Old Mutual increased results from operations by 87 percent to R4.1 billion in the six months to June 30 due to a strong operating performance, the exit from the Covid pandemic and even though it was the first time that Nedbank’s results were not included.
The interim dividend was maintained at 25 cents. Life APE (annual premium equivalent) sales grew 15 percent to R6.2bn. Gross written premiums increased 9 percent to R10.9bn. The solvency ratio was robust, up by 300 basis points to 187 percent.
The share price fell 5.04 percent to R10.93 yesterday afternoon. BoFA Securities said in a note Old Mutuals results “from operations comfortably ahead of prior expectations. Positively, this seems a fairly clean update”.
The group said lower market levels in South Africa and globally saw funds under management fall 7 percent. A commitment to realise R750 million in cost savings in 2022 was on track.
Another commitment to improve the investment performance in Old Mutual Investment’s funds was indicated by the fact that 94 percent of its funds were above benchmarks over a one year measure, while the percentage was 81 percent over three years.
The group recently launched its Bula Tsela scheme, making it the first insurer to offer shares directly to the black South African public, and the first to include lower income earners via its retail scheme.
The group’s insurance business was also one of eight major companies that were raided by the Competition Commission last week for alleged collusion and price fixing, which the company has denied.
CEO Iain Williamson said yesterday in a statement he was pleased the results were not defined by the impacts of Covid-19. It is also the first set of results that excludes income from the strategic investment in Nedbank, which was unbundled in November 2021.
Despite weaker market returns, return on net asset value improved to 9.6 percent, due to the unbundling of Nedbank, thus delivering on the group’s promise to simplify the capital structure and provide a substantial return of capital to shareholders.
Life APE (annual premium equivalent) sales were driven by strong recoveries in the Mass and Foundation Cluster and Rest of Africa businesses.
Strong growth in the value of new business (VNB) in the Mass and Foundation Cluster, Old Mutual Corporate and Rest of Africa business was offset by a VNB reduction in its Personal Finance Business. The VNB margin of 2.2 percent remained within a medium-term range of between 2-3 percent.
He said the operating environment was expected to remain challenging, with consumers under financial pressure. He said the equity market was expected to remain under pressure.
To raise empowerment in its asset management investments, a 21.2 percent stake in Futuregrowth was sold to African Women Chartered Accountants Investment Holdings, a 100-percent black woman-owned investment company.
This deal, with Bula Tsela, was expected to result in Futuregrowth and Old Mutual Investment Group becoming majority black owned.
Group partnerships included a strategic partnership with Bridge Taxi Finance to expand lower-end market access, a minority investment in Preference Capital building on the SME-focused ecosystem, as well as in Old Mutual Insure to grow the Property and Casualty market share and strengthen distribution.
Longer-term growth engines included building the east and west Africa businesses, the China joint venture, and building an enhanced transactional capability, said Williamson.
BUSINESS REPORT