Old Mutual Profit Down, Aviva Profit Climbs

(RTTNews) - British insurer Old Mutual Plc. (ODMTY.PK, OML.L) reported Thursday lower profit in its first half as premiums were hurt mainly by fragile economy in its main market of South Africa. Funds under management, however, increased from last year. Its domestic rival Aviva Plc (AV.L, AV) meanwhile, posted higher first-half profit, despite weak premiums.

Looking ahead, Old Mutual warned of challenging conditions in emerging markets, while Aviva noted that its focus will be shifted to earnings growth.

Old Mutual's first-half profit before tax dropped to 564 million pounds from 805 million pounds last year. Profit attributable to equity holders of the parent declined 49 percent to 213 million pounds, with earnings per ordinary share decreasing to 4.1 pence from 8.3 pence last year.

Adjusted operating earnings, which excluded certain items, were 424 million pounds or 8.8 pence per share, down 5 percent.

On a constant currency basis, adjusted profit climbed 17 percent as Emerging Markets were benefited by higher asset-based fees, despite challenging conditions in South Africa.

Group net margin decreased 4 basis points to 45 points.

Total revenue was 7.958 billion pounds, lower than last year's 9.641 billion pounds. Net earned premiums fell to 1.464 billion pounds from 1.833 billion pounds in the previous year.

Net asset value for the first half dropped 2 percent to 8.87 billion pounds, and net asset value per share declined 3 percent to 133.3 pence.

Funds under management was 300.5 billion pounds increased 2 percent on a reported basis, and 5 percent in constant currency.

Further, Old Mutual's Directors declared an interim dividend of 2.45 pence per share, a growth of 17 percent from last year.

For Aviva, six-month pre-tax profit from continuing operations attributable to shareholders' profits surged to 1.14 billion pounds from 623 million pounds last year.

Profit after tax was 863 million pounds, a growth of 11 percent from last year. The prior year results included profit from discontinued operations of 370 million pounds. On a continuing operations basis, year-over-year profit growth was 113 percent, due to lower restructuring costs and positive investment variances.

Half-yearly earnings per share amounted to 24.6 pence, compared to last year's total income of 22.5 pence per share and income from continuing operations of 10.1 pence.

Operating profit increased 4 percent, despite the impact of lower annuity sales, higher weather losses, disposals and adverse foreign exchange movements. Operating earnings per share improved 16 percent to 23.6 pence

Gross written premiums totaled 11.37 billion pounds, compared with 11.45 billion pounds last year. Net earned premiums were 10.40 billion pounds, compared to 10.55 billion pounds last year.

IFRS net asset value per share went up 7 percent at 290 pence.

Further, Aviva said its directors declared an interim dividend of 5.85 pence per ordinary share, a growth of 4.5 percent.

Looking ahead, Old Mutual Chief Executive Julian Roberts stated that the company expects the external conditions for emerging markets businesses to continue to be challenging in the next six months, particularly given the lower GDP growth expectation in South Africa. The company expects the strength of Sterling to have an impact on reported results.

Aviva noted that its focus will shift from primarily balance sheet repair and capital conservation to cash flow and earnings growth.

In London, Old Mutual shares were losing 4.30 pence or 2.22 percent and trading at 189.60 pence. Meanwhile, Aviva shares were gaining 13.80 pence or 2.82 percent, and trading at 503.50 pence.