050314 MMI Holdings grew its operating profits by 24 percent in the six months to 31 December 2013 and achieve a 20 percent return on embedded value for shareholders.MMI Chief Executive Nicolaas Kruger presented the company financials in Sandton North of Johannesburg.photo by Simphiwe Mbokazi 5

Johannesburg - The past year presented a competitive environment for insurers, putting pressure on the premiums they charge, but MMI Holdings was able to balance competing on price and maintaining its profit margin, it said yesterday.

MMI, born out of a merger of Metropolitan and Momentum in 2011, reported 23 percent growth in the value of new business across all business units to R378 million for the six months to December. Core headline earnings increased by 13 percent to R1.66 billion, with operating divisions contributing profit of R1.4bn, an increase of 24 percent.

MMI’s annualised return on embedded value was 20 percent.

“When you look at the overall profit from new business, our profit margin of 1.8 percent remained the same as last year. So we did not have to sacrifice the profit to get the nice volumes we achieved,” MMI group chief executive Nicolaas Kruger said.

“It has been one of the most competitive periods,” he added.

The Momentum Retail and Momentum Employee Benefits divisions had the strongest growth in the value of new business during the interim period.

At Momentum Retail, the value of new business increased by 46 percent to R136m and in the employee benefits business, it was up 36 percent to R90m.

Although growth in new business volumes would be dependent on the economic environment in the current six months, MMI said, in the following financial year it would expand its distribution channels, including independents and its own intermediaries.

The two acquisitions the group announced last year, of Guardrisk and of a majority stake in Kenyan insurer Cannon Assurance, would create new distribution channels and give MMI access to a unique base of clients.

Although the company already has operations in Nigeria, Kruger expected Cannon Assurance to give the group more scale and it would also see MMI venture into short-term insurance in that market.

After the two acquisitions, MMI was still sitting on R3.5bn cash at the end of December. It has earmarked R1bn of this for strategic growth initiatives that would come its way and would keep a portion to comply with the solvency assessment and management regulations, which are due to come into effect in 2016.

It declared an interim dividend of 57c a share.

MMI closed 0.56 percent up at R23.15 while the JSE’s life insurance index fell 0.14 percent. - Business Report