Old Mutual reports increase in profits

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  • Results from operations up 52% to ZAR2.68 billion
  • Life APE sales were 6% ahead of the prior year
  • Gross written premiums increased by 6% to ZAR8.43 billion

JSE-listed financial services group, Old Mutual Limited released a voluntary operating update for the period ended 31 May 2021 (year-to-date), showing an increase in profit while loans and advances continue to be depressed.

“Profitability for the year to date has improved compared to the same period in the prior year as a result of higher asset-based fees due to an increase of 13% in average Funds Under Management (FUM), closing FUM at the end of May was 17% above May 2020 levels,” the Group said.

Also impacting the increase in profit was an improved credit experience due to a deliberate focus on tightening of credit criteria and more selective offers to customers in Old Mutual Finance in South Africa, the non-repeat of the negative mark to market losses in Old Mutual Investments, and significant level of COVID-19 business interruption and rescue claims in Old Mutual Insure.

“We remain on track to deliver our cost-savings target of R750 million at the end of 2022,” said the Group.

Results from operations scaled up 52% to ZAR2.68 billion compared to ZAR1.76 billion recorded in the prior year’s comparative period.

Life APE sales were 6% ahead of the prior year due to the positive recovery of productivity levels as observed in issued sales volumes.

Gross Written Premiums increased by 6% to ZAR8.43 billion from ZAR7.98 billion reported in the previous year’s corresponding period.

“Good customer retention and pleasing acquisition rates in Rest of Africa, as well as growth across most lines in Old Mutual Insure, has driven the increase in Gross Written Premiums compared to the prior year,” the Group said.

Meanwhile, the decrease in Loans and Advances continue to be a function of a decline in disbursements due to footfall in retail branches in South Africa and Rest of Africa, which has not yet fully recovered to pre-COVID-19 levels, and the further tightening of credit criteria in Old Mutual Finance as part of managing risk appetite in the current environment.

In relation to the COVID-19 pandemic, the Group said: “We continue to closely monitor the impact of COVID-19 on our claims experience. Our claims experience is in line with expected claims levels assumed in the December 2020 pandemic reserve, set up for the anticipated impacts of COVID-19 in 2021.

“At this stage, it is too early to determine whether additional provisions will be required at the end of H1 2021.

“The reserve will be assessed at 30 June 2021, taking into account the possibility of further waves and other developments relating to the pandemic.”

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