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Old Mutual boosts capital but life sales fall 25 per cent

Old Mutual has reported a 25 per cent drop in group-wide life sales from £423m to £316m but it has boosted its capital position by almost 20 per cent to £900m in the first quarter of 2009.

Single premium sales at Skandia UK and International dropped a significant 40 per cent in the first quarter although sales of products on the Skandia wrap platform jumped 62 per cent due to a re-price in September.

The firm says the boost in sales on the platform partially offset the decline in sales in the more traditional sector.

The South African-based company boosted its capital surplus in the first quarter from £749m at year-end to £900m at March 31. The increase was a result of accrued profits as well as £40m from a Nedbank rights issue.

The firm experienced impairments of £28.4m in the US in Q1 and no defaults but it maintains defaults and impairments are the major risks to surplus.

The firm closed its Bermuda operations to new business in March this year and is set to acquire ACSIS, a South African asset management firm with funds under management, advice and administration of £1.58bn.

Group chief executive Julian Roberts says: “The group has delivered a solid performance for the first quarter despite the operating environment being profoundly different to the same period last year.

“Sales were affected by a shift in consumer sentiment, the closure of Bermuda to new business and the deliberate downsizing of our US Life business. Our Nordic and South African businesses, where we have significant scale, once again performed well.

“Funds under management have held up well over the past year relative to the marked fall in equity markets, and we continue to tighten expenses across the group.

“Strengthening our capital position remains a key priority for the group and I am pleased to report that our FGD surplus now stands at £900m, a significant increase on the year end principally as a result of accrued profits and a Nedbank subordinated debt issue.”

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