CAPE TOWN – Rand Merchant Investment Holdings' (RMI) normalised earnings fell 8percent to R2.1billion in the six months to December 31, 2018, much in line with the decline in earnings of most of its investments.
The group holds 25 percent of Discovery, 29.9percent of Hastings, 27.3 percent of MMI Holdings, 89.1 percent of OUTsurance, 100 percent of RMI Investment Managers and 100 percent of AlphaCode - the portfolio hasn't changed since last year.
The cash dividend was raised 15percent to 45cents a share.
The compound shareholders’ return since listing in 2011 was 20.3 percent a year, the company said in its results statement yesterday.
The share price was trading 3.1 percent lower at R31.91 just after 1 pm yesterday and closed the day at R31.90.
The decline in earnings was attributed to increased spending on new initiatives and a spike in large mortality claims at Discovery, and an increase in the claims of the short-term insurance operations, and investments in new business growth at OUTsurance.
Discovery’s normalised earnings fell by 16percent for the six months to end December. Discovery Life experienced a spike in large mortality claims.
RMI directors said the macroeconomic environment in which the group operates was turbulent, with headwinds that included a slowing global economy, Eskom, adverse weather conditions on the western maize growing areas of the country, strike activity in gold mining, and uncertainty ahead of the national elections.
Economic growth was expected to remain low. In global markets - Brexit, a weaker UK outlook, the US-China trade war, and downward adjustments to gross domestic prodcut by the EU and Bank of England, were weighing on global investor confidence.
Normalised earnings from Hastings fell 9percent to R348million.
MMI’s normalised earnings increased 2percent to R1.6bn and it resumed dividend payments, with an interim dividend of 35c a share.
OUTsurance’s normalised earnings fell 9percent to R1.3bn.
The cost-to-income ratio at OUTsurance increased to 27.3 percent from 25.2 percent due to higher natural peril claims in Australia and a lack of premium inflation, generally.
New business premium is written increased by 20 percent.
RMI Investment Managers was performing in line with management’ expectations.
Royal Investment Holdings, which is a joint venture between RMI Investment Managers and Royal Bafokeng Holdings, also performed to expectations.
During the 2018 calendar year RMI’s share price fell by 21 percent, following an increase of 15 percent the previous year, compared to a 1percent increase in the life insurance index and a 15percent increase in the non-life insurance.
The share price has fallen by about 10percent since the start of January.
Last year Discovery’s share price fell by 14 percent, MMI’s fell by 18 percent, while the value attributed to the unlisted investments fell by 15 percent to R26bn.
New investments would continue to be sought - in addition to optimising the existing portfolio through strategic dialogue and assistance in fostering leadership, stability and succession planning.