Old Mutual, South Africa’s oldest insurer founded in 1845, reported a drop in headline earnings for the first half of its financial year. The decline matters most to shareholders, policyholders and the many small businesses that rely on its life and savings products for employee benefits.
Headline earnings, the profit figure before one-off items, fell about 5.5% year-on-year to R3.9 billion, down from R4.2 billion in the same period of 2025. Adjusted headline earnings, profit after stripping out items that are not expected to recur, fell a sharper 30% to roughly R3 billion. The company attributes the weaker numbers to “negative shareholder investment returns” linked to poor performance in equity and bond markets.
Old Mutual said the slump in its investment portfolio mirrors the fall in South African equity and bond indices, which have been pressured by ongoing geopolitical tensions. It singled out the war in the Middle East, specifically the conflict in Iran, as a driver of “sharp risk-off conditions”. In plain terms, investors are shying away from riskier assets, which drags down the returns on the insurer’s shareholdings.
The gap between headline and adjusted headline earnings is explained by strong results in Zimbabwe. Old Mutual recently relisted on the Victoria Falls Stock Exchange and said its Zimbabwe operations boosted overall profit, but those gains are excluded from the adjusted figure. This distinction is a company claim and has not been independently verified.
Despite the earnings dip, the life and savings segment showed resilience. The embedded value, a measure of the long-term worth of life policies, rose 4% and new business value jumped 32% to R569 million, up from R432 million a year earlier. Life insurance sales increased 21% to about R7.9 billion, a notable gain given industry-wide pressure on annuity volumes.
Banking arm continues to lose ground
The banking division posted a near-total loss, down roughly 97% year-on-year. Net interest income grew, but non-interest income fell about 5% to R579 million, dragging the segment into the red.
For investors, the earnings decline translated into a 1% fall in headline earnings per share (HEPS, profit per share before one-off items) and a 27% drop in adjusted HEPS. The company did raise its interim dividend to 40 cents per share, an 8% increase from 37 cents.
Group CEO Jurie Strydom said the group delivered a “solid first-half performance” thanks to “focused execution and growth momentum”. He highlighted an 11% rise in results from operations per share and a return on group equity value of 12.7%.
For small-to-medium enterprises that buy group life policies for staff, the mixed picture means continued access to a stable insurer, but also a reminder that market turbulence can affect the financial health of the provider. The war-driven risk-off environment is unlikely to reverse quickly, so businesses may want to monitor how Old Mutual’s investment strategy evolves.
Why one insurer’s investment losses ripple into small-business benefits
Old Mutual’s earnings decline traces back to a source most policyholders never think about: an insurer’s own shareholder investment portfolio, the pool of capital backing the guarantees it sells, is invested in the same equity and bond markets its clients’ policies reference, which means a geopolitical shock like the one described here hits the insurer’s balance sheet through the identical channel it would hit an ordinary investor’s own portfolio. For a small business that has bought group life or disability cover for staff, that distinction matters because it separates two very different kinds of risk: the risk that a claim goes unpaid, which depends on the insurer’s solvency and reserves, and the risk that the insurer’s own profitability wobbles in a bad investment year, which affects shareholders and future product pricing far more than it affects an existing policyholder’s actual cover.
The gap between Old Mutual’s raised dividend and its falling adjusted earnings is itself a signal worth reading correctly: a board raising a dividend during a earnings dip is typically communicating confidence that the shortfall is cyclical, tied to a specific, identifiable event like the Middle East conflict, rather than a structural weakening of the underlying business, since cutting a dividend is a far more damaging signal to shareholders than temporarily paying it from reserves during a rough patch.
