Life insurer Momentum Metropolitan is expecting its headline earnings to go up a staggering nine times in its annual results, but was quick to point out that its 2022 year is “not directly comparable” to 2021.
Momentum expects headline earnings per share (Heps) to accelerate 855%-875% year on year to 295c-301c and normalised Heps 320%-340% to 282c-295c for the year to end-June, the company said on Tuesday.
However, 2021 was severely affected by the Covid-19 pandemic, including a net negative mortality and longevity experience variance of R1.7bn and a net increase in additional Covid-19 provisions of R1.1bn.
“All SA life insurance operations experienced a significant turnaround in mortality experience from the prior period,” Momentum said. “In the current year, mortality experience variance improved significantly and started to normalise over the third and fourth quarters.”
The insurer in May, along with Old Mutual, reported fewer death claims in the March quarter, suggesting that the worst of the Covid-19 pandemic might have passed. Over the past year, vaccination coverage and so-called natural immunity gave insurance companies breathing space after two punishing years in which they were flooded with huge Covid-19-related claims.
But Momentum recorded a small full-year net mortality profit for the first time since the start of the pandemic in 2022. Earnings were further propped up by improvements in its investment variances thanks to favourable yield curve movements in the quarter versus the rest of 2022.
“Investment return also showed strong growth, supported by the general recovery of investment markets, fair value gains from the revaluation of the group’s investment in venture capital funds and foreign exchange gains on foreign currency-based assets,” it said.
In other news, the Abu Dhabi Investment Authority (ADIA), sovereign wealth fund of the Emirate of Abu Dhabi, looks set to become the third shareholder in the Aditya Birla Health Insurance Company (ABHI), which was launched as a joint venture between Momentum Metropolitan Holdings (MMI) and Indian financial services group Aditya Birla Group in November 2016.
The proposed R1.3bn capital injection will drive ABHI’s growth in the health insurance market in India. If regulators give the green light, Aditya Birla Capital Limited (ABCL) will own a 45.91% stake in ABHI, Momentum 44.1% and ADIA 9.99%.
Momentum, valued at R26.27bn on the JSE, will release its annual results on September 14. The share price was up 3.3% to R17.54 by the JSE’s close on Tuesday.
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