Momentum Metropolitan said yesterday in an operational update for the nine months ended March 31, 2023 that its earnings surged 29% boosted by lower claims in its life insurance business following the Covid-19 pandemic impact dropping.
This despite a challenging economic environment.
The listed life insurance and asset management group, which this month announced Jeanette Marais as Group CEO effective August 1 to succeed Hillie Meyer, delivered R3.4 billion of normalised headline earnings for the reported period. Normalised headline earnings per share increased from 169.6 cents to 224.4c.
“This growth in earnings was supported by the improved mortality experience in the life businesses, benefiting from the less severe impact of Covid-19, net of the release of Covid-19 reserves, in the current period,” it said.
Operating profit improved by 70% to R2 951m, underpinned by the recovery in mortality experience variance in Momentum Life, Momentum Corporate, and Momentum Metropolitan Africa and good fee income growth in Momentum Metropolitan Health.
“Guardrisk delivered a positive earnings contribution leveraging off their industry and product diversification across cells,” it said.
Momentum Investments' normalised headline earnings decreased by 1% to R705m.
“This includes a 12% decline in operating profit, offset by strong growth in investment return resulting mainly from currency translation gains and higher interest rates," it said.
Metropolitan Life's normalised headline earnings decreased by 2% to R389m.
“The current economic conditions are placing pressure on this segment's customer base and lapse experience is expected to remain under pressure,” the group said.
Normalised headline earnings in Momentum Corporate showed strong growth of 42% in the prior period to R877m, bolstered by a further improvement in underwriting results in group risk products.
“This was aided by improved mortality claims experience, Covid-19 reserve releases, a continued improvement in disability experience as well as higher interest earned on assets backing liabilities,” it said.
Meanwhile, Momentum Metropolitan Health's contribution to normalised headline earnings improved by 45% to R234m in the prior period.
“This includes growth in fee income generated from membership growth, annual fee increases, and an increase in interest income. The overall membership growth of 3%, despite the challenging economic environment, is largely due to growth in the public sector and Health4Me membership," it said.
However, Momentum Insure flagged a loss of R145m for the nine-months, largely due to a high claim ratio of 78% compared to 69% in the prior period.
“The impact of prolonged inflationary pressures on the cost of claims, increased frequency of incidents due to power surges (exacerbated by load shedding), higher motor accident and theft claim frequency, a continuation of adverse weather-related events, and a lag in premium increases following the policy renewal cycle contributed to the higher-than-expected claim ratio,” the group said.
Looking ahead, Momentum Metropolitan said economic activity continued to be hampered by rising interest rates, high inflation and load shedding.
“We are concerned about the pace of any potential economic recovery and the impact this will have on disposable income. This is likely to place ongoing affordability pressure on new business volumes, particularly on long-term savings and on protection business, where we have already seen a decline in demand.
“The investment business is negatively affected by other factors, such as low confidence in SA asset classes and consumer preference to maintain their assets in liquid low-risk investments,” it said.
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