Old Mutual is opting to preserve capital and deferred its decision on a first-half dividend due to high levels of uncertainty caused by the coronavirus pandemic.
- Profit excluding one-time items fell 67% in the six months through June, Johannesburg-based Old Mutual said in a statement Tuesday. Earnings from the South African insurer’s operations, excluding accounting charges and the effect of Covid-19, fell 4% from the prior year.
- The company, which also manages mutual funds and provides loans, is withdrawing previous guidance and will instead provide targets that are “more appropriate for measuring our progress as we transition the business through the crisis,” possibly in the second half.
- Old Mutual’s decision on its dividend comes after South Africa’s Prudential Authority urged firms to grow reserves ahead of payments to shareholders. It will revisit this decision for the full-year when it has more clarity regarding possible economic scenarios in the wake of the virus.
- The financial-services company forecast that full-year profit will decline more than 20%, although it will only be able to give more detail once there’s increased clarity on the outlook.
- Old Mutual will focus on improving productivity from its advisers in the second half after a lockdown to contain the spread of the virus hindered output.
- A sales slump and an increase in business-interruption and funeral claims as a result of the lockdown also weighed on the insurer’s profit.
- South Africa’s oldest insurer headed into the coronavirus crisis following a protracted legal fight with its former chief executive officer. Since being appointed permanently in July Iain Williamson, who has spent almost three decades at the company, has had to deal with turmoil surrounding its Zimbabwe listing.
- Old Mutual’s shares have fallen 43% this year, compared with a 29% drop in the five-member FTSE/JSE Africa Life Insurance/Assurance Index.
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