Momentum in double-digit earnings growth
DURBAN - Momentum Metropolitan Holdings bounced back strongly in the first quarter of the 2021 financial year by reporting a double-digit growth in earnings after it was hurt by the Covid19 outbreak in its full-year results.
The country’s largest insurance financial services group yesterday reported an 18 percent growth in normalised headline earnings to R1.04 billion during the quarter to the end of September, with operating profit up by 61 percent to R846 million and value of new business increasing by 6 percent to R106m.
Momentum Metropolitan Africa reported a 29 percent increase in normalised headline earnings to R165m, driven by the recovery of the investment markets across the region.
Chief executive Hillie Meyer said the good results were partly because they efficiently acclimatised themselves to the changes in the needs and behaviour patterns required as a result of Covid-19.
“We are pleased with the continued progress that we have made in each of the business units towards our ‘reset and grow’ strategic objectives. Our employees remain instrumental to our continued success, and their contribution to the group’s resilience in the past nine months of the Covid-19 crisis cannot be overstated,” Meyer said.
The quarterly results come on the back of disappointing full-year results for the year to the end of June, in which the group reported a 51 percent decline in earnings, hurt by a R251m loss on additional provisions that were made, and a net negative impact of R983m for potentially adverse claims and policyholder lapses and withdrawals related to the Covid-19 pandemic.
The fall in earnings at year-end put the group’s “reset and grow” strategy under threat and potentially missing out on its 2021 targets of achieving between R3.6bn and R4bn in normalised headline earnings.
The group said the release of Covid19 provisions did not materially impact this positive result and a 45 percent decline in investment returns due to current low interest rates slowed down the group’s overall performance, but it still managed to report an 18 percent increase in earnings.
Momentum Investments reported a 75 percent increase in operating profit to R255m and new business volumes increased 30 percent to R8.7bn compared with the same quarter last year.
The group said the strong growth was driven by earnings from annuities, structured products and good expense management. Momentum Life saw its operating profit increasing by 17 percent to R284m, and Metropolitan Life’s operating profit increased by 21 percent year-on-year.
Looking ahead, Meyer said the impact of Covid-19 and the challenging economic conditions globally and in South Africa would continue to be felt in their business for some time.
“Given the general decline in infections and deaths, we support the further opening of the economy to all sectors. However, we remain vigilant in safeguarding and supporting our clients and employees who are affected by Covid-19,” he said.
Momentum Metropolitan’s shares closed 2.38 percent higher at R16.34 on the JSE yesterday.