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Despite a subdued growth outlook, Old Mutual is confident of delivering on its medium term targets in its new financial year, similar to how it delivered on promises made at the beginning of the 2021 year. This is the view shared by Old Mutual CEO Iain Williamson in presenting the life office’s figures for the year to end-December 2021 on Tuesday.

“At mid-year, I made commitments to our stakeholders, and I believe that the results show that we delivered on these promises,” says Williamson, noting that Old Mutual succeeded in revitalising customer experience and distribution, made progress on achieving R750 million in cost savings by the end of 2022, and improved its investment performance.

“Looking forward, we expect continued growth in 2022, albeit at a slower pace than 2021. Our business is substantially rectified, a lot simpler than it was only a few years ago, and it is already starting to be amplified in many areas.

“Notwithstanding the uncertainties posed by potential new Covid-19 variants, as well as recent events in Europe, we remain optimistic in the group’s ability to shift gears and accelerate our growth trajectory,” he says.

On the economy …

Old Mutual expects the global economy to grow by 4,4 percent this year, in line with the latest forecast made by the International Monetary Fund (IMF). Sub-Saharan Africa economic growth is projected at 3.8% for 2022, as low vaccination rates, Covid-19-related restrictions and other challenges continue to pose a risk.

Williamson points out that the IMF revised South Africa’s growth forecast downward to only 1,9 percent for 2022, with a weaker outlook for investment as business sentiment remains subdued.

“In addition, the Reserve Bank increased the repo rate by 25 basis points to 4 percent and has indicated that more interest rate hikes can be expected to manage the expected increase in inflation.

    “The conflict in Ukraine has dramatically increased the level of uncertainty around global economic growth and inflation, with a stagflation scenario now more likely,” says Williamson. 

“The recent oil price hikes and the risk of negative sentiment towards emerging markets are also likely to lead to an increase in inflation and lower growth in our local markets.”

Williamson indicates that Old Mutual is better positioned to head off challenges and take advantage of opportunities in that the group has recovered from the impact that Covid-19 had on its operational and financial performance during 2020.

Earnings and outlook

Adjusted headline earnings increased by some 117 percent to R5,4 billion in 2021, compared to R2,5 billion in the previous year.

Headline earnings per share increased by 41 percent to R1,64.

Management highlights that the balance sheet remains well-capitalised with strong liquidity to help withstand the challenging operating environment.

“Our focus for 2022 is to continue putting our customers first and consolidating and simplifying systems and processes that remain a barrier to building an agile business.

“The recent corporate activities within the group positioned us well for the future to ensure sustainable growth,” says Williamson, referring to Old Mutual Insure’s acquisition of a 51 percent stake in One Finance Services Holdings, the sale of 21,2 percent of its stake in Futuregrowth to African Women Chartered Accountants Investment Holdings, and the unbundling of its stake in Nedbank Group to shareholders.

– Moneyweb