Old Mutual Plc (OML), the U.K.’s third- largest insurer by market value, said it will pay down more debt than planned this year as it posted full-year profit that beat analyst estimates.
Adjusted operating profit climbed 9 percent to 17.5 pence a share, beating the 16.5 pence estimate of 13 analysts surveyed by Bloomberg. Old Mutual will pay down 1.7 billion pounds ($2.7 billion) of debt by the end of this year, exceeding its 1.5 billion-pound target, following the sale of its Nordic unit, the insurer said in a statement today.
Old Mutual, recovering from two years of net losses linked to hedging failures in 2008 and writedowns of investments, has sold 2.3 billion pounds of assets since March 2010 to cut debt. The company, which is Africa’s largest insurer, sold its U.S. life insurance unit in 2010, and agreed to sell its Nordic unit to Skandia Liv in December. The company is also considering an initial public offering of its U.S. asset management unit.
“This is an upbeat statement,” said Marcus Barnard, an analyst at Oriel Securities Ltd. in London with a buy rating on the stock. “The company has successfully de-geared and refocused the group following the sale of Nordic, focusing the business and putting it in a better position for the future.”
The shares rose 0.4 percent to 19.30 rand at the 5 p.m. close in Johannesburg trading. The stock, which has gained 28 percent in the past 12 months, is the best performer on the five-member FTSE/JSE Africa Life Assurance Index (JLFEA) this year.
The insurer will pay a final dividend of 3.5 pence, up 21 percent from the year earlier. Old Mutual also expects to meet its 15 percent goal for return on equity, a measure of profitability, it said.
“We have exposure to fast growing emerging markets, which we expect to continue to perform well in 2012, and specialist, low-risk businesses in Europe where we also anticipate growth albeit in tougher market conditions,” Chief Executive Officer Julian Roberts said in a statement.
Old Mutual’s full-year operating profit after tax for the year through December was 855 million pounds, compared with 765 million pounds a year earlier. That missed analyst estimates after the company excluded income from its Nordic business from the figures.
“The exclusion of Nordic from the IFRS operating profit could give the initial impression of an earnings miss, but adding this back operating profit is in line with expectations,” Barnard said.
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