Old Mutual Life South Africa Notes Rated zaAA- by S&p

In Short

S&P Global Ratings has rated Old Mutual Life South Africa’s proposed unsecured subordinated notes at zaAA- on the South Africa national scale.

What Happened

S&P Global Ratings assigned a zaAA- issue rating to proposed deferrable, floating-rate subordinated notes from Old Mutual Life Assurance Co. (South Africa) Ltd. The rating applies to two planned series, a five-year note (series 24) and a seven-year note (series 25).

This is a rating on a proposed issuance, and it is subject to confirmation of the final terms and conditions. S&P said it understands the insurer will use the proceeds for capital management, meaning it is adjusting how much regulatory capital it holds rather than funding day-to-day operations.

S&P rated the notes three notches below the insurer’s long-term zaAAA national scale rating. It said the downgrade reflects two risks common in this type of debt.

First is coupon payment risk. The notes have mandatory interest deferral triggers if solvency requirements are breached, meaning the insurer can be forced to pause interest payments under certain capital stress conditions.

Second is subordination. Subordinated notes sit below senior debt in the repayment order if an issuer fails, so investors take more loss risk.

S&P cited Old Mutual Life South Africa’s regulatory solvency ratio of 175% as of June 30, 2026, and Old Mutual Group’s ratio of 160%. It expects capital to remain within the firm’s target range of 150% to 180%.

The notes are being issued under a ZAR25 billion multi-issuer note programme, with expected proceeds of up to ZAR1.7 billion.

Why It Matters

For investors, the zaAA- rating signals strong expected credit quality on South Africa’s national scale, but also highlights the trade-offs of subordinated insurance debt, including deferrable coupons and lower repayment priority.

For the group, the planned issuance is another example of how large African financial services firms use local debt markets for capital planning. If completed, it could support balance sheet flexibility without materially lifting leverage, which S&P expects to stay below 20% over the next two years.