Old Mutual, the life assurance and financial services group, yesterday hiked its annual dividend as it also announced a share buyback of up to R1.5 billion.
In its annual results for the year ended December 31, 2022, the financial services group 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.
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.
Its adjusted headline earnings increased by 34% to R6.7bn.
Old Mutual, which trades in 14 countries and is one of South Africa’s biggest financial institutions, 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%.
The value of new business grew by 16%. The value of new business margin of 2.2% remained within its medium-term target range of 2% to 3%.
Old Mutual CEO Iain Williamson, said: “I am very pleased with our robust operating performance with strong sales and earnings. We demonstrated resilience as we continued to navigate a challenging environment and remained true to our purpose of championing mutually positive futures every day.”
However, the group reported negative net client cash flow for the year. This was primarily due to the decline in gross flows, combined with large disinvestments and terminations in Wealth Management and Old Mutual Investments, respectively.
"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," it said.
Results from operations increased to R8.7bn, primarily driven by improved profits on the back of strong sales and core operational performance across the Group.
"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.
"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," the group said.
Looking ahead, the group said load shedding in South Africa continued to affect economic activity. Failure to address load shedding will have an impact on crop failure, higher food prices and shortages of certain food products, which will further dampen economic growth.
"The macro-economic environment in our markets is expected to remain challenging, and will continue to exacerbate financial pressure on our customers.
"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," it said.
BUSINESS REPORT