Old Mutual — the huge insurance group which manages in excess of £320 billion in assets — has confirmed plans to break itself into four separate decisions following a “strategic review” led by the company’s new chief executive Bruce Hemphill.
Old Mutual — which was founded in South Africa, but is now headquartered in London — is a single business, but under the new plans it will split into several individual businesses. They include:
- Nedbank, one of the biggest lenders in South Africa, in which Old Mutual has a big stake.
- A UK-focused wealth unit.
- A South Africa-based emerging markets operation.
- An institutional asset management business.
Speaking about the break-up, which is expected to be completed in 2018, chief executive Hemphill said:
The strategy we have announced today sets out a bold new course to unlock value currently trapped within the group structure. We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the group.
Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements.
The strategic review was initially undertaken by Old Mutual to deal with problems in the company generated by the weakness of the South African rand. Old Mutual makes a large proportion of its money in rand, but the currency has struggled in the past couple of years thanks to South Africa’s resource reliant economy being hit by the commodity price crash.
After rumours of the split were revealed, shares in Old Mutual went crazy, jumping more than 11% in early trading on Monday. However shares are a little more subdued after the official announcement. At the open today, the company’s stock jumped by around 3% to £1.91 per share, but has since pared those gains, and just after 8:30 a.m. GMT (3:30 a.m. ET) is trading marginally in negative territory, down by 0.22%.
Along with the announcement of the split, Old Mutual also dropped its annual results on Friday morning, and they’re pretty good. Here are some of the highlights:
- Pre-tax profits up by 4% to £1.7 billion; 11% on a constant currency basis.
- Earnings per share up by 15% to £0.193.
- The company has increased its dividend by 2% to £0.089 per share.