Old Mutual Holdings H1 revenue grew 12%

Old Mutual Holdings Limited, a prominent insurance company, recently reported a 12.2% increase in insurance revenue to Ksh16.2 billion in the first half of the year. While the top-line growth was robust, the group's net profit experienced a decline of Ksh348 million, settling at Ksh1.2 billion. In an exclusive interview with CNBC Africa's Julius Bizimungu, David Muchai, the Group CFO at Old Mutual Holdings, delved into the company's financial performance and strategic focus across its subsidiaries. Muchai highlighted the strong performance of the company's East African subsidiaries, particularly in Kenya, Uganda, and Rwanda, where the insurance businesses have been thriving. However, challenges persisted in Tanzania and South Sudan, with the latter just breaking even in the first six months of the year. Tanzania is still working towards generating a positive return for Old Mutual Holdings, primarily affected by scalability issues in the region. Muchai emphasized that the growth in premiums across the company's operations was predominantly organic, with notable success in the health portfolio in Kenya and Uganda, as well as growth driven by the oil and gas sector in Uganda. Despite the impressive top-line growth, Muchai acknowledged a decline in the bottom line, attributing it to increased finance costs. The finance costs nearly doubled, primarily due to currency fluctuations, specifically the weakening of the Kenyan shilling against the US dollar. Additionally, Muchai pointed out the impact of rising interest rates, which significantly escalated finance expenses for the company. When questioned about the company's ability to withstand external risks such as inflation, floods, and droughts, Muchai reassured that Old Mutual Holdings had internal capabilities to respond to these challenges. He highlighted that a significant portion of the company's dollar loans were shareholder-related, providing room for restructuring to manage risks effectively. However, these challenges have contributed to the board's decision not to recommend a dividend payout in the current period, as the focus remains on stabilizing the balance structure and enhancing profitability. Looking ahead, Muchai expressed confidence in the outlook of the region, despite macroeconomic challenges such as inflation and FX pressures. He anticipated a positive second half of the year, citing stable political environments across key markets, including successful political transitions in Kenya and anticipated smooth elections in Rwanda and Uganda. Overall, Old Mutual Holdings remains optimistic about its performance in the upcoming months, leveraging its operational strengths to navigate through the prevailing economic uncertainties.