Old Mutual’s mixed bag of results

Old Mutual’s results for the first half of this year were mixed, with some areas of strong growth offset by others of weakness.

Old Mutual released its results for the six months ended 30 June 2023, which revealed a mixed bag of results.

Life APE sales increased marginally by 1%, excluding significant savings products sales in China’s broker channel, which were stopped in anticipation of regulatory changes. 

Gross flows grew by 17%, driven by strong flows in Old Mutual Investments. 

However, net client cash outflows were worse than in the prior period due to large outflows in Personal Finance and Wealth Management and Old Mutual Investments, as high interest rates and pressure on disposable income constrained local consumers.

Funds under management grew by 6% to R1.3 trillion, driven by positive local equity market performance, partially offset by higher outflows.

The company delivered an annualised return on group equity value of 10.5%, assisted by the Life and Savings business, providing an annualised return on embedded value of 13.9%. 

The value of new business growth and positive risk and expense variances offset adverse persistency experience and additional short-term persistency provisions.

Results from operations increased by 3% from the prior period, primarily driven by good operational performance. 

However, this was dampened by the continued adverse persistency with short-term persistency provisions raised in the Mass and Foundation Cluster.

Old Mutual’s return on net asset value of 11.9% increased by 180 bps from the prior period due to strong growth in adjusted headline earnings. 

This growth was driven by increased shareholder investment return due to increased interest rates and a recovery in equity markets. 

Core return on net asset value – which excludes investment in new growth and innovation initiatives – increased by 230 bps from the prior period to 13.1%.

The company’s solvency ratio remains robust at 186%, within its target range of 170% to 200%. 

Old Mutual Life Assurance Company South Africa’s (OMLACSA) solvency ratio remains strong at 209%, at the upper end of the company’s target range of 175% to 210%. 

OMLACSA issued R859 million of floating rate subordinated debt to optimise the company’s weighted average cost of capital.

Old Mutual declared an interim dividend of 32 cents per share, higher than the 25 cents declared last year.