Momentum Metropolitan Holdings reported positive results for the six months ended 31 December 2022.
Momentum Metropolitan’s operating profit more than doubled to R1.9 billion. The company attributes this increase to an improved mortality experience and positive investment variances.
The company also achieved normalised headline earnings of R2.2 billion, 46% higher than the prior period.
Group CEO Hillie Meyer said these results prove that the company’s execution of its ‘Reinvent and Grow strategy’ is on track.
“We are grateful to see the easing of Covid-19 related death claims and the positive mortality-experience variances in our main life insurance businesses,” he said. “This indicates that the Covid-19 pandemic has reached its endemic phase.”
However, the company’s new business volumes did not meet expectations for some of the product lines. It was mainly due to the prevailing economic headwinds and lack of growth in the industry.
The company declared an interim dividend of 50 cents per share, a 43% increase from the previous period. Normalised headline earnings per share increased by 49%.
The group repurchased R750 million of its shares as the company traded at a discount to embedded value (EV). This created an EV uplift of R583 million.
The company plans a further R500 million repurchase while the shares trade at a discount of more than 25% to EV.
Group finance director Risto Ketola said the company managed an 18.4% return on equity (ROE) for the reported six months, which he ascribes to the disciplined capital management regime the company implemented a few years ago.
“The high return on capital, combined with strong cash generation, has enabled us to declare a strong dividend and to continue buying back our own shares at the same time.”
Momentum Life and Momentum Corporate largely contributed to the company’s positive results, reporting increased headline earnings and operating profit.
Excluding the impact of the one-off items in the prior period, Guardrisk’s normalised earnings also increased by 18%.
Momentum Metropolitan Health’s normalised headline earnings improved by 55% to R146 million. The Health business’s memberships grew by 3%.
Meyer said the company is “cautiously optimistic” that it will achieve the Reinvent and Grow financial target range for the next year.
This target involves increasing normalised headline earnings from R4.6 billion to R5.0 billion and achieving an ROE of 18% to 20%.
“While our earnings outlook has improved over the past eighteen months, recent pressure on sales volumes indicates that South Africans’ disposable income remains under pressure due to rising interest rates, high inflation and the lack of economic growth in South Africa. This is likely to put ongoing affordability pressure on new business volumes,” he said.