Momentum Metropolitan Holdings reported solid results for the six months ended 31 December 2021. Highlights include normalised headline earnings of R1 525 million, 51% higher than the prior period and a 23% increase in value of new business premiums to R37 billion. The Group’s value of new business grew 20% from the prior period to R400 million, driven by strong new business volumes and good expense management. Investment returns increased significantly from R122 million to R740 million and compensated for net mortality losses of R378 million. Operating profit, which differs from normalised headline earnings in that it excludes investment returns, declined 12% to R785 million, which was largely attributable to the net mortality loss of R378 million

Group CEO, Hillie Meyer, was pleased with Momentum Metropolitan’s financial performance. “We delivered strong half-year results by focusing on turning our Reinvent and Grow strategy into action, despite operating within the limitations of the pandemic. I’m especially pleased that we achieved double-digit growth for both new business value and volumes. Our teams delivered on what they could control, and we maintained a proactive external focus on advisers and clients."

The Group declared an interim ordinary dividend of 35 cents per ordinary share, representing a 40% increase from the 25 cents per share interim ordinary dividend declared in the prior period. Normalised headline earnings per share increased by 50% from 67.6 cents to 101.7 cents. Headline earnings per share increased by 64% to 91.4 cents whereas earnings per share declined by 23% relative to the prior period to 48.4 cents. “This decline in ‘basic’ earnings is largely attributable to a partial write-off of the goodwill recognised on the acquisition of the Alexander Forbes Short-term Insurance business,” explained Risto Ketola, Group Financial Director.

The advantage of the Momentum Metropolitan Group’s diversified business model was evident, with strong positive contributions from various divisions:

• Momentum Investments continued its growth trajectory with normalised headline earnings improving by 11% to R489 million. Their value of new business increased significantly from R144 million to R232 million, on the back of very good annuity sales.
• Momentum Corporate’s normalised headline earnings increased from a loss of R212 million in the prior period to a profit of R370 million. This was aided by strong earnings growth in underwriting results. New business volumes of R4.9 billion increased by 37% compared to the prior period, attributable to a strong 94% growth in recurring premium volumes on group risk products.
• Guardrisk’s normalised headline earnings increased by 73% to R295 million. Operating profit growth was supported by increased management fees from the mining rehabilitation and life divisions and pleasing growth in underwriting profits of 53%.
• Metropolitan Life continued to see strong growth and the present value of new business premiums increased by 39% to R3.6 billion. This includes a 45% growth in protection new business.
• Momentum Metropolitan Health’s normalised headline earnings of R94 million were 9% higher than the prior period. This result was mainly driven by fee income generated from continued growth in the low cost product (Health4Me) and public sector membership.
• Momentum Metropolitan Africa improved its new business volumes by 38% to R2.1 billion on the back of good growth in Namibia, Lesotho and Botswana.

Looking ahead, Meyer said that the Group remained cautious about the pace of economic recovery across its operations, as disposable income remains under pressure. “We continue to focus on delivering long-term value, as encapsulated in our Reinvent and Grow strategy. We are focussing on various digital transformation initiatives, whilst we aim to maintain our recent positive momentum around market share growth and improved efficiency ratios.”

“We foresee an ongoing hybrid way of work and longer-term cost savings from reduced need for office space. However, with Covid-19 showing signs of becoming endemic, I am looking forward to connecting with colleagues more regularly in a physical office environment. We want to get optimal productivity back on track in areas such as client service where delivery was impacted as a result of people working from home.”

Ketola commented on the balance sheet and outlook: “Our solvency and liquidity positions of the Group remain strong, which allows all of the business units to focus on their strategic targets”.

“We estimate that, in the absence of further extraneous shocks, we remain on track to meet the Reinvent and Grow financial targets of normalised headline earnings of between R4.6 billion and R5.0 billion and return on equity of 18% to 20% in F2024,” Ketola concluded.