On an IFRS basis, the firm made an adjusted operating profit of £1.17bn compared with £1.13bn in 2008.
Old Mutual says it has commenced an expense reduction exercise in wealth management intended to deliver savings across the business of £45m per annum by 2012.
The bulk of the exercise focuses on Skandia UK, which it says is aiming to reduce its cost base in order to operate “profitably and sustainably” in the new low margin environment.
Old Mutual has announced a group-wide cost saving target of £100m per annum by the end of 2012, claiming it has identified further cost and revenue synergies.
The firm is planning a partial IPO of its US Asset Management business to “fund growth, enhance market profile and provide valuation visibility”. It wants to reduce exposure to the US by exploring the disposal of its US life business.
Old Mutual says it will be “ruthless” with other poor performing parts of the business.
It claims it will retain businesses which meet its “capital and risk requirements, can achieve a 15 per cent return on equity, add value to other parts of the group and have scope for sustainable future growth and are capable of creating future shareholder value”.
The results state: “We will be ruthless in our application of these criteria and our businesses will be subject to continual review”.
Old Mutual’s capital surplus at December 31, 2009 increased to £1.5bn from £700m the previous year. The firm is also returning to dividend payments with the board recommending a 1.5p final dividend for 2009.
Skandia UK says it saw a 43 per cent increase in net client cash flow to £1.28bn as at December 31, 2009 and a 25 per cent increase in funds under management to £28bn as at December 31, 2009.
Group chief executive Julian Roberts says: “Our operating results for 2009 are ahead of the previous year despite the highly volatile markets over the period.
“We benefited from improved market conditions in the second half, which resulted in greater demand for equity-based products from our clients, but the improvement also reflects our aggressive expense management as part of our drive to improve business performance.
“During 2009 our priority was to stabilise the business by addressing the issues in US Life and Bermuda and restoring the Group’s capital and liquidity positions.
“With substantial improvements in place, we started the process of simplifying our portfolio of businesses and improving our operational performance, while further examining the Group to determine its optimal future shape.
“We are today setting out a clear strategy to build a cohesive long-term savings, protection and investment group by leveraging the strength of our capabilities in South Africa and around the world.
“We will rigorously drive performance improvement across all of our businesses and have introduced challenging three-year cost saving and return on equity targets.
“We have also identified specific synergy opportunities from our businesses working together. We anticipate further rationalisation of our activities and will exit markets where we do not have scale or our operations are not capable of achieving a return on equity of 15 per cent over the next three years.”