Old Mutual Q1 sales up 2 pct, misses forecasts

LONDON (Reuters) - UK-listed insurer Old Mutual (OML.L) missed analyst forecasts on Thursday with a 2 percent rise in first-quarter sales, held back by weakness in its UK arm and the impact of market volatility, which also dented margins.

Old Mutual (OMLJ.J), South Africa's largest insurer, said life insurance sales on an annual premium equivalent (APE) basis totalled 426 million pounds ($833 million), below a consensus estimate of 438 million, according to a company poll.

European sales dropped 7 percent, with the UK business alone down 18 percent, as unit trust sales were hit by volatile markets and tax changes that led clients away from life bonds.

The value of new business dropped 5 percent to 55 million pounds, again below market estimates of 64 million pounds, as U.S. growth failed to offset a drop in the UK and South Africa, where an early Easter and sales training affected production.

The group's APE profit margin dipped to 13 percent from 14 percent.

Old Mutual, which describes itself as an asset gatherer rather than a life insurer, said net client cash flow increased 3 percent, while funds under management dropped 7 percent to 260.8 billion pounds, edging away from a 300 billion target for in 2008.

Old Mutual shares, which trade at one of the lowest multiples in the sector, have dropped some 25 percent this year, hit by concerns over both its South African and U.S. exposures, and underperforming its UK-listed peers by 18 percent.

(Reporting by Clara Ferreira-Marques; Editing by David Cowell)