Old Mutual Q3 sales boosted by wealth, managed funds dip

* Gross inflows up 31 pct; Wealth unit flows at record

* Wealth sales boosted by UK pension & savings rule changes

* Shares (Berlin: DI6.BE - news) up 1.5 pct in 0.6 pct stronger FTSE 100

By Simon Jessop

LONDON, Nov 4 (Reuters) - Anglo-African financial services company Old Mutual (Other OTC: ODMTY - news) posted forecast-beating third-quarter sales on Wednesday, boosted by record inflows into its wealth management unit.

The firm, which offers fund and wealth management, banking and insurance services across the UK, the United States, Africa and other emerging markets, said it had been particularly helped by changes to UK pensions and savings rules this year.

Under those changes, retirees can now choose what to do with their money, including buying more flexible retirement products or investing it in mainstream investment funds, as opposed to being forced to buy an annuity, or income for life.

Gross sales across the group were up 31 percent in the three months to the end of September to 8.1 billion pounds ($12.49 billion), boosted by a 45 percent jump in sales at its UK Wealth unit to 5.5 billion pounds.

The Wealth unit had "benefited from its integrated strategy of owning distribution, an investment platform, discretionary fund and asset management as well as the recent changes to the UK pension regime," Finance Director Ingrid Johnson said.

The firm also saw strong sales across its Africa and emerging markets operations, with the latter up 22 percent in local currency terms.

Shares in Old Mutual were up 1.5 percent at 217.6 pence by 0827 GMT, outperforming a 0.6 percent stronger FTSE 100.

Calling the Wealth unit performance "the highlight" of the update, Shore Capital analyst Eamonn Flanagan said group funds under management came in lower than expected, after a quarter of volatile market performance amid concerns over global growth.

That meant that while group funds under management were flat year to date, they were down 5 percent over the quarter to 319.4 billion pounds, weighed by stock market falls and adverse currency moves.

Old Mutual's Johnson said there would likely be some more asset outflows, although it was hard to predict. She (Munich: SOQ.MU - news) also flagged the potential for additional loan impairments at the firm's Nedbank operations as a result of the changing commodity cycle, that would make emerging markets "challenging".

Calling the stock a "hold", with a price target of 214 pence, Shore Capital's Flanagan said the firm traded on a price-to-earnings ratio of 11 times earnings, below that of its UK asset manager peers.

"The key for us as to the investment case, is the ongoing success that Old Mutual has within the emerging African markets and within South Africa, which we remain bullish over, and its success with a vertically integrated approach in the UK, over which we remain unconvinced," he wrote in a note to clients.

($1 = 0.6483 pounds) (Editing by Dominic Evans)