Old Mutual well placed for a bright future
FOUNDED in Cape Town in 1845 as the Mutual Life Assurance Company, Old Mutual today has businesses spanning the globe.
An international investment, savings, insurance and banking group, Old Mutual has its primary listing in London, where it is a member of the FTSE100 with a market value of £ 11.3billion. It also has a dual listing in Johannesburg.
The company serves 17.5 million customers and has funds under management of almost £ 320billion.
By region, its earnings come from South Africa ( 64 per cent), the UK, Europe and International ( 20 per cent), the US ( 9 per cent), rest of Africa ( 5 per cent) and Asia and Latin America ( 2 per cent). By business lines, this breaks down in earnings to Life & Savings ( 44 per cent), Banking & Lending ( 33 per cent) and Asset Management ( 21 per cent).
We last looked at this stock 12 months ago, since when the shares have added 13 per cent to stand at the current level of £ 2.29.
Its most recent update to the market came in the form of fi rst- quarter results in mid- May, when it reported an 18 per cent rise in gross sales to £ 7.3billion, helped by an improvement of 20 per cent in Old Mutual Emerging Markets and a 16 per cent jump from Old Mutual Wealth. Prior to this, the company had noted that the UK Government’s proposal for defi ned contribution pension schemes to provide impartial advice to members approaching retirement would be positive.
Less positively, the group reports in sterling and therefore faces currency headwinds.
The company has a presence in a competitive sector, where the competition is only likely to increase as generational change forces many to rethink their own responsibility for retirement income. With the potential in place for demographic change, and the company having a fair amount of geographical diversity in its operations, Old Mutual seems well placed to fl ourish.
The current market consensus for Old Mutual is in agreement with this assessment for prospects, such that the shares come in at a buy.