Old Mutual expects double-digit profit jump on lower mortality rates

Life insurance group Old Mutual expects to report double-digit growth in headline profits for the year ended December 2022, as the company saw lower mortality rates on the back of the Covid-19 pandemic easing.

In a voluntary trading statement to shareholders on Friday, Old Mutual said it expects headline earnings per share (Heps) to increase 20% to 195.7 cents, compared to 163.8 cents per share for the prior full-year.

Heps is the main profit measure for most companies listed on the JSE in South Africa.

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“All remaining Covid-19 provisions were released but the impact was mostly offset by the strengthening of our mortality basis to allow for endemic Covid-19 claims, and worsened persistency as the challenging economic conditions continue to impact our retail customers,” Old Mutual said.

The company added that it expects adjusted headline earnings to increase between 7% and 27%, or between 5 791 cents per share and 6 871 cents per share.

The adjusted earnings exclude its Zimbabwe operations, which contended with challenges such as currency deterioration.

“The movement in headline earnings and adjusted headline earnings relative to the prior year was primarily driven by [a] substantial improvement in operating profits, partially offset by the deferred tax associated with the unbundling of Nedbank in the prior year and the decline in Zimbabwe earnings,” Old Mutual noted.

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In 2021 Old Mutual unbundled a portion of its shareholding in Nedbank, which was historically part of its strategic equity investments. The now distributed 12.6% stake it held in the bank contributed R646 million of the R5.4 billion it achieved in adjusted headline earnings.

“Excluding the impacts of Nedbank, adjusted headline earnings [are] expected to be between 23% – 43% up,” the insurer and financial services group said.