In a recent voluntary operating update for the period ending September 30, 2023, Old Mutual Limited, a prominent financial services group in South Africa, has reported continued sales momentum in South Africa and its African regions despite facing economic challenges globally and locally.
Global growth has showcased resilience in 2023, with China’s economy exceeding expectations in the third quarter. However, the South African landscape has not been without its challenges, with loadshedding remaining a key focus. Collaborative efforts between the government and the private sector have yielded a reduction in loadshedding during the fourth quarter.
Old Mutual has demonstrated a robust performance, positioning itself for growth despite severe currency depreciation against the USD, dollar shortages, high inflation, and elevated interest rates in the markets it operates in.
Table 1: Financial Key Performance Indicators (R millions unless otherwise stated)
|Key Performance Indicators
|30 September 2023
|30 September 2022
|Life APE Sales
|Net Client Cash Flow
|Loans and Advances
|Gross Written Premiums
Excluding China, Life APE sales recorded a remarkable 13% growth relative to 2022 and an impressive 23% growth relative to 2021. This growth has been attributed to solid risk sales, higher credit life sales, and improvements in productivity levels.
Excluding China, Life APE sales saw strong growth of 13%, while gross flows increased by 8% from the prior period. In the Mass and Foundation Cluster, sales were boosted by solid risk sales across all retail channels and higher credit life sales. Positive sales momentum in Personal Finance contributed to growth, driven by strong single premium guaranteed annuity sales and higher recurring premium savings sales.
Old Mutual Africa Regions delivered robust retail and corporate sales, mainly due to new business, renewals, and improved productivity in East Africa. Including China, the overall increase was 4%, considering the prior period included certain savings product sales in China’s broker channel, which were discontinued in anticipation of regulatory changes.
Despite challenges, there was strong growth in net client cash flow in Mass and Foundation Cluster, Personal Finance, and Old Mutual Africa Regions. However, significant outflows were experienced in Old Mutual Investments and Wealth Management, driven by clients requiring liquidity in challenging economic conditions.
The marginal growth in loans and advances in Mass and Foundation Cluster was in line with a cautious lending strategy. This was partially offset by a decline in the loan book in Old Mutual Africa Regions due to the depreciation of the Kenyan shilling against the rand.
Gross written premiums grew by an impressive 15% from the prior period, driven by new business growth, premium increases, and renewals across all divisions in Old Mutual Insure. The acquisition of Genric Insurance Company Limited also contributed to this growth. Excluding Genric Insurance Company Limited, gross written premiums grew by a solid 11%.
In Old Mutual Africa Regions, new business secured across all regions and improved renewals in both the medical and general insurance books in East Africa contributed significantly to the growth in gross written premiums.
Casper Troskie, Group Chief Financial Officer of Old Mutual Limited, is set to reach the company’s normal retirement age in April 2024. The company’s board has announced an agreement with Mr. Troskie to extend his employment contract for one year until the end of April 2025. This extension is strategic, allowing for at least one supplementary financial reporting cycle under the new insurance accounting standard, IFRS 17. The process to appoint a suitable candidate as Mr. Troskie’s successor has already commenced.
Old Mutual Limited’s voluntary operating update reflects a company navigating through economic challenges with resilience and strategic planning. Despite the obstacles posed by currency fluctuations, inflation, and interest rates, the company’s diversified business segments, strategic decisions, and strong sales trajectory position it for continued growth in the future. Investors and stakeholders are encouraged to participate in the upcoming conference call to gain deeper insights into Old Mutual’s performance and strategic direction.