Shareholders of South Africa’s leading insurer, Old Mutual Limited, will not be receiving any interim dividend payouts in the meantime. This is due to the company’s poor performance in H1 2020 which was caused by COVID-19.
The insurance company’s latest earnings report showed that profit (excluding one-time items) declined by as much as 67%, even as earnings also declined.
In the financial statement, a copy of which was seen by Business Elites Africa, the company’s CEO (Iain Williamson) explained that the decision to scrap interim dividend was borne out of necessity. He also noted that the decision could be revisited in the near future, after the company must have gotten a clearer picture of the prevalent economic realities.
“We believe this action is necessary… and we will revisit this decision for the full-year dividend declaration when we have more clarity on the shape of possible economic recovery scenarios,” Williamson said.
Much like every other insurance company around the world, South Africa’s oldest insurer struggled with the limitations and financial constraints brought about by the Coronavirus pandemic. As Williamson explained, increased funeral claims and a significant plunge in sales during the lockdown adversely influenced the company’s abysmal half-year performance.
Meanwhile, Old Mutual is optimistic that the effects of the pandemic will gradually wear off soon. Already, there has been a significant increase in business activity levels since the COVID-19 restrictions were lifted by the South African Government.
Old Mutual Limited is a is one of the biggest and oldest insurance companies in Africa. Listed on the Johannesburg Stock Exchange and London Stock Exchange, the company has subsidiaries in many African countries including Nigeria. It recently broke up its international conglomerate structure just so that it can focus mainly on the African continent.