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Business Writer
Old Mutual expects to post a loss in the first half of 2020 amid weakening business volumes due to the Covid-19 pandemic.
According to the Group, new business sales volumes were hurt as most of the group’s tied 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.
While lockdown restrictions have been eased and economic activity has somewhat resumed, sales levels remain below prior year levels, it said.
The insurance giant has also been faced with a spike in claims as a result of business interruption due to the novel coronavirus.
Insurers across the globe have been setting aside billions of dollars as they face steep claims resulting from coronavirus lockdowns, which have shut businesses and led to cancellations or postponements of major events including the Olympics.
Another aggravating factor has been higher credit spreads, which Old Mutual said have led to notable unrealised mark-to-market losses in the unlisted equity and credit portfolios of its investment business.
In a trading update released yesterday, Old Mutual said basic loss is forecast to come between 128.5 and 154.2 South African cents per share for the six months ended June 30, versus earnings of 127.3 cents prior year comparative.
Old Mutual, which also has operations in Zimbabwe, expects results from operations to plunge by between 61 percent and 71 percent to R1,31 billion-R1,76 billion (US$44.56 million-US$76.80 million) in the period.
Bongani Ndlovu