Old Mutual’s CEO Roberts Steps Down, Hemphill Appointed

By and | April 15, 2015

Old Mutual plc’s Julian Roberts is stepping down as chief executive officer of Africa’s biggest insurer and will be replaced by Standard Bank Group Ltd.’s Bruce Hemphill.

Roberts, 57, is resigning after almost seven years leading the London-based company, and will stay on until the fourth quarter, Old Mutual said in a statement Wednesday.

Since becoming CEO in 2008 during the global financial crisis, Roberts has sold assets, overseen an initial public offering for the insurer’s U.S. asset management business and paid down debt. Old Mutual, formed in South Africa more than 150 years ago, has made acquisitions in the rest of the continent as it focuses on emerging markets to boost profit.

“This appears a suitable appointment for this stage of the Old Mutual story,” London-based Sanford C. Bernstein Ltd. analyst Edward Houghton said in a note. “Hemphill will bring extensive experience of the very markets that are increasingly central to the Old Mutual group, namely South Africa and sub- Saharan Africa. We expect a smooth succession, with the current CEO leaving on good terms.”

Hemphill, 51, head of wealth, insurance and non-bank financial services at Johannesburg-based Standard Bank, will be an executive director of Old Mutual and based in London until he takes over, it said. Hemphill was head of Standard Bank’s insurance unit Liberty Holdings Ltd. until joining the parent last year.

‘Excellent Choice’

“Bruce Hemphill is an excellent choice to succeed Julian Roberts and Old Mutual has also followed a very orderly succession plan,” said Adrian Cloete, a money manager at PSG Wealth in Cape Town which has investments in Old Mutual. “Roberts has achieved everything and more that shareholders could have expected from him.”

Roberts was appointed CEO to replace Jim Sutcliffe, who resigned as the company was writing off losses related to the financial crisis. After Hemphill assumes the CEO role, Roberts will take a break and consider what he wants to do next, according to an Old Mutual spokesman.

The insurer converted from being a mutual company owned by its policyholders into one owned by shareholders and listed in London and Johannesburg in 1999. Between then and Sutcliffe’s departure, the share declined 44 percent. Since Roberts became CEO the stock has increased in value by more than 2 1/2 times.

During his tenure, Roberts sold the bulk of the company’s Skandia units in Europe, which Sutcliffe had fought to acquire. He oversaw the sale of the U.S. life business to Harbinger Capital Partners for $350 million.

New York IPO

Old Mutual Asset Management plc completed its IPO in New York in October, raising $483 million. The insurer last year also bought Intrinsic Financial Services Ltd. and U.K.-based Quilter Cheviot Ltd.

“Julian has done a good job steering Old Mutual through the global financial crisis and getting the market to once again value the insurance business at a slight premium to its embedded value,” Liam Hechter, an analyst at Anchor Capital in Johannesburg, said in an e-mailed response to questions.

Old Mutual rose 0.5 percent to 236.6 pence as of 2:18 p.m. in London, compared with the 0.2 percent drop in the eight- member FTSE 350 Life Insurance Index.

Hemphill was CEO of Liberty from 2008 to March 2014. During that time, shares in the insurer, which now operates in 14 African countries, climbed 96 percent in Johannesburg.

Earnings Record

Net income during Hemphill’s tenure rose to 3.91 billion rand ($324 million) by the end of 2013 from 1.1 billion rand in 2008. In 2014, profit was little changed after margins on new business fell and money manager Stanlib experienced fund withdrawals.

The change in CEO is unexpected, partly because Roberts had set in motion a 2013-2016 strategic plan and had recruited Ingrid Johnson from banking unit Nedbank Group Ltd. as CFO only last year, said Craig Pheiffer, head of private client asset management and wealth and investment management at Barclays Africa Group Ltd.

“It’s certainly a surprise and fairly disconcerting seeing as the current strategic plan adopted in 2013 is still being rolled out and also because the CFO left so recently,” said Pheiffer. “I don’t think it was time for Roberts to go.”

The new CEO may have his own targets and objectives for Old Mutual, Pheiffer said. “Hemphill has all the right credentials and should be well received and maybe a new vision from him will be the catalyst for a further re-rating in time -– let’s wait and see what that is.”

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