Old Mutual profits rise as insurer expands in Africa

Insurance giant Old Mutual posted an 18 per cent increase in annual profits driven by a strong performance in Africa.

Africa's largest insurer reported an adjusted operating profit before tax of £1.6bn for 2012, up from £1.3bn the year earlier, exceeding analysts' expectations.

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Old Mutual attributed its results to reduced costs and focus on selling life insurance in fast-growing countries including Kenya and Namibia in Sub-Saharan Africa.

Kenya and Zimbabwe contributed to the majority of the 13% increase in the company's customer base.

Higher profits in its part-owned South African bank Nedbank Group, also helped boost overall profit.

"Old Mutual has four strategic priorities: expanding in Africa; developing our business in the fast growing South African markets; building our Wealth business; and growing US Asset Management," said Chief Executive Julian Roberts.

Roberts said the group will spend around 5.0bn rand over the next three to five years on further expansion in Africa.

The move is part of the firm's massive restructuring.

In 2010 Old Mutual sold its US life insurance arm as it lost the firm money during the financial crisis and forced managers to step down including Chief Executive Officer Jim Sutcliffe.

A year later it announced a deal to sell its Nordic long-term savings and banking business, Skandia Insurance Co. for £2.1bn.

The disposals in the US and Europe helped to slash costs and shift the company's focus to more profitable markets.

"While the economic environment remains uncertain, we are focused on the markets which fit our criteria and where we see long-term, structural growth," Roberts added.

The group's net income for 2012 climbed 76% to 1.17bn. Operating profit for emerging markets grew 19% to £605m as life insurance sales increased in Kenya and among South Africa's growing middle class.

"Over the past three years, we have significantly de-risked the business, more than met our operational targets and made substantial returns of capital to both equity and debt holders. We can now move forward from a position of strength," Roberts said.

Shares climbed 1.18% to 204.90p at 08:44 Friday.

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