By ETimes
Old Mutual Limited (OMU) says it will continue to exclude the results of its Zimbabwean business from adjusted headline earnings owing to the persistent effects of hyperinflation on the country’s economy.
“The group headline earnings for the current period was lower than the prior period due to the significant decline in Zimbabwe earnings,” OMU said in a voluntary operating update for the period ended 30 September 2022.
“This was largely driven by the deterioration of Zimbabwean dollar to the rand, the currency depreciated from closing exchange rate of 1 ZWL$: 0.1369 ZAR at 30 September 2021 to closing exchange rate of 1 ZWL$: 0.0278 ZAR for the period ended September 2022.”
OMU stated, however, that its life businesses’ sales rebound continued to gain steam in the third quarter of 2022, despite a challenging economic condition.
Sales of life APE increased by 17% from the nine months ended 30 September 2021, when lockdowns were a factor, according to the group.
“Sales in the current period benefited from strong issued sales across all channels and improved credit life sales in Mass and Foundation Cluster,” it said.
“Sales growth was also driven by higher group risk and annuity sales in Old Mutual Corporate as well as higher retail and corporate sales in Namibia.”
Gross flows fell by 7% because the current period did not include the same money market and corporate cash product flows that were present in the prior period, which also included new responsibility-driven investing mandates.
“Strong flows from Old Mutual Africa Regions and China as well as significant flows into new deals secured in Old Mutual Investments and Old Mutual Corporate in the third quarter contributed positively to flows.
“This was partially offset by lower flows in Personal Finance and Wealth Management due to lower guaranteed annuity sales and reduced demand for offshore investments,” OMU said.
Due to lower mortality claims across the life businesses and fewer client disinvestments and terminations, net client cash flow improved from the prior period, according to the company.
With a group solvency ratio that is within its goal range, the group’s balance sheet is nevertheless well-capitalized.
“We are committed to deliver on our medium-term targets, noting that the results from operations targets will be difficult to achieve given the current economic climate and market volatility.
“We remain on track to achieve our cost savings target of R750 million, with savings of more than R700 million achieved for the period ended 30 September 2022. The value of new business margin remains within our medium-term target range of 2% to 3%,” it said.
According to OMU, IFRS 17 is being implemented as planned in order to create an initial balance sheet – Harare