Old Mutual lifts dividend after a year of good sales growth

Signage on the Old Mutual building, Sandton, Johannesburg. Picture: Karen Sandison/Independent Newspapers

Signage on the Old Mutual building, Sandton, Johannesburg. Picture: Karen Sandison/Independent Newspapers

Published Mar 28, 2024


Old Mutual’s integrated financial services strategy, which also sees it on track to launch a bank this year, helped drive strong top-line growth and new business and its dividend for 2023 increased 7% to 81 cents a share.

Sales growth of 17% was generated across life segments, indicating profitable market share growth in key markets, CEO Iain Williamson said yesterday.

The share price increased 4.56% to R11.93 yesterday afternoon, compared with a flat 0.59% increase in the life insurance index of the JSE, indicating the results were favourably received by investors.

Value of new business grew by a sturdy 37% in 2023, with gross flows and gross written premiums increasing by 14%.

Profitability remained strong. Results from operations increased 14% driven by strong sales growth in operational performance in Old Mutual Africa Regions, Mass and Foundation Cluster and Old Mutual Corporate.

In the South Africa entry-level market, underwritten life sales, available through Old Mutual Protect, supported sales growth in Mass and Foundation Cluster. There was some pressure on policy lapses as consumers faced financial challenges, but there were “green shoots” in the fourth quarter that were expected to continue, he said in an online presentation.

“Our results reflect our progress in building the integrated financial services business of the future. Our strategy is built around our distribution and digital engagement capabilities. Our business remains well positioned for growth,” Williamson said.

The bank was on track to launch later this year, and while Williamson would not disclose its intended competitive edge over the other banks, he said, “We feel we have a compelling value proposition. The proof will be in the pudding. Watch this space.”

Old Mutual saw strong uplift in return on net asset value, which improved by 170 basis points from 2022 to 11.1%, on track to reach their medium-term target of 14.8%.

A final dividend of 49c per share, 4% lower than 51c at the end of 2022, brought total dividends to 81c per share for the year.

In the second half a share buy-back of R1.5 billion was concluded.

Active digital users across the Life and Savings businesses reached 1.4 million, up 17% from 2022.

Direct and digital distribution channels, such as the Pineapple partnership, ensured accessibility through channels that were convenient to customers.

Accolades for the group during the year included being recognised as one of South Africa’s top 10 strongest brands (Brand Finance Top 100 Brands Report, 2023) and a recent first place in the News24 Long-Term Insurer of the Year award.

Sustainability was central to Old Mutual’s strategy and for stakeholders, this manifested in investments that positively affected communities the group operates in.

Investments in non-listed companies or projects was through the group’s private market business, and was made possible because of the availability of long-dated policy liabilities on the life book.

Over the past year, support for a cleaner future included investment of R30.7 billion in renewable energy, up from R26.7bn in 2022.

Old Mutual funded into 39% (2.6 gigawatts) of South Africa’s total renewable energy capacity in 2022, placing it at the leading edge of climate change solutions.

The group also invested R1.3bn in the low-income and affordable housing sector and facilitated the investment of R1.2bn into education. With South Africa in the grip of a water crisis, Old Mutual also invested R2bn into water and sanitation.

In recent years, other such investments included in wind, solar, toll roads, student accommodation, housing and school infrastructure, and always on projects where there would be return over time, said Williamson.

“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. Our focus remains on building the integrated financial services business of the future,” he said.