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14 September 2022 | 3 - 5 min read
~ Declares strong dividend and solidifies competitive position.
Momentum Metropolitan delivered normalised headline earnings of R4 383 million during the financial year which ended on 30 June, with operating profit increasing to R3 363 million from R73 million in the prior year. All the Group’s main South African businesses performed very well. The strong growth was supported by improved mortality results and positive growth in investment variances. Normalised headline earnings per share grew from 67.1 cents to 287.2 cents per share; return on equity increased to 22.7% from 4.9% the previous year; and a total dividend of 100 cents per ordinary share was declared, 2.5 times what was declared in the previous year.
“These strong results in year one of the three-year Reinvent and Grow strategy are encouraging and confirm our solid competitive position. It was a real team effort, with almost all our businesses performing at, or close to potential,” shared the Group’s CEO, Hillie Meyer.
“It is important to note that this set of results is not directly comparable to the previous year, due to the impact of the Covid-19 pandemic and a mortality loss of R2 823 million in last year’s results,” added Meyer. “Even so, we posted a solid performance and executed well on a range of strategic initiatives – the impact of which is not yet fully reflected in this set of results. With these results, we are giving ourselves a sporting chance to deliver on the F2024 objectives set in our Reinvent and Grow strategy.”
New business volumes increased by 10% to R72.7 billion, driven by strong growth in Momentum Corporate’s recurring premiums on group risk products and single premium investments from large corporate clients. Metropolitan Life continued to achieve a strong increase in protection and annuity new business volumes, while Momentum Metropolitan Africa also saw growth from corporate business. Momentum Life’s new business volumes declined year-on-year, but showed encouraging new business growth in the last quarter of the financial year compared to the first three quarters. Momentum Investments delivered solid growth of 2% on an already strong base in the prior year.
The Group announced that they are creating additional value for shareholders, through a share repurchase programme. Said Risto Ketola, Group Finance Director: “Given our strong capital position, we have initiated a share buyback programme of R750 million. Subject to the capital and liquidity requirements of the Group, and provided ordinary shares can be bought back at an attractive discount to embedded value per share, it is anticipated that the share repurchase programme could be increased once the current R750m programme has been completed. The buyback programme demonstrates the strong cash generation in the group and our commitment to dynamic capital management.”
“Looking ahead,” added Meyer, “we remain cautious about the effect that the lack of economic growth, continued unemployment and pressure on disposable household income could have on our operations. The timing and magnitude of future Covid 19 waves remain uncertain and could still impact our earnings in future. Although it appears that the disease has now become endemic, mortality has not returned to pre-Covid levels, and it might take a long time do so.”
“We are beginning to see employees returning to the office in much larger numbers, which we welcome. However, we foresee that the hybrid way of work will be the new normal, and our spatial planning allows for the fact that many employees will work from home – to varying degrees. Due to the pandemic, we fast-tracked plans we had to renovate our offices and extended our ideas to create an environment where our employees can come to connect, collaborate, and innovate.”
Momentum Metropolitan executives shared their excitement about leading innovations they are launching for the flagship Momentum Myriad life cover product range, as well as radical changes they are making to their rewards programme to make it simpler, easier to engage with, and to offer more value for money to clients. “We are effectively unbundling loyalty and rewards into focused rewards programmes where every product house can tailor their respective programme to what is relevant, and worthy of reward, for a particular product,” said Meyer. “Multiply will continue to be an essential part of Momentum Health’s value proposition, through which they will incentivise and reward healthier outcomes for their clients. In Momentum Myriad, our brand-new underwriting innovation uses a cutting-edge digital screening process through a client’s smart phone to do underwriting. Qualifying clients can look forward to a less intrusive experience where their life insurance can be issued without further medical tests. This same digital process will allocate upfront discounts to clients, making life insurance more affordable for more clients.”
“As Momentum Metropolitan we will continue to make every effort to look after the financial needs of our policyholders and to generate value to shareholders,” concluded Meyer.
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