Old Mutual H1 2026: Life Growth Offsets Earnings Decline

Old Mutual Ltd (LSE:OMU) reported a 27% decline in adjusted headline earnings per share for the first half of 2026, primarily driven by reduced shareholder investment returns and active bond positions. Despite this earnings pressure, the group highlighted strong top-line performance in its life insurance division, where Annual Premium Equivalents (APE) sales increased by 21%. Underlying growth, excluding large corporate gains, stood at approximately 12%. According to GN markets/earnings (en-US), management attributed the divergence between revenue growth and bottom-line results to volatile investment markets rather than core business deterioration.

To signal confidence in the group’s valuation and capital position, Old Mutual announced an 8% increase in its dividend payout. Additionally, the board approved a share buyback program worth ZAR 1 billion. The company also reported progress on its cost-efficiency initiatives, having secured ZAR 936 million in cumulative savings to date. Management projects that total savings will reach at least ZAR 1 billion by the end of 2026, supporting the group’s margin targets despite ongoing operational challenges in other clusters.

Investments Division Leads Flow Growth

Old Mutual Investments delivered the strongest performance among the group’s segments, with gross flows rising by 48% and Risk-Adjusted Fee-Producing Assets (RFO) increasing by 40%. This surge was driven by robust non-annuity revenue and capital raises in the alternatives segment. The COO of Old Mutual Investments noted that while non-annuity revenue can be lumpy due to fund exit timing, the business maintains a steady trajectory for ongoing fee generation. This growth counterbalanced weaker flows in other parts of the investment portfolio.

Banking Momentum Meets Insurance Losses

OM Bank continues to expand its customer base, reaching approximately 750,000 customers by June 2026 with deposits growing to ZAR 1.6 billion by August. The company expects to surpass one million customers shortly, with activity rates tracking just below the 35% to 38% target set for 2028. Conversely, Old Mutual Insure faced a significant headwind from severe flooding, resulting in ZAR 376 million in net catastrophe losses. This event reduced the underwriting margin by approximately 3%, though management stated that attritional performance excluding these losses was better than in the same period last year.

Margin Targets Remain Challenging

Despite operational improvements, Old Mutual’s return on Group Embedded Value (RoGEV) and normalized return on Average New Business Value (RoNAV) remain below target ranges. The New Business Value (VNB) margin stands at 1.4%, significantly short of the 2% to 3% medium-term goal. Specific pressure points include the Mass and Foundation segments, where the VNB margin is 2.5% after removing credit life, and the Personal Finance segment, which continues to report negative margins. In the banking and lending cluster, loans and advances remained flat, and Old Mutual Finance required additional credit provisioning, indicating persistent stress in that area.