Old Mutual's chief executive, Jim Sutcliffe, refused to be drawn yesterday about progress, or lack of it, in the South African insurance company's takeover talks with the Swedish insurer Skandia.

Old Mutual's shares, listed in London and Johannesburg, have been held back recently by fears that it might raise part of the purchase price of some £3.5 billion from its shareholders, as well as taking on new debt.

Old Mutual sold the Birmingham stockbroker Gerrard to Barclays for £210 million in 2003.

Yesterday, the shares recovered well to close 31/4p higher at 134p, after Old Mutual reported half-year profits 29 per cent ahead at £554 million, boosted by a turnaround in the fortunes of the South African bank Nedbank, where it has a controlling stake.

The interim dividend is raised by 5.7 per cent to 1.85p.

Mr Sutcliffe said Old Mutual was well placed to maintain this first-half performance over the rest of the year.

He insisted that he feels no pressure to do a deal for Skandia, as Old Mutual's existing businesses are motoring ahead.

"We are careful about the things that we do," Mr Sutcliffe added. "We take time to make sure that we make our decision properly, whatever that may be."

Skandia's directors are expected to make a decision one way or the other by the end of this month.

An Old Mutual spokesman declined to comment on the timing of any announcement concerning the talks.

"It is a good set of results and highlights the pity that they are looking to dilute exposure to this business through messing around with Swedish life business," commented one Johannesburg analyst, who asked not to be named. "In the absence of Skandia, Old Mutual shares would have been a couple of rand higher."

The half-year profit contribution from Nedbank rose by 200 per cent to £162 million as a recovery programme launched last year at South Africa's fourth-biggest bank began to bear fruit.

Severe problems, including wrong interest rate calls, hit Nedbank hard last year, forcing it to raise fresh capital.

Profit from Old Mutual's original South African life assurance operation fell by seven per cent to £212 million, due largely to a 225 million rand charge for compensation paid to customers who had been overcharged and a lower investment return on the bank's existing assets.

South African life and investment sales, however, rose by over 20 per cent. The outlook for them was described as positive amid improving stock prices.

The contribution from Old Mutual's US life business were 25 per cent higher at £50 million.