Old Mutual restored its annual dividend on Tuesday even after higher coronavirus-related provisions and reserves led the country's second-largest insurer to post a basic loss for the year. Photo: Bongani Mbatha, ANA.
Old Mutual restored its annual dividend on Tuesday even after higher coronavirus-related provisions and reserves led the country's second-largest insurer to post a basic loss for the year. Photo: Bongani Mbatha, ANA.

Old Mutual restores dividend despite annual loss

By Reuters Time of article published Mar 23, 2021

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JOHANNESBURG - Old Mutual restored its annual dividend on Tuesday even after higher coronavirus-related provisions and reserves led the country's second-largest insurer to post a basic loss for the year.

Still, the payout of 35 cents per share was 53% lower than last year's. Old Mutual had paused the dividend in the first half, as the coronavirus crisis became the latest in a series of challenges for the company since it completed a costly break-up of its previous structure in 2018.

Its basic loss per share stood at 116.3 cents - around the middle of its forecast range - and compared with a basic earnings per share of 208.3 cents a year earlier.

"2020 has been one of the most challenging years our organisation has ever faced," Chief Executive Iain Williamson said. However, the insurer remains well-capitalised and liquid, he added.

Confidence in the insurer among some shareholders had already been wavering before the pandemic, mainly due to a prolonged legal battle with ex-CEO Peter Moyo over his abrupt dismissal.

Like all insurers, the pandemic forced Old Mutual to increase provisions for claims substantially. The health crisis also hit sales and prompted higher credit losses as lockdowns hit distribution and consumer finances.

Old Mutual also had to hike its business interruption and rescue reserves to 791 million rand and suffered mark-to-market losses of 704 million rand on unlisted equity and credit portfolios.

Its headline earnings per share - the main profit measure in South Africa that strips out certain one-off items - stood at 116.1 cents for the year to Dec. 31, a 51% decline from the 236.1 cents it reported a year earlier.

($1 = 14.8090 rand)

BUSINESS REPORT ONLINE

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