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Old Mutual Reports Strong Growth and Strategic Advancements

Old Mutual Group Interim Results Announcement

Old Mutual Group has demonstrated strong revenue growth and solid profits in its interim earnings report for the period ending June 30, 2024. CEO Iain Williamson highlighted significant strategic advancements, with key financial indicators showing marked increases. Life Annual Premium Equivalent (APE) sales rose by 6%, gross written premiums for short-term insurance grew by 9%, and funds under management expanded by 5%.

Adjusted headline earnings per share increased by 7%, and the Board declared an interim dividend reflecting a 6% rise. A ZAR 1 billion share buyback for 2024 has been approved, subject to regulatory clearance. The launch of OM Bank is slated for the first quarter of 2025, in line with ongoing digital modernization initiatives.

Key Highlights:

  • Life APE sales grew by 6% to ZAR 6.6 billion.
  • Gross written premiums for short-term insurance up by 9% to ZAR 13.8 billion.
  • Funds under management increased by 5% to ZAR 1.4 trillion.
  • Adjusted headline earnings per share rose by 7% to ZAR 0.735.
  • Interim dividend declared at ZAR 0.34, a 6% increase.
  • Return on net asset value improved by 70 basis points to 12.6%.
  • A ZAR 1 billion share buyback is approved, pending regulatory approval.
  • OM Bank is expected to launch in Q1 2025.
  • Achieved an AA ESG rating and BEE Level 1 rating.
  • Underwriting profitability in Old Mutual Insure has significantly improved with gross written premiums up 10%.

Company Outlook:

  • The launch of OM Bank is anticipated in Q1 2025.
  • Digital modernization and portfolio optimization initiatives are underway.
  • The company remains hopeful about a gradual recovery in the macroeconomic landscape, particularly in South Africa.

Challenges:

  • Sales growth in H1 2024 faced difficulties due to a large non-repeat premium deal from the previous year.
  • The Value of New Business (VNB) margin decreased by 70 basis points to 2.4%.
  • Shareholder solvency ratio slightly decreased from 190% to 188%.

Positive Developments:

  • Robust profits across the portfolio.
  • Enhanced underwriting profitability in Old Mutual Insure, with Gross Written Premiums up 10%.
  • A 5% increase in life sales in the Africa Regions, despite currency depreciation challenges.

Shortcomings:

  • Results from Operations (RFO) dropped to ZAR 4.2 billion.
  • New business value decreased by 8% to ZAR 858 million.

Q&A Session Highlights:

  • The reduced asset management valuation is linked to a change in the valuation methodology.
  • The discretionary capital balance stands at ZAR 1.4 billion, not including a pending ZAR 2 billion special dividend.
  • Comments regarding the one-off impairment from a single counterparty highlighted the significance of managing risk.

In conclusion, Old Mutual Group has displayed resilience and growth in its interim results, showing promise for the forthcoming launch of OM Bank alongside continued strategic investments. The company’s commitment to boosting its stature within the competitive financial services sector is underscored by its multi-channel distribution strategy and modernization initiatives. Despite facing certain challenges, its financial metrics reflect strong cash generation and enhanced shareholder returns, positioning the company favorably for future growth.

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