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Old Mutual forecasts H1 loss as coronavirus crisis hammers volumes

Credit: REUTERS/MIKE HUTCHINGS

Old Mutual said on Monday it expects to post a loss in the first half of 2020 as it deals with weak business volumes and a spike in business interruption insurance claims caused by the COVID-19 crisis.

Adds details from statement, background on industry and company

Aug 24 (Reuters) - Old Mutual OMUJ.J said on Monday it expects to post a loss in the first half of 2020 as it deals with weak business volumes and a spike in business interruption insurance claims caused by the COVID-19 crisis.

The South African insurer forecast basic earnings to be between a loss of 128.5 and 154.2 South African cents per share for the six months ended June 30 versus a profit of 127.3 cents a year earlier.

The 175-year-old company expects results from operations to plunge by 61% to 71% to 1.31 billion to 1.76 billion rand($44.56 million to $76.80 million)for the period.

"New business sales volumes were negatively impacted, as most of our tied advisers 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," the company said.

Old Mutual named Iain Williamson as its permanent Chief Executive last month, hoping to move on after a year of upheaval caused by the exit of his predecessor Peter Moyo who was fired over an alleged conflict of interest.

Insurers across the globe have been setting aside billions of dollars as they face up to steep claims resulting from coronavirus lockdowns, which have shut businesses and led to cancellations or postponements of major events including the Olympics.

Another aggravating factor has been higher credit spreads, which Old Mutual said have led to notable unrealised mark-to-market losses in its unlisted equity and credit portfolios in its investment business.

($1 = 17.0563 rand)

(Reporting by Muvija M in Bengaluru Editing by Rachel Armstrong)

((muvija.m@tr.com; within UK: +44 20 7542 1810, outside UK: +91 80 6182 2698; Mobile: +91 90 4702 2289;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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