Old Mutual beat a London market sell-off on Friday on disposal rumours.
The stock added 2 per cent to 41.9p on talk management has investigated asset sales to help rebuild its capital reserves, which were decimated last year by its Bermudan and US life units.
One option would be for Old Mutual to sell its 53 per cent shareholding in South Africa’s Nedbank.
The stake was worth £2.5bn at Friday’s prices, equivalent to nearly half Old Mutual’s market value. Standard Chartered and HSBC have been mooted among the potential interested parties.
Walking away from cash-hungry operations, such as the US life business, could also help Old Mutual’s liquidity position.
Concern over capital levels has pushed the cost of insuring Old Mutual’s debt to record levels, while its shares have lost a third of their value in a fortnight.
According to UBS, the stock price is already pricing in $6bn of mark-to-market losses in the group’s US bond portfolio. “We believe this business is ring-fenced, and in an extreme case (such as that being priced in), the company could effectively walk away from the US life business,” it said.
Old Mutual is due to deliver results on March 4. The rest of the insurers were helped by Prudential announcing a capital boost through the disposal of its troublesome Taiwanese business. Its full-year results matched consensus forecasts, with solvency well ahead of expectations.
Prudential gained 11.1 per cent to 285p, leading the blue-chip risers, while Aviva rose 1.3 per cent to 290½p. But Legal & General continued to spiral lower following a report that ING, the Dutch group, was considering halting coupon payments on some hybrid securities.
L&G was down 9.3 per cent to 317½p. The stock is down 45 per cent in a fortnight on concerns about the quality of securities in its bond portfolio.
Fear of US bank nationalisations led the FTSE 100 down 3.2 per cent at the close, losing 129.31 points to hit a three-month low of 3,889.06. For the week the index slid 7.2 per cent, the steepest since November.
Among the UK lenders, Royal Bank of Scotland sank 11.5 per cent to 19.3p and Barclays was off 5.8 per cent to 95.2p.
HSBC was down 4.2 per cent to 477¼p as gossip continued to circulate about a dividend cut and cash call in the run-up to its results next month.
Anglo American led the miners lower after scrapping its dividend and delivering 2008 profit that fell short of reduced forecasts. The stock was down 16.9 per cent to £10.27, a six-year low.
Anglo also said it had to give De Beers an interest-free loan to help it survive the downturn. Smaller peer Gem Diamonds slid 14.1 per cent to 161¼p in response.
Meanwhile, Xstrata lost 10.6 per cent to 643½p and Rio Tinto was down 9.5 per cent to £18.10 amid growing concern that the recent rally in steel prices looks fragile.
“Anecdotal evidence indicates that traders in China are becoming increasingly nervous as supply appears to overshoot demand,” said UBS, which blamed “over-enthusiastic anticipation of the impact of the Chinese stimulus package”.
Software maker Sage inched higher by 2.1 per cent to 165.8p, tracking a post-results gain for its main US competitor, Intuit.
Intuit’s quarterly numbers were in line although the firm cut sales guidance for Quickbooks, its direct rival to Sage’s Peachtree package.
Cattles led the mid-cap fallers, crashing 73.6 per cent to 3½p on expectations it will breach debt covenants.
The subprime lender, which needs to refinance £500m debt by July, said it was delaying its full-year results pending completion of a review into its impairment provisions.
Vague refinancing hopes helped Debenhams put on 4.1 per cent to 37¾p.
Ashmore slid 6.8 per cent to 117p on worries Tuesday’s results from the emerging markets fund manager may disappoint.
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