Old Mutual produces strong results

Old Mutual produced a solid set of financial results, with headline earnings and profit soaring 34% and 20%, respectively. 

However, the company’s results from operations declined by 3% to R4.24 billion, and the value of new business slumped by 8.4%. 

Presenting its interim results for the half year ended 30 June 2024, CEO Iain Williamson said positive sentiment following South Africa’s national elections in May will drive an improvement in the company’s operating environment. 

Williamson said positive investor sentiment in South Africa following the general election, along with the recent policy rate cut and further possible cuts expected later in the year, has reset the base case for growth.

While business and consumer confidence remains low, there has been a slight improvement in the period. This will benefit Old Mutual in the coming years as disposable income increases in South Africa. 

In the immediate future, it will benefit the company’s asset management business as funds under management grew 5% on the back of a strong showing from the JSE since the elections. 

Despite the complexity of the operating environment, Old Mutual increased our life sales by 6% and grew gross written premiums by 9%.

This led to strong profit growth of 20% to R5.2 billion for the period. Profit is strangely higher than results from operations as it includes the performance of Old Mutual’s Zimbabwean business, while other metrics exclude it. 

Adjusted headline earnings per share increased by 7%  to 73.5 cents, bolstered by the R1.5 billion share buyback executed in 2023. 

Strong cash generation supported a 6% dividend growth, with the interim dividend of 34 cents a share – up from 32 cents in the prior reporting period. 

Group return on net asset value increased by 70 bps to 12.6%, driven by earnings growth and capital optimisations. A further R1 billion share buyback is proposed for 2024, subject to regulatory approval.

The company continues to invest heavily in modernising its IT systems to further drive efficiencies and has exited its life and general insurance businesses in Nigerian and Tanzania to focus on profitable markets. 

Old Mutual Insure delivered a solid turnaround through better risk selection and disciplined expense management. Premiums grew by 10%, driven by solid channel productivity, while net underwriting results increased by more than 100%.

Despite coming off a high base, the Mass and Foundation cluster reported strong sales growth of 14%.

Personal Finance and Wealth Management reported sales growth of 8% in the reporting period, driven by higher guaranteed annuities and recurring premium savings sales. 

Assets under management in the Investments business demonstrated resilience, growing 3% after benefiting from market performance in South Africa.

Old Mutual Africa Regions, meanwhile, delivered sustained profit growth, ignoring currency movements. Gross written premiums increased by 17% and life sales by 5%.  

The company remains focused on launching its bank, which has been delayed to the first quarter of 2025. 

OM Bank has successfully tested its systems with selected industry partners and has been integrated into the National Payments System.

Apart from the delay in launching the bank, Old Mutual also said building out its systems resulted in significantly higher investment. The company allocated R1.3 billion to the bank build for the financial year. 

The bank contributed a net loss to the group of R488 million, with this loss widening significantly from the same period last year.