Major South African insurer on a roll

Momentum has reported a strong performance across most business units for the nine months ended 31 March 2025.

The insurance giant released a trading update for the nine-month period on Monday, 2 June 2025.

This update comes after the insurer released a strong set of results for the first half of its 2025 financial year.

The company explained that, in the three months following these results, it continued this positive trajectory with a solid operational performance.

This is despite escalating geopolitical tensions and subdued economic growth experienced in its third quarter.

Momentum reported normalised headline earnings (NHE) of R4.8 billion for the nine months ended 31 March 2025. 

It explained that its earnings run rate in the third quarter aligned with the first two quarters, excluding the substantial positive market-related variances of the first six months of approximately R500 million. 

It said these results were underpinned by disciplined execution across the group’s business units and a continued focus on profitable growth.

Momentum’s sales, as measured by the present value of new business premiums (PVNBP), declined by 4% year-on-year. 

The company explained that its third quarter PVNBP experience was in line with the trend seen in the first two quarters.

Positively, Momentum’s value of new business (VNB) continued to grow in the third quarter, albeit more slowly than in the first half of the financial year. 

Over the nine-month period, VNB was supported by a shift in the new business mix toward more profitable lines and improved performance from Metropolitan Life.

The company told News24 earlier this year, following the release of its interim earnings, that it is now focused on weeding out unprofitable businesses that are costing the company R1 billion a year.

In its trading update, Momentum explained that it experienced a reduction in its yield curve from 30 June 2024 to 31 March 2025.

This benefited the bond portfolios backing contractual service margin (CSM) liabilities, while credit spreads on the annuity portfolios also contributed positively to earnings. 

In addition, a stronger equity market performance supported higher fee income from investment contracts. 

It explained that an increase in the company’s direct expenses was marginally above inflation across the group, largely reflecting the long-term incentive plan awards triggered by Momentum’s strong share price gains over the period. 

Other contributing factors include increased spending to meet compliance requirements resulting from regulatory changes and IT investment required to implement the two-pot retirement system reforms. 

As reported in the company’s interim results, Momentum reiterated that benefits from its group-wide performance optimisation project will become more pronounced in the 2026 financial year.

“To date, savings of R116 million have been identified and are expected to be realised over the next year,” it said.

The company also confirmed that it has received approval from the Prudential Authority for its R1 billion share buyback programme announced earlier this year. This programme commenced on 14 May 2025.