Momentum Metropolitan reported a 51% jump in first-half normalised headline earnings, as investment returns more than compensated for Covid-19 mortality losses.
But SA’s fourth-largest life insurer was cautious in its outlook, given the geopolitical uncertainty after Russia invaded Ukraine and how the crisis will affect the global economic recovery.
“Luckily, there is no direct impact. We don’t really have any exposure to Eastern Europe in terms of any business initiatives or products or clients,” CEO Hillie Meyer told Business Day.
“But like all other companies, the indirect effects will obviously be a feature that will affect us in market volatility and maybe in investment returns going forward. But clearly if [the war] affects the country’s economy and markets, then like all other businesses in SA, we will be affected.”
The geopolitical effects come as Momentum and its peers are emerging from the pandemic, which resulted in them paying billions of rand worth of death claims.
However, the Omicron-fuelled fourth wave was less fatal than previous waves, giving insurers breathing space in terms of provisions for potential claims from their clients.
The third wave was the worst for Momentum, according finance director Risto Ketola, as the company paid R1bn more on average in the three months to end-September. Before the pandemic, it paid an average of R600m a month.
Momentum’s normalised headline earnings rose 51% to R1.52bn in the six months to end-December as investment returns leapt to R740m from R122m, more than offsetting mortality losses of R378m.
Its value of new business grew 20% to R400m, driven by new business volumes and expense management. But the value of new business margin held steady at 1.1%. The value of new business premiums rose 23% to R37bn.
“The value of the group’s diversified financial services business model was evident, with strong positive contributions from Momentum Investments, Momentum Corporate and Guardrisk, ensuring that group results remained resilient, despite some business units being adversely affected by Covid-19 mortality claims and weather-related claims,” Meyer said in a statement.
Momentum declared an interim dividend of 35c a share, up a whopping 40% from the year-earlier period. Its shares rose 1.24% to close at R17.08 on the JSE, having dropped by nearly 20% over the past five years.
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