Old Mutual plc, the London-based insurer, said first-quarter sales gained 18 percent as revenue from operations in Africa jumped by a third.
Gross sales increased to 7.3 billion pounds ($11.5 billion), from 6.3 billion pounds a year earlier, Old Mutual said in a statement Thursday. Sales in emerging markets surged 20 percent to 2.7 billion pounds, while funds under management increased 10 percent to 351.4 billion pounds.
The overall sales figure beat consensus estimates provided by Old Mutual, while new life assurance business was better than expected, Eamonn Flanagan, an analyst at Shore Capital Group Ltd. in London who has a hold rating on the stock of Africa’s largest insurer, said in a note to clients. Total funds under management were in line with estimates, he said.
Old Mutual, founded in Cape Town more than 150 years ago, has operations in Africa, the U.S., the U.K., Europe, Latin America and China. It has focused on African expansion in the past two years as growth from that continent outpaces developed markets. Roberts is due to leave before year-end, to be succeeded by Standard Bank Group Ltd.’s Bruce Hemphill.
Old Mutual rose as much as 1.4 percent in Johannesburg before paring gains to trade 0.9 percent higher at 42.76 rand as of 10:38 a.m.
Net client cash flows improved to 500 million pounds in the first quarter from a decline last year, Old Mutual said. This result was “much lower than market expectations, albeit better than the negative figure” a year earlier, Shore Capital’s Flanagan said.
“This has been a very good start to the year, with all of our businesses performing well with continued strategic progress,” Old Mutual Chief Executive Officer Julian Roberts said. Banking unit Nedbank Group Ltd. in South Africa “has had another excellent quarter with good growth in non-interest revenue. Gross sales elsewhere in Africa grew by 34 percent,” he said.
Net outflows of 100 million pounds from Old Mutual Asset Management were caused by sector rotation as investors adjusted their allocations, Ingrid Johnson, the insurer’s financial director, said by phone from London. There were inflows into funds such as emerging-market equities while others, like U.S. value funds, experienced outflows, she said.
Through its purchase of microfinance company Faulu Kenya DTM Ltd. and a controlling stake in Kenya’s UAP Holdings Ltd., Old Mutual has strengthened its presence in east and central Africa.
In west Africa it is partnering with Ecobank Transnational Inc., 20 percent-owned by Nedbank. Having spent 3.6 billion rand ($303 million) of the 5 billion rand earmarked for African expansion, this year may be more about consolidation and integration than acquisitions, Johnson said.
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