Old Mutual Sees Rapid Recovery in 2022 Despite Ukraine Fallout

(Bloomberg) -- Old Mutual Ltd., the biggest insurer by assets in Africa and the Middle East, predicts a “significant” recovery in its business this year despite the geopolitical fallout from Russia's war on Ukraine. 

The Cape Town-based company earlier on Tuesday reported net income of 6.66 billion rand ($440 million), compared with a 5.1 billion rand loss in the same period a year earlier. The insurer returned to profit even as it paid out 13 billion rand in claims for excess deaths in South Africa, Namibia, eSwatini and Botswana because of the coronavirus. 

For South Africa, Russia and Ukraine account for less than 1% of total trade. With Russia locked out of global business, it provides an opportunity for miners in Africa's most-developed economy, and across the continent, to fill the demand for commodities ranging from palladium and gold to nickel and copper.

“For South Africa, there's a little bit of a silver lining in the sense that the commodity-based industries are going to boom,” Old Mutual's Chief Executive Officer Iain Williamson said in an interview. “The main risk we face as a country is that there is a break out variant” because that could materially hurt the economy, he said.

In 2021, South Africa's benchmark stock index jumped the most in 12 years helping boost Old Mutual's asset base. Inflows into the firm rose 4% to 194.8 billion rand boosted by its investment and wealth management units.

The insurer increased provisions by 2.2 billion in 2021, and had 2.9 billion in reserves by the end of December to cater for potential future Covid-19 related mortality claims. 

The company's profit for 2021 was “depressed because of Covid, so we would expect to see a further significant recovery in 2022,” Williamson said.

©2022 Bloomberg L.P.

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