Momentum’s businesses deliver robust earnings in nine months

Momentum offices. SUPPLIED.

Momentum offices. SUPPLIED.

Published Jun 5, 2024


Momentum Metropolitan Holdings’ run rate was lower in the third quarter, but most business units delivered robust earnings in the nine months to March 31, the group said in a trading statement yesterday.

Recurring premium was down 15% to R2.96 billion compared with the same quarter in 2023, while single premium business was up 32% to R47bn.

New business was up 20% to R60.3bn. Total direct expenses were up 8% to R9.35bn. New business at Momentum Retail increased 13% to R6.28bn. New business at Momentum Investments increased 21% to R35.12bn.

Assets under administration on the Momentum Wealth investment platform increased 14% to R265bn. Health members under administration were up 2%.

Directors said the performance was supported by favourable mortality experience and good investment income from the assets in the portfolios with shareholder-backed liabilities.

The group’s positive investment variances reduced in the third quarter following an increase in yields in March 2024. Rising yields resulted in negative investment variances on bonds held in annuity contractual service margin (CSM) mandates.

Smaller unrealised losses were also experienced on the assets backing the protection business over the quarter. Investment variances remained positive overall for the full nine-month period.

The present value of new business premiums increased to R60.3bn, a 20% increase compared to the prior period. This was enhanced by the reduction in the discount rate used to calculate the present value of premiums to align with the risk-neutral valuation methodology used for IFRS 17.

Strong growth in life annuities continued. Momentum Corporate benefited from strong structured investment flows, partly offset by a decline in recurring premium protection business.

Momentum Retail saw growth in the protection and long-term savings of new business. Metropolitan Life’s protection and long-term savings new business volumes declined following the decision to reduce the number of tied agents to focus on writing higher quality business.

Expenses growth was slightly above inflation, mainly driven by investments into capabilities and improvements to both client and adviser service.

The group said its federated model continued to bring rewards for the business, as it empowered business units to be entrepreneurial.

“Our focus on enhancing the client and adviser experience and enabling product and propositional enhancements that differentiate us in the market, has resulted in pleasing sales volumes.”

Both the corporate and retail savings businesses were well advanced in preparation for the implementation of the two-pot retirement system.

Notable progress had been observed on Metropolitan Life's five-point turnaround plan resulting in improvements to the quality of new business and reduction in the expense base.

The share repurchase programme was still in process. As at June 3, 2024, the group had bought back 20 million shares, of which 18 million have been cancelled, for a total consideration of R426m.

India’s earnings, although a loss, improved marginally compared to the prior period. This was mainly due to a 35% growth in gross written premium to R5.4bn, with strong growth in both the retail and group business, offset by an elevated claims ratio of 76%, compared to 65% in the prior period.