Old Mutual restores dividend despite annual loss
South Africa’s Old Mutual declared a dividend of 35c per share on Tuesday after swinging to a pre-tax loss in 2020.
Group profits were slashed by the pandemic, forcing the company to set aside billions of rand in provisions.
Old Mutual cut final dividend by 53 per cent to 35c per share, equating to a pay out of R1.65bn.
The financial services firm reported a basic loss per share of 116.3c, around the middle of its forecast range and a drop from the 208.3c posted a year earlier.
Pandemic challenges
Confidence in the insurer among some shareholders had already been wavering before the pandemic, due to a prolonged legal battle with ex-CEO Peter Moyo over his abrupt dismissal.
Like all insurers, the pandemic forced Old Mutual to increase provisions for claims substantially.
The health crisis also hit sales and prompted higher credit losses as lockdowns hit distribution and consumer finances.
The firm said it was confident in its financial position despite concerns about South Africa’s slow vaccine rollout and the prospects of a third Covid wave.
Reaction
“2020 was one of the most challenging years our organisation has ever faced,” said Chief Executive Iain Williamson.
“Our business remained well capitalised through decisive management actions and our liquidity position was strong, despite the material negative impact Covid-19 had on our earnings.
“The fundamentals of our business were tested through this extreme scenario, but we remained true to our purpose of championing mutually positive futures every day and our diversified business model enabled us to demonstrate resilience in this environment.”