Old Mutual head offices in Sandton.photo by Simphiwe Mbokazi 9

Johannesburg - If Old Mutual’s performance in the first quarter is any indication of what to expect this year, the dual-listed insurer looks set to tighten its grip on the South African and other African markets.

The Anglo-South African group, which is on a trajectory to position itself as Africa’s financial services champion, published a management statement yesterday showed that its gross sales rose by 24 percent year on year in cionstant currency to £6.2 billion (R108bn) in the first quarter.

But gross sales were up only 12 percent in reported currency due to the impact of the strong pound exchange rate. Old Mutual’s funds under management grew 2 percent to £297.1bn, with positive market movements in South Africa and the US.

The growth was in spite of some sizable fund outflows amounting to $3.6bn (R37bn) in its US asset management business and £19m in the Nordic business.

“The quarterly flows can be lumpy and volatile. I wouldn’t be concerned about it yet,” said Jean Pierre Verster, an analyst at 36One Asset Management, who expects the net outflows might reverse in the next quarter, as the US asset management unit worked hard to get on the front foot in the run-up to the pending listing of a minority interest in the division during the second half of the year.

Verster said Old Mutual’s performance was encouraging in both the affluent and mass foundation markets in South Africa and the inflows into its European business after a change of strategy necessitated by new regulations.

Old Mutual maintained its strong momentum in emerging markets in the first quarter, growing gross sales by 18 percent to R41.3bn.

The group’s retail affluent business in South Africa grew gross sales by 32 percent, benefiting from the new single-premium product propositions introduced last year.

The group said since the launch of Old Mutual Wealth in South Africa last year, it had attracted R1.1bn in net inflows in the first quarter of this year.

The group’s mass foundation cluster, the business that offers products like funeral plans, as well as savings and loan products to thje emerging black middle class and public sector workers, recorded a 14 percent rise in gross sales. Its life annual premium equivalent sales rose by 10 percent.

In the UK, Old Mutual recorded gross sales of £1.3bn and its total funds under management increased by 2 percent to £80.2bn.

In African markets outside of South Africa, Old Mutual grew gross sales by 27 percent. Its stated goal of becoming the continent’s “financial services champion” picked up pace as the company announced its signing of new distribution agreements with Mainstreet Bank in Nigeria, which has 220 branches, and with Ecobank in Ghana, which has about 80 branches.

With a fat share still remaining of the R5bn earmarked for its African expansion, Old Mutual said it was actively looking at other opportunities in both east and west Africa, particularly in bancassurance.

Verster said given the fact that Old Mutual only refined its African strategy last year, it should be given more time to make investment decisions on the continent, where financial services sectors were more fragmented and less developed than South Africa.

Shares dropped 3.76 percent to R34.78 on the JSE yesterday.