Positive contributions from most business units boosted Centurion-based Momentum’s annual earnings, though the group sounded a note of caution about the subdued economy and the effect of that on its operating environment.
Normalised headline earnings for the year ended June were up 27% at R4.44bn, while normalised headline earnings per share (HEPS), which adjust for nonoperational factors, rose 32% to 309.7c.
HEPS were 39% higher at 298.6c, the group said in a statement on Friday.
Operating profit was up 31% R3.6bn as many of the business units benefited from higher investment income from the assets in the portfolios backing policyholder liabilities and higher interest rates.
A final dividend of 65c a share was declared, taking the full-year payout to 125c, up 4% from a year ago. The board has approved an additional R1bn for further share repurchases.
The prior year’s accounting has been restated for the application of the IFRS 17 — Insurance Contracts (IFRS 17) standard, which became effective in July 2023.
It said there were positive contributions from most business units, including a recovery in Momentum Insure’s earnings, solid life annuity profits from Momentum Investments, improved persistency experience in Metropolitan Life, and strong underwriting experience in Momentum Corporate and Guardrisk. Earnings were also supported by favourable mortality experience across the group’s operations and higher investment income from asset portfolios, it said.
The group said notable progress was made with Metropolitan Life’s five-point turnaround plan, which led to enhanced product commerciality and an improvement in the quality of new business written.
Despite adverse weather-related events during the year, the claims ratio in Momentum Insure improved to 67% from 77% in the prior year, reflecting the positive effects of the underwriting measures the group has implemented.
Since the implementation of two-pot retirement system, the group had received about 150,000 withdrawal applications worth R2.5bn.
The group’s sales as measured by the present value of new business premiums (PVNBP) increased 19% to R82.1bn, it said
Momentum Retail’s long-term savings and protection new business volumes improved and Momentum Investments continued to deliver solid growth in new business volumes on life annuities and on Momentum Wealth's investment platform.
Metropolitan Life saw a decline in protection and long-term savings new business volumes, partially offset by good growth in life annuities.
Momentum Corporate reported solid growth in structured investment flows (albeit at low margins), partially offset by a decline in recurring premiums from protection new business. Africa’s PVNBP declined marginally following lower corporate protection new business volumes in Botswana and Lesotho, partly offset by higher retail new business volumes in Namibia.
Value of new business (VNB) declined by 2% to R589m, largely affected by the strengthening of persistency and expense basis implemented in June 2023, which resulted in VNB being calculated on a more conservative basis than in the prior year, most notably for Metropolitan Life. The overall group new business margin declined to 0.7% from 0.9%.
Note of caution
Momentum said it remained concerned about the pressure on its operating environment given the subdued economic growth, but was seeing encouraging signs of improvement in the SA economy.
The group, which is valued at R41bn on the JSE, would continue to drive sales volumes and find innovative solutions to improve VNB outcomes, it said.
The conclusion of its “reinvent and grow” strategy has enabled Momentum to continue to strengthen its competitive position within the SA and other markets. Its new “impact” strategy revolves around six strategic objectives aimed at driving meaningful outcomes, including unlocking the full potential of the businesses and optimising the cost base to grow earnings.
By executing this strategy, it aims to generate normalised headline earnings of R7bn by the 2027 financial year and increase the value of new business to R1bn-R1.2bn.
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