Old Mutual targets share buyback of up to R1,5 billion

Life assurance and financial services group Old Mutual has upped its annual dividend and also announced aims of a share buyback of up to R1,5 billion.

In its annual results for the year ended December 31, 2022, the Cape Town-headquartered company said it had earmarked between R1bn and R1.5bn for return to shareholders as a share buyback and has initiated approval processes with the board and Prudential Authority.

Media reports reveal that Old Mutual declared a final dividend of 51c per share, making the full dividend for the year amount to 76c, which once adjusted due to Nedbank unbundling, was 13% higher than the prior year.

The group pronounced that its adjusted headline earnings increased by 34% to R6.7bn as it in 14 countries.

As one of South Africa’s biggest financial institutions, it said: “the group delivered a solid set of financial results in 2022 despite the difficult macro-economic environment and market volatility.

“The pressure on our operating earnings caused by the Covid-19 pandemic has lifted as the ongoing impact of the pandemic becomes muted.”

Life APE (annual premium equivalent) sales grew by 10% to R12.5bn; its gross written premiums were up by 12% to R22.3bn, while the group solvency ratio remained robust, up by 600 basis points to 190%.

“I am very pleased with our robust operating performance with strong sales and earnings,” said Old Mutual CEO Iain Williamson.

“We demonstrated resilience as we continued to navigate a challenging environment and remained true to our purpose of championing mutually positive futures every day.

“We are confident that the overall health of our pipeline will support improvements in net client cash flow. Our funds under management (FUM) of R1.2 trillion declined by 4% due to weaker market performance in South Africa and globally.”

IOL has it that the results from operations increased to R8.7bn and they are primarily driven by improved profits on the back of strong sales.

“Our life profits benefited from the refinement in hedging methodology, enabling a material release of excess discretionary margins, as well as lower mortality in the current year as the effects of Covid-19 eased,” the group announced on Tuesday.

“All remaining Covid-19 provisions were released, but the impact was mostly offset by the strengthening of our mortality basis to allow for endemic Covid-19 claims and worsened persistency as the challenging economic conditions continue to impact our retail customers.”

Looking ahead to the future, Old Mutual decried the ongoing power crisis as it affected economic activity in the country.

“The macro-economic environment in our markets is expected to remain challenging, and will continue to exacerbate financial pressure on our customers,” it said.

“We remain focused on driving sales volumes and profitable sales mix to improve market share growth in our segments. Despite the challenging headwinds, we are through our recovery phase and have largely delivered on our medium-term targets one year ahead of schedule.”