OLD MUTUAL LIMITED - Group annual results and final dividend declaration for the year ended 31 December 2025
What this filing means
Old Mutual reported mixed FY25 results, pairing 24% adjusted earnings growth and an 8% dividend increase with a 52% collapse in the value of new business.
Old Mutual grew its adjusted profits and increased the dividend it pays to shareholders by 8%. However, its ability to sell profitable new policies dropped sharply, and some of the profit growth was driven by temporary economic effects in countries like Malawi.
Bull case
- Adjusted headline earnings increased by 24% to R8.3 billion.
- The total dividend increased by 8% to 93 cents per share, supported by robust cash generation.
- Management continues to execute the R3 billion share buyback, with R0.7 billion completed to date.
- Disciplined cost control led to a 15% reduction in shareholder operational costs excluding restructuring charges.
Bear case
- The value of new business collapsed by 52%, dropping the margin to 1.2%, which is below management's target range.
- Earnings are heavily distorted by elevated returns in Malawi; adjusting for kwacha devaluation would significantly dampen reported growth.
- The group's reliance on non-IFRS adjusted metrics masks a 2% decline in standard headline earnings.
- The shareholder solvency ratio declined by 2,000 basis points to 162% due to market movements and equity shocks.
AI-generated summary by SENS-AI, based on the original JSE SENS filing.
SENS-AI conclusion
Old Mutual reported FY25 results featuring a 24% increase in adjusted headline earnings to R8.3 billion and an 8% increase in the total dividend to 93 cents per share. While the ongoing R3 billion share buyback and 15% reduction in operational costs support capital returns, the underlying quality of earnings is pressured by a 52% decline in the value of new business and significant reliance on volatile regional operations in Malawi. This filing does not establish whether the recent deterioration in new business margins can be reversed in the near term. Investor Takeaway: Strong capital returns and adjusted earnings growth provide downside protection, but the collapse in new business value limits conviction in the core operational growth thesis. Signal-to-Price Note: The stock is down 0.81% today on elevated volume, which may reflect market concerns over the stark divergence between adjusted earnings and the underlying new business deterioration.
Fundamental momentum is mixed due to the divergence between strong capital returns and weak new business metrics. Useful as thesis confirmation for yield stability, not as a fresh conviction trigger.
Decision framework
Current stance: Filing Neutral
Key drivers
- Adjusted headline earnings increased by 24% to R8.3 billion.
- The total dividend increased by 8% to 93 cents per share, supported by robust cash generation.
- Management continues to execute the R3 billion share buyback, with R0.7 billion completed to date.
Key risks
- The value of new business collapsed by 52%, dropping the margin to 1.2%, which is below management's target range.
- Earnings are heavily distorted by elevated returns in Malawi; adjusting for kwacha devaluation would significantly dampen reported growth.
- The group's reliance on non-IFRS adjusted metrics masks a 2% decline in standard headline earnings.
What would change the view
- Guidance and cash-flow quality both improve materially from current baseline.
- Subsequent filings remove current uncertainty and confirm durable execution.
- Market structure/positioning shifts enough to support a directional thesis.
Evidence from the filing
Adjusted headline earnings increased by 24% to R8.3 billion, reflecting strong operational performance across the group.
“Adjusted headline earnings increased by 24% to R8.3 billion, further benefitting from elevated shareholder investment returns in South Africa and Malawi.”
The group declared a final dividend of 56 cents per share, resulting in a total dividend of 93 cents per share, an 8% year-on-year increase.
“On cash generation, the Old Mutual Board declared a final dividend of 56 cents per share, bringing the total dividend to 93 cents per share, an increase of 8% year-on-year.”
The share buyback program initiated in September 2025 remains active, with R0.7 billion completed to date, signaling management's confidence in the company's value.
“The Group announced a R3 billion share buyback in September 2025. R0.7 billion has been completed to December 2025 and the programme is continuing while it remains value accretive to shareholders.”
Disciplined cost management resulted in a 15% reduction in shareholder operational costs, excluding restructuring charges, while R450 million in savings were realized in 2025.
“Excluding the impact of restructuring costs, shareholder operational costs reduced by R246 million from the prior year, a reduction of 15%.”
The value of new business (VNB) declined by 52%, with the VNB margin falling to 1.2%, which the company explicitly acknowledges is 'below our target range,' signaling potential long-term competitive or pricing pressure.
“Value of new business declined by 52% largely due to strengthened persistency assumptions, as well as lower annuity and retirement fund umbrella sales. This led to a reduction in the value of new business margin to 1.2%, below our target range.”
The group's financial performance is heavily distorted by volatile regional operations, specifically in Malawi, where results are inflated by elevated returns; the company admits that adjusting for a 30-50% kwacha devaluation would significantly dampen reported growth metrics.
“Our 2025 earnings are also significantly impacted by elevated returns and performance in Malawi, which continues to experience elevated levels of inflation and shortages of foreign currency. Assuming a devaluation of the Malawian kwacha of between 50% and 30%, the increase in results from operations would have been between 7% and 9%.”
The reliance on non-IFRS financial measures, which the company itself warns 'may not fairly present Old Mutual's financial position,' introduces reporting subjectivity that complicates a clear assessment of the group's underlying health.
“Because of their nature, they may not fairly present Old Mutual's financial position, changes in equity, results of operations and cash flows.”
The 2,000 basis point decline in the shareholder solvency ratio to 162% highlights reduced capital buffer strength, which, while currently within target, leaves less room for error given the group's exposure to market volatility and equity shocks.
“The Group's shareholder solvency ratio of 162% remained well within the target range of 155% to 185%. This was impacted by significant market movements, particularly lower yields and higher prescribed equity shocks due to stronger equity markets.”
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