27th Sep 2023 08:13
(Alliance News) - Old Mutual Ltd said on Wednesday it "performed well" in the first half of 2023 as profit surged and revenue rose on the back of higher new business value, robust gross inflows, and strong insurance premiums.
The Anglo-South African financial services firm said pretax profit surged by 75% to ZAR8.27 billion in the six months that ended June 30 from ZAR4.72 billion a year earlier.
Insurance revenue was up 8.5% to ZAR33.27 billion from ZAR30.65 billion, with gross written premiums growing by 16% to ZAR12.59 billion from ZAR10.89 billion.
Non-insurance revenue was 9.2% higher at ZAR8.28 billion from ZAR7.58 billion.
The company said value of new business rose by 32% to ZAR937 million from ZAR708 million due to strong guaranteed annuity sales and a shift towards higher margin products in Personal Finance and Wealth Management.
Gross flows increased by 17% to ZAR97.72 billion in the recent half-year from ZAR83.39 billion a year before, mainly due to strong flows in Old Mutual Investments driven by higher inflows into money market, fixed income and alternative products, as well as new business secured and higher unit trust sales in East Africa.
But net client cash outflows worsened by 67% to ZAR7.25 billion from ZAR4.33 billion due to large outflows in Personal Finance and Wealth Management, and Old Mutual Investments.
"We delivered solid growth on gross flows and gross written premiums despite the challenging macro-economic environment," Old Mutual said.
Funds under management was ZAR1.300 trillion on June 30, up 5.6% from 1.231 trillion on December 31 and up 9.8% from ZAR1.184 trillion on June 30, 2022. FUM growth was driven by positive local equity market performance, which offset outflows, Old Mutual said.
Old Mutual lifted its interim dividend to 32 rand cents, up 28% from 25 cents.
In the second quarter, Old Mutual launched a share buyback programme to repurchase shares worth ZAR1.5 billion by December 31. It has spent ZAR1.35 billion thus far.
Earnings per share fell by 9.5% to 96.7 cents in the first half from 106.8 cents a year before, while headline EPS eased by 7.7% to 96.8 cents from 104.9 cents.
Looking ahead, Old Mutual expects sales and value of new business to remain robust for the remainder of 2023.
It estimates global economic growth at 2.5% from 2.9% in 2022. Growth in South Africa is expected to slow to 1% this year from 1.9% in 2022, reflecting electricity crisis and depressed confidence.
In Africa Regions, Old Mutual anticipates that the economic environment will continue to present significant challenges across its markets.
Countries such as Malawi, Kenya, and Nigeria, which are in tight fiscal positions, pose material sovereign risk, it warned.
Old Mutual shares were up 4.7% to 54.00 pence in London early Wednesday.
By Artwell Dlamini, Alliance News reporter
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