Jim Sutcliffe, chief executive of Old Mutual, raised the prospect of fresh acquisitions yesterday after it became apparent that last year’s £3.3 billion deal to buy Skandia of Sweden was showing signs of early success.

Mr Sutcliffe, who is commited to diversifying profits growth for the insurer beyond his native South Africa, said that once the integration of Skandia was complete, Old Mutual would be eyeing acquisitions in the US and Europe.

Speaking as Old Mutual delivered a 7 per cent rise in annual pretax profits to £1.7 billion, he made it clear that the UK’s third-largest insurer had ambitious plans to grow and would be prepared to go up against Aviva and Prudential in the UK and continental players such as ING of the Netherlands and Axa of France.

‘There is a lot of growth here and across the Atlantic, I think we should recognise the strength of the opposition,’ said Mr Sutcliffe as he outlined plans to generate profits growth that will come one third each from the US, South Africa, and the UK and continental Europe. About 58 per cent of Old Mutual’s annual earnings still come from South Africa, with the US and Europe accounting for about 20 per cent each.

Shares in Old Mutual rose as much as 6 per cent as the insurer said Skandia was beating expectations in the UK, helping to drive a 109 per cent surge in unit trust sales to over £3 billion, and a 52 per cent increase in UK life assurance sales to £396 million on an annual premium equivalent basis.

Group operating profits improved by 22 per cent to almost £1.7 billion. Investors were further cheered by a 14 per cent hike in the dividend to 6.25p for the full year. The strong results saw investors shrug off caution about unfavourable currency markets, and £45 million of additional investment costs will limit earnings growth for this year.

Skandia, secured last February after Old Mutual pressed ahead with a hostile offer, is on track to deliver cost-savings of £70 million a year by the middle of 2008. By that time Old Mutual will have spent £80 million on integration costs.

Funds under management having shot up nearly a third last year to £239 billion, Old Mutual said yesterday that it was on course to take managed assets to above £300 billion by the end of next year.

“I think Shareholders have accepted that the underlying growth machine is pretty good,” said Mr Sutcliffe. “They really wanted to see that underlying growth was coming through and that the one-offs we had in the third quarter were genuinely one-offs.”

Taking over

Aug 2005 Old Mutual admits talks with Skandia and some of its shareholders over cash and shares deal

Sept 2 Old Mutual launches formal offer worth SKr43.6 a share and seeks board recommendation

Sept 23 Skandia formally rejects offer, Old Mutual presses ahead

Dec 1 More than 50 per cent of share capital in favour of Old Mutual proposal

Jan 26 2006 Old Mutual’s offer declared wholly unconditional

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