Old Mutual turns to African financial services veteran

Old Mutual has turned to a 20-year veteran of African financial services to replace Julian Roberts as chief executive, in the clearest sign yet that the future of the FTSE 100 insurer lies in the continent.

Bruce Hemphill, an executive at Standard Bank, the largest African banking group by assets, will take charge of a group that now generates about 70 per cent of its earnings from the region.

His appointment prompted questions from analysts about the fate of Old Mutual's operations outside Africa, notably its UK arm. Aside from a four-year stint as a lawyer in London and Hong Kong about 25 years ago, Mr Hemphill has spent nearly all his career working in South Africa.

The 51-year-old father of three is to relocate to London to succeed Mr Roberts, whom Old Mutual disclosed on Wednesday would stand aside in about six months after seven years at the helm.

The incumbent chief executive joined just days before Lehman Brothers failed in 2008, when shareholders were clamouring for a break-up of the debt-laden insurer.

Mr Roberts went on to simplify and recapitalise Old Mutual, largely through a series of asset sales. He lowered the net debt burden by £1.7bn, or more than 60 per cent.

Shareholders have enjoyed total returns of 205 per cent during his tenure, although the stock still trades at a discount to peers including Prudential and Standard Life.

Old Mutual has exited 15 countries as part of the restructuring, yet some analysts said that it still had an awkward composition. UK investment and US asset management sit alongside South African insurance and banking.

"It is an uncomfortable fit," said Chris Hartwell, strategist at RBC Capital Markets. "While management have made huge progress on the simplification, could a new CEO, particularly an externally appointed one, initiate a broad strategic review?"

Already, Old Mutual is expected to further reduce its 78 per cent stake in its US fund management arm, which it floated in October.

People familiar with the matter said that the board may also be willing to consider an exit from the UK, but that this would be most likely to become a question in two or three years' time.

The group is in the middle of bulking up its UK retail investment business and integrating recent acquisitions - the wealth manager Quilter Cheviot and Intrinsic, a network of financial advisers.

Presenting annual results in February, Mr Roberts said that Old Mutual would focus on operational execution over further dealmaking during the next 18 months.

Founded in Cape Town in 1845, and listed on the Johannesburg stock exchange as well as London, Old Mutual has also turned its attentions to expanding in Africa.

The group, which holds a controlling stake in the South African lender Nedbank, has set aside about $500m to make acquisitions in the region.

It is awaiting regulatory approval to buy a 60 per cent stake in financial services group UAP for £162m, which has a presence in markets including Kenya, Uganda and Tanzania.

Mr Hemphill's appointment comes a year after Old Mutual hired Ingrid Johnson from Nedbank to be its finance director.

Colleagues of Mr Hemphill said that his departure from Standard Bank would be a loss for the lender, where he has spent the past year as chief executive of its wealth, insurance and non-bank financial services division.

The affable rugby fan was credited with reviving the fortunes of Liberty, the South African insurer and wealth manager controlled by Standard Bank, which he ran between 2006 and 2014.

Patrick O'Sullivan, Old Mutual's chairman, highlighted his experience of investments, insurance and banking. He also had "a deep understanding of the South African and wider African financial services environment," he added.

People familiar with the matter said that Mr Roberts, 58, was not seeking another executive appointment, but would consider a chairmanship or senior advisory role in a wider range of sectors.

? Four executives at Legal & General have shared a total pay package of £13.5m. Nigel Wilson, chief executive, was handed £4.2m, including shares awards under long-term incentive plans - up from £4m a year ago. L&G lifted operating profits last year by 10 per cent to £1.3bn.

Additional reporting by Andrew England

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation