Old Mutual Limited Plc says its expects a decline in headline earnings for the six months period to June 30, 2020 due to the impact of the coronavirus.

The pandemic necessitated lockdowns dragged group sales over a significant part of the six months.

The group is set to release its full results for the indicated period.

Said Old Mutual in a trading update:

“New business sales volumes were negatively impacted, as most of our tied advisers were unable to sell during the lockdown period due to the partial closure of the branch network and lack of access to customers’ homes, worksites and branches.

“Although lockdown restrictions have been eased, and economic activity has somewhat resumed, sales levels remain below prior year levels.

“This impact was most severe in the Mass and Foundation Cluster, where sales volumes were too low to cover the largely fixed initial expenses and this resulted in negative Value of
New Business for H1 2020 for this segment.”

In the second quarter, the Johannesburg Stock Exchange (JSE) SWIX was down 8% at the end of June 2020 and average equity market levels were 10% lower than the prior year.

The group however maintains that some key indicators show the company’s capacity to withstand such economic stresses.

“Throughout the period, in this tough economic environment, our solvency capital has remained strong.

“At the end of June 2020, the solvency ratio was 182% for the Group and 208% for OMLACSA,” said management.

“This demonstrates the capital strength and resilience of our Group to withstand periods of prolonged market stresses and positions us well to take advantage of growth opportunities as they arise.”