South Africa’s second-largest insurer Old Mutual posted double-digit growth in profits, on the back of a decrease in the effect of the Covid-19 pandemic, following a high claims environment over the last few of years.
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Old Mutual said headline earnings rose 10% to R7.9 billion for the year through December 2022, up from R7.2 billion in the previous reporting period. Headline earnings per share (Heps) also increased 10% to 180.1 cents per share, compared with 163.8 cents per share in the prior year.
The insurer said profits benefitted from lower mortality claims as the Covid-19 pandemic and its effects eased.
“The volatility in our operating earnings caused by the pandemic over the last two years has stabilised in the current year as the ongoing impact of the pandemic became muted … All remaining Covid-19 provisions were released but the impact was mostly offset by the strengthening of our mortality basis to allow for endemic Covid-19 claims,” Old Mutual said.
However, the insurer noted that the challenging economic conditions currently playing out in South Africa continue to impact its retail customers.
During the period, Old Mutual managed to grow gross written premiums by 12% to R22.b billion, while growing new life insurance sales by 10% to R12.5 billion.
Despite the solid set of results, Old Mutual said real income growth was impacted by higher interest rates, inflationary pressures and a slow recovery in employment following the pandemic, as well as the impacts of the civil unrest in KwaZulu-Natal, all of which are affecting consumers’ ability to save and invest in insurance products.
“This downward pressure on disposable income growth, combined with depressed confidence made it difficult for customers to maintain or increase their contributions to protection, savings and investment products,” the company said on Tuesday.
“Our corporate customers’ growth and liquidity levels were also negatively impacted,” it said.
Shares in Old Mutual traded 0.17% higher at R11.70 when the market opened on Tuesday morning.