Old Mutual anticipates heavy first-half loss

Financial services group Old Mutual said in a trading statement for the six months ended June 2020, that it expects adjusted headline earnings per share (HEPS) of between 102.5 cents and 89.7 cents per share, a decline of between 20% and 30% from 128.1 cents before.

Results from operations are expected to decline by between 61% and 71%, it said, citing the fallout from the Covid-19 pandemic, which the company said “continues to have an unprecedented impact on our business, our lives and how we work and interact”.

The insurer expects to post an after tax loss of between R5.62 billion and R6.75 billion, from a prior profit of R5.82 billion.

It noted that the government enforced restrictions to control the spread of Covid-19 in most geographies it operates in, which dramatically reduced the level of economic activity during the first half of 2020 and negatively impacted growth forecasts for the remainder of the year.

Old Mutual said that new business sales volumes were negatively impacted, as most advisers were unable to sell during the lockdown period due to the partial closure of the branch network and lack of access to customers’ homes, worksites and branches.

“Although lockdown restrictions have been eased, and economic activity has somewhat resumed, sales levels remain below prior year levels,” it stressed.

Old Mutual said that while there is still much uncertainty around the pandemic and the impact that it will have on experience, it has raised short term provisions in anticipation of worsening mortality, morbidity and persistence in the second half of 2020.

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Old Mutual anticipates heavy first-half loss