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Old Mutual lays out growth plans, but pandemic bites

‘Bearing in mind the residual uncertainty… it’s going very well,’ Iain Williamson said.
Image: Bloomberg

South Africa’s Old Mutual announced plans on Tuesday to expand its banking services and look at acquisitions, as the insurer positioned for recovery after a tough few years that have included absorbing higher-than-expected Covid-19 claims.

In addition to the pandemic, the group has had to manage a damaging dispute with its ex-CEO and trouble in some key units, especially elsewhere in Africa.

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In a presentation to investors, Chief Executive Iain Williamson said efforts to win back ground lost to competitors, turn around some units and recover from the impact of Covid-19 were on track.

“Bearing in mind the residual uncertainty… it’s going very well,” he said.

Old Mutual plans to start offering credit to small- and medium-sized firms, is looking for small acquisitions to drive growth, and should have completed the turnaround of businesses in east and west Africa by 2023, executives said.

The insurer will also invest in building up its existing banking offering and broadening its target market, Williamson added.

Old Mutual also flagged on Tuesday that it had used a further R4.9 billion ($309 million) of its pandemic provisions.

It has already repeatedly had to increase its provisions after underestimating the level of death claims it would receive.

The company now has only R1 billion left in its reserve with cases starting to rise once more in South Africa, raising the prospect provisions could have to be hiked again.

The insurer said claims had been higher in part due to higher levels of vaccine hesitancy in South Africa, and that provisions would be assessed again at the end of the year.

South Africa is the worst-hit country on the continent, with 2.93 million recorded cases and 89 584 deaths. Despite high vaccine supplies, only 35% of adults are fully vaccinated.

Old Mutual is not alone in facing higher-than-expected claims. European insurers Swiss Re, Aegon and Munich Re also reported a worse-than-anticipated impact.

Its shares closed 1.62% lower on Tuesday.

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