Momentum said it expects its profit for the six months ended December will rise by as much as 55% due to the strong performance of its insurance and Guardrisk business in the period — a trading update that sent the group’s shares more than 10% higher.
The share price of the group, headed by Jeanette Marais, shot up 14.5% after the release of the upbeat trading update, which indicated that the company’s refreshed strategy, unveiled last year, was bearing fruit.
“Momentum Group’s strong operational performance delivered robust earnings across all business units. Earnings benefited from good performance on the existing book of business, bolstered by improved persistence experience variance in most of our SA life insurance businesses,” the company said.
“Mortality and morbidity claims variance remains positive, although less positive than recent periods. Strong underwriting discipline and favourable weather conditions resulted in a solid recovery in Momentum Insure’s earnings,” it said.
“Guardrisk saw notable growth in underwriting profits and management fee income. The group’s results were further aided by higher market returns and favourable yield curve shifts over the period. Strong cash generation supported the group’s capital and liquidity position.”
Momentum last year — as part of its new strategy — indicated that work was under way to beef up Guardrisk with acquisitions and possible international expansion. This as part of the group’s growth blueprint, which aims to push up its earnings to R7bn by 2027.
Momentum bought Guardrisk for R1.6bn from Alexforbes a decade ago. It has identified SA’s largest cell captive insurer as key in its strategy to unlock value for shareholders in the next three years.
Momentum has set a target of achieving return on equity by 2027 and has pledged to pay dividends of about R6bn over the next three years.
The group has largely retreated from its rest of Africa portfolio, having exited several unprofitable markets, with its exposure on the continent now reduced to a presence in Ghana, Botswana, Mozambique, Lesotho and Namibia. Some of the markets the company exited in the past few years include Nigeria, Tanzania and Kenya.
The company has set a target of improving its productivity to 1.2 policies per adviser per week in its Africa portfolio.
The group expects Guardrisk to lift its earnings from the current R700m to R1bn in the next three years, while Momentum Investments is expected to grow earnings R400m in the period, with Momentum Corporate pencilled in to contribute R1bn.
Marais took over the helm of Momentum a year ago, becoming the only woman CEO of a large listed SA life insurer.
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