Old Mutual is preparing for a shake-up that may lead to its British wealth management business being sold and the group headquarters relocated to South Africa.
The FTSE 100 Anglo-African insurer is understood to have received an approach for its wealth business that could value it at about £4.5 billion.
That may prompt an unravelling of the wider group, which is struggling to compete because of its exposure to the weakened rand and new solvency rules that do not allow it to count surplus South African capital towards its group position.
Bruce Hemphill, the new chief executive, is expected to unveil a restructuring with annual results on Friday. A spokesman said: “We can confirm that all options for the strategic review are being considered but no decision has yet been made.”
Edward Houghton, an analyst at Sanford Bernstein, said that Old Mutual may sell Old Mutual Wealth in Britain, while retaining its 53 per cent take in Nedbank, a South African lender and bringing its bank and insurance assets in Africa closer together. As part of the shake-up, the group may move back to its historic home of South Africa, he said.
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“We estimate that Old Mutual could reduce corporate centre costs by 50 per cent by moving its headquarters from London to South Africa,” Mr Houghton said.
Cinven and Warburg Pincus are understood to have approached the company with an offer for Old Mutual Wealth, whose businesses include Quilter Cheviot, an investment manager, and Intrinsic, a network of independent advisers. The buyout firms may have visions of replicating the success of St James’s Place, which offers advice and manages assets.
One sticking point could be an investigation announced last week by the Financial Conduct Authority into charges that it may have imposed on pensions and other savings. Old Mutual is one of six insurers that have been passed to the FCA’s enforcement division, which is looking at whether they made “exit” charges and “paid up” fees (on people who kept their money in the same place but stopped making contributions) sufficiently clear.
Old Mutual, along with Abbey Life, will be subject to a broader inquiry than the others, the FCA said last week.
When Old Mutual picked Mr Hemphill to replace Julian Roberts as chief executive, expectations were raised that the group would shift focus to Africa. Mr Hemphill joined from Standard Bank, the largest African banking group by assets, and has spent most of his career in the continent. Old Mutual was founded in Cape Town in 1845 and is listed on the Johannesburg stock exchange as well as London.