Arbitration Ruling

RNS Number : 0021F

Old Mutual PLC

03 October 2008

 



Ref 146/08

3 October 2008 

Arbitration Ruling 

Old Mutual plc ('Old Mutual' or the 'Group') announces that a ruling has been passed in respect of the arbitration proceedings between Skandia AB ('Skandia'), the Group's Swedish subsidiary and Skandia Liv, Skandia´s wholly owned life insurance company in Sweden which is run on a mutual basis. 

In 2002, prior to Skandia being acquired by Old Mutual, it sold its asset management business, Skandia Asset Management, which principally managed the assets of the Skandia Liv business, to Den Norske Bank for SEK3.2 billion.  As previously disclosed, following the sale, Skandia Liv submitted a claim against Skandia, firstly based upon the proceeds of sale and, secondly based upon the terms of the asset management agreement entered into prior to the sale. In June 2004, Skandia and Skandia Liv agreed to settle the dispute by means of a binding arbitration process.  

The arbitration board has not accepted Skandia Liv's claim to any part of the purchase price paid, but has ruled that Skandia is obliged to pay Skandia Liv a total sum of £47 million (SEK580 million) plus interest by way of compensation in relation to fees under the asset management agreement which Skandia Liv deemed to be higher than prevailing market rates.  Old Mutual had already set aside £41 million (SEK500 million) to cover the arbitration within its pre-acquisition balance sheet.  

Julian Roberts, Chief Executive of Old Mutual, commented:

'We are pleased with the outcome of the ruling. We can now put this behind us and continue to focus on achieving our strategic aims for the Swedish business.'

For further information on Old Mutual plc and to view a translation of the executive summary of the arbitration ruling, please visit the corporate website at www.oldmutual.com 

Enquiries

Investor Relations
Aleida White	UK	[phone]
Deward Serfontein	SA	[phone]
Media
Matthew Gregorowski	UK / SA	[phone]
Finsbury
Mike Smith / Brian Cattell	UK	[phone]

  Notes to Editors

Old Mutual

Old Mutual plc is an international savings and wealth management company based in the UK. Originating in South Africa in 1845, the group has a portfolio of businesses offering asset management, life assurance, banking and general insurance services in over 40 countries in Europe, the Americas, Africa and Asia-Pacific.  Old Mutual plc is listed on the London Stock Exchange and the JSE, among others.

In the year ended 31 December 2007, the group reported adjusted operating profit of £1.62 billion (on an IFRS basis) and had £279 billion of funds under management at the year end. The Company has approximately 53,000 employees.

Skandia Nordic 

Skandia has operated in the Swedish market for over 150 years. Its Swedish business, Skandia AB, offers a full set of financial products to individuals and life insurance products to corporations. Skandia and Skandia Liv, its mutual subsidiary, hold a leading position in the local life assurance, with a combined customer base of 1.9 million customers in their Nordic operations.  

Skandia Liv

Skandia Liv is Sweden's largest life assurance company offering life and pensions insurance in the traditional life market with assets under management as at 31 December 2007 of SEK 303 billion. The company is a wholly-owned subsidiary of Skandia, but operates as a mutual company within a strict local legal framework that does not provide its holding company with power to control it in such a way as to access benefits usually associated with share ownership. Instead the benefits accrue to Skandia Liv's policyholders. 

 

END

 

 

MSCFKBKBOBDDPKK