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- Old Mutual declared a final dividend of 49 cents a share after tax profit attributable to shareholders rose 35% to R7.07 billion.
- Old Mutual Insure underperformed due to adverse weather events in Gauteng and the Western Cape, while the group's investment unit also saw profit slip in the 2023 financial year.
- Old Mutual Africa Regions again shot the lights out with a 74% spike in profit driven by non-SADC markets.
- For more financial news, go to the News24 Business front page.
Old Mutual's share price jumped on Wednesday morning after the group declared a final dividend on the back of strong 2023 financial results that saw most of its underlying business units deliver a rise in earnings.
Nevertheless, Old Mutual Insure underperformed during the financial year due to adverse weather events in Gauteng and the Western Cape, while the group’s investment unit also saw profit slip on the back of financial market vagaries.
The group's share was up 4.6% at R11.93 per share in early morning trade after it announced a final dividend of 49 cents a share for the year to end-December. This, along with its 32 cents a share interim dividend, took its total shareholder distribution for 2023 to 81 cents a share. After tax profit attributable to shareholders rose 35% to R7.07 billion for the year to end-December while headline earnings were up 35% at R7.38 billion.
"We’re delighted – it’s a really robust operational and financial performance," Old Mutual CEO Iain Williamson told News24. "We see the topline growth that we’ve achieved, with margin expansion, as a critical proof point that the strategic choices we’ve made are right. The strategy is really built around building out our integrated financial services capability and utilising our competitive strength in distribution and digital engagement to drive that."
The Cape Town-headquartered insurance and investment group's 2023 results were characterised by a strong performance by most of its business segments, though its insurance and investment units underperformed. Williamson said the group demonstrated a strong ability to generate new sales in a tough environment, with the value of new business rising 37% in the year alongside a corresponding increase of 10 basis points in the value of new business margin.
The group's strategically important Mass and Foundation Cluster delivered a 183% jump in profits to R1.39 billion, largely driven by the underwritten life sales available through Old Mutual Protect, which serve SA’s entry-level market. Personal Finance and Wealth Management lifted profit by over 19% to R2.69 billion while Old Mutual Corporate increased profit by 49% to R1.22 billion.
Old Mutual Africa Regions put in another stellar showing with a 74% spike in profits to R3.61 billion driven by its presence in non-SADC markets. The rest of Africa segment operates in 12 countries across southern, east and west Africa.
On the downside, Old Mutual Insure suffered a 32% profit slump to R331 million, while Old Mutual Investments saw profit fall 22.3% to R688 million. Williamson said the root cause of Old Mutual Insure's underperformance was a decline in underwriting margin caused by flooding in the Western Cape and hail in Gauteng.
"You’ll see that pattern across the short-term insurance industry, particularly for those players who have big personal lines books – think household and car cover for the man in the street," said Williamson.
"That business was under a lot of pressure from a claims perspective mainly because of weather – floods in the Western Cape….and both hail and flooding in Gauteng. The other work we need to do in Old Mutual Insure is to get the efficiencies right – their expense ratio is too high."
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Williamson said Old Mutual Investment's profit drop was affected by non-annuity revenue, which was negatively impacted by marking to market the value of certain assets managed by the group, though he said he was not overly concerned.
"We had some credit impairments on our proprietary credit book in 2023 – that line can be a bit volatile," he said, adding:
Williamson said he was very confident of the future growth prospects of Old Mutual's private markets business, which is the biggest in SA and invests in unlisted assets like infrastructure, wind and solar energy projects, student housing and toll roads.
The group also booked a R2.3bn loss for what it calls "other group activities and intercompany eliminations" – an accounting entry that relates to management of its capital structure and intra-company activities. Though that was 69% wider than the R1.36 billion loss entered for the same accounting entry in the 2022 financial year, it has to be remembered that Old Mutual bought back R1.5 billion in shares in the second-half of 2023 to return capital to shareholders.
"Our market share gains in core lines of business; profitable growth; strong cash generation and sustainable headline earnings places us on a firm footing to continue, responsibly, building the most valuable business in our industry," said Williamson.
