Old Mutual Group Interim Results (June 30, 2024)

Old Mutual Group (OMU.JO) has reported sustained revenue growth and resilient profits in its interim results earnings call for the period ending June 30, 2024. The company’s CEO, Iain Williamson, outlined significant strategic progress, with key financial metrics indicating increases across the board. Life APE sales rose by 6%, gross written premiums for short-term insurance increased by 9%, and funds under management grew by 5%.

Adjusted headline earnings per share grew by 7%, with an interim dividend declared at a 6% increase. The Board also approved a ZAR 1 billion share buyback for 2024, pending regulatory approval. Old Mutual’s upcoming launch of OM Bank is set for Q1 2025, alongside ongoing digital modernization efforts.

Key Takeaways

• Life APE sales increased by 6% to ZAR 6.6 billion.
• Gross written premiums for short-term insurance rose by 9% to ZAR 13.8 billion.
• Funds under management grew by 5% to ZAR 1.4 trillion.
• Adjusted headline earnings per share increased by 7% to ZAR 0.735.
• Interim dividend declared at ZAR 0.34, a 6% increase.
• Return on net asset value rose by 70 basis points to 12.6%.
• Board approved a ZAR 1 billion share buyback for 2024, pending regulatory approval.
• OM Bank set to launch in Q1 2025.
• Achieved an AA ESG rating from MSCI and a BEE Level 1 rating.
• Underwriting profitability in Old Mutual Insure improved significantly, with gross written premiums up 10%.

Company Outlook

• Launch of OM Bank in Q1 2025.
• Ongoing digital modernization and portfolio optimization.
• Optimism regarding recovery in the macroeconomic environment, particularly in South Africa.

Bearish Highlights

• Sales growth challenges in H1 2024 due to a non-repeat large single premium deal from last year.
• Value of New Business (VNB) margin decreased by 70 basis points to 2.4%.
• Shareholder solvency ratio reduced from 190% to 188%.

Bullish Highlights

• Strong profits across the portfolio.
• Improved underwriting profitability in Old Mutual Insure, with gross written premiums up 10%.
• Life sales in the Africa Regions business saw a 5% increase despite currency depreciation in Nigeria and Ghana.

Misses

• Results from Operations (RFO) decreased to ZAR 4.2 billion.
• Value of new business decreased by 8% to ZAR 858 million.

Q&A Highlights

• Asset management valuation reduction linked to a change in valuation methodology.
• Discretionary capital balance stands at ZAR 1.4 billion, excluding the ZAR 2 billion special dividend.
• Slightly worse natural catastrophe experience in 2024, but OM Insure expected a sustainable margin of 5.9%.
• Cash capital spent on the bank to date: approximately ZAR 2.5 billion.

In summary, Old Mutual Group has shown resilience and growth in its interim results, with a positive outlook for the upcoming launch of OM Bank and continued strategic investments. The company’s commitment to maintaining a strong position in the competitive financial services sector is evident in their multi-channel distribution strategy and digital modernization efforts. Despite some challenges, Old Mutual’s financial metrics indicate robust cash generation and enhanced shareholder returns, positioning the company well for future growth.

InvestingPro Insights

Old Mutual Group’s (ODMUF) interim results for the period ending June 30, 2024, reflect strong performance in financial data, with revenue of $5.68 billion over the last twelve months and a revenue growth of 13.99%. This supports the reported increases in life APE sales and gross written premiums.

InvestingPro Tips highlight that Old Mutual has maintained dividend payments for 15 consecutive years, consistent with the company’s 6% increase in interim dividends, demonstrating commitment to shareholder value, reinforced by the approved ZAR 1 billion share buyback program for 2024.

The company’s profitability is underscored by an adjusted P/E ratio of 8.92, low relative to near-term earnings growth, suggesting Old Mutual may be undervalued considering its growth prospects. Reports indicate strong market positioning and competition in the Insurance industry, aligning with growth in gross written premiums for Old Mutual Insure.

For a thorough analysis, InvestingPro provides additional tips for Old Mutual, offering deeper insights into the company’s financial health and market position.