Nov. 6 (Bloomberg) -- Old Mutual Plc said the sale of Mutual & Federal Insurance Co., South Africa's second-largest property and casualty insurer, is ``progressing well'' as it seeks to reduce its dependence on Africa's biggest economy.

``Old Mutual is currently considering proposals from those bidders that have been short-listed,'' the London-based insurer said in a statement today. ``An announcement with regard to the disposal will be made before the end of the year.''

Mutual & Federal, based in Johannesburg, this year cut more than 600 jobs, a fifth of its staff, to help restore profit after claims rose and declining stock markets reduced the value of its investments, the company said in a separate statement today. Old Mutual, the biggest insurer in Africa, derives about 70 percent of its profit in South Africa.

Mutual & Federal gained 1 percent to 14.80 rand, giving the company a market value of 4.7 billion rand ($472 million).

The insurer's business selling policies to companies and their staff returned to an underwriting profit in the third- quarter, the company said.

Old Mutual in March ended talks to sell its 77 percent stake in Mutual & Federal to Royal Bafokeng Holdings Ltd., the investment arm of a 300,000-strong South African community. Royal Bafokeng offered to buy the stake for 25.30 rand.

To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net

Last Updated: November 6, 2008 11:01 EST