Due To The Covid-19 Pandemic Old Mutual Has Cautioned A Full Year Loss
Due To The Covid-19 Pandemic Old Mutual Has Cautioned A Full Year Loss. South African insurer Old Mutual warned on Monday of a full-year loss, saying it had been forced to increase provisions and reserves related to the Covid-19 pandemic, sending its shares down more than 3%. “We exercised tight cost control across the business to part mitigate negative earnings impacts,” Old Mutual told Financial Post, adding it had also seen a recovery in sales and productivity in the second half. Old Mutual said its adjusted headline earnings per share (HEPS) would remain positive, but decline by up to 79% to sit between 44 cents and 69.4 cents. It forecast a basic loss per share of between 97.9 cents and 139.5 cents in the year to Dec. 31, and an after-tax loss of up to 6.2 billion rand.
“We exercised tight cost control across the business to part mitigate negative earnings impacts. Despite the impact to earnings, strong gross flows throughout the year drove a significant increase in NCCF demonstrating the resilience of our business. We have observed a good recovery in sales and productivity levels during the second half of 2020, after a significant decline in volumes in the second quarter when the national lockdown was most restrictive.” Old Mutual said in a statement.
Old Mutual, South Africa’s second largest insurance firm, increased provisions by almost 3.4 billion rand as claims outstripped the funds it set aside in the first half amid a second, more severe wave of COVID-19 in South Africa. Combined with counterparty mark-to-market losses and downward revisions to some assets in its unlisted equity portfolios as the second pandemic wave hit markets, these factors drove the impact on profits, Old Mutual told Financial Post.
Old Mutual is a premium African financial services group that offers a broad spectrum of financial solutions to retail and corporate customers across key markets segments in 14 countries. Old Mutual’s primary operations are in South Africa and the rest of Africa, and it has a niche business in Asia. With over 175 years of heritage across sub-Saharan Africa, it is a crucial part of the communities it serves and the broader society on the continent.
