Insurer MMI reported no growth in earnings for the year to end-June, as underwriting losses and weak investment markets took their toll.
But the group maintained its annual dividend.
Diluted core headline earnings were flat for the period at R3.2bn, MMI said on Wednesday.
Diluted core headline earnings per share (HEPS) were unchanged, but diluted HEPS fell 11%.
New business fell 23% to R547m.
Embedded value, a measure of the present value of future profit, fell 1% to R42.5bn. This reflected a 4.7% return on embedded value, down from 12.8% in the previous comparable period.
Life insurers have battled to sell policies amid high levels of unemployment and low economic growth in SA. Muted returns on the JSE have negatively affected their growth in assets under management and the fees they earn on these.
"The year under review was characterised by tough economic conditions, including the credit rating downgrade to sub-investment grade for SA, business confidence reducing to levels last seen during the global financial crisis and weak equity markets," MMI said on Wednesday morning.
MMI’s earnings were supported by strong mortality profits, cost control and the decision to exit certain countries in Africa, group CEO Nicolaas Kruger said.
MMI declared a dividend for the year that was unchanged from last year’s 157c per share.
The mortality experience was R176m stronger for the year, mainly on improvements in the group’s corporate and public sector segment.
Underwriting losses in the group disability business and muted growth in asset-based fee income as a result of weak investment markets had a negative effect on earnings, he said.
At Momentum Retail, the largest business in the group, new business fell 9% to R228m and the present value of new business premiums dropped 3% to R22.8bn. To address this, MMI plans to double the number of Momentum agents, to 1,600, over the next four years.
Earnings in this segment fell 15% to R1.27bn.
Metropolitan Retail’s new business fell 7% to R178m but present value of new business premiums was up 5% to R5.2bn. Earnings fell 6% to R660m, due to the pressure on new business, increased spending on new initiatives, and "weakening persistency", which MMI said it was addressing.
MMI said it planned to sharpen its focus on SA and, in its international operations, to focus more on Southern Africa.
New business in the rest of Africa grew 3% to R73m and the present value of new business premiums was up 3% to R2.5bn.
The international operations as a whole reduced core diluted headline earnings by R166m, which MMI attributed in part to start-up losses in the Indian health joint venture and costs at aYo, its African cellphone joint venture with MTN.
For both of these, 2017 was their first full year of inclusion, and their combined start-up costs were R90m higher than in 2016.
At Momentum Short-Term Insurance, sales rose 20% and the claims ratio improved from 82% to 73%.
The Corporate and Public Sector business grew earnings by 23% to R835m. The unit’s value of new business, however, declined to R68m from R199m on competitive pricing in the employee benefits industry.
MMI said the Momentum Health open scheme membership grew 10.6% to 158,624, "in an industry where growth is muted". MMI expects the business to generate more than R200m in earnings in 2018.
The group is nearly halfway to its cost-cutting target of R750m by 2019 — having achieved cuts of R323m in the year under review.
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