Old Mutual plc, South Africa’s largest insurer, has posted a notable improvement in its South African businesses in the third quarter of its financial year, recording strong growth in life-insurance and unit-trust sales, while lifting its new business margin and stabilising net client cash outflows.
Providing a trading update for the nine months to September 30 on Monday, Old Mutual said its South African life business recorded total life sales of about R3-billion on an annual premium equivalent (APE) basis (including sales into Old Mutual International), up 18% from the year-earlier period.
Sales benefited from the group’s continued investment in distribution capacity, it said.
Individual business life sales rose by 11% to R2,1-billion for the nine months, versus R1,9-billion in the comparable period in 2004, with good growth seen across all product categories.
The 14% increase in single premiums was positively affected by a 78% surge in bancassurance life sales through the Nedbank channel, up 78% for the nine months. Going forward, Old Mutual South Africa and Nedbank will continue to work closely together to focus on growing sales through this channel, the insurer pledged.
South Africa life single-premium sales into Old Mutual International were up by 32%.
Meanwhile, recurring premiums for the nine months increased by 9% to R1,5-billion from R1,4-billion a year earlier, with growth in savings, protection and group-schemes business all up by similar amounts. Sales benefited from good growth through Old Mutual’s own agency channel and the group-schemes sales forces, as it continued to boost its adviser headcount.
Commenting on group business sales (including health care), Old Mutual said this rose by 40% to R909-million for the nine months, compared with R649-million for the equivalent period in 2004.
Health-care sales were up by 7% year-on-year, while group protection recurring premium sales increased by 50%. At R340-million, group single premiums were 127% higher than the prior period as a result of good annuity sales to retirement funds.
The company’s overall new business margins had improved to 17% over the period from 15% for the half-year, with group business posting a margin of 22% and the individual business margin, at 14%, reflecting investment in distribution and the switch to lower-margin products.
Regarding its unit-trust sales, Old Mutual said it posted growth in both its broker and agency channels, up 93% overall to R6,3-billion. Net cash flows into unit trusts rose to R2,5-billion over the nine months, versus R0,5-billion for the year-earlier period.
The pension-funds adjudicator continued to hear complaints and make determinations against retirement annuity funds, the group noted.
“While discussions between the industry, the regulator and the National Treasury continue, our philosophy of ensuring that our products provide good value to our customers continues to be Implemented,” Old Mutual commented.
The company’s net client cash outflow stabilised at R17-billion, the same as that reported at the half-year point. The total included the R10-billion withdrawal of funds by the government’s Public Investment Corporation in the first half.
As a result primarily of higher equity markets, customer funds under management were 10% higher than December 31 2004, at R343-billion.
Old Mutual Asset Managers South Africa continued to deliver a strong investment performance, with more than 90% of its funds outperforming their benchmarks over one and three years by September 30. — I-Net Bridge