Old Mutual said its sales and earnings recovered in the six months to June 30, notwithstanding a R2 billion additional provision for Covid-19 related mortality claims.

The life assurance and financial services group said in a trading statement yesterday that mortality claims paid relating to Covid-19 in the group’s life businesses for the six months to June 2021 had been more than anticipated, and were driving negative Net Client Cash Flows.

However, this was offset by inflows in the Asset Management and Wealth businesses.

“Our mortality experience has been worse than anticipated, with impact on profits mitigated by a partial release of provisions raised at the end of 2020.”

The group’s Covid-19 provisions were increased by R2bn as at June 30, 2021, to take into account emerging expectations of wave 3 and 4 as well as potential future waves.

Old Mutual’s adjusted headline earnings a share were expected to increase by between 65 to 75 percent to 61.6 cents and 65.3c per share, from 37.3c at the same time last year. The interim results will be released on August 31, 2021.

The group said productivity levels in its South African retail segments, Mass and Foundation Cluster and Personal Finance, had materially improved in the first half. “There has been a strong customer take-up in the Old Mutual Protect proposition, which has seen rapid growth supporting the recovery in risk sales.”

In the Mass and Foundation Cluster, sales in the first half were above the comparative period due to the significant impact that lockdown had on issued sales in 2020. This was supported by improved credit experience in the banking business.

Personal Finance had higher single and recurring premiums, driven by an increase in productivity. In Old Mutual Corporate, Super-Fund umbrella quote activity improved.

The recovery in local equity markets with positive flows in the Asset Management business had benefited Old Mutual Investments.

In Rest of Africa, digital channels were being upgraded to improve customers’ experience and to provide connectivity support to enable intermediaries to work remotely.

Old Mutual said that although local and foreign markets had rallied ahead of pre-Covid-19 levels, the environment remained volatile as the challenging impact of the pandemic was navigated.

In Old Mutual Insure, business interruption claims paid in the first half were offset by the reserves raised at the end of 2020.

There was a turnaround in the Credit Guarantee Insurance Corporation business profitability due to large Covid-19 related claims in the prior year that did not repeat, as well as lower attritional claims in the current year.

Old Mutual’s share price closed 4.16 percent higher at R14.27 on the JSE yesterday.


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