23rd Mar 2021 06:11
(Alliance News) - Old Mutual Ltd on Tuesday said it fell into loss in 2020 amid a slump in revenue and the hefty cost of Covid-19.
The Anglo-South African financial services firm swung to a pretax loss in 2020 of ZAR3.27 billion from ZAR13.80 billion in profit a year prior. This was off of revenue and other income of ZAR146.53 billion, sinking 17% from ZAR176.12 billion.
Gross insurance premium revenue increased, however, by 1.0% to ZAR81.57 billion from ZAR80.76 billion.
Costs related to Covid-19 amounted to ZAR6.08 billion.
"2020 was one of the most challenging years our organisation has ever faced," said Chief Executive Iain Williamson.
"Our business remained well capitalised through decisive management actions and our liquidity position was strong, despite the material negative impact Covid-19 had on our earnings. The fundamentals of our business were tested through this extreme scenario, but we remained true to our purpose of championing mutually positive futures every day and our diversified business model enabled us to demonstrate resilience in this environment."
Old Mutual declared an annual payout of 35.00 rand cents per share, down 53% from 75.00 cents in 2019.
Going forward, Old Mutual said: "We will complete the rollout of Old Mutual Protect to our alternative channels. Our expansion into the funeral services industry was negatively impacted by the pandemic but we will continue to pursue this to access more customers and have end to end value chain capabilities. Various initiatives remain in place to deliver cost savings in the short term and shape future spend. We will continue to invest in alternative channel capabilities to reduce the level of dependency on our adviser force. Growing our rewards base and expanding our offering will remain a key focus as we continue to give value back to our customers whilst rewarding and driving good financial behaviour."
Old Mutual sees a third wave of Covid-19 infections coming in the approaching winter months in South Africa, and has therefore increased its Covid-19 pandemic reserve to cover expected excess deaths before the government's vaccination efforts take effect.
Old Mutual said that ultimately the rate of economic recovery will determine when sales will return to prior year levels.
By Greg Roxburgh; [email protected]
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