Old Mutual H1 profit drops on weaker returns

Old Mutual reported a significant decline in profitability for the six months to June 2026, as market conditions weighed on investment performance. Adjusted headline earnings fell 30% to 2.95 billion rand over the period. Profit attributable to shareholders under IFRS also declined, slipping about 5% to 3.89 billion rand.

The reported drop in adjusted headline earnings represents a notable setback for the group over the first half of the year. The figures reflect the sensitivity of the insurer’s earnings to movements in financial markets and shifts in investor risk appetite.

Old Mutual attributed the decline in adjusted headline earnings mainly to negative shareholder investment returns. Risk-off sentiment linked to conflicts in the Middle East curbed investment activity and reduced returns on the shareholder portfolio. These weaker market-driven outcomes pulled earnings below what the group describes as normalised expectations.

Market volatility and heightened geopolitical uncertainty prompted investors to move away from riskier assets, affecting the value and performance of Old Mutual’s investments. This dynamic, rather than underlying insurance operations, was identified as the primary driver of the earnings contraction in the period.

Despite the pressure on profits, Old Mutual’s board opted to maintain capital returns to shareholders. The company declared an interim dividend of 40 cents per share for the six-month period to June 2026. In addition to the dividend, the board approved a 1 billion rand share buyback.

The combination of a cash dividend and a share repurchase programme signals a continued focus on distributing excess capital to shareholders. These actions come even as earnings were reduced by adverse investment conditions tied to geopolitical tensions.

The first-half 2026 results underline how Old Mutual’s performance is closely linked to market sentiment and global events. Earnings were hit primarily through shareholder investment returns, while the group continued to return capital via dividends and buybacks. Future profitability will remain influenced by the evolution of geopolitical risks and the corresponding impact on risk appetite and asset values.