Old Mutual Holdings returns to profitability after six years

• Old Mutual Holdings Returns to Profitability after Six Years;

Old Mutual Holdings has posted the first profit in over six years owing to the reduced expenses of servicing loans.

The Insurer recorded a net profit of Sh838 million in the year to December 2024, up from a net loss of Sh114 million last year.

The full-year net profit is a first after successive losses in at least half a decade, with the largest net loss of Sh3.49 billion realized in 2019.

Old Mutual says that the finance costs dropped by  49 percent to Sh1.1 billion even though borrowed funds rose to Sh7.09 billion from Sh6.8 billion, which  indicates that it had retired more expensive credit facilities.

The firm said it converted part of the shareholder loans to equity, which saved it from higher finance costs.

“The notable sources of the increase in profits include the continued growth of the asset management business, which registered a Sh0.3 billion increase in profits and a significant increase in investment income of Sh2.3 billion,” old Mutual said in a report adding that,

“We also realized savings in operating expenses as well as a reduction in finance charges following conversion of shareholder loans into equity.”

The increased investment income drove Old Mutual’s performance despite a decline in insurance service results – the difference between premiums collected and claims paid out as well as the related expenses-by 77.8 percent to Sh361 million.

Old Mutual cited its lower insurance profit to increased cost of claims across the medical businesses and costs incurred in exceptional events such as the floods, and  protests which hit Kenya from March to June last year.

Old Mutual further said claim costs incurred during the period of review were Sh15 billion higher than in 2023, pointing to higher payouts.

In addition, Old Mutual noted lower claim recoveries were realized in its facultative business in Uganda, leading to increased outflows in the reinsurance results.

Old Mutual exited the Tanzanian market under review, registering a Sh363 million loss on disposal of the subsidiary.