Adjusted Headline Earnings per Share: Increased by 17% to $0.06 per share. Return on Net Asset Value: Grew by 160 basis points to 12.7%, excluding new growth initiatives improved to 15.6%. Final Dividend per Share: Declared at $0.52, total dividends for the year $0.86, a 6% increase year on year. Value of New Business (VNB) Margin: Improved by 20 basis points to 2.5%. Funds Under Management: Grew by 10% to 1.5 trillion rand. Life APE Sales (Mason Foundation Cluster): Increased by 9% to 5.24 billion rand. Credit Loss Ratio (Old Mutual Finance): Deteriorated to 8.9%, excluding impairment improved to 7.1%. Assets Under Management (Wealth Management): Increased by 14% to 420.4 billion rand. Gross Written Premiums (Omni to Insure): Increased by 9% to 21.9 billion rand. Net Underwriting Margin (Omni to Insure): Improved to 6.2%. Revenue (Investment Cluster): Increased by 20% to 4 billion rand. Group Equity Value: Strong at 92.5 billion rand. Results from Operations (RFO) per Share: Increased by 7%. Adjusted Headline Earnings: Grew 14% to 6.7 billion rand. Group Equity Value (GEV): Increased to 97.5 billion rand. Return on Embedded Value: Healthy at 9.7%. Cash Remittances: Totaled 10.5 billion rand, including 1 billion from Africa regions.

Warning! GuruFocus has detected 3 Warning Sign with ODMUF.

Release Date: March 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Old Mutual Ltd (ODMUF) reported a strong double-digit earnings growth with adjusted headline earnings per share increasing by 17%. The return on net asset value improved by 160 basis points to 12.7%, and excluding new growth initiatives, it rose to 15.6%. Funds under management grew by 10% to 1.5 trillion rand, supported by improved equity market performance in South Africa. The company declared a final dividend per share of $0.52, bringing the total dividends for the year to $0.86 per share, a 6% increase year on year. Old Mutual Ltd (ODMUF) successfully launched OM Bank, a digital-first bank, which is expected to be a significant growth catalyst for the company.

Negative Points

The credit loss ratio deteriorated to 8.9% due to an impairment in the secured loan book. Persistency issues were highlighted, with management actions needed to improve collections and customer retention. The value of new business (VNB) decreased by 8%, coming off a high base from the previous year. Old Mutual Ltd (ODMUF) faced challenges in the African region, with significant inflationary pressures and weakened currencies impacting key growth markets. The suspension of Old Mutual's trading on the Zimbabwe Stock Exchange remains unresolved, affecting the company's operations in Zimbabwe.

Story Continues

Q & A Highlights

Q: Can you unpack the persistency assumption changes and their impact on VNB? Also, what management actions are being implemented to improve persistency? A: Casparus Troskie, CFO, explained that management is focusing on improving collections through systems enhancements and DebiCheck. Clarence Nethengwe, CEO of OM Bank, added that they are tightening controls on distribution channels to prevent bad behavior. Nico van der Colff, Analyst, noted that persistency issues are more structural than cyclical, affecting savings business across segments.

Q: Could you provide a breakdown of the development spend in the covered EV statement and its trajectory into 2025? A: Casparus Troskie, CFO, stated that the development spend of 900 million rand in 2024 is part of ongoing investments in growth initiatives, including digital transformation and technology upgrades. The trajectory into 2025 will continue to focus on these areas to support long-term growth.

Q: Why have personal finance and wealth life APE sales struggled to return to pre-pandemic levels? A: Kerrin Land, Managing Director of Personal Finance and Wealth Management, clarified that there was an error in the reported figures, and sales are actually higher than in 2019. The shift in sales strategy, including platform migrations and product consolidation, has changed the mix between covered and uncovered sales.

Q: What is the impact of the new currency in Zimbabwe on your business, and what is your outlook for the market? A: Casparus Troskie, CFO, explained that the Zimbabwean economy's dollarization led to a change in functional currency to US dollars, resulting in more stable profits and less volatility. Iain Williamson, CEO, added that the suspension on the Zimbabwe Stock Exchange remains unresolved, but discussions with authorities continue.

Q: With the underwriting margin exceeding the target range, do you plan to change the PNC target long-term? A: Charles Nortj, Interim CEO, stated that there are no plans to change the target range of 4-6% despite the strong performance in 2024. The business is fundamentally different and set up for success, aiming to maintain margins within the target range even in challenging conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

View Comments