Old Mutual Holdings has reported a dramatic decline in its half-year 2025 financial results, with profit before tax tumbling 66% to KES 380 million from KES 1.1 billion a year earlier. Profit after tax suffered an even sharper drop, plunging 99% to just KES 5 million, underscoring the mounting pressures facing the insurer amid a tough economic environment.
The results, for the six months ended 30 June 2025, highlight how weaker interest income, rising liabilities in insurance operations, and higher financing costs have combined to erode profitability across the group’s business lines.
The most significant factor weighing on Old Mutual’s earnings was lower interest rates in Kenya. The company said this alone had a negative impact of KES 625 million, stemming from reduced interest income, fair value losses on fixed income securities, and an increase in discounted insurance liabilities.
“Lower interest rates in Kenya resulted in a negative impact of KES 625 million due to the net effect of lower interest income, fair value movements of fixed income securities and an increase in discounted insurance liabilities, adversely impacting profits,” Old Mutual said in a commentary statement.
Insurance Service Results from insurance businesses declined by KES 57 million when compared to HY 2024 driven by lower insurance revenues across all countries. The Life business in Kenya was also impacted by higher loss ratios than in HY 2024.
The group’s life business in Kenya was hit particularly hard by higher loss ratios, a measure of claims costs relative to premiums. This trend reflects a rise in policyholder claims and payouts, as well as a tougher operating environment for households grappling with inflation and slower economic growth.
Other factors dragging profitability included lower income from equities and higher financing costs linked to the refinancing of a loan for the group’s property holdings in Uganda.
Adding to the pain, Old Mutual’s effective tax rate rose sharply, further squeezing net earnings. After accounting for taxes, the company reported just KES 5 million in profit from continuing operations, down from KES 1.1 billion in the same period last year.
The group described the tax impact as a “material driver” of the 99% decline in after-tax profits.
One area of relief came from foreign exchange movements. Old Mutual reported KES 94 million in other comprehensive income arising from the impact of translating the financial results of our foreign operations into the Group’s Consolidated Financial Statements following a slight weakening of the Kenya shilling against the Uganda shilling. This was partly offset by the stabilization of the Kenya shilling against the US dollar.
Despite the stark headline figures, Old Mutual said it continues to identify areas of resilience. Operating expenses and outgoings were broadly flat compared with 2024 and came in significantly better than expected thanks to strict cost-cutting measures.
“We continue to see a few bright spots despite the challenging environment: total expenses & outgoes remain flat compared to HY 2024 and significantly better than planned due to cost containment measures.” The company said.
The group’s asset management division also reported robust growth, with income rising 31% to KES 1.0 billion from KES 0.7 billion a year earlier. This performance, Old Mutual said, reflects rising demand for investment products in East Africa, particularly in fixed-income funds and diversified portfolios.
Old Mutual’s difficulties mirror those of other insurers operating in Kenya and across Africa, where weaker economic growth, regulatory changes, and rising claims have weighed on performance.
Kenya’s insurance industry has also been facing structural challenges, including low penetration rates, increasing competition, and pressure to innovate through digital channels. At the same time, macroeconomic shifts, such as falling interest rates, have reshaped the investment landscape for financial institutions.
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