South African insurer Old Mutual remained resilient in 2020 despite the challenges of COVID-19-related lockdowns, although the company did see a financial impact from the pandemic.
Results from operations (RFO) were 7.7 billion rand (about US$520.5 million), 14% down from the prior year, according to earnings results released by the insurer. Direct COVID-19 impacts for the full year amounted to 6.1 billion rand due to an increase in pandemic reserves, business interruption and rescue claims, and negative mark-to-market losses in Old Mutual’s credit and private equity portfolios.
Adjusted headline earnings of 2.5 billion rand were down 75% from the prior year, impacted by lower shareholder investment returns and Nedbank earnings.
However, Old Mutual’s solvency position was strong at the end of 2020 thanks to key regulatory approvals and capital management actions that offset lower earnings and additional provisions raised for COVID-19. Return on embedded value also remained positive despite Old Mutual absorbing large negative impacts related to the pandemic, the company said.
“2020 proved to be a formative year for Old Mutual,” said CEO Iain Williamson. “Despite the challenges, we remained true to our purpose of championing mutually positive futures every day for all of our stakeholders. … We have come through an exceptionally difficult year in good shape and extremely well-equipped to build on our core, our brand, our strategy, and our strengths.”