Old Mutual’s balance sheet remains robust amid economic uncertainty

The Zimbabwe Stock Exchange listed Old Mutual Limited reported a 3% increase in adjusted headline earnings for the six months ended June 30, 2024, driven by robust shareholder investment returns and improved performance in South African equities.

The financial services group’s adjusted headline earnings per share rose 7% to 73.5 cents, bolstered by a R1.5 billion share buyback executed in 2023. Return on net asset value increased by 70 basis points to 12.6%.

Life sales grew 6% to R6.7 billion, while gross written premiums increased 9% to R13.8 billion. Funds under management rose 5% to R1.4 trillion.

Despite a challenging operating environment, Old Mutual’s balance sheet remained robust with a Group shareholder solvency ratio of 188%.

The company declared an interim dividend of 34 cents per share, representing 6% growth and a dividend cover of 2.0 times.

CEO Iain Williamson expressed pride in the group’s progress, citing successful completion of industry testing and integration of OM Bank into the National Payment System.

“Our South African bank initiative, OM Bank, remains a key priority of our strategy to build an integrated financial services business,” he said.

“The technical and operational progress is ahead of schedule, with successful industry testing and integration into the National Payments System already completed.

“Pending the remaining Section 17 regulatory conditions, unrelated to technical readiness, we anticipate the public launch in Q1 2025.

“For the rest of the year, we are focused on meeting the remaining Section 17 conditions and continue refining systems and capabilities to ensure a seamless launch.

“Across our Africa regions, the execution of our perimeter review supported disciplined capital allocation and shareholder value creation. We concluded the exit of the life and general insurance lines of business in Nigeria and Tanzania.

“The turnaround in Property and Casualty in Southern and East Africa supported by actions to improve claims management and experience-based pricing led to improved underwriting margins in these regions.

“This was more than offset by a negative net underwriting margin in West Africa. Excluding Nigeria there was improvement in the net underwriting margin.

“Our ‘pivot to corporate’ strategy continues to yield results with increased profitability in our Life insurance business across East and West Africa.”

Old Mutual’s outlook for H2 2024 remains cautiously optimistic, with expected growth in South Africa and improved economic environments in East Africa.

“The outlook for our Africa regions suggests a challenging yet slightly improved economic environment.

“Growth for Sub-Saharan Africa is expected to rise to between 3.5% and 3.7%, reflecting gradual recovery despite continued elevated debt levels, high inflation, external financing pressures and climate change impacts in some parts of the regions,” Williamson stated.

“East Africa’s economies are showing resilience with growth projected at approximately 5.1% in 2024, while inflation is likely to moderate by the end of the year.

“We expect fiscal risks in East and West Africa to remain largely contained either through debt restructuring or recourse to debt markets.”