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Old Mutual on track for a good financial second half

Signage on the Old Mutual building, Sandton. Picture: Karen Sandison/African News Agency(ANA)

Signage on the Old Mutual building, Sandton. Picture: Karen Sandison/African News Agency(ANA)

Published Sep 28, 2023


Old Mutual, which reported a strong performance for the six months to June 30, was likely to continue to perform well in the second half, its results showed yesterday.

“I remain confident in the clear strategic direction of our core and growth businesses. While the macro-economic outlook in our markets is expected to remain challenging for our customers, we remain focused on delivering strong top-line growth across our business, creating excellent value, and improving efficiencies,” CEO Iain Williamson said yesterday.

“We expect sales and value of new business to remain robust for the remainder of 2023. Persistency outcomes in Mass and Foundation Cluster are likely to remain under pressure, which will continue to impact our results from operations. Our management interventions to improve persistency... are yielding positive results.”

He said he was pleased with the “exceptional value creation and strong new business growth.” There were market share gains and benefits from a well-diversified portfolio of businesses, he added.

The interim dividend was raised 28% to 32 cents a share. The share price nudged up 0.17% to R9.59 yesterday afternoon, and was up by over 26% over 12 months. Headline earnings per share was down 8% to 96.8 cents.

Life APE (annualised premium equivalent) sales marginally increased by 1%, but the prior period included significant savings products sales in China's broker channel, which the group stopped selling in anticipation of regulatory changes.

Excluding China, Life APE sales grew by 14%. Sales benefited from strong risk sales in Mass and Foundation Cluster across all retail channels, as well as higher corporate and retail sales in east Africa.

Higher single premium guaranteed annuity sales in Personal Finance and Wealth Management contributed further to growth in sales.

The strong sales momentum was evident in the value of new business (VNB) growth of 32% to R937 million, backed by strong VNB margin growth.

Results from operations were up 3%. Adjusted headline earnings grew by 23%, mainly driven by increased returns on shareholder investment portfolios.

Persistency challenges in its Mass and Foundation Cluster prompted an adjustment to its existing short-term provisions to cater for the impact of economic pressures on customers. The group however delivered positive operating variances of over R1 billion.

Funds under management increased 6% to R1.3 trillion, driven by positive local equity market performance, while the group solvency ratio remained within the target range of 170% to 200%.

Customer delivery highlights included broadening solutions within the health solutions and home loan propositions, as well as growth in membership and business value of Old Mutual Rewards.

The bank build, central to the integrated financial services strategy, was on track and within budget.

Several strategic relationships were being delivered through the Next176 subsidiary.

This included a relationship with the Vodacom Group, following the transfer of Vodacom’s standalone retirement funds into Old Mutual’s SuperFund Umbrella Fund.

Next176 partnered with Openview and ShopriteX to launch a “Buy Now, Pay Later” venture called OsioPay.

TEBA and Old Mutual Wills had partnered to offer its employees and customers access to the TEBA branded Digital Wills platform.