Pan-African insurer Old Mutual has said that market volatility as a result of the ongoing COVID-19 pandemic and lockdown has had a significant impact on its business.
According to Old Mutual CEO Iain Williamson, new business sales volumes were negatively impacted as many of its tied advisers were unable to sell during the lockdown period due to the partial closure of the branch network and a lack of access to customers’ homes, worksites and branches.
“Although lockdown restrictions have been eased and economic activity has somewhat resumed, sales level remain lower than last year,” he said.
“Although there has been some recovery since the start of the second quarter of the year, average equity market levels were 12.1% lower than last year during H1. We have also noted a widening of credit spreads in the second quarter, which has resulted in unrealised mark-to-market losses on our equity and credit portfolios. These unrealised losses may, however, be reversed in future periods as market conditions recover.”
Williamson outlined the actions already taken by the financial services giant to mitigate against the depressed market conditions as well as to continue providing relief to both customers and the communities in which the Group operates. These include:
Raising short term provisions in anticipation of worsening mortality, morbidity and persistency experience in H2. These reserves are intended to allow for expected short term variances to the Group’s long term assumptions.
Increasing provisions for expected credit losses in Old Mutual Finance in recognition of declining GDP forecasts, and the anticipated impact of this on future credit losses.
The decision to offer commercial settlements to certain qualifying Small, Medium and Micro Enterprise customers to enable them to continue operating.
“While we expect the ongoing fallout of the pandemic to continue to put pressure on our customers and affect our performance for the remainder of 2020, we remain cautiously optimistic that the easing of lockdowns everywhere will be positive for us,” said Mr Williamson.
Old Mutual will release its 2020 Interim Results on Tuesday, 1 September 2020.
Source AIR
