Old Mutual Rises to Highest in Three Years on Sale of Skandia Finnish Unit
Old Mutual Plc (OML), the third-biggest U.K. insurer, rose to its highest in Johannesburg since before the 2008 global financial crisis after saying it will sell the Finnish unit of Skandia Life Assurance Co. Ltd. to Finland’s banking co-operative, the OP-Pohjola Group, to cut debt.
Old Mutual rose as much as 2.1 percent and closed 0.7 percent higher at 16.81 rand in Johannesburg, its highest close since June 2008. In London, the stock added 0.8 percent to 130.4 pence as of 3:23 p.m.
“The transaction is part of Old Mutual’s commitment to streamlining its business,” the London-based insurer said in a statement today. The Finnish unit had gross assets of 1.3 billion euros ($1.7 billion) at the end of September, Old Mutual said, without disclosing the sale price.
On Dec. 15 Old Mutual, founded in South Africa in 1845, announced the sale of its Nordic unit to Skandia Liv for 2.1 billion pounds ($3.3 billion). The cash sale of Skandia Insurance Co. Ltd. included Old Mutual’s long-term savings and banking operations in Sweden, Denmark and Norway, while excluding the Finnish business. Old Mutual, Africa’s biggest insurer, bought Skandia AB in June 2006 for 56 billion kronor ($8 billion) to enter Scandinavia and bolster sales in the U.K.
“Skandia Finland is small, but if you add that to the Nordic sale, it will now enhance the special dividend payable to shareholders,” Patrice Rassou, head of equities at Sanlam Investment Management in Cape Town, said in an e-mailed response to questions. “Old Mutual (OML) is now definitely enhancing value, and it’s hard to justify the large discount to embedded value.”
To contact the reporter on this story: Renee Bonorchis in Johannesburg at email@example.com