Old Mutual profit drops, US unit needs more cash
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Old Mutual profit drops, US unit needs more cash UPDATED 05 Aug 2009 | 07:21  
Old Mutual profit drops, US unit needs more cash

LONDON (Reuters) - Anglo-South African insurer Old Mutual reported a bigger than expected drop in statutory profit on Wednesday and said it may need to pump more money into its troubled U.S. operations next year.

Adjusted operating profit fell 30 percent to 538 million pounds in the six months to the end of June. Analysts had expected a figure of 555 million pounds according to a poll compiled by the company.

Operating profit on a market consistent embedded value basis, which will become the required standard for all European insurers by the first quarter of 2010, was 755 million pounds, down from 902 million last year but above the 514 million expected by analysts.

South Africa's largest insurer said that while there had been no defaults on its corporate bond portfolio in the period it had suffered impairment losses of $199 million on investments such as mortgage-backed and hybrid securities.

At its U.S. life business Old Mutual said it had largely completed a major overhaul that is expected to reduce sales by about two-thirds but that the division was likely to need another cash injection next year expected to be between $200 million and $300 million.

The insurer announced the appointment of Patrick O'Sullivan as chairman, replacing Chris Collins who will retire at the end of the year.

Elsewhere the company confirmed that it would not pay an interim dividend having said in March that there would be no payout for shareholders this year.

"The board will consider the position in respect of a final ordinary dividend for 2009 at the appropriate time in light of the then prevailing market and economic conditions," the company said in a statement.

The group said it had a pro-forma financial group directive surplus of 1 billion pounds at the end of June, up from 700 million at the end of 2008.


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