Rand strength boosts OM's sterling earnings

The strengthening of the South African rand against major currencies, particularly the United States dollar and the pound sterling, helped boost global insurance giant Old Mutual's earnings in sterling during the first half of this year.

But it was bad news for South African investors. Though the embedded value was 3 percent up from December 31, 2002 in pounds sterling, it was 7 percent down in rands.

The bulk of the group's revenue came from South Africa with life assurance contributing 206 million pounds, up from 160 million pounds. Asset management increased slightly from 13 million to 18 million pounds but banking was down from 99 million to 77 pounds while general insurance rose from 19 million to 28 million pounds.

The life assurance business is the United States improved slightly from 33 million to 39million pounds but asset management dropped by almost half from 60 million to 37 million pounds.

In the UK and the rest of the world, life assurance improved from a negative 3 million to 8 million pounds while asset management was down from 5 million to 1 million pounds. Banking was also down from 29 million to 27 million pounds.

Operating profit, however, improved from381 million to 395 million pounds with net profit increasing from 121 million to 174 million pounds.

The group is listed on the Zimbabwe, Malawi, Namibia, Johannesburg and London Stock Exchanges. The group says the improved investment climate in its three key geographies since April, if maintained, should provide a better background for business in the second half.

The group was managing funds totaling 128 billion pounds at the end of June, up from 124 billion at the end of December.

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