Just one day after the Association for Savings and Investment South Africa (Asisa) revealed that life assurers paid out a collective R599-billion over the last year, Old Mutual revealed that it paid out R30-million a day in claims in 2023.

Momentum Metropolitan also confirmed to Daily Maverick that it paid out R103-billion for the 2023 financial year.

Old Mutual chief executive, Iain Williamson, says the financial services giant paid out more than R14-billion in claims for the financial year to the end of December 2023, and settled 88% of funeral claims in a four-hour turnaround time.

When asked about policy lapses (where policies fall away because consumers have been unable to keep up the premium contributions), Williamson said there has been a lot of pressure in the system from a lapses perspective. “Consumers have been under intense financial pressure over the last few years. We think that cycle bottomed in about July last year. So, there was still pressure for sure in the second half of last year, but it seemed to improve slowly,” he said.

Williamson says there were green shoots indicating the beginning of a recovery in the last quarter of 2023, which seemed to have continued into 2024, “bearing in mind that January is usually the worst month of the year for collections and persistency”.

“On a forward-looking basis, I anticipate further improvement essentially driven by prospects of the rates cycle, and hopefully that’ll happen around the middle of the year,” he said.

Jeanette Marais, group chief executive of Momentum Metropolitan also expressed concern that the impact of South Africa’s economic stagnation, compounded by the ongoing electricity and water crisis, continues to place financial strain on all South Africans. “We firmly believe that challenges present opportunities for innovation and growth, and we will continue to provide our clients with advice, solutions and service that enable them to achieve their financial goals,” she said.

On a positive note, the value of new business grew by an impressive 37% in 2023, with gross flows and gross written premiums increasing by 14%. Shareholders will receive a final dividend of 49 cents per share amounting to a dividend cover of 1.5 times, with total dividends declared in 2023 amounting to 81 cents per share, up 7% from the prior year.

Old Mutual Bank on track to launch this year

Williamson says the company completed the bulk of the core bank infrastructure by the end of the year within a budget of R1.75-billion. As part of the regulatory application process, an external audit firm had to confirm that everything Old Mutual bought was fit for purpose and that it would be capable of running a bank appropriately with the infrastructure purchased. The regulator has confirmed that the application for a conditional banking license is complete and is now under consideration.

“Once we receive this next round of approval, we have to integrate the bank into all the payment clearing houses in the Payments Association of  South Africa. That’s a three-month process, and once done will kick off another round of approvals. Once that’s done, we can use a small pilot group of customers to fully test the end-to-end functionality of the bank, before we finally launch to the public,” Williamson said. DM