Old Mutual Limited sales shows signs of resilience

Old Mutual Limited sales shows signs of resilience

Staff reporter

HARARE, Old Mutual Limited says operating conditions across its businesses have remained challenging during the second half of 2020 although its volume related key performance indicators (KPIs) have shown recovery, demonstrating the resilience of the franchise.

In a preliminary trading update for the year ended 31 December 2020, OML said its gross flows for the period were R188 billion, 10% up on the prior year.

“Positive NCCF of R10,1 billion is R7,0 billion higher than the prior year, driven by strong investment flows across the Group in the second half of the period, which were partially offset by higher outflows in Old Mutual Corporate as a result of the deteriorating economic environment.

“We have also seen continued improvement in adviser productivity with sales trending towards historic levels,” OML noted

Whilst there are encouraging signs of recovery in our sales metrics OM said it was concerned about the rapidly increasing rate of COVID-19 infections in its key geographies and the impact that the pandemic could have on its customers, economic recovery, and mortality rates.

“We are currently in the process of finalizing our life reserves, considering the global experience of the impact of the pandemic and the potential of a more sustained spread of the virus. There remains a large degree of variability in the data and we are monitoring infection and mortality related claims data on a weekly basis. We expect to communicate the outcome in the near term.,” said OM

Meanwhile following a lengthy period of legal uncertainty, OM advised its shareholders that Old Mutual Insure has commenced the process of finalizing all outstanding valid claims for business interruption for affected customers.

The complex question as to whether customers with business interruption extensions for infectious and contagious diseases are entitled to cover for the COVID-19 pandemic and the related government enforced national lockdown has been the subject matter of several court cases.

“The recent rulings on this matter by the Supreme Court of Appeal of South Africa have provided legal certainty and we have therefore commenced with processing valid business interruption claims with specific conditions that are materially the same in nature as those already decided by the courts.” said OM.

Going forward OM  anticipates  that the net business interruption and business rescue reserves reported for the year ended December 2020 will increase by between R85 million to R140 million compared to the amount reported for six months ended 30 June 2020.

The net business interruption and business rescue claims (including reserves) of R464 million reported for the first half of the year included an amount to settle business interruption claims of SMME customers with an annual sum insured of R5 million or below to enable them to continue operating in a tough economic environment.

“This settlement was applied to all our qualifying SMME customers who had the infectious disease extension at the time of loss.” said OM.