OLD MUTUAL sales and earnings recovered well in the year to December 31 as Covid-19 restrictions eased and despite higher than expected mortality claims that had a negative impact on earnings, CEO Iain Williamson said yesterday.
Results from Operations (RFO) more than doubled to R4.4 billion. RFO, excluding the impacts of Covid-19, was up 18 percent compared to the prior year, driven by recoveries across all divisions, he said.
Net income of R6.66bn swung around from a R5.1bn loss a year before. A final dividend of 51 cents was declared.
Williamson said through the year the group had returned R13.3bn in capital to shareholders through dividends and the unbundling of 12.2 percent of Nedbank in November 2021. The focus on returning capital to shareholders would continue, he said.
He said that in spite of a subdued economic outlook, the long term insurer and financial services group’s management were confident of delivering their medium-term targets.
“Our balance sheet remains well capitalised with strong liquidity,” he said.
The focus for 2022 was “putting our customers first”, and consolidating and simplifying systems that were a barrier to an agile business, through technology and partnerships, he said.
Gross flows increased 4 percent to R194.8bn due to strong inflows in Old Mutual Investments and Wealth Management. Life APE sales increased 16 percent to R11.4bn due to a strong recovery in sales following improved productivity levels.
Good traction was reported in the take-up of new solutions, particularly Old Mutual Protect, which supported the group’s recovery in the recurring premium business, replacing its previous flagship risk product, Greenlight.
Net client cash flows declined to R0.1bn from R9.6bn, mainly as a result of Covid-19 related mortality claims from the Life businesses and lower inflows compared to the prior year in the Rest of Africa segment.
In South Africa, the retail segments paid about R13bn in mortality claims.
Value of new business (VNB) grew to R1.3bn from R621m in 2020 due to strong new business sales.
Excess mortality claims amounted to R6.8bn, for which R5.3bn was released from pandemic provisions, partially offsetting the impact on group profit. Some R2.9bn in pandemic provisions remained to be utilised against future Covid-19 related claims.
In the Mass and Foundation Cluster, RFO (excluding Covid impacts) increased more than 50 percent enabled by more streamlined tied channels and a focus on advised and non-advised products, which lifted productivity.
The Personal Finance business had an outstanding year outside pandemic claims, with sales exceeding 2019 levels.
Williamson said the group had paid about R21bn in claims in its Life Businesses in South Africa.
A New Growth and Innovation Office had been established to enhance competitive advantage by focusing on new solutions and capabilities adjacent to the core business.
Old Mutual’s share price fell 1.31 percent to R12.83, a level barely moved from the R12.44 share price 12 months ago.
BUSINESS REPORT ONLINE