By Lehlohonolo Lehana.
Old Mutual, largest and the most advanced insurer in Africa, on Tuesday (30 August) reported 62% increase in half year profits, against the backdrop of a challenging operating environment.
It said that results from operations increased 87% to R4.1 billion, while gross written premiums were up by 9% to R10.9 billion.
The group, however, recorded a 7% decrease in funds under management driven by lower market levels in South Africa and globally
Chief executive officer, Iain Williamson, said: “I am particularly pleased that this solid set of results is not defined by the impacts of Covid-19. It is also the first set of results which excludes the income associated with our strategic investment in Nedbank, which was unbundled in November 2021.”
Despite weaker market returns, return on net asset value improved to 9.6%, due to the unbundling of Nedbank, he said.
While the group reported a 7% decrease in funds under management, driven by weaker markets and a marginally negative net client cash flow, Old Mutual said it has worked to improve its balance sheet, increasing its solvency ratio by 300 basis points to 187%, within its target range of between 170% to 200%.
“These results are evidence of how we have shifted gears and accelerated growth, maintaining our strategic focus and ensuring that we become our customers’ first choice to sustain, grow and protect their prosperity,” said Williamson.
Looking ahead, we remain alert to the rapidly changing nature of our operating environment, as well as our customers’ changing needs and preferences. In response to this, we have defined four clear focus areas for developing and deploying a number of
new growth engines. These are our East and West Africa businesses, our China joint venture, building an enhanced transactional capability and NEXT176.
“We believe that these investments will be critical to securing sustainable growth and value creation over the long term,” said Williamson.
Last week, Competition Commission raided the offices of eight major insurers it is investigating for possible price collusion.
Discovery Ltd, Old Mutual Insure, and Sanlam are among the companies being probed for possible involvement in collusive practices to fix prices and trading conditions for fees related to investment products such as retirement annuities and premiums on risk-related products.
Old Mutual said it is “co-operating fully” with the investigation.