Momentum Metropolitan’s share price on the JSE rose by almost 5% in intraday trade on Tuesday after the insurance group reported strong earnings growth following the Covid-19 pandemic disruptions
The shares traded at R17.64 on the JSE, and have increased by 12.37% in the past six months.
In its operational update for the three months ended September 30, 2022, released on Tuesday, the group said normalised headline earnings per share increased by 73% to R1.3 billion.
This growth in earnings can be partly explained by the impact Covid-19 had on the results for the comparative period. The positive impact of improved mortality experience, particularly in Momentum Life, was therefore to be expected.
According to the group, operating profit more than tripled, from R299m in the prior period to R1.04 billion in the first quarter of the 2023 financial year.
“The strong performance in operating profit follows the recovery in mortality experience variance in Momentum Life, Metropolitan Life, Momentum Corporate, and Momentum Metropolitan Africa,” it said.
The group said Momentum Life’s normalised headline earnings showed a strong improvement to R353m, from R39m during the prior period.
“The prior period was significantly impacted by the Delta wave of Covid-19 infections, which resulted in a large negative mortality experience variance during the first quarter of the 2022 financial year,” it said.
The current period saw improved mortality experience variance, as well as favourable movement in investment variances, mainly driven by an upward yield curve shift, it said.
Momentum Investments’ normalised headline earnings improved by 21%, from R199m in the prior period to R241m, which was mainly driven by an increase in earnings from annuities.
Metropolitan Life’s normalised headline earnings increased by 110% to R176m, from R84m in the prior period.
“This was mainly due to a small positive investment variance, compared to large negative investment variance in the prior period, as well as a strong improvement in mortality experience variance,” the group said.
Momentum Corporate’s normalised headline earnings improved by 95% to R338m, mainly due to strong underwriting results on group risk products.
“The contribution from group life products was boosted by an improvement in mortality experience variance,” it said.
According to the group, Momentum Metropolitan Health’s normalised headline earnings increased to R82m, from R48m in the prior period.
Guardrisk’s normalised headline earnings declined by 22% to R147m, predominantly due to one-offs in the prior period, it said.
Looking forward, the group said in South Africa, electricity load shedding continues to stifle economic growth.
“Against this backdrop, we are concerned about the pace of any potential economic recovery, and this will probably keep disposable income under pressure. This is likely to put pressure on new business volumes, particularly on long-term savings and investment business, where we have already seen a decline in demand. We are also more concerned around persistent trends than previously,” the group said.
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