Business

Old Mutual warns of year-round losses

South African insurer Old Mutual warned of losses for the full year on Monday, saying it was forced to increase reserves and reserves related to the Covid-19 pandemic, dropping its shares by more than 3%.

The base loss per share for the year ending December 31 is estimated to be between 97.9 cents and 139.5 cents, with an after-tax loss of up to R $ 6.2 billion ($ 404 million).

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South Africa’s second-largest insurer, Old Mutual, raised its reserves by nearly R $ 3.4 billion as claims exceeded funds secured in the first half of the year in Covid-19’s second, more serious wave in South Africa. Increased.

It also more than doubled the previous estimate that reserves for business interruptions and bailouts would increase from up to 140 million rants to about 300 million rants.

Old Mutual’s second pandemic wave hit the market, and these factors, coupled with counterparty market value losses and downward revisions to some assets in its unlisted equity portfolio, impacted profits. Said that.

“We implemented strict cost controls throughout our business to partially mitigate the negative impact on our bottom line,” he added, adding that sales and productivity also recovered in the second half of the year.

Not all South African insurers needed to tighten regulations, but during the pandemic, all insurers faced challenges, including changes in normal distribution channels caused by blockades.

They also face the threat of insurance expiration as cash-deficient customers cut spending and are often insured first.

Old Mutual said adjusted earnings per share (HEPS) remained positive, but fell by up to 79% to fall between 44 and 69.4 cents.

HEPS is South Africa’s main earnings indicator, but it removes certain temporary items that undermine Old Mutual’s performance last year.

Its share had fallen 3.4% by 0724 GMT.

Old Mutual warns of year-round losses

Source link Old Mutual warns of year-round losses

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