Staff Writer

Old Mutual Limited (OML), incorporated in South Africa says it ceased to apply hyperinflation accounting for Zimbabwe for FY2024 following the change in functional currency from ZiG to the US dollar.

Consequently, the group expect reduced transfers to the foreign currency translation reserve in the future.

In a voluntary operating update for the quarter ended March 31, 2025, the group said IFRS profits and headline earnings arising from Zimbabwe are expected to reduce, with no impact on adjusted headline earnings.

“We expect a limited impact on the net asset value of the Zimbabwean business,” reads part of the update.

Zimbabwe’s OML operations falls under the Old Mutual Africa Regions (OMAR) which has a presence in 10 countries, including Zimbabwe.

OMAR earlier in the year said it is well-positioned to drive growth and financial inclusion across the African continent, including Zimbabwe, with a commitment to compliance and governance.

In the update, OML said the global economy continues to experience significant uncertainty with the risk of rising trade barriers reducing demand and triggering new inflationary pressures.

It said global GDP growth showed signs of moderation, with projections for 2025 revised slightly downward.

“In South Africa, investor sentiment was dampened by uncertainty over the stability of the Government of National Unity and the impact of US tariffs on exports.

“Inflation decelerated to 2.7% year-on-year in March 2025, but higher interest rates continue to strain consumer credit affordability, impacting persistency.

“Our Old Mutual Africa Regions markets experienced mixed macro performance in the first quarter of 2025, driven by tariffs, the withdrawal of donor funding, inflationary pressures and currency volatility,” reads part of the statement.

The group’s Life APE sales was marginally lower than the prior period, primarily due to a decrease in guaranteed annuities sales in Personal Finance, in line with the overall market decline resulting from a drop in yields.

The non-repeat of significant savings sales secured in the prior period in Old Mutual Corporate further contributed to reduced sales.

Large corporate sales are lumpy by nature with long and sometimes unpredictable lead times.

“This was partially offset by good risk sales across all distribution channels in Mass and Foundation Cluster as well as strong corporate sales in Old Mutual Africa Regions, particularly in Namibia and Malawi,” the group said.

Gross flows increased by 6% from the prior period and this was mainly driven by strong inflows in Wealth Management across the local and offshore platforms, Private Clients and Cash and Liquidity Solutions.

OML said Old Mutual Africa Regions reported higher asset management inflows into the international US dollar fund in Namibia, following the strengthening of the US dollar.

It said these were partially offset by reduced inflows in Old Mutual Investments, particularly in the Equity and Multi-Asset capability, where the prior period included a large client inflow.

“Additionally, Old Mutual Corporate experienced lower inflows due to the non-repeat of significant savings flows recorded in the prior period.

“Despite good growth in gross flows, net client cash outflow was adversely impacted by significant outflows in Old Mutual Investments and Old Mutual Corporate.”

Old Mutual Investments reported low margin indexation outflows of R6.4 billion from a large offshore investor that continues to restructure their existing investment mandate.

Higher outflows in Old Mutual Corporate were attributable to terminations of R3.6 billion in respect of the exit of unprofitable business on an investment platform.

Loans and advances remained consistent with the prior period, in line with our cautious lending strategy.

Gross written premiums grew by 7%, mainly due to fee increases in Old Mutual Insure, particularly in the Specialty business.

Old Mutual Insure delivered growth of 12% in gross written premiums, with an underwriting margin well above the upper end of our 4-6% target range, coupled with strong investment performance.

“The growing diversity of insurance revenue makes Old Mutual Insure increasingly resilient with respect to claims correlated to climate change.”

In Old Mutual Africa Regions, gross written premiums were lower than the prior period due to lower renewals and the impact of discontinued operations from the Nigeria business, which was disposed of in June 2024 following our perimeter review.

“The launch of OM Bank remains on track, with internal customers actively refining processes and enhancing the service experience ahead of the public rollout later this year,” OML said.

The group noted that amid ongoing economic uncertainty and constrained household disposable income, it has not seen an improvement in Mass and Foundation Cluster persistency and it continue to closely monitor the impact on its economic recovery reserves.

“We will reassess the need to strengthen our persistency basis as at 30 June 2025. The regulatory solvency ratio for Old Mutual Life Assurance Company (South Africa) Limited (“OMLACSA”) remains strong, at the upper end of our target range while the Group shareholder solvency ratio remains well within our target range.”

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