Insurer shifts focus to organic growth to keep momentum up
JOHANNESBURG – Momentum Metropolitan has said that it would focus on organic growth after it boosted its annual headline earnings 53 percent to R3.1 billion in the year to end June on the aggressive execution of its turnaround strategy.
The insurer, formerly known as MMI Holdings, said yesterday that diluted normalised headline earnings increased by 61 percent, reflecting the success of the R2bn share buyback programme it completed in November.
It said its performance in the previous year was impacted by large negative operating basis changes and investment variances across the South African retail businesses and the rest of Africa.
Group chief executive Hillie Meyer, who is now to extend his tenure by two years until June 2023, said: “A year ago we simplified our structure and created empowered, end-to-end business units. At our previous annual results we presented a roadmap, and this year we are on track to deliver on our promises.”
The group declared a dividend of 70 cents a share.
It said its corporate unit realised strong flows of new business from a range of clients, including good growth in recurring premium inflows for group insurance, as well as a number of large annuity deals in the first and fourth quarters.
Headline earnings rose 87 percent to R883 million while headline earnings per share increased more than 100 percent to R512m with Metropolitan Retail up more than 100 percent at R610m.
Meyer said the group planned no further acquisitions following the R1.94bn deal in July to buy the short-term insurance business of financial services group Alexander Forbes.
The company, with brands Metropolitan, Momentum, Guardrisk and Eris Properties and a market capitalisation of R28bn last year embarked on a three-year turnaround plan.
“We remain committed to delivering on our three-year reset and grow target to generate profits between R3.6bn and R4bn by F2021,” Meyer said.
He said pension business numbers were not increasing on the health and individual side due to the economy. Meyer said if the current challenging operating environment persisted, the pressure on revenue might result in earnings heading for the lower end of the 2021 target range.
He said the government’s National Health Insurance plans had added regulatory uncertainty. However, he said, it was important for business to engage with the government.
“Despite the challenging environment, underlying improvements are visible… most importantly, greater levels of engagement and energy across the group’s employees, positions it well to capitalise when the external environment improves,” Momentum Metropolitan said.
Momentum and its rivals are battling to gain growth in South Africa. Old Mutual on Monday posted interim results with adjusted headline earnings rising 10 percent to R5.2bn, while Sanlam, which is due to release its interim results today, was expected to see its earnings tank by at least 35 percent.
Momentum Metropolitan rose 3.77 percent on the JSE on Wednesday to close at R16.81.
BUSINESS REPORT
Source: iol.co.za