Johannesburg - A healthy economy and the growing black middle class would be the growth drivers for Old Mutual South Africa and would strengthen its position in life assurance, Old Mutual, the international wealth management group, said on Friday.
The company said Old Mutual SA would expand its distribution reach by introducing new era products and providing specialised asset management options for investors.
It neither named the products it would introduce, nor said when it would do so.
The introduction of new products, according to Old Mutual, should result in client cash flow of 2.5 percent of funds under management from 2009, while keeping return on capital above 20 percent.
But the market was not excited by this information. The stock fell 0.6 percent to R25.02 on the JSE on Friday, while the life insurance sector fell 0.44 percent. Though the drop was not that significant, it showed the market was unmoved by the positive update.
Paul Hanratty, the managing director of Old Mutual SA, said the country had an unprecedented period of economic growth in recent years.
"While inflationary pressures could curb short-term economic momentum, prospects over the medium to long term remain excellent," said Hanratty. "This has translated into disposable income in the black middle class."
The company's breadth of services in the corporate market provides a strong foundation for further growth. Its new multi-boutique asset management model will attract new flows, as will its drive into the small and medium-sized business market.
Old Mutual, South Africa's biggest insurer and the controller of Mutual & Federal Insurance and Nedbank Group, gets about 58 percent of its earnings from South Africa.
The company bought Stockholm-based Skandia for 56 billion kroner (R58.38 billion) in February last year to enter into new markets in Europe.