Momentum Metropolitan’s robust earnings growth driven by healthy sales volumes

Momentum Metropolitan CEO Jeanette Marais. Photo: Supplied

Momentum Metropolitan CEO Jeanette Marais. Photo: Supplied

Published Mar 28, 2024


MOMENTUM Metropolitan Holdings reported robust earnings for the six months to December 31 after most business units performed in line with management expectations in a tough economic and competitive environment, CEO Jeanette Marais said yesterday.

She said they were proud of these results, as it was the first time since at least 2018 that all the business units had reported solid earnings contributions to the group, barring slightly lower earnings from Momentum Metropolitan Health.

Normalised headline earnings increased 42% to R2.4 billion, and operating profit was up 69% to R2bn. Sales were strong with the group’s present value of new business premiums increasing 18% to R39.1bn.

Marais said their model of empowered, accountable businesses again demonstrated resilience and agility, enabling the group to report robust earnings and solid financial results, while withstanding the challenging environment.

“Even though we managed to increase sales volumes, the high cost of acquiring new business placed our new business margin under pressure. We are giving significant attention to new business pricing, cost of acquisition and improving the sales mix,” Marais said.

Normalised headline earnings per share increased by 48% to 168 cents from 113.7 cents, with the per share growth benefiting from the share repurchases over 18 months. An interim dividend of 60 cents per share was declared, a 20% increase on the prior period.

A further R500 million had been approved for future share repurchases.

Group finance director Risto Ketola said it was their first set of results under the new International Financial Reporting Standard (IFRS 17) for insurance contracts, and segmental disclosure was also updated to more accurately reflect the way the business was managed.

Momentum Retail’s normalised headline earnings improved to R709m from R382m in the prior period. Earnings were boosted by the effect of high interest rates on assumptions about future premiums, the launch of a new life product that was less expensive to underwrite and administer, and new pricing.

Momentum Investments delivered record new business sales volumes in life annuity sales, which contributed to its normalised headline earnings of R268m.

Momentum Corporate’s normalised headline earnings increased to R624m due to the improved protection business claims experience and the refinement of its reinsurance strategy.

Momentum Insure made progress with corrective actions it had taken. Its normalised headline earnings improved to a R31m profit from a loss of R70m.

Metropolitan Life’s normalised headline earnings increased 49% to R299m, mainly due to an improvement in the persistency experience on protection business.

Momentum Metropolitan Africa’s normalised headline earnings increased to R284m, primarily aided by improved investment income from Namibia.

The Momentum Metropolitan Health business achieved overall membership growth of 4%. Due to much of the growth occurring in lower margin business, their earnings declined marginally by 5% to R124m.

Guardrisk’s normalised headline earnings improved 3% to R360m off a strong prior period.

The R153m normalised headline earnings loss in the India business represented an improvement of 7% due to significant growth in gross written premiums.

Marais expressed concern that the impact of South Africa’s economic stagnation, compounded by the ongoing electricity and water crisis, continued to place financial strain on all South Africans.

It was a very competitive life insurance market in South Africa and the group had to fight for every quote.

“We firmly believe that challenges present opportunities for innovation and growth…the group is on solid financial footing and is well-positioned to adapt to the evolving needs of our clients,” she said.

She said the group on track to achieve the targets of its three-year Reinvent and Grow strategy by the end of this financial year. They were finalising a strategy for the period beyond 2024, which would be shared with investors early in the new financial year, she said.