Thanks in part to steep cost cutting and new business growth, Momentum Metropolitan (previously known as MMI Holdings) has seen a sharp increase in its profitability.
The insurer hiked its diluted normalised headline earnings by 53% to R3.1 billion for the year ended 30 June 2019 thanks to efficiency improvements and lower life insurance claims – but also because the “operating basis changes and investment variances” in the previous year.
Excluding the impact of this, normalised headline earnings improved by 21% year-on-year.
This was despite a 31% increase in losses – to almost half a billion rand - at its “new initiatives” unit, which includes its health insurance joint venture in India, and aYo (a mobile insurance joint venture with MTN in African countries).
But its new business volumes increased by 12%, and headline earnings from Momentum Life jumped by 87%, while profit from Momentum Investments and Metropolitan Retail more than doubled. The group said Momentum Life benefitted from “updated product pricing”, while Metropolitan Retail’s growth was supported by increased adviser productivity and a higher proportion of policies with premiums collected via salary deduction
While the group has been on a drive to cut costs in recent years, it acknowledged in its results that “cost reductions on its own have its limitations".
"We shall in the coming years rely more heavily on revenue growth. This will be challenging in the current environment, and single-digit earnings growth for F2020 might be a fair result."
The board has extended Hillie Meyer’s tenure as group CEO until June 2023.