Johannesburg - MMI Holdings, South Africa’s third-largest life insurer, was eyeing acquisition opportunities in several countries in Africa as it hoped to grow the revenue contribution from these regions to between 10 percent and 15 percent in future, chief executive Nicolaas Kruger said yesterday.
The company had earmarked R500 million to invest in its expansion, Kruger said, but there were not many available targets on the continent.
The company had considered Angola and Zimbabwe among other territories. It was bedding down a deal in east Africa but he said discussions were not at an advanced stage.
Many potential acquisition targets were either not available or were not interested in a bid. Sellers were still asking for high prices, he said. “I’ll be quite disappointed if we don’t spend R500m within the next year or two.”
The company already operates in 12 countries outside South Africa. On Tuesday, it announced a deal to distribute insurance with Indian cellular operator Bharti Airtel, which competes with MTN in Africa. Details of the deal would be published soon, Kruger said.
Yesterday, the firm reported new business growth exceeded target and gained 19 percent to R711m during the year to June following the introduction of new insurance and health products for African markets. The performance by its operational divisions resulted in a 19 percent increase in core headline earnings to R2.5 billion during the period under review.
The firm has 3 million lives under its administration.
Momentum Retail, the division focusing on the middle- to upper-income market, grew new business by 17 percent to R203m while operating profit jumped 11 percent to R1.2bn.
Metropolitan Retail, targeting the lower- to middle-income segment, reported a fall in new business to R239m and a 16 percent increase in operating profit to R509m.
Kruger said the firm would introduce a new initiative specifically for the middle-income sector, a market of about 5 million people, where the company felt it was underrepresented. However, he said “it’s too early to be definitive on the specific products”.
Kruger said consumers remained under pressure, while lower economic growth and labour unrest were further challenges. “The environment is tough. In the longer term we would want double-digit growth,” he said, adding that the firm would want to exceed gross domestic product growth by at least 3 percentage points.
MMI was formed by merging Metropolitan Group and Momentum Group three years ago. The group said the merger had been bedded down and R346m in savings of the R500m targeted had been realised.
Headline earnings a share grew 7 percent to R2.05, beating the R2.01 median estimate of five analysts surveyed by Bloomberg.
The stock gained as much as 2.6 percent and closed 1.35 percent higher at R23.22, its highest close in three months.
MMI was the largest gainer on the five-member FTSE/JSE Africa life assurers index.