(Reuters) – The South African insurance company Old Mutual Ltd. warned on Monday of a full-year loss, saying it had been forced to increase provisions and reserves related to the COVID-19 pandemic and lower its shares by more than 3%.
It predicted a basic loss per share of between 97.9 cents and 139.5 cents and a loss after tax of up to 6.2 billion rand ($ 404 million).
Old Mutual, South Africa's second largest insurance company, increased its sales by almost 3.4 billion rand as receivables exceeded the funds allocated during the first half of the year in the middle of a second, more serious wave of COVID-19 in South Africa.
It also more than doubled an earlier estimate for an increase in the reserves for business interruptions and business rescue to about 300 million rand from up to 1
"We exercised tight cost control throughout the business to partially mitigate adverse earnings effects," said Old Mutual, adding that it had also seen a recovery in sales and productivity in the second half.
Not all South African insurers had to equalize their livelihoods, but they have all faced challenges during the pandemic, including changes in their regular distribution channels caused by lockdowns. -trapped customers reduce their expenses, with insurance often among the first things to go.
Old Mutual said its adjusted earnings per share (HEPS) would remain positive but fall by up to 79% to be between 44 cents and 69.4 cents.
HEPS is the most important profit measure in South Africa, but removes some non-recurring items that hurt Old Mutual's results last year.
Its shares had fallen 3.4% before 0724 GMT.
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