In a bid to boost profitability on its international products, Old Mutual is cutting back its offsho...
In a bid to boost profitability on its international products, Old Mutual is cutting back its offshore presence and moving from direct intermediary sales to distributing via banks and corporates.
Meanwhile, the company has launched a fund of hedge funds aimed primarily at the South African market.
Omega, Old Mutual International's long-term single premium offshore bond, has stopped accepting new applications and is concentrating on products like Prima, which is a shorter-term product with premiums that are low frequency and high value.
Jane Berntsen, marketing communications manager for Old Mutual International (OMI), said: "If you look at how widespread the global expat market is, trying to enter these markets profitably is just not as easy as it once was."
OMI aims to achieve economies of scale by building on its corporate and banking network, which includes Lloyds and Royal Bank of Scotland International. It will still sell to intermediaries but via intermediary networks rather than on an individual basis. Essentially, OMI is looking for more institutional money. The company will no longer market long-term regular premium contracts, which means it will no longer accept new applications into the single premium Omega.
OMI aims to change the focus of its distribution technique towards selling via banks and other corporate intermediaries. Broker support offices in Dubai, Bangkok and Horsham will be closed, although Old Mutual's distribution capabilities into Africa will remain unaffected.
Tony Shearer, managing director of the group, said: "These decisions have been tough to make but are vital and positive steps forward for the long-term development of the group's international business. People's needs are changing, moving more towards a pure investment requirement."
The Guernsey part of Old Mutual has two parts - OMI, which sells to the international expat market, and Old Mutual Guernsey (OMG), which sells mostly into South Africa. Both have been under the unified control of Dennis Burger since the departure of five sales and marketing staff who moved to Insinger while the strategic review was being formulated.
But while the international side looks for more institutional money, the South African side is largely untouched as the size of the market and the density of the population make it more economically-attractive. Indeed, OMG has just launched a five-year Capital Protection Bond, a multi-manager hedge fund wrapper.
Investors pay a minimum premium of $25,000 and a capital protection element means they will receive a valuation of the bid price at either the beginning or end of the term, whichever is greater.
Gerry Barber, senior product marketing manager, said that four different funds provide investment strategies through GNI fund of funds: Park Place Capital, GLC, Thames River and Winton Capital.
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