Insurance provider Old Mutual fears its clients could find it harder to afford their monthly premiums and meet other financial obligations if the VAT increase goes ahead on May 1.
“Premiums are not VAT-able fortunately, but [the VAT increase] puts more pressure on consumers in terms of monthly budgets and affordability, it is more concerning from the perspective of people's ability to pay their premiums than anything else,” CEO Iain Williamson said.
Old Mutual is banking on interest rate cuts to relieve households constrained by rising costs, but geopolitical uncertainty and friction in the government of national unity are causing economic headwinds, he said.
“We need growth to be 3% or 4%, not 1% or 2%. Growth is required to allow balance sheet recovery and the general health of consumers and the economy. That has a knock-on impact for all business prospects. You cannot grow a business if you don't have consumers to utilise your services. It is a concern.”
The 179-year-old insurer, which serves 13.7-million customers, reported a 14% increase in adjusted headline earnings in 2024. The group upped digital use to 1.7-million active users in 2024, up from 1.4-million in 2023, while its retail branches increased to 816 from 796 a year earlier.
Williamson said Old Mutual was poised for further growth, having launched a bank after exploring the possibility for three years.
“OM Bank is not fully available to the public yet. We have about 200 of our staff using the bank, and I am one of them. I think it is a fantastic product, the app is great, it is seamless and integrates completely with our rewards programme. We look forward to unveiling it widely later in the year.”
The insurer spent R2.8bn building OM Bank and securing its deposit-taking retail banking licence and expects to do a national rollout by the fourth quarter of 2025.
“Initially it is going to be consumer facing and the initial product will be very much a transactional product account, savings account overdraft facility, credit card, your traditional core banking facilities with a lot of capability on the app to help people with their monthly financing, their budget, how they think about saving for particular things, and over time we will expand the offering further.”
In its retail mass market business, the two biggest competitors are Avbob and Capitec, but Old Mutual's distribution channels are ahead of the pack, Williamson believes
Old Mutual sees potential in East Africa, where there are prospects to grow market share after putting in three years of work to fix the business.
In its retail mass market business, the two biggest competitors are Avbob and Capitec, but Old Mutual's distribution channels are ahead of the pack, Williamson believes.
“We have successfully continued to grow and defend that business primarily through the distribution that we have, both the breadth of it and the different kinds of distribution and ways that we offer customers to access our services give us a broad reach, much broader than others can offer.”
Williamson is stepping down after 32 years with the company.
“I am not planning to put my feet up on the beach somewhere, but I have been advised by a number of people to deliberately pause and think carefully about what the future looks like. I probably have 10 years of contribution to make. If I spend six months thinking about what that should look like so I can set it up for success, it is probably a good thing to do, rather than rushing into something. So I am going to pause and think about what that should look like.”
He was appointed CEO in July 2020 following the suspension and axing of Peter Moyo after a protracted legal battle with the insurer.
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