OLD Mutual’s Mass and Foundation Cluster (MFC), which offers South African customers a range of financial services and insurance products, has emerged from a challenging 2020 by attaining R355 million in new business (VNB).
MFC managing director Clarence Nethengwe said this week that Old Mutual’s drive to rectify, simplify and amplify business was bearing fruit.
“Supporting this growth result from operations, which by the end of June this year, were R1.25 billion against the loss of R70 million in the first half of 2020, a growth of more than 100 percent,” said Nethengwe.
Payments for mortality claims rose to R1.9bn, with 90 percent of those claims said to have been paid within four hours of being lodged.
MFC said that the highlights of the first six months of this year included the increased productivity levels and strong growth in the Old Mutual Protect insurance offering, which indicated that risk products such as life insurance and funeral insurance sales were recovering.
This policy sales grew substantially over a 12-month period. Its profitability was said to be driven by the unique flexibility that enabled customers to personalise their insurance by selecting various modules according to their needs.
MFC said these results were backed by a significant increase in customer digital transactions and adviser digital enablement. It had recorded a 57 percent growth in digital transactions, with most customers using their mobile devices and the Old Mutual App to sign on for services.
“The move to digital platforms has resulted in a change in demand for our traditional face-to-face adviser services. Advisers are now offering assistance on a digital platform that is growing well and has played a part in increasing issued policies by 100 percent since the second quarter of 2020,” said Nethengwe.
“Leading the drive back to pre-Covid 2019 prosperity for MFC, the R355m of value of new business written reflects a significant turnaround from the loss recorded in the corresponding period of 2020. Although sales are presently below 2019 levels, we expect this to normalise in the next few months.”
Old Mutual Finance sales activity was 13 percent below the prior year due to a conservative lending approach given the difficult trading environment. The business continued to offer customer relief support where required and the loan repayment terms had been reduced as it was believed that this was in the long-term interest of customers. Credit experience was said to have improved mainly due to the effects of better origination and collection strategies as well as lower new business strain, which resulted in the credit loss ratio dropping to 4.1 percent.
The Old Mutual Rewards platform had continued to gain traction. To date, one million individuals had joined the programme, with about 600 000 being MFC customers.
Old Mutual’s full year results for the year ended December, announced in March showed that a difficult macro environment and significant market volatility brought about by the Covid-19 pandemic adversely impacted the group’s performance in 2020.
Old Mutual reported that the impact of directly attributable Covid-19 items on its results amounted to some R6.1bn before tax. Results from Operations (RFO) excluding direct Covid-19 impacts demonstrated resilience in this environment, with most segments seeing a recovery in the second half of the year.