FINANCIAL services group Old Mutual says the business has sufficient liquidity levels having maintained a strong solvency position despite the adverse impact of the Covid-19.
The pandemic has spread across countries including Zimbabwe since its outbreak last December, forcing countries to adopt lockdown measures to curb its spread. The measures have inflicted a huge strain on economies due to slowdown in business activity. In a statement accompanying interim financial results for the six months ended June 30, 2020, Old Mutual said its operations were also affected but bottom line has remained strong.
“Although the pandemic adversely affected earnings in the first half of the year, our business remains robust, with sufficient levels of liquidity and strong solvency positions in our regulated subsidiaries,” said the group.
“We have performed stress tests to assess our liquidity and solvency position sunder various recovery scenarios. In all scenarios, our liquidity levels remain positive and our solvency ratio remains within our target range.”
Old Mutual said due to the significant level of uncertainty prevailing at the moment, it has deferred the decision to declare an interim dividend.
“We believe this action is necessary in a period of heightened uncertainty and we will revisit this decision for the full year dividend declaration when we have more clarity on the shape of possible economic recovery scenarios,” said the group.
During the period under review, new business sales volumes were negatively impacted, as most of Old Mutual’s tied advisers in the Mass and Foundation Cluster were unable to sell during the lockdown period due to the partial closure of the branch network and lack of access to customers’ homes, worksites and branches. On personal finance, the impact was less severe as we could enable remote working for a larger proportion of advisers.
“Although lockdown restrictions have been eased, and economic activity has somewhat resumed, sales levels remain below prior year levels. The continued financial pressure on our customers led to a decline in sales activity and poor persistence experience, which adversely affected distribution efficiencies,” said the group.