CAPE TOWN - THE VALUE of the financial services sector investments held by Rand Merchant Bank Investment Holdings (RMBH) grew 9 percent to R76.03 billion in the six months to December 31 despite the economic uncertainty and market volatility caused by the pandemic.
Interim results released yesterday showed normalised earnings up 11 percent to R2.04bn.
RMBH’s portfolio includes 24.8 percent of Discovery, 27.4 percent of Momentum Metropolitan, 89.1 percent of Hastings, 100 percent of RMI Investment Managers and 100 percent of Alphacode. An interim dividend of 22.5 cents was declared.
The increase in normalised earnings was driven mainly by a strong, 23 percent increase in normalised earnings by OUTsurance.
Discovery’s normalised earnings decreased by 1 percent to R2.3bn, with most of its growth coming from emerging businesses, including Discovery Insure, Vitality Group (VitalityLife tripled its normalised profit) and Ping An Health.
Momentum Metropolitan delivered good operating results and new business growth during the period, but earnings were dampened by the second wave of the Covid-19 pandemic.
Normalised earnings fell 43 percent compared with the prior period. The Covid-19 provision was increased for possible adverse experience at Momentum Metropolitan.
Mortality data from the SA Medical Research Council indicated that recorded Covid-19 deaths were understating the mortality impact of the pandemic.
In addition, investment return fell 75 percent from lower yields on shortdated instruments, lower investable shareholder assets following the acquisition of Alexander Forbes Insurance in February 2020, and a weaker hedging performance on the share scheme.
Normalised earnings from OUTsurance, including its stake in Hastings, increased 23 percent to R1.4bn. Excluding this, OUTsurance’s normalised earnings rose 22 percent due mainly to lower claims frequencies, coupled with reduced natural peril losses in Australia and South Africa.
Normalised earnings of R183 million from Hastings were included for the six months to the end of December last year, representing an increase of 8 percent after Hastings had delivered a “satisfactory operational and financial result”.
RMI Investment Managers reported a better-than-expected financial performance on the back of good growth.
RMBH shares closed 1.44 percent lower at R1.34 on the JSE yesterday.
BUSINESS REPORT