Bruce Whitfield:
We can now talk to Jim Sutcliffe, the chief executive of Old Mutual on the line to us from London. And Jim, following that acquisition of Skandia, it seems to have bedded down rather nicely but your share was down four percent today, the market concerned that you missed a couple of targets and they are market targets as well. Some depreciation, some one off adjustments having an impact on the numbers, the currency depreciation seems to have bothered the market most of all.

Jim Sutcliffe:
Hi Bruce, I think that's right. I think Skandia continues to be ahead of our expectations, you know the growth rate of mutual funds 67 percent up in the UK and 52 percent up in the Elam, the Nordic is a little bit lower but the net cash flow is good so the underlying growth trends are all in the right direction but as you say the combination of the currency effect and the couple of historical adjustments that we made have caused the price to be down today.

Bruce Whitfield:
Historical adjustments, what sort of adjustments are those?

Jim Sutcliffe:
There are two or three things: first of all in South Africa there is a series of adjustments that related to some of the administrative practices from 2002 and 2003; they are quite old but they are being corrected through this quarter's account and then in the US we have got a downward sloping yield curve and that is not a good environment for us. That causes our laps rate to go up.

Bruce Whitfield:
What is a downward sloping yield curve Jim, in layman?s language?

Jim Sutcliffe:
Well what it means is that a customer can earn more money by putting it in the bank on a one-year basis than investing it in a medium term plan. So we have had to increase the rates that we pay to a higher level and that cost us some profit.

Bruce Whitfield:
So basically making investment products more attractive than simple bank deposits, for argument's sake.

Jim Sutcliffe:
Exactly, that's right, because we have got fixed interest products in the US. It is not equity products; it is all about the interest rate you pay.

Bruce Whitfield:
What about the South African group business? That looked disappointing as well.

Jim Sutcliffe:
Yes, I think the healthcare business is slow and we are busy reformulating a strategy for that business, looking for some ways to put it all onto a single platform with someone else and we are well advanced in the negotiations with that.

Bruce Whitfield:
Onto a single platform with somebody else?

Jim Sutcliffe:
Yes.

Bruce Whitfield:
What does that entail, what does that actually mean? You are going to outsource the health business.

Jim Sutcliffe:
Yes, I mean broadly. There are different ways in which this thing can be achieved structurally but it has that effect.

Bruce Whitfield:
Is it an acknowledgement by Old Mutual that perhaps life insurance and unit trusts are easier to manage than health insurance businesses which are notoriously quite tricky?

Jim Sutcliffe:
We see ourselves as a savings and wealth management company so we are looking after people's money rather than doing all the risk taking. Now you know medical aid and the risk in South Africa on the health side, then you are left as an administrator and you know we don't see ourselves as that.

Bruce Whitfield:
And the evolution of Old Mutual Asset Management, you are working at the moment on structuring it pretty much like the very successful US businesses. That evolution of Old Mutual Asset Management; how is that going?

Jim Sutcliffe:
That really starts at the beginning of next year. So it has been announced and all the hard work is underway at the moment but I have no doubt that given the individual managers and the focus of very specialist or very specific asset mandates which is popular with the clients in South Africa but also in the US allows people to concentrate on the investment process closely, the one that they are familiar with and that has produced better returns for our customers.

We have got 91 percent of the US customers who have received three year returns in excess of their benchmarks so the process works.

Bruce Whitfield:
Have you got evidence yet of the cooperation between Old Mutual and Nedbank and Mutual & Federal? That is a process that has been under way for some time in South Africa, is that beginning to bear fruit?

Jim Sutcliffe:
Yes, no doubt. I mean three or four years ago we?d talking in this kind of programme about Old Mutual being a long way behind the others. I think the penetration of bank assurance into the Nedbank customer base is now I will claim better than the others, it certainly is good, and the job now really is to build Nedbank's retail business which we are busy with as you have said and we are looking forward to that challenge.

Bruce Whitfield:
Jim Sutcliffe, on the line to us from London, the chief executive of Old Mutual.