Europe Affects Old Mutual Annual Performance

May 13 - Poor market performance in Europe could have damaging results to the company's entire operations, according to Old Mutual, owner of South Africa's biggest life insurer.

Old Mutual stated that financial targets that were set for 2008 may not be reached due to a drop of 7% in its European sales and an increasingly volatile market.

However, good news is that the company has reported excellent performances in its US and South African markets which could possibly offset the damages caused by poor European performance to a point.

Old Mutual had set a March target for 438 million GBP but was still 12 million GBP short, after reporting a 2% rise in sales.

A market analyst, commenting on the European sector's sales performance said: "The Skandia acquisition seems to have gone wrong, with last year's problems in the Nordic division being followed by a collapse in volumes in the UK, and in both volumes and margins for Europe and Latin America."

Old Mutual owns the short-term insurance company, Mutual and Federal in the South African market, as well as Nedbank, the country's fourth largest bank. Nedbank's performance was highly satisfactory, presenting an improved cost to income ration in the past year.

Gross written premiums at Mutual and Federal were up by 6%, according to financial reports.

Commenting on Old Mutual's dip in profit margin from 14% to 13%, the group's CEO, Jim Sutcliffe noted: "Old Mutual's diversified business model and international portfolio enabled us to achieve a resilient performance in the first quarter against a background of challenging market conditions."