UPDATE 2-S.Africa's Old Mutual restores dividend despite annual loss

  • Reuters
  • Stock Market News
UPDATE 2-S.Africa's Old Mutual restores dividend despite annual loss
Credit: © Reuters.

* Declares dividend of 35 cents per share, down 53%

* Swings to full-year basic loss

* Shares fall 3%

* Sets new strategy to deliver on promise of growing value

(Adds details, shares)

JOHANNESBURG, March 23 (Reuters) - South Africa's Old Mutual (LON: OMU ) OMUJ.J returned to paying dividends on Tuesday after reporting an annual loss but said a plan to invest in products and digital services would see it become the most valuable in the industry.

The coronavirus crisis has marked the latest in a series of challenges for the country's second-largest insurer, which has been trying to win back investor confidence dented by lacklustre performance and the shock dismissal of a former CEO.

It suspended its dividend in the first-half as the pandemic struck, and its annual payout was still 53% lower than a year earlier as it swung to a basic loss per share of 116.3 cents.

"2020 has been one of the most challenging years our organisation has ever faced," Chief Executive Iain Williamson said.

It has launched an updated long-term strategy it says will allow it to build "the most valuable businesses in the industry".

This will include product innovation, investment in both physical and digital distribution and tying rewards to customers' financial behaviour, Williamson said.

Its shares were down around 3% by 0756 GMT.

The pandemic dealt a 6.1 billion rand blow to Old Mutual, driven by higher provisions for excess claims. Like rivals, its sales also fell and credit losses rose.

But Old Mutual also had to hike its business interruption and rescue reserves to 791 million rand in the second half - a rise that was more than double what it guided in the first half.

That once again knocked faith in an insurer that has long struggled to deliver on a promise to grow value for shareholders after completing a costly break-up of its previous structure in 2018.

A prolonged legal battle with ex-CEO Peter Moyo over his abrupt dismissal, which Old Mutual had only just put behind it when the pandemic struck, has been a major blow to that effort. = 14.8090 rand)

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or