• Significant decline in Zimbabwean earrings for the period ended 30 September 2022.
  • Life APE sales increased by 17% from 8.1 billion.
  • Gross flows declined by 7% from 146.6 billion.

Old Mutual Limited has experienced difficult global macroeconomic conditions that have impacted the operating environment across all countries in which it operates. In the Zimbabwean market, the economic climate continues to be volatile due to escalating inflation rates and a depreciating currency. These factors have resulted in increased financial pressure on customers.

Due to the ongoing impact of hyperinflation on the Zimbabwean economy, the company has to exclude the results of the Zimbabwe business from adjusted headline earnings. The Group headline earnings for the current period was lower than the prior period due to the significant decline in Zimbabwe earnings. This was largely driven by the deterioration of the Zimbabwean dollar to the rand, the currency depreciated from a closing exchange rate of 1 ZWL$: 0.1369 ZAR on 30 September 2021 to a closing exchange rate of 1 ZWL$: 0.0278 ZAR for the period ended September 2022.

In the period ended 30 September 2022, The company’s Life APE sales across all operating regions were up by 17% from a base in the prior period of 8,1 billion. Sales in the current period benefitted from strong issued sales across all channels.

Gross flows declined by 7% as the prior period included new Liability Driven Investment mandates together with flows into the money market and corporate cash products in Old Mutual Investments which did not repeat in the current period. Strong flows from Old Mutual Africa Regions as well as significant flows into new deals secured in Old Mutual Investments and Old Mutual Corporate in the third quarter contributed positively to flows. This was partially offset by lower flows in Personal Finance and Wealth Management due to lower guaranteed annuity sales and reduced demand for offshore investments.

Despite the decrease in gross flows, net client cash flow recovered from the prior period due to reduced mortality claims across the life businesses and lower client disinvestments and terminations.

Funds under management were negatively impacted by market volatility due to the weaker performance of local and global equity markets.

There has been no significant movement in loans and advances compared to the prior period. However, Old Mutual Africa Regions remain under pressure with lower disbursements due to tough economic conditions.

Strong growth in gross written premiums was supported by higher renewal rates and new business sales in Old Mutual Africa Regions coupled with good premium growth in the Specialty division of Old Mutual Insure.

Results from operations were above the prior period, mainly driven by improved profits in life businesses resulting from lower COVID-19 excess deaths in the current period. Despite market volatility, Old Mutual Investments delivered higher asset-based fees due to higher average asset levels which positively impacted profits.

The company’s central costs were above the prior period due to new development costs and license application costs related to transactional capabilities.

The company’s discretionary capital, which represents the surplus assets that are available for distribution for the current period, was R3.5 billion. The discretionary capital balance on 30 September 2022 includes amounts earmarked for investments in growth and innovation initiatives including building our transactional capabilities which will enable us to responsibly build the most valuable business in our industry.

The Residual plc board has approved a dividend of GBP39 million, which is expected to be paid to the Group before the end of 2022. The dividend will increase the discretionary capital for the Group.

The company’s balance sheet remains well capitalized with a Group solvency ratio within the target range.

The company remains on track to achieve its cost savings target of R750 million, with savings of more than R700 million achieved for the period ended 30 September 2022.

The value of the new business margin remains within the medium-term target range of 2% to 3%.