Currency headwinds were a problem for South African insurance group Old Mutual in the first half of 2012, as were falling interest rates, which hit investment returns.
Profit before tax in the six months to the end of June fell to £733m from £909m in 2011. Adjusted operating profit on an international financial reporting standards (IFRS) basis rose 1% to £791m from £785m the year before, but was up 12% on a constant exchange rates (CER) basis.
Adjusted operating earnings per share on an IFRS basis fell 7% to 8.7p from 9.4p the year before, but were up 2% on a CER basis.
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Life assurance sales declined 12% to an annualised premiums equivalent (APE) figure of £561m from £637m a year earlier, and were down 8% on a CER basis.
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Net client cash flows were positive at £4.4bn over the half year period, versus positive inflow of £3.7bn in the first quarter of 2012 and positive flows of £0.3bn in the first six months of 2011.
Funds under management at the end if June stood at £260.7bn, down 2% from £267.2bn a year earlier and from £284.2bn at the end of the first quarter of 2012.
"Against a backdrop of sustained low growth and falling interest rates we continue to deliver good strategic and operational progress. We are expanding in attractive African markets; introducing new products across the group; and today are unveiling our UK Platform pricing ahead of the introduction of the Retail Distribution Review," revealed Julian Roberts, Group Chief Executive of Old Mutual.
The Retail Distribution Review (RDR) will change the relationship between independent financial advisers and insurance companies. Getting the Long Term Savings (LTS) Wealth Management strategy and governance in readiness for RDR remains a top priority for Old Mutual, although there are indications that part of the regulatory changes may be delayed until 2014.
"We have built a portfolio of resilient, high quality and cash generative businesses. Although economic conditions remain uncertain, we remain confident that we have the right offering, the right people and exposure to both emerging and developed markets that will allow us to continue to create value for both shareholders and customers," Roberts added.
The interim dividend has been lifted to 1.75p from 1.50p in 2011.
JH
