Table of Contents

Corporate Governance in Modern Financial Capitalism

Corporate Governance in Modern Financial Capitalism

Old Mutual’s Hostile Takeover of Skandia

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand

This insightful book focuses upon corporate governance processes, and explores the conditions required for effective corporate governance and control in 21st century globalized and financialized economies. In presenting a comprehensive study of a cross-border hostile corporate take-over process, describing the actors, institutions and events involved, this book examines and questions the current forms of corporate governance and control – both from a national and a global perspective. Using Old Mutual’s takeover of Skandia as a case study, the authors address corporate governance theory, and highlight its two fundamental dimensions: financial and operational flows.

Chapter 10: Old Mutual

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand

Subjects: business and management, corporate governance, strategic management, economics and finance, corporate governance, financial economics and regulation, law - academic, corporate law and governance


THE HISTORY OF OLD MUTUAL Old Mutual had a history of more than 150 years as a South-Africanbased mutual society before its public listing in 1999. Back in 1845, a Scotsman named John Fairbairn led a group of 166 members in the formation of South Africa’s first mutual life assurance society. Old Mutual grew strongly right up to the end of the nineteenth century, and soon claimed to be one of South Africa’s leaders in the life assurance market. When the country gained self-government from the UK and became a member of the Commonwealth Union in 1910, Old Mutual became one of South Africa’s most dominant institutions, capturing as much as onethird of the country’s life assurance market. In the face of the government’s strict exchange controls, Old Mutual – akin to many other South African companies – focused its energy primarily on the domestic market. Similarly, the society’s investment portfolio reflected the increasing ostracism of the apartheid state. Unable to invest in corporations outside South Africa, Old Mutual became a major shareholder in a number of South African financial institutions such as Nedbank, Swiss-based Richemont, Rembrandt, Standard Bank, Barloworld and Anglo American. Old Mutual’s position in South Africa had become strong. Throughout its history, it had actively recruited South Africa’s non-European population into its membership, in part by actively promoting group memberships and group-based insurance, and other financial products. By the 1990s, Old Mutual held 25 per cent of the country’s industrial assets through its life and asset management operations, and...

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