CFO Casper Troskie accredits Old Mutual results to “combination of right solution sets”
The group’s diverse business model enabled Old Mutual to deliver a solid set of half-year results.
Old Mutual has delivered a solid set of financial results for the six months ended 30 June 2021, with growth in both its sales and earnings, despite the tough economic conditions. The group accredited this success to its diversified business model and strong balance sheet, which has enabled Old Mutual to “consistently demonstrate resilience in the face of great adversity”.
The group added that, during this time, it maintained its focus on driving the recovery of its underlying business activity from the disruptions caused by Covid-19 and the associated hard lockdowns of 2020.
As a result of this recovery strategy, CFO Casper Troskie says the group saw a strong resurgence in revenues and profitability from two of its biggest businesses, being its Mass and Foundation Cluster (MFC) and Personal Finance (PF).
According to Old Mutual, in MFC, issued sales in the first half of the year were above the prior year due to the significant impact that lockdown had on issued sales in 2020. However, sales remain below 2019 levels, given the tough economic environment, but are expected to exceed 2019 levels in the near-term.
In PF, issued sales were above those of the prior year and 11 percent above the first half of 2019.
“We launched a new risk solution set in MFC and PF called Old Mutual Protect,” Casper says. “The launch has been extremely successful and rewarding, given the time and cost it has taken to bring this to market.”
Old Mutual Corporate’s SuperFund umbrella activity also improved relative to the levels seen in 2020, and Value of New Business (VNB) recovered well due to higher sales volumes as well as a shift towards a more profitable mix of new businesses.
The recovery in local and global equity markets positively impacted Old Mutual’s asset base, resulting in closing Funds Under Management (FUM) of R1.2 trillion, six percent up from the end of December 2020. Higher average FUM levels drove higher asset-based fees for the period.
Casper accredits this success to “a combination of the right solution sets and focusing on enabling advisers to be more effective in the current environment by enabling them with the right tools to manage their clients”.
Casper explains that Old Mutual remains very well capitalised and is continuing to focus on selective investments in its core business, digitalisation, simplification, increasing its distribution footprint, expanding its transactional capability and in achieving scale in selected markets in Africa.
“We have also announced the unbundling of a large part of the stake we hold in Nedbank and hope to include this unbundling in the fourth quarter of this year,” he says, adding that this will help to substantially simplify the business.
More vaccinations to battle high Covid-19 claims
Casper says that Old Mutual has also prioritised the payment of claims to its clients over the period and has been able to pay 90 percent of claims within four hours in the funeral space. “We paid R10 billion in mortality claims, fulfilling our commitment to our customers.”
According to the company, its 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 Covid-19 provisions have been increased by R2 billion as at 30 June, to take into account the emerging expectations of wave three and four of the pandemic, as well as potential future waves. “The significant Covid-19 claims in our life businesses drove the negative NCCF [net cumulative cash flow]. These effects were offset, to an extent, by large inflows in Wealth Management and Old Mutual Investments.”
Casper says: “We continue to monitor the impacts of Covid-19 infections and deaths on our business. The rollout of vaccines to our customers remains extremely important in limiting the impact of the pandemic and curb the number of deaths.”
He strongly urged customers and the public at large to get vaccinated. “To this end we have opened vaccination centres to help get both our employees and customers vaccinated.”