Old Mutual’s new CEO, Jurie Strydom, has put an emphasis on disciplined capital allocation and cost containing, challenging underperforming to earn the right to have more capital directed their way.
The approach sets the group’s businesses in East Africa, West Africa and China to turn the corner.
“Some of the growth markets we have gone into like East Africa, West Africa and China have not delivered strong economics for us in recent times,” Strydom said.
“What we need to do is turn around margins and returns in those markets to be able to earn the right to deploy more capital,” he said. “The term earning the right to deploy capital really reflects the resolve to make sure we are disciplined in our capital allocation going forward.”
The group has historically been shy to exit markets that do not deliver acceptable returns to it, having already exited Nigeria and Tanzania. It has also transitioned its South Sudan run-off.
“These actions underscore our commitment to concentrating resources on markets with the greatest potential for sustained long-term value creation,” Strydom said.
“Future capital allocations will be targeted towards opportunities that align with our strategic priorities, taking cognisance of our goal of enhancing return on group equity value and return on net asset value to competitive levels in the medium term.”
The group reported a 29% rise in adjusted headline earnings at the halfway stage of its financial year, driven by a strong underwriting performance in Old Mutual Insure and strong equity market performance, particularly in SA and Malawi.
Adjusted headline earnings for the six months to end-June rose to R4.2bn from R3.26bn a year ago, supported by an 88% increase in shareholder investment returns.
Results from operations increased 16% to R4.94bn primarily driven by exceptional growth in Old Mutual Insure and favourable market conditions, the group said on Wednesday.
This growth was partially offset by the negative effect of a persistency basis change in the mass and foundation cluster and higher central costs, which includes a one-off restructuring provision incurred to reduce future expenditure.
International financial reporting standards profit and headline earnings declined, mainly reflecting reduced profits from the Zimbabwean business after the transition of its functional currency from Zimbabwe gold to the US dollar.
Headline earnings per share (HEPS) were down 27% to 97.5c. Old Mutual declared an interim dividend of 37c per share, up 9% from a year ago.
The group saw muted sales growth with present value of new business premiums decreasing 7%. Life APE (annual premium equivalent) sales increased 1%, with higher retail risk volumes in the mass and foundation cluster and good sales in Old Mutual Africa regions largely offset by lower guaranteed annuity sales in personal finance.
Gross flows grew 7%, driven by good contributions from wealth management and Old Mutual Africa regions, partially offset by lower inflows in personal finance.
Gross written premiums increased 5% driven by good growth in Old Mutual Insure.
The group’s value of new business reduced 50% to R432m, largely due to model changes. This led to a reduction in the group value of new business margin to 1.3%.
To restore its value of new business margin to an acceptable level, the group said it planned to drive expense efficiencies, supported by the operating model redesign and leaner corporate centre.
Group net underwriting margin increased by 270 basis points to 7.1% primarily driven by the exceptional performance in Old Mutual Insure.
The board has approved a share buyback of up to R3bn subject to prevailing market conditions. The buyback will proceed while the share price reflects a level that is considered accretive to shareholder value, it said.
Update: September 10 2025
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