Old Mutual swings into a loss amid Covid-19 hit

Insurer Old Mutual has reported a hefty first-half loss after the Covid-19 pandemic resulted in a sharp fall-off in new business and prompted volatility on financial markets.

The group reported a loss after tax of R5.62bn in its six months to end-June, from profit after tax of R5.8bn previously, reporting pressure on its customer base, while a partial closure of its branch network and lack of access to homes weighed on sales.

The group also raised additional short-term provisions of R1.34bn in anticipation of worsening mortality claims, saying it had seen an increase in mortality and morbidity claims towards the end of its second quarter, which has continued in the third.

Headline earnings, which strips out certain one-off items, declined 28% to R4.2bn.

The group said it noted an increase in retrenchment activity in its customer base during the second quarter, adding “this trend is expected to worsen, given the negative economic outlook for SA and that many businesses are struggling to recover after the devastating effects of the pandemic”.