Old Mutual, South Africa's largest insurer, reported robust profits today, with operating profits growing by 29 per cent.
The group said its first-half adjusted operating profit increased to £554 million pounds, helped by a turnaround in its majority-owned South African bank Nedbank Group.
The profit contribution from Nedbank rose 200 per cent to £162 million as a recovery programme launched last year at South Africa's fourth-biggest bank began to have an effect.
Profits at Old Mutual's South African life insurance business fell 7 per cent to £212 million, largely due to a 225 million rand charge for compensation paid to customers who were overcharged and a lower investment return on the company's existing stock of assets.
South African life and investment sales, however, rose over 20 per cent, and the outlook was positive amid improving stock prices. Old Mutual's US life business saw its profits rise 25 per cent to £50 million.
Chief executive Jim Sutcliffe said Old Mutual was well placed to maintain its first-half performance over the rest of the year.
He declined to be drawn on progress in takeover talks with Swedish insurer Skandia, but said he felt no pressure to do a deal.
"We are careful about the things that we do. We take time to make sure that we make our decision properly, whatever that may be," he said.
A decision on the sale of Skandia is likely to be made by the board of the Swedish insurer by the end of this month, a source revealed today, but an Old Mutual spokesman declined to comment on the timing of any announcement concerning talks on a possible deal.
The prospect of buying Skandia, valued at around $6 billion, has proved controversial among investors because it would require Old Mutual, valued at nearly $10 billion, to issue some debt and equity to help fund it. A move into Scandinavia would also mark a strategic departure.