Old Mutual posts rise in FuM in first quarter

Old Mutual saw its funds under management (FuM) grow in the first quarter on the back of strong net client cash flows and positive market movements.

FuM rose 7.0% to £288.4bn, driven by net client cash flow of £3.9bn and a 14% increase in gross sales in the life and savings business.

During the period, the company made progress in its Nigerian life insurance firm which recorded sales for the first time.

Africa has been identified as a profitable market for the group as the country's economy improves. The International Monetary Fund's world economic outlook forecasts growth in sub Saharan Africa to average 5.6% this year and 6.1% next year.

In the UK, on the other hand, the company has experienced challenges after the Retail Distribution Review (RDR) disrupted the savings market with many independent financial advisers (IFA) having trouble adjusting to the new regulation.

The group said while challenges are expected to remain in the short-term, it was confident of being well placed to be net beneficiaries of the RDR.

Emerging Markets maintained its momentum with healthy net inflows boosted by robust performance in Asia and Latin America.

Life annual premium equivalent (APE) sales were up 19% with the South African Mass Foundation Cluster (MFC) rising 16%, bolstered by a larger sales force and the inclusion of credit life sales.

"Old Mutual has had a good start to the year, with positive net client cash flow in all of our businesses," said Chief Executive Officer, Julian Roberts.

"Sales in Emerging Markets were strong. The UK recorded positive net flows despite some market disruption following the introduction of the Retail Distribution Review."

In the quarter, Nedbank grew net interest income by 7.0% and its non-interest revenue by 8.0% as a result of continued growth in commission and fee income.

Old Mutual said Nedbank remains on track to meet its earnings growth target in 2013, notwithstanding the more challenging economic environment.

The division has also agreed the acquisition of an initial 36% stake in Banco Unico in Mozambique for $24m, subject to regulatory approvals.

Its wealth division, however, reported flat net client cash flows of £0.4bn despite a £225m net outflow during the quarter following the sale of Skandia Nordic last year.

Nevertheless, Roberts said he was pleased with the continuing trends in performance of the businesses. He said against a backdrop of continued challenging macroeconomic conditions "we are confident in the prospects for the group for the full year".

Shares rose 1.25% to 218p at 08:26 Thursday.

RD