Old Mutual Insure more than doubled its operating profit in 2024, from R524 million to R1.8 billion, thanks to improved pricing, underwriting actions, and strong investment returns.
The net underwriting result also more than doubled from R46m to R1.14bn, and the insurance service result increased by more than 100% to R1.78bn, driven by above-inflation revenue growth.
Gross written premiums (GWP) increased by 9% to R21.93bn, driven by new customer acquisitions and “robust” performance in the alternative risk transfer and specialist business portfolios. This pushed the net underwriting margin to 6.2% – above the target range of 4% to 6% – and an improvement of 9% from 2023.
Old Mutual Insure said it expanded its presence in niche markets, particularly in accident and health insurance. Growth was also enhanced via alternative distribution channels, improved intermediary productivity, and pricing adjustments.
Old Mutual Insure paid out R11.8bn in claims, slightly higher than R11.6bn in 2023, but the claims ratio fell from 57 to 49.7.
The group’s Integrated Report said the segment remains resilient despite challenges, such as high unemployment and the rising cost of living, which have impacted new customer acquisitions and retentions.
Weather-related disasters remain a concern. However, there was a slight decrease in the severity of these events in 2024. Old Mutual Insure said its ability to mitigate the impact of weather-related losses has been significantly improved through pricing adjustments and integrating climate modelling into its underwriting processes.
Old Mutual Insure operates through the following businesses:
- Retail, which includes commercial business portfolios catering to small to large businesses and personal business portfolios that serve individuals.
- iWYZE, which offers direct, short-term, gap cover and business insurance.
- Specialty, which provides insurance for large and complex risks in niche markets, particularly property, engineering, marine, agricultural assets and corporate property insurance.
- Old Mutual Alternative Risk Transfer Insure offers first and third-party cell captive and alternative risk solutions.
- Credit Guarantee Insurance Corporation provides insurance for trade credit, bonds and surety.
- Blue Sky, which focuses on non-life insurance providers, including Genric, specialising in accident and health insurance, and ONE Financial Services, operating as a cell owner.
Retail business
GWP increased by 6%, supported by improved new business pricing and a stringent renewal strategy for the existing portfolio.
The insurance service result turned from a loss of R63m in 2023 to a profit of R643m, supported by remediation efforts aimed at enhancing the quality of the portfolio and restoring loss ratios to acceptable levels. This improvement was achieved through targeted underwriting and pricing adjustments, as well as enhanced security measures for high-risk items.
Claims incurred were lower compared to the prior year as investments in technology, data, and advanced analytics assisted in managing claim costs, fraud detection, and minimising claims leakage.
iWYZE
GWP decreased by 9% across the portfolio because of the transfer to Old Mutual Alternative Risk Transfer Insure of Pineapple, an insurtech in which the group holds an ownership interest, as well as resetting its customer acquisition strategy in the direct channel.
Organic growth on the remainder of the portfolio was marginal because of higher costs to acquire new business. The financial pressure on customers impacted collection rates and the retention of existing business.
Specialty
GWP grew by 17% to R9.61bn, largely driven by new business written through strategic partnerships and the traditional lines of businesses. This was supported by diversification into new lines of business such as general liability and the public sector.
Old Mutual Alternative Risk Transfer Insure reported a 22% growth in GWP, driven by significant expansion in third-party cell business and the inclusion of Pineapple.
In Premier, GWP grew marginally by 1% from the prior year. The growth in renewals resulting from the remediation strategy was mostly offset by cancellations and the discontinuation of business that no longer aligned with Old Mutual Insure’s risk appetite.
Credit Guarantee
GWP decreased marginally by 1% to R1.74bn, reflecting the pressure experienced by the business because of poor trading conditions.
Old Mutual said the trade credit environment remains challenging amid global economic uncertainty, high interest rates, and persistent inflationary pressures. The business faced increased default risks because of tighter credit conditions and slower economic growth in key markets.
The insurance service result increased by 25% to R441m, mainly because of lower claims.
Blue Sky
GWP increased by 4% to R855m because of new business in the accident and health portfolio, as well as annual premium increases on existing portfolios in Genric.
ONE Financial Services achieved robust growth in net premiums, particularly in the commercial lines and transport portfolios.
The insurance service result increased by 29% to R342m, largely because of an improved claims environment.
