Adjusted Operating Profit and reported under IFRS. We will also report on our cost savings and RoE targets excluding Nordic going forward.
Enquiries
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External Communications / Investor Relations |
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Patrick Bowes |
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Media |
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William Baldwin-Charles |
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Notes to Editors
Old Mutual
Old Mutual is an international long-term savings, protection and investment Group. Originating in South Africa in 1845, the Group provides life assurance, asset management, banking and general insurance to more than 15 million customers in Europe, the Americas, Africa and Asia. Old Mutual is listed on the London Stock Exchange and the Johannesburg Stock Exchange, among others.
In the year ended 31 December 2010, the Group reported adjusted operating profit before tax of £1.5 billion (on an IFRS basis) and had £309 billion of funds under management from core operations, and shareholders' equity of £9.0 billion.
For further information on Old Mutual plc, please visit the corporate website at www.oldmutual.com
Appendix - Nordic Trading Statement for the year ended 31 December 2011
Discontinued business - Nordic
Despite the turbulent stock markets and a number of one-off costs, the Nordic business had a robust underlying IFRS AOP result. A cost reduction programme was implemented during the year and the management team has refocused the business on delivering its key priorities, namely:
· Strengthening distribution power
· Improving the product offering to customers
· Stimulating future growth in net client cash flow
· Increasing operational efficiency to secure profitable growth
· Optimising structures and risk frameworks to unlock value.
Product development has been accelerated with the release of the Depå pension product and a bank investment savings account.
According to customer surveys, Skandiabanken had the most satisfied banking customers for the tenth year in a row and was also nominated for best customer service in Norway in 2011.
Net client cash flow and funds under management
NCCF decreased 3% to SEK7.2 billion, driven by higher surrenders in the occupational pension business and outflows from the bank offering. The increased outflows in Skandiabanken were primarily driven by customers seeking lower-risk investments, such as deposit accounts. Skandiabanken Sweden retail deposits grew, which are not included in NCCF, to SEK33.1 billion.
Funds under management (FUM) reduced by 8% to SEK134.3 billion at the year-end, with negative market movements partially offset by positive NCCF. The stock market recovery during the fourth quarter had a positive impact on FUM.
Sales
APE sales rose 6% to SEK2,381 million, driven by strong sales in Denmark as a result of attractive products and continued distribution growth via the Tied Agents sales force. Swedish APE sales were 5% down, with lower Corporate sales. Corporate business growth was held back by the delay in launching the occupational pension version of the Depå product and the current market conditions, which favour products with guarantees.
Mutual fund sales were up 1% to SEK6,553 million, with customers transferring assets to the low risk and popular Skandia interest-earning funds.
IFRS AOP results
IFRS AOP (pre-tax) was down 16% to SEK1,036 million (2010:SEK1,227 million). The 2010 result included one-off income of SEK126 million related to a divestment of a private equity holding and restructuring costs of SEK49 million. The 2011 result includes several one-off costs totalling SEK281 million, including IT costs. Excluding all one-off items, the underlying profit was SEK1,317 million (2010: SEK1,150 million) - a robust result in a challenging economic climate.
MCEV results
Operating MCEV earnings after tax increased to SEK1,336 million (2010: SEK503 million), primarily due to growth in existing business contribution, strong new business value and a strengthening of operating assumptions in 2010 that negatively impacted 2010 earnings. Operating MCEV earnings included two one-off effects, a restructuring expense from the ongoing redundancy programme and a change in the modelling of tax on overhead expenses. Without these two non-recurring effects, operating MCEV earnings after tax would have been SEK1,482 million.
The value of new business increased 27% to SEK584 million, driven by positive new sales in Skandia Link Denmark. The APE margin increased from 21% to 25%, due to a more profitable product mix.
This information is provided by RNS
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