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OLD Mutual plc has announced that following the strategic review conducted by new group chief executive, Bruce Hemphill in November 2015, the group will separate its four principal businesses, namely, Old Mutual Emerging Markets (OMEM), Nedbank, Old Mutual Wealth and Old Mutual Asset Management.OMEM and Nedbank’s relationship will continue following the separation, with a minority shareholding in Nedbank distributed to Old Mutual shareholders over time.

“Following completion of the managed separation and at an appropriate point in the future, the Group, in its current structure will no longer exist,” Old Mutual said in a stock exchange filing.

Hemphill’s strategic review found that this would best serve the long-term interests of the group’s shareholders and other stakeholders, Old Mutual said. Hemphill said the strategy announcement would “unlock value currently trapped within the group structure”. “We’ve four strong businesses that can reach their full potential by freeing them from the costs and constraints of the Group,” Hemphill said on Friday.

Old Mutual said that, while the four businesses had “strong growth prospects in sizeable markets”, there were limited tangible synergies between them.

“The evolving regulatory environment in Europe and South Africa is adding a degree of additional cost, complexity and constraints. The current Group structure also inhibits the efficient funding of future growth plans for the individual businesses, restricting them from realising their full potential,” Old Mutual said.

The preferred route for the separation has yet to be determined and will involve “significant ongoing regulatory and stakeholder engagement”, Old Mutual said. “We expect that the managed separation will be materially completed by the end of 2018.” Going forward, Old Mutual plc’s primary role will be to implement the separation of the businesses.

Meanwhile, former deputy CEO of Liberty Holdings, Rex Tomlinson, will join the group executive committee as group chief of staff, working with the business units to operationalise strategy. Tomlinson was deputy CEO at Liberty over the same time that Hemphill was CEO of the rival insurance group.

The financial services group said on Friday that for the 12 months to December, pre-tax adjusted operating profit (AOP) climbed 11 percent in constant currency to £1.7 billion.

In reported currency, profits climbed four percent reflecting the weakening of the rand against the pound, as Old Mutual’s South African operations account for the bulk of group profits.

Old Mutual said that the four businesses it plans to separate earned combined pre-tax profits for the year of £1.8 billion.

OMEM grew AOP nine percent to R12 billion, with the South African retail business accounting for more than 50 percent of this. OMEM delivered a return on equity of 23 percent, growing to 10.7 million customers in 2015, up from 9.4 million in 2014.

Old Mutual plc delivered ROE of 14.2 percent, within its 12-15 percent target range. -The Citizen.