Old Mutual feeling the pain from the war in Iran

Profit at Old Mutual declined for the first time since 2022 as risk-off sentiment from conflicts in the Middle East curbed investment returns at Africa’s biggest insurer by assets. 

Adjusted headline earnings fell 30% to R2.95 billion in the six months through June, while the Johannesburg-based company declared an interim dividend of 40 cents per share.

Profit attributable to shareholders slid 5.2% to R3.89 billion. 

US-Iran tensions since February have disrupted seaborne traffic through the Strait of Hormuz, raising energy and fertiliser costs and stoking price growth. 

The increase in import costs saw inflation in Old Mutual’s biggest market, South Africa, accelerate at the fastest pace in two years in June to 5%, before easing to 4.3% in July.

This impacted what Old Mutual refers to as shareholder investment returns, which directly affects its bottom line.

This is the fair value gains or losses incurred when investing the insurance float generated by premiums. This is the money Old Mutual holds to pay out claims.

The cash is typically invested in highly liquid fixed-income instruments and can be immensely profitable for insurers if market conditions are favourable.

Thus, the investment performance of these funds does impact Old Mutual’s profitability. However, they do not reflect the business’s operational performance.

In contrast, Old Mutual said the business’s operational performance was strong.

Life APE sales rose by 21%, driven by strong group risk and annuity sales in Old Mutual Corporate and higher living annuity and endowment sales in Wealth Management.

This translated into strong gross inflows, which rose by 21% to R128.9 billion. This figure was partly boosted by the inclusion of 10X Investments, which Old Mutual acquired in 2025.

Old Mutual Investment Group reported strong inflows, driven by improved activity from third-party clients across key investment offerings.

Net client cash flow improved, driven by the strong gross flows during the period and the non-repetition of low-margin indexation outflows that were reported in the prior period.

Gross written premiums increased by 3%, supported by growth in Old Mutual Insure, partially offset by currency movements and lower renewals in the Africa Regions.

Crucially, the new business is profitable, with the margin rising to 1.4%. The value of new business surged by 32% to R569 million.

Reported with Bloomberg.