CAPE TOWN – One of South Africa’s investment and insurance companies, Old Mutual, has opted against keeping Chief Executive Officer Peter Moyo.
Dubbed the second biggest insurance company, the Cape Town-based firm has suspended Moyo.
The company announced the CEO’s suspension on Friday stating material breakdown in trust and with the board, just hours before the yearly shareholder meeting.
In addition, the move has knocked down the insurer’s shares, but analysts reckon the move leaves a room for speculation.
Moneyweb reports that Moyo resumed the role of CEO at newly-listed Old Mutual less than a year ago and will be succeeded by Chief Operating Officer Iain Williamson as acting CEO with immediate effect.
“The board has had various engagements with Mr. Peter Moyo…These engagements have caused the board to conclude that there has been a material breakdown in trust and confidence between him and the board,” Old Mutual said in a statement.
“The Board of Old Mutual (“Board”) has decided to separate with the Group CEO, Peter Moyo. Pending the conclusion of this and to manage it effectively, the Board considered it appropriate to suspend Mr. Moyo, so releasing him from his duties and enabling the appointment of an interim chief executive officer.
“The separation was a result of a material breakdown of trust and confidence, which occurred due to the management of conflicts of interest in business relations with related parties. These business relations pre-exist the appointment of Mr. Moyo as CEO of Old Mutual and were considered at the time of the appointment to be manageable,” concluded the company.
Moreover, the suspended CEO has previously held senior executive or board positions in a variety of firms and served as a deputy managing director in a previous stint at Cape Town-based Old Mutual.
He rejoined Old Mutual in 2017, initially as head of the emerging markets division, before the former conglomerate’s main African financial services business was split off in a disentanglement of the 173-year-old group’s structure.
Chairman Trevor Manuel, a businessman and former South African finance minister, would provide more information at the Old Mutual’s Annual General Meeting, a spokeswoman said.
Following the developments, both Old Mutual’s Johannesburg and London-listed shares dropped 5% on news of Moyo’s suspension, but recovered to R21.53 per share by 0725 GMT in Johannesburg, a 0.78% decline.
Since its listing as a separate business in June 2018, Old Mutual has been working to hone its strategy as a stand-alone business and parent company to what remains of Old Mutual.
Old Mutual announced a R2 billion ($139 million) share buyback in March in a bid to placate shareholders following an almost one-third drop in the share price since the listing.
Meanwhile, traders and investors were left guessing after the suspension with a portfolio manager at Old Mutual investor Denker Capital Jan Meintjies, saying the move has left a room for speculation.
“Given the very little information in the announcement, it leaves room for speculation,” said Meintjes.