A strong shilling, increased underlying assets, and fair value gains saw Old Mutual’s investment income
strengthen by 13 per cent to Sh4.2 billion from Sh3.7 billion in the first six
months of the year.
The Kenyan shilling has remained steady at 129.2 units against the US dollar for almost 18 months, supported
by rising export revenue and diaspora remittances.
Even so, the overall performance
was impacted by a
challenging macroeconomic environment across the East African region,
characterised by a surge in claims and lower
interest rates.
According to financial results
released on Tuesday, the firm posted a 98 per cent drop in net earnings to Sh5
million compared to Sh249 million same period last year. Gross earnings also shrank by 66 per cent to
Sh380 million from Sh1.1 billion in
2024.
Insurance revenue dipped
2.4 per cent to Sh16.4 billion, while the insurance service result worsened to
a loss of Sh303 million from Sh246 million previously.
The net earnings slump translated into a loss per share of 1.21,
compared to earnings per share of Sh1.42 a year earlier. Retained earnings
swung into a deficit of Sh218 million, reversing the Sh38 million surplus
reported last year.
Despite the profit hit,
Old Mutual Group delivered a turnaround in total comprehensive income, booking
Sh99 million compared to a loss of Sh873 million a year ago, demonstrating
stronger balance sheet gains outside the income statement.
The surge in claims during the period spread
across both the short-term and long-term insurance businesses, which stood at
Sh452 million compared to the same period in 2024.
Profitability was also weighed down by reduced
performance in the asset management and property operations, driven in part by
lower occupancy in Uganda and South Sudan properties.
Speaking during the 2025 interim results
announcement, Old Mutual Holdings Group CEO Arthur Oginga expressed confidence
in the outlook, saying that the increase in claims underscores Old Mutual’s
commitment to honour its promise to safeguard the well-being and financial security
of its clients.
“Although higher claims placed short-term
pressure on profitability, it is a demonstration of the strength of our promise
to customers and the resilience of our business model. I am encouraged by the
growth in investment income, the expansion of our asset management business,
and the strengthening of our balance sheet,’’ Oginga said.
“These fundamentals give us confidence in our
ability to deliver long-term value for our shareholders, while continuing to
stand firmly with our customers in times of need.”
The life insurance business recorded a profit
after tax increase of Sh580 million, mainly attributable to fair value gains on
financial assets following a decline in the yield curve, as well as lower
reinsurance costs.
The asset management unit maintained earnings at
par with prior year levels, demonstrating the resilience of the Group’s
diversified portfolio.
Total
assets rose to Sh79.2 billion (up from Sh4.8 billion in December 2024),
reinforcing the Group’s capacity to support future growth. Property rental
income declined as
occupancy fell to 72.6 per cent in Uganda (from 92%) and 53.9% in South Sudan
(from 63%).
Group commission fee and operating expenses
increased to Sh1.6 billion from Sh0.9 billion in H1 2024.
This increase was impacted by one-off costs in
the current year and one-off provision reversal in the prior period, coupled
with higher.
Funds under management in Uganda rose to Sh145
billion, driving higher fee and commission income. The asset management line of business reported good
growth in Unit trust business, reaching AUM of Sh142 billion, a growth of 25
per cent.
The firm is
optimistic about the future as it moves from being viewed as an insurance provider to
becoming a partner in our customers’ overall well-being.
