Old Mutual registers further losses despite withstanding COVID-19 effects

  • RFO down by 33%
  • Loan and Advances in the quarter grew to R23 039 million
  • The Group has experienced minimal COVID-19 related disruptions to its business operations

Harare – Dual-listed Old Mutual Limited’s profits have remained on a downward trajectory which saw the Group registering declines in the first quarter of 2020 (Q1 2020).

Results for the first quarter ended 31 March 2020 show that the Group’s RFO decreased by 33% from R1 835 million in the prior comparable period to R1 227 million.

The decline has been attributed to lower asset-based fees and negative fair value movements on unlisted equity and credit portfolios in Wealth and Investments.

In addition, lower life sales volumes not sufficient to cover fixed distribution related costs, deterioration in underwriting experience in Old Mutual Corporate and the impact of poor persistency and higher credit losses, specifically in Mass and Foundation Cluster have also contributed to the decline in profits.

The decline in the Group’s profits has carried on from the 2019 financial year which saw a 78% contraction in the Group’s profit from R42.7 million in the prior year to R9.6 million.

 Q1’s decline was however partially offset by improved underwriting experience in Old Mutual Insure compared to significant catastrophe losses in the prior year.

Loan and Advances in the quarter grew by 2% from R22 684 million in Q1 2019 to R23 039 million with deliberate slowed disbursements to manage credit risk.

In light of the COVID-19 pandemic which has disrupted business operations across the globe, Old Mutual said it has experienced minimal disruption to its business operations, with the exception of its distribution processes where the disruption levels have been higher.

“We were able to successfully mobilise and enable the majority of our employees to work from home and this has allowed us to continue to serve our customers”, the Group said.

As part of efforts to help customers and communities in dealing with the effects of the pandemic, the Group has taken a number of steps that include, the offering of ZWL$2 billion life insurance cover to health professionals on the frontline of the fight against COVID-19 in Zimbabwe while R4 billion worth of free life cover has been made available to approximately 430 000 registered healthcare workers across South Africa.

Also, the Group is providing ongoing customer relief such as premium payment holidays, premium discounts, delays in annual rate and fee reviews and grace periods for loan repayments among others relief measures.

Old Mutual Limited has a primary listing on the Johannesburg Stock Exchange (JSE) and a secondary Zimbabwe Stock Exchange listing (ZSE).

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