Old Mutual has announced that its four businesses - Old Mutual Emerging Markets (OMEM), Nedbank Group, Old Mutual Wealth (OMW) and Old Mutual Asset Management (OMAM) – will be separated from each other by the end of 2018.

Bruce Hemphill, Old Mutual Group CEO, said when the separation is complete, the businesses will be delivering enhanced performance relative to their peers and they will be held by their natural shareholder base.

Following the appointment of Hemphill as Group CEO in November 2015, Old Mutual has initiated a strategic review of the Group.

"The previous strategy has led to reshaping and de-risking of the Group, but despite this Old Mutual still trades at a substantial discount to its peer group," he said.

Hemphill said that there is a limited rationale for four businesses to be in one Group as each of those businesses "has a competitive position with great prospects and sizeable markets".

Old Mutual has delivered strong performance for the year ended December 31, 2015 with pre-tax adjusted operating profit (AOP) of £1.7bn, up 11% in constant currency, and up 4% in reported currency.

All of the business units performed well in 2015.

Old Mutual Emerging Markets (OMEM) delivered a strong performance with AOP up 9% to R12bn.

Nedbank’s headline earnings were up 9.6% to R10.8bn.

Old Mutual Wealth had a very good year with AOP of £307m, whereas OMAM produced a solid performance against backdrop of volatile markets in the second half of the year with profits up 9% to $229m.

"Following a long period of operational improvements, the performance of the underlying businesses, allied to stronger balance sheets, mean they are now ready for the next stage of their development," commented Hemphill.

"We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the Group," he said.

"Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements," he said.

Hemphill noted that 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," he said.

The separation process will involve significant ongoing regulatory and stakeholder engagement.

"The Group has a range of options available to it and the feasibility, sequencing and timing of each element will be affected by a mixture of market, regulatory and other factors," said Hemphill.