U.K.-based financial services firm Old Mutual Plc
2018 will see the 172-year-old firm complete its £130 million breakup plan: The company intends to list two separate entities on both the London and Johannesburg stock exchanges, with one to mainly consist of Old Mutual Wealth operations, to be renamed Quilter plc, and the other to become a new South African holding company, Old Mutual Ltd., which will comprise Old Mutual Emerging Markets Ltd., Old Mutual Ltd.'s stake in Nedbank Group Ltd. and the residual Old Mutual plc.
Old Mutual intends to hold a secondary offering of up to 9.6% as part of the Quilter listing, with proceeds to be retained by Old Mutual and its subsidiaries.
The final step will be a distribution of majority of Old Mutual Ltd.'s stake in Nedbank to Old Mutual Ltd.'s shareholders, with the distribution date to be determined by Old Mutual Ltd.'s board, although it is expected to take place within roughly six months of the company's listing. Following the distribution, Old Mutual Ltd. will retain a 19.9% stake in Nedbank.
Old Mutual said March 15 its business model for the duration of the restructuring will be to manage the separation of the underlying businesses to realize their full potential as stand-alone entities in a manner that will create value for shareholders over time.
CEO Bruce Hemphill said the listings would take place "as soon as practically possible ... before the end of 2018," adding that he will step down when the breakup is "materially complete," Reuters reported March 15. Hemphill may be given a maximum bonus of 1,000% if he could successfully manage Old Mutual's breakup, the news agency noted.
Hemphill added that the company was in talks with potential buyers on a sale of its Chinese and Latin American businesses, Reuters noted.
The group reported consolidated full-year 2017 IFRS profit after tax attributable to equity holders of the parent of £909 million, up 59% from a restated year-ago profit of £570 million.
Diluted EPS amounted to 18.9 pence, up from 11.7 pence in 2016, while adjusted return on equity rose to 14.6% from 13.3% over the same period.
Gross earned premiums for the year totaled £4.23 billion, up from £3.73 billion a year earlier. Net earned premiums increased on a yearly basis to £3.83 billion from £3.41 billion.
Nonbanking investment return increased year over year to £5.48 billion from £1.88 billion. Fee and commission income and income from service activities amounted to £673 million, compared to £565 million in 2016.
Net claims and benefits incurred reached £5.04 billion 2017, up from the year-ago £3.26 billion. Change in investment contract liabilities came in at £1.77 billion, compared to £545 million in 2016.
The group Solvency II ratio stood at 123% as of Dec. 31, 2017, compared to 122% at the end of 2016.
Old Mutual announced a second interim dividend of 3.57 pence per share for 2017, bringing the total dividend for the year to 7.10 pence per share, up 17% from 6.06 pence per share in 2016. The second interim dividend will be paid to shareholders of the company April 30.
