The South African financial services group Old Mutual, which has extensive insurance interests across Africa, has announced that it plans to split into four businesses. The announcement came as the company posted a 4% rise in annual pre-tax operating profits to £1.7bn.
Old Mutual had announced its strategic review in November, after former Standard Bank executive Bruce Hemphill took over as chief executive. Hemphill cited the evolving regulatory environment in Europe and South Africa as adding a degree of additional cost, complexity and constraints to the group’s operations.
Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank and OM Asset Management are to be separated under the plan, which is expected be materially completed by end of 2018.
Hemphill said the current group structure inhibits the efficient funding of future growth plans for the individual businesses, restricting them from realising their full potential and prevent shareholders from benefiting from the full value of the underlying businesses.
“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,” he said in a statement.
The group said it had yet to decide how it would go about spinning off the units.
Old Mutual posted a group RoE of 14.2% for 2015; its Solvency II surplus was £1.6bn, with a ratio of 135%.