Momentum Group’s first-half earnings were up more than 50% as all its business units performed well, driven by management interventions to enhance the new business mix.
Headline earnings rose 54% in the six months to end-December to R3.3bn, with headline earnings per share (HEPS) 55% higher at 243.6c.
Normalised HEPS, which adjusts for the effect of finance costs related to preference shares, rose 48% to 244.8c.
The group said there was a “significantly improved” underwriting result in Momentum Insure, strong underwriting performance in Guardrisk, profits released from annuities in Momentum Investments, improved new business profitability in Metropolitan Life, and higher earnings from the group risk business in Momentum Corporate.
Earnings were further supported by improved persistency experience across most of the group’s operations and a favourable external investment and underwriting environment.
Operating profit increased by 33% to R2.8bn.
An interim dividend of 85c per share was declared.
The group said results were further aided by higher market returns and favourable yield curve shifts over the period.
Momentum Retail reported marginally lower operating profit, mainly due to lower positive mortality and morbidity experience variances and a reduction in market variances.
The decline in Africa’s operating profit follows lower market variances, driven by unfavourable yield curve shifts in Namibia, Botswana and Lesotho.
The operating loss in India narrowed, aided by strong gross written premium growth, a reduction in the loss component and an improved combined ratio, the group said.
The group’s new business sales, as measured by the present value of new business premiums, remained flat at R38.9bn.
The group achieved solid value of new business (VNB) growth of 40% to R279m, largely supported by the change in new business mix towards more profitable protection business in Momentum Retail, an improvement in Metropolitan’s VNB, and the positive contribution from life annuities in Momentum Investments. Overall, the group’s new business margin improved to 0.7%.
The board has approved a further R1bn for the buyback programme of the group’s ordinary shares, given the prevailing discount to embedded value.
A favourable external investment and underwriting environment supported the results of the past six months, but similar conditions may not necessarily persist in the second half of the financial year, the group said.
While it is cautiously optimistic about the prospects for SA, lingering risks from global economic uncertainty and local fiscal pressures could keep financial market volatility elevated.
“We remain steadfast in improving VNB and driving sales volume growth,” it said.
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