Old Mutual feels the heat, pays billions in mortality claims during 2020

By Wellington Zimbowa
PREMIUM finance services group Old Mutual recalls that 2020 posed a serious macro-economic challenge, paying ZAR 13billion in 2020, in fast-tracked mortality claims.
In its 31 December, 2020 annual trade report the company that has a regional footprint paid tribute to ‘decisive management actions’ and a strong liquidity base for its viability, despite the harsh operating environment that was exacerbated by the COVID- 19 global outbreak.
“2020 was one of the most challenging years our organisation has ever faced. Our business remained well capitalised through the execution of decisive management actions and our liquidity position was strong, despite the material negative impact COVID- 19 had on our earnings. The fundamentals of our business were tested through this extreme scenario, but we remained true to our purpose of championing mutually positive futures every day and our diversified business model enabled us to demonstrate resilience in this environment. We remained deeply committed to supporting our customers, employees and communities through these unprecedented times. During 2020, we supported customers and their families through fast-tracked payment of approximately R13 billion in mortality claims during the year,” said the chief executive officer, Iain Williamson
He added that the company has continuous relief interventions for its customers, particularly SMEs that have been negatively affected by COVID- 19, through business interruption.
“As part of our on-going relief initiatives to customers, we made interim payments in respect of business interruption claims to qualifying SME customers, to enable them to continue operating. We offered various financial support initiatives to provide relief to customers, intermediaries, communities and our employees. We have extended premium free cover to frontline healthcare workers in South Africa, Malawi and Zimbabwe,” he added.
Williamson said the company that marked its 175th birthday anniversary last year has been donating medical supplies, protective equipment and funding to frontline health care workers and regional hospitals on the continent.
Despite the impact on earnings, strong gross inflows throughout the year drove a significant increase in Net Client Cash Flows (NCF), which he said was a strong indication of business resilience.
Old Mutual also realised positive gains in adviser productivity levels and new business sales volumes in the second half of the year after a lower performance in the second quarter due to increased lockdown restrictions on the South African market.
“This was through hindered face-to-face interactions with the market resorting to digital business such as WhatsApp, Facebook messenger among others in quest of the drive to be a leading business player business in African, through digital platforms,” added Williamson.
Customers have been able to open investment accounts, manage their accounts and request withdrawals through these platforms.
Meanwhile, the financial conglomerate processed around 202,000 applications issued for Old Mutual Protect in 2020.
Old Mutual Protect Life Income Cover pays a monthly tax-free amount during the term you’ve chosen when the insured person dies, according to the company website.
Meanwhile, the group paid a final dividend of 35 cents per ordinary share following approval by the board of directors which is in line with dividend cover of 1.50 times of Adjusted Headline Earnings for the 2020 year, which is in line with Old Mutual Limited’s dividend cover target range of 1.50 times to 2.00 times.

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