Old Mutual doubles profits on increased policy sales

Insurance giant Old Mutual has reported a 41 per cent increase in headline earnings per share for the year ended 2021, showcasing a strong recovery despite ongoing challenges. CEO Iain Williamson sat down with CNBC Africa to provide insight into the company's performance and future outlook. The impact of the COVID-19 pandemic was still felt in 2021, primarily affecting the claims line. Old Mutual paid out 13 billion Rand in COVID-related death claims to customers during the year, impacting profitability to a lesser extent compared to 2020. Despite this, the front end of the business saw significant growth in sales and revenue. Sales volumes increased, leading to a substantial rise in the value of new business, which more than doubled from the previous year. This growth was particularly driven by the South African retail business, reflecting a positive trend for the company. While the value of new business showed strong performance, Old Mutual has yet to reach pre-pandemic levels in some sectors. Williamson acknowledged that work still needs to be done in the corporate business and mass foundation cluster. However, he expressed optimism that these units would meet and surpass 2019 levels in the near future. The company also fell short of its return on equity targets due to the impact of COVID claims, but aims to consistently deliver returns exceeding the cost of equity moving forward. Regarding business interruption claims, Old Mutual had less exposure compared to competitors and had settled approximately 80% of claims with the remainder in progress. Looking ahead, Williamson discussed the challenges posed by the July riots and inflation pressures in South Africa. Old Mutual has responded by re-evaluating risk cover, especially in high-risk areas where prices may be adjusted accordingly. The CEO emphasized the need to monitor inflation's impact on customers' ability to afford insurance and services. With South Africa's economy facing uncertainties amidst global events, including the crisis in Ukraine, some sectors are expected to flourish while others may struggle. Williamson highlighted the importance of navigating these changes to ensure the company's resilience and continued growth. In conclusion, Old Mutual remains focused on adapting to evolving market conditions, addressing customer needs, and enhancing overall business performance. Despite the challenges faced in 2021, the company's strategic initiatives and commitment to delivering value to shareholders and customers position it for sustainable growth in the future.