LONDON -- Shares in life insurance specialist Old Mutual (LSE:OMU) have stopped for breath in recent weeks, after earlier edging to their loftiest since May 2006 above 210 pence at the start of March.

I believe that the company offers great earnings growth and dividend prospects that are not factored into the price at current levels, and I therefore expect the stock to gain traction again sooner rather than later.

Insurance giant prints strong 2012
Old Mutual announced last month that profit before tax increased 18% to 1.6 billion pounds in 2012, with funds under management treading 3% higher to 262.2 billion pounds. Although new business profits fell, this was because of the sale of its Nordic division, and underlying new business profits from continuing operations rose 11% from 2011 levels.

And Old Mutual has significant scope to slash costs further to boost earnings after cutting expenditure 133 million pounds last year. In particular, RBC Capital notes that that the commission costs of major insurers should collapse by 50% as the Retail Distribution Review, which came into effect at the start of the year, delivers massive cost savings. This replaced the payment of commission to financial advisors with upfront product fees.

Double-digit growth forecast in coming years
City estimates put earnings-per-share growth (EPS) for 2013 at 13%, to 20 pence, and is forecast to advance a further 10% in 2014 to 22 pence.

Old Mutual currently deals on a small P/E rating of 10 for this year, some distance off a forward earnings multiple of 12.2, and which is anticipated to fall to 9.1 next year. And Old Mutual's position as an attractive value stock is underpinned by a price/earnings to growth (PEG) readout of 0.8 and 0.9 for this year and next -- a figure below 1 is generally considered exceptional value for money.

A plump dividend pick
On top of decent earnings growth, Old Mutual also offers investors a chance to latch onto exciting dividend possibilities. The firm hiked last year's total dividend 23% to 7 pence, and said that it is aiming to keep shareholder payments rolling higher in coming years. Indeed, analysts expect the full-year dividend for 2013 and 2014 to come in at 8.1 pence and 9.1 pence respectively.

These payments carry yields of 4% and 4.6%, well above the FTSE 100 forward average of 3.3%. And medium-term dividends come well protected, with dividend coverage well above the safety watermark of 2 times potential earnings, and management said that it aims to provide cover of at least 2.25 earnings moving forward.

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Royston does not own shares in Old Mutual. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.