Old Mutual reports surge in net client cash flows
Amount more than tripled in the group’s year to end-December, partly due to improving adviser productivity
Old Mutual net client cash flows more than tripled in its year to end-December amid strong investment flows and improving sales due to adviser productivity, the financial services group has reported.
Net client cash flow of R10.1bn to end-December was R7bn higher than the prior year, Old Mutual said in a trading update, adding that while it had experienced encouraging signs of recovery in sales, it is concerned about rising Covid-19 infection rates.
Old Mutual still expects headline earnings per share to fall at least 20% for the year, and like many SA insurers is battling with the fallout from Covid-19, which has resulted in hefty business interruption payouts to clients.
In a landmark Supreme Court of Appeal ruling against Momentum Metropolitan Holding’s subsidiary, Guardrisk, in December, the court dismissed with costs Guardrisk’s appeal against a prior ruling that it compensate Cape Town restaurant Café Chameleon for business interruption losses.
This confirmed that insurers are liable, provided there was an occurrence of Covid-19 within a designated radius of the insured premises.
“The recent rulings on this matter by the Supreme Court of Appeal of SA have provided legal certainty and we have therefore commenced with processing valid business interruption claims with specific conditions that are materially the same in nature as those already decided by the courts,” Old Mutual said on Monday.
The group said it expects that the net business interruptions and business rescue reserves reported for the year ended December 2020 to increase by R85m-R140m compared with R1.13bn reported for six months ended June — an increase of as much as 12.4%.
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