South African insurance giant takes a R2 billion hit from Zimbabwe

Old Mutual expects a significant decline in earnings after its Zimbabwean business saw a R2.2 billion decrease in profits.

This impact offset strong organic growth from Old Mutual’s other business units, including a solid performance from Old Mutual Insure.

Old Mutual is an African financial services group that operates across 12 countries. It is listed on the JSE with a market cap of R64 billion.

On Tuesday, 26 August, the company released a trading statement for the six months ended 30 June 2025, which revealed a mixed performance.

In this statement, Old Mutual explained that its earnings benefited from the share repurchase programme the company implemented in 2024.

In addition, the insurer said growth in its results from operations was primarily driven by exceptional growth in Old Mutual Insure and the impact of favourable financial markets. 

These upcoming results will also benefit from a lower base in the prior period, as the first half of the company’s 2025 financial year included once-off adverse mortality experience in Personal Finance and an impairment of a secured loan in Mass and Foundation Cluster. 

The company noted that growth was partially offset by the negative impact of a persistency basis change in Mass and Foundation Cluster and higher central costs, which include a once-off restructuring provision incurred to reduce future spending.

Old Mutual added that its adjusted headline earnings growth was further bolstered by increased shareholder investment returns as a result of improved performance in the South African and Malawian equity markets, which were considerably above expected returns.

South African equity markets are experiencing a strong year, with the JSE Top 40 having outperformed the S&P 500 in rand terms in 2025 year-to-date.

The MSCI South Africa index has also outperformed many other MSCI regions, including MSCI World and MSCI Emerging, in the year-to-date.

Despite this strong performance, Old Mutual’s H1 2025 results are expected to take a significant hit from its Zimbabwean operations.

This business unit experienced a R2.2 billion decrease in profits as Old Mutual implemented a change in functional currency from Zimbabwe Gold to the United States dollar from 1 July 2024.

The company explained that, while this resulted in lower earnings, it had a limited impact on net asset value due to lower currency translation losses reflected in equity. 

Therefore, Old Mutual expects the following changes in its earnings and other results for the six months ended 30 June 2025. Note that adjusted headline earnings do not include Old Mutual’s Zimbabwean operations.