Old Mutual, a prominent financial services group, anticipates a substantial decline in its adjusted headline earnings for the six months ending June 2026, projected to fall between 25% and 35% to an estimated $2.7 billion to $3.2 billion. This downturn is attributed to decreased returns on investments, a consequence of heightened risk aversion stemming from ongoing geopolitical conflicts, particularly in the Middle East. This profit slump marks the first significant drop since 2022.
Despite the decline in headline earnings, Old Mutual demonstrated strong operational performance. Gross inflows surged by 21% to $128.9 billion, and Life Annual Premium Equivalent (APE) sales also increased by 21% to $7.9 billion. The value of new business saw a robust 32% rise to $569 million, with the new business margin slightly improving to 1.4% from 1.3%. Net client cash flow improved significantly, reducing outflows by 69% from $10.1 billion to $3.1 billion.
The company experienced positive sales growth across its African operations, including Zimbabwe, driven by stronger sales to employers and substantial growth in new business. Its Wealth Management division, serving middle and high-income earners, saw strong demand. Inflows were further boosted by the majority acquisition of South African asset manager 10X Investments. Old Mutual Investments also benefited from increased client activity, while Old Mutual Africa saw growth from money market inflows in Malawi and improved unit trust sales in East Africa.
Analysts noted that while Old Mutual's core insurance and savings businesses are performing well, the company's investment portfolio lost value due to global market declines influenced by Middle East conflict fears. Adjusted headline earnings per share, the group's primary profit metric, are expected to fall between 22% and 32% to $0.657-$0.753, a material decline. Although the net underwriting margin at Old Mutual Insure compressed to 7.6% from 9.7%, it remained within the target range of 5%-8%, supported by careful underwriting and effective claims management. The full interim results are scheduled for release on September 8, 2026.
