Skandia UK sees profits fall 29% despite strong H1 for Old Mutual

Old Mutual saw profits climb in the first half, driven by cost cutting measures and the performance of its South African banking arm Nedbank, while Skandia saw its profits fall by nearly a third.

Over the six months to 30 June 2011 the firm made a pre-tax profit of £845m, a 15% increase, and saw funds under management edge up 1% to £302.8bn.

Nedbank’s profits increased 31%, while it made an £82m cost saving. The group also reported strong growth in the UK, with sales of £2.8bn Old Mutual’s interim dividend increased 36% to 1.5p per share.

Meanwhile, Skandia UK, part of Old Mutual Wealth Management, reported net sales of £1.3bn in the first half, driven by strong gross sales, primarily via the Skandia Investment Solutions platform.

Overall, gross sales were up 4% to £3.4bn but platform gross sales were up 7% to £2.8bn.

Funds under management increased by 4% to £35.3bn as at 30 June 2011 compared to £33.9bn as at 31 December 2010.

IFRS adjusted operating profit for the first half of 2011 was £53m, a 29% fall compared to the first half of 2010.

Skandia said that was solely as a result of a lower profit from smoothing of policyholder tax which gave rise to £14m in H1 2011 compared to £36m in H1 2010.

The group said it is well prepared to react to the FSA’s decision on platform cash rebates, and added it is preparing to launch a range of new services via the Skandia Investment Solutions platform.

Julian Roberts, group chief executive, said: "Old Mutual is a resilient and robust group and this has been a successful half year for us. We have improved our operational performance and the impact of our cost control programme is now clearly visible in our results.

"Current economic conditions in some of the markets where we operate are highly uncertain and we remain cautious over the timing of any recovery. We have a good mix of emerging markets and developed world business.

“We are well placed to grow in Africa and Latin America, which are enjoying both GDP and population growth. In Europe, we are increasingly able to provide our retail customers with the choice and transparency they demand and to take the opportunities created by the changes in regulatory regimes.

"We remain on track to achieve our 2012 targets and despite volatile markets will continue to make further progress against our strategic goals as and when shareholder value can be created."