JOHANNESBURG - Old Mutual plc has announced that US-based The Travelers Companies and St Paul Fire and Marine Insurance Company (Travelers) have dropped the claim they lodged against the financial services group in March.
Old Mutual chief executive Bruce Hemphill told Business Report during the results presentation that the group had always believed that the action was without merit.
“Travelers have withdrawn all of the remedies they were claiming,” the group said in a statement yesterday.
The claim was lodged in the US District Court for the Southern District of New York in relation to pre-existing plc head office legacy items relating to previously disposed of US assets.
In March 2016, Old Mutual announced a new strategy of managed separation entailing the separation of its underlying businesses into independently listed, standalone entities.
Old Mutual said the managed separation would be completed by the end of 2018.
“BrightSphere Investment Group, a US-based institutional asset manager, which rebranded from OM Asset Management in March 2018, is now independent from Old Mutual,” the group said.
The remaining underlying businesses are Old Mutual Limited, Nedbank and Quilter.
The group yesterday said it had always made it clear that it would continue to hold sufficient liquid and high-value assets to meet its liabilities and contingencies during its 2017 annual results in March.
The group said it would need to satisfy the UK court, in relation to any legacy items, that it will continue to hold sufficient liquid, high quality assets to meet its liabilities and deal with any contingencies, plus adequate headroom, taking into account relevant insurances.
Jordan Weir, an equities trader at BayHill Capital, said the dropping of the claim allowed Old Mutual to focus on its JSE-listed Old Mutual Limited business in South Africa and its UK-based wealth management arm Quilter, without having to worry about last-minute allegations made against the firm.
Weir said the outcome of the Travelers case had denied opportunists a chance to prevail against the multinational.
“When large companies look to separate into smaller, more streamlined stand-alone entities, they usually make provision for any unforeseen costs or hidden liabilities that might occur as the demerger process gets under way. Consequently, one will often find opportunists emerging from the shadows of past business relationships in order to try and take advantage of potentially low-hanging demerger provisions,” Weir said.
Old Mutual shares rose 0.22percent on the JSE yesterday to close at R40.13.