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LONDON (Alliance News) - Insurance firm Old Mutual Ltd reintroduced its final dividend Monday as 2018 profit widened as costs savings helped offset weak trading in difficult economic conditions, and it remains confident of meeting medium term targets.
In 2018, pretax profit widened to ZAR8.45 billion from ZAR7.12 billion the year prior. This was despite total income falling to ZAR109.88 billion from ZAR175.93 billion the year before.
During the year, Old Mutual secured ZAR750 million in recurring costs. The firm remains on target to secure its ZAR1.00 billion savings target. In the fourth quarter, Old Mutual distributed a 32% share in Nedbank Ltd to its shareholders whilst retaining a 20% stake.
"I am pleased with the progress we made on our eight battlegrounds," Chief Executive Peter Moyo said.
"We delivered particularly good sales and NCCF in a tough economic and competitive environment. We delivered very well against the promises we made to investors. Sadly we did not meet our Results from Operations growth target of GDP+2%."
During 2018, net client cash flow almost doubled to ZAR10.7 billion from ZAR5.6 billion the year before. Returns from operations, however, fell 4.0% to ZAR9.96 billion from ZAR10.37 billion the year prior "reflecting net reserve movements, and mortality and morbidity losses in Personal Finance in the first half of 2018 and the change in functional currency in Zimbabwe."
"We are still confident that we will meet all our targets in the medium term noting that the RFO target will be difficult given the negative growth in 2018," Moyo added.
"We have improved our customer experience through digital enhancements and the delivery of key phases of our IT refresh journey. Whilst we continue to see economic headwinds in the near term, our group is resilient, well capitalised and managing its costs tightly."
Old Mutual proposed a 72 rand cents final dividend, after not paying one the year prior. For the full year, the dividend stood at 117 cents.
"Global growth is still expected to continue for 2019, assuming trade tensions and equity market risks do not result in a loss of confidence. This presents the opportunity for our operations in those regions to grow our consumer base and develop our product lines."
In 2018, the group solvency ratio increased to 170% from 161% the year prior.
"Our RFO target of GDP plus 2% CAGR will become increasingly challenging to achieve over our three year target period due to negative RFO growth in 2018. AHE will continue to be influenced by investment returns in South Africa and the Rest of Africa. Despite the weak growth outlook in South Africa, the above macroeconomic risks and strong competitive pressures, we remain confident in delivering our medium term targets."