Old Mutual reported marginally lower life insurance sales in the first quarter of this year compared to the same period in 2022, mainly because of a decrease in the sales of savings products in China.
Life APE (annual premium equivalent) sales slipped 1% to R2.873 billion in the three months to the end of March, the financial services group said in a voluntary operating update. Old Mutual ceased selling certain products in China in anticipation of regulatory changes in that market.
Excluding China, life APE sales were 7% higher than in the prior period because of growth in credit life sales and strong risk sales in the group’s Mass and Foundation Cluster.
Personal Finance and Wealth Management delivered higher single-premium guaranteed annuity sales and better recurring-premium savings sales compared to the prior period.
Old Mutual attributed in the higher sales in the abovementioned business units to improved productivity.
Sales in Old Mutual’s Africa Regions were above those in the prior period, mainly because of corporate sales growth in East Africa driven by new business, renewals, and higher productivity.
Gross written premiums rose 19% to R6.512bn during the quarter, up from R5.465bn in the corresponding period the previous year. Old Mutual said this was mainly because of better retention and new business growth in the medical and general insurance books in its Africa Regions.
Gross flows increased by 22% to R49.046bn, mainly because of strong flows in Old Mutual Investments, which saw higher inflows into money market, fixed income, and corporate cash products in subsidiary Futuregrowth.
The increase in flows was also driven by higher alternative flows compared to the prior period, increased new business, and higher unit trust sales in East Africa.
There was a significant turnaround in net client cash flows compared to the first quarter of 2022, from a net outflow of R4.9bn to a net inflow of R899 million. However, this was partially offset by large outflows in Wealth Management across all platforms.
There was no significant movement in loans and advances compared to the prior period. A slight increase in the Mass and Foundation Cluster was offset by a decrease in Old Mutual’s Africa Regions. This decrease was driven by depressed disbursements in line with stricter lending criteria and write-offs in the non-performing loan book due to tough economic conditions.
Old Mutual said the global macro-economic environment remains challenging, although the easing of the Covid-19 policy in China has boosted economic activity.
“Our customers’ disposable income remains under pressure due to rising inflation and interest rate increases. The sustained high levels of loadshedding in South Africa continue to reduce customers’ confidence.”
Old Mutual said its group solvency ratio remains stable and within its target range of 170% to 200%.
The group’s discretionary capital balance at the end of March decreased to R1.4bn from the R3.5bn at the end of December 2022. This was mainly because of capital allocation decisions, including the R300m acquisition of the Genric Insurance Company and the N$214m minority buyout of Old Mutual Finance Namibia, and the R1.5bn share buyback programme.
Old Mutual’s discretionary capital balance of R1.4bn has been earmarked for the acquisition of an equity stake in the Two Mountains Group, a provider of funeral insurance and funeral services, and towards “continued investment in growth and innovation initiatives”.
