A letter to the people we serve
Old Mutual: Financially strong - and here for you
The year that marks our 175th anniversary as a market-leading financial services provider is turning out to be one of extreme change and uncertainty. The world is facing unprecedented challenges, primarily caused by the Covid-19 pandemic but aggravated by many other factors such as climate change, urban concentration, rapidly changing technology and geopolitical tensions.
In these uncertain times, Old Mutual is very conscious of the anxiety and pressure that our customers, investors, business partners, financial advisers, employees and other stakeholders are experiencing.
As the Chief Risk Officer of Old Mutual, I would like to assure you of our Group’s financial resilience, preparedness and ability to support you through the current turbulence.
Being a large institution that provides essential financial services, we regularly analyse our ability to withstand different types of shocks and scenarios, especially those where a number of risks occur at the same time. The aim of these stress-testing exercises is to ensure that we always have sufficient capital and sources of liquidity to pay claims to our policyholders, honour our guarantees, and meet all our other financial obligations.
175 years of strength behind us
At Old Mutual, our credo is to be a certain friend in uncertain times and we have lived up to this promise for 175 years by maintaining a strong and resilient balance sheet and ensuring that we remain operationally sound and storm-proof. Our financial strength targets are set at a level that enables us to survive a ‘Perfect Storm’ scenario, while honouring all our obligations to our stakeholders and still remaining comfortably above the capital level required by regulators.
In South Africa, we are indeed experiencing a severe scenario, with a high risk to the health of citizens who are infected with the coronavirus, operational challenges due to the temporary shutdown of the economy, extreme falls in financial markets, low prospects for economic growth, failure of certain state-owned entities to deliver services and the country in a dire fiscal position.
Nevertheless, the shocks that we have experienced to date are not as severe as the ‘Perfect Storm’ scenario that we designed our business to withstand. Therefore, we are confident that we will remain strong and able to support all those who depend on us, even if the current crisis gets worse.
We want to especially reassure our policyholders, who trust us to pay benefits in the event of death, disability or severe illness, as well as those who rely on us to meet general insurance claims, that we are fully committed to being able to pay claims as quickly as we can, despite the disruption to normal operations.
While we have ensured that our service channels remain open, we are nevertheless urging our customers to make use of online and digital channels as far as possible, for their safety and convenience. Our employees are able to work from home with secure access to our network and systems, thereby ensuring we continue to service your needs.
Stay calm. Stay focused, Stay together.
Many of our clients who trust us with their savings and investments will have been dismayed at the reduction in values caused by the fall in markets. In times like these, almost all asset classes other than cash tend to fall dramatically, and because cash is never a solution for long term saving, it means a widespread fall in values for most investors. We encourage you to stay calm and think clearly. Panic can lead to rash decisions that are later regretted. It is far wiser to be patient, consult your financial adviser for guidance and remain focused on the long-term picture.
Old Mutual applauds the South African President for his courageous and proactive leadership in fighting the spread of the pandemic. As a responsible business with heart, we are committing resources and funding to support the Solidarity Response Fund and government’s efforts to save hundreds of thousands of lives, support the economy and assist the vulnerable during this crisis.
It is this spirit of solidarity we share with our colleagues, customers, stakeholders and fellow countrymen across the continent that will help get us through this difficult time.
Take great care and stay safe.
Old Mutual Limited: Chief Risk Officer