Momentum Metropolitan Holdings continued to show resilience and achieved good operating performance for the nine months to end-March, and though the third-quarter earnings run rate was lower than that seen in the first two quarters, most business units continued to deliver robust earnings.
Recurring premiums for the nine months ended March were down 15% at R2.96bn, single premiums rose 32% to R46.97bn and present value of new business premiums (PVNBP) was up 20% at R60.27bn, it said in a statement on Tuesday.
Assets under management on its Momentum Wealth investment platform rose 14% to R265bn.
“This pleasing performance was supported by a continuation of favourable mortality experience and good investment income from the assets in the portfolios with shareholder backed liabilities,” it said.
The group recorded a positive investment variance for the nine-month period, largely benefiting from a reduction in the yield curve over the period.
Direct expenses growth across Momentum Metropolitan was slightly above inflation, mainly driven by investments into capabilities and improvements to both client and adviser service.
The group said both the corporate and retail savings businesses are well advanced in their preparation for the implementation of the two-pot retirement system.
It added that notable progress has been observed on Metropolitan Life’s five-point turnaround plan resulting in improvements to the quality of new business and reduction in the expense base.
Despite the adverse weather-related events over the period, the claims ratio in Momentum Insure improved to 68% compared to 77.6% in the prior period, reflecting the positive impact of underwriting measures implemented.
The share repurchase programme is still in process and as of June 3, the group had bought back 20-million shares, of which 18-million have been cancelled, for a total consideration of R426m.
Momentum Retail’s earnings were aided by positive mortality experience, mainly driven by lower-than-expected average claim sizes, it said.
The unit’s PVNBP improved by 13%, reflecting year-on-year growth in protection new business of 21% and 7% in long-term savings new business.
Momentum Investments’ earnings benefited from the recent strong growth in annuity new business volumes and higher mortality profits from its life annuities business.
Metropolitan Life’s earnings were supported by an improvement in persistency experience variance on protection business and lower expenses year on year, partly offset by the impact of onerous business written over the period.
New business volumes declined by 7% (on a PVNBP basis) compared to the prior period. This follows the decision to reduce the number of tied agents, resulting in a decline in recurring premium sales from protection and long-term savings business, somewhat offset by good growth in single premium sales from annuities.
Momentum Corporate’s earnings were aided by the refinement of the reinsurance strategy, a continuation of positive claims experience in the protection business, favourable investment variances on savings business, and higher investment income.
Momentum Metropolitan Health’s earnings were negatively affected by a change in new business mix away from its traditional medical scheme business. Membership growth of 2% was achieved year on year, despite an otherwise flat market.
Guardrisk’s growth in earnings was mainly driven by a 24% improvement in the underwriting profit in Guardrisk General Insurance and growth in Guardrisk Life's management fee income.
Momentum Insure’s earnings improvement was largely driven by a 6% increase in gross written premiums, a 9.6% improvement in the year-to-date claims ratio, and an increase in investment income.
Momentum Metropolitan Africa's earnings benefited from favourable investment income following good returns on bond assets backing liabilities; however, the strong investment performance reported at December 2023 partly reversed during this quarter mainly due to unfavourable yield curve shifts in Namibia, resulting in a lower rate of return. Earnings further benefited from an improvement in the claims ratio in the health business. This result was partially offset by a one-off system impairment expense. The group expects an increase in expenses from systems implementations and distribution enablement.
India’s earnings, though a loss, improved marginally compared with the prior period. This was mainly due to a 35% growth in gross written premium to R5.4bn, with strong growth in both the retail and group business, offset by an elevated claims ratio of 76%, compared to 65% in the prior period.
Addressing new business margins will be a key focus for the group.
It expects the operating environment to remain under pressure given the weak economic growth, potential political uncertainty following the election and the impact of prolonged inflationary pressures and elevated interest rates on disposable incomes.
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