Staff Writer

Old Mutual swung back to a first-half basic profit on Tuesday and revised its 2023 targets upwards, even as it warned of uncertainty around the future impacts of the pandemic.

The South Africa-based financial-services company said net profit was 2.98 billion South African rand (US$203.1 million) compared with a loss of ZAR5.62 billion for the first half of 2020.

Revenue rose to ZAR41.04 billion compared with ZAR39.74 billion for the year-prior period.

The insurer benefited from higher sales of more profitable new business and a recovery in local and global equity markets, though mortality claims from COVID-19 were worse than it had anticipated.

Its basic earnings per share stood at 67.8 cents (US$0.0463) in the year to June 30, compared to a basic loss per share of 128.5 cents a year earlier and in the middle of its forecast range.

It also restored its results from operations (RFO) which is its measure of operating profit to 2019 levels, and Chief Executive Iain Williamson said a significant improvement across such key metrics had “provided the base for us to increase our medium-term targets for 2023”.

It increased its RFO target to deliver between 5% and 10% growth on 2019 by 2023 and said it wants to achieve a return on net asset value of between 2% and 4% higher than it’s cost of equity. It had previously aimed to return both metrics to 2019 levels.

The insurer did, however, have to increase its pandemic provisions by 2 billion rand in the first six months of the year as mortality claims during South Africa’s third wave of infections outpaced its expectations.

It warned that the impact of future waves was uncertain amid the risk of future new variants and vaccine hesitancy, but added that it expected the additional funds it had raised to be sufficient.

It declared an interim dividend of 25 cents per share, in line with its payout policy – Harare

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