28 February 2014
Old Mutual Wealth, comprising Skandia and Old Mutual Global Investors, saw IFRS Adjusted Operating Profit increase by 11% to £217 million (2012: £195 million) as it continues to benefit from the growing demand for platform based portfolio management solutions post RDR. Its assets grew by 13% during the period to £78.5 billion as at 31 December 2013 (2012: £69.2 billion).
Underlying profits before tax have grown 36%, from £160 million to £217 million. The reported 2012 profit of £195 million included £13 million from Finland which was sold in H2 2012 and exceptional policyholder tax contributions of £22 million, in part due the move to a new life tax regime.
Old Mutual Global Investors’ (OMGI) IFRS Adjusted Operating Profit improved to £15 million from £2 million in 2012, with gross sales up 68% at £7.6 billion (2012: £4.5 billion). Improved sales were seen across the Alternatives and Equities desks, with the latter benefiting from high profile hires during the year, improved market conditions, added consumer confidence and a shift from fixed income back into equities.
OMGI reported net client cash flow for 2013 of £0.7 billion, which includes an outflow of £1.0 billion as a result of the Group’s disposal of the Skandia Nordic business. Net new business sales through the UK Platform into OMGI funds were 16% for the full year, up from 14% in 2012. This is a result of OMGI’s improved offering and continued strong investment performance – 44% of funds are in the first quartile over a three year period and a total of 66% of funds are above the median. OMGI’s funds under management have increased by 16% to £16.0 billion (December 2012: £13.8 billion).
The UK platform recorded an IFRS Adjusted Operating Profit of £13 million for the full year (2012: £2 million), with assets jumping 21% on the prior year to £27.3 billion. Growth was driven by demand for packaged investment solutions from financial advisers who are increasingly seeking to outsource their investment processes post-RDR. Platform gross sales increased by 14% to £4.7 billion (2012: £4.1 billion), generating positive net client cash flow (NCCF) of £2.4 billion (2012: £2.2 billion).
International cross border gross sales of £1.92 billion were up 14% on the prior period (2012: £1.68 billion) and NCCF almost doubled to £492 million (2012: £265 million). This growth was driven by strong sales of QROPS in Europe and improved portfolio bond sales globally. Meanwhile the Latin American operation has developed well following the acquisition of AIVA helping leverage the cross-border distribution reach in that market.
The Skandia operations in Europe that are open to new business also returned strong results in 2013 following improved sales in Italy and the significantly reduced expense base in France. Initiatives focused on strengthening and diversifying the distribution channels across the open markets have started to pay off with France recording an operating profit for the business for the first time, while Italy exceeded its target return on equity for the local business of 12%.
Paul Feeney, chief executive of Old Mutual Wealth, comments:
“People require high quality financial advice and portfolio management to help them achieve their financial goals. With developments like WealthSelect, our newly launched range of portfolio management solutions, we are going beyond being simply a transactional platform to providing the solutions that can help financial advisers manage their clients’ wealth.
“We are well on the road to creating a market leading asset management business in Old Mutual Global Investors. The hires we have made this year are a signal of our ambition for a business that will be a key driver of our future growth alongside our investment platforms.
“Today we have reinforced our commitment to financial advice through the acquisition of Intrinsic which is an important step in creating the UK’s leading retail investment business, improving access to wealth management services for customers across the UK.”