Old Mutual Malawi Limited has declared a bonus of 34.4 percent on its Guaranteed Fund for the year 2022, which is 13 percent more than the average inflation rate.
Additionally, the Guaranteed Fund has exceeded its targets and delivered on its promise to customers as historical data shows that the annualized fund bonuses for the three, five, and 10-year periods were above inflation, delivering a real return to clients over the medium to long term.
Speaking to journalists in Lilongwe on Friday, the Managing Director for Old Mutual Assurance Company (Malawi) Limited, Roy Punungwe, described the feat as a result of good performance on investment by the company.
Punungwe assured that the company will continue declaring a healthy bonus in the coming years as it continues to invest in customer focused solutions.
“The Guaranteed Fund’s objective has remained the same for more than five decades: to provide inflation-beating returns over the medium to long-term. The Fund’s size allows for diversified investments, reducing volatility and increasing returns. The two key components of the product are smoothing and guarantees. Smoothing decreases the impact of volatility on customer funds, ensuring more stable performance over time, and the product provides 100% guarantee on capital and vested bonuses, which is a key protection mechanism for customers,” he said.
In 2022, headline average inflation increased to 21.0 percent due to increases in both food and non-food costs. Interest rates also increased as the Policy Rate was raised to 14 percent in May 2022 and then again to 18 percent in October 2022.
Additionally, the government devalued the currency by about 25 percent on May 26, 2022, due to forex shortages. The equity market performance, as measured by the All-Share index, was positive at 36.7 percent in 2022, compared to 40.0 percent the previous year, a feat attributed to strong corporate earnings from the banking and agricultural sectors.
Thus, Punungwe said the Guaranteed Fund’s performance was driven by strong performance across all asset classes, achieving 24 percent returns, which is above the average inflation rate of 21 percent experienced over the same period.
Among key highlights, the company registered an increase in assets under management by 38 percent to close at MK539 billion as of 31 December 2022 while contributions increased by 49 percent on the back of strong new business performance.
Benefit payments increased by 38 percent, attesting to the growth of the Fund. Meanwhile, Old Mutual has announced plans to launch two solutions in 2023 based on customer feedback.
The first solution is a new Smoothed Bonus Fund similar to the Guaranteed Fund, but with a more transparent bonus declaration formula, and customers will have more choice regarding the level of guarantees provided.
The second solution is a Market-Linked Fund that will not offer smoothing of returns or guarantees, which is more appropriate for customers who are less risk-averse but still want to benefit from investing in a large collective investment vehicle. These solutions are intended to provide value and more choice to customers.
