Momentum shares hit a record high on Tuesday as the group’s executives outlined their growth strategy over the next two years, with many business units already having made strides in achieving their 2027 targets.
The group’s share price reached R36.11 as the executive team led by group CEO Jeanette Marais took investors on the group’s growth journey at a capital markets day in Cape Town.
The presentations show a company adjusting to evolving market dynamics and innovating to achieve its growth target of raking in at least R7bn in earnings by 2027 and a return on equity of 20%.
The group’s key business units are partnering with some of Southern Africa’s largest churches in search of scale as the group ramps up the execution of its strategy.
The group’s subsidiary Metropolitan Life has partnered with Nazareth Baptist (Shembe) Church in a tie-up that will initially introduce a customised funeral insurance product, specifically co-created to meet church members’ cultural and religious needs.
Beyond the initial phase, which will offer cash payouts for claims, Metropolitan Life aims to introduce comprehensive funeral management services that will assist bereaved families in conducting ceremonies that adhere to Shembe traditions.
The church, founded in 1910, is one of SA’s largest with a membership said to be about 8-million.
Metropolitan Life CEO Peter Tshiguvho, who recently visited the church, said the partnership was important to win new business.
“We want to get new revenue streams. We have entered into a partnership with the Nazareth Baptist Church. As much as we have entered into this relationship, there is still a lot of work we have to do,” Tshiguvho said.
“We are going to be utilising the current distribution channel to penetrate this market. What really excites me about this partnership is that this is a different kind of client. We have to learn as much as possible from this particular grouping,” he said.
“We are not going to get someone outside to go sell there, we want the church members to be the ones selling among themselves. This will be a totally different revenue stream for us.”
Momentum’s Namibian business has launched the Elcin Funeral Plan, a purpose-built funeral cover product offered exclusively to members of the Evangelical Lutheran Church. The church is said to have about 500,000 members.
SA financial services companies are no strangers to partnering with big religious groups to diversify their income. Patrice Motsepe’s TymeBank in 2020 partnered with what is considered to be SA’s largest church — the Zion Christian Church (ZCC), with an estimated 12-million members.
TymeBank has since grown to more than 11-million customers, making it one of the country’s fastest-growing lenders.
It has credited its long-standing relationships with Pick n Pay and Boxer, TFG and the ZCC as among the reasons for its success.
Momentum is deploying further capital to its promising Indian business, Aditya Birla Health Insurance, which recently achieved breakeven.
The business has a 12.6% market share in that market segment, and Momentum’s Guardrisk is also expanding its cell captive model to India.
Momentum bought Guardrisk for R1.6bn from Alexforbes a decade ago and has identified SA’s largest cell captive insurer as key in its strategy to unlock value for shareholders in the next three years.
The group has largely retreated from its rest of Africa portfolio, with its exposure on the continent now reduced to 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.
Under the group’s strategy the businesses in the group that are expected to do the heavy lifting in increasing the normalised headline earnings to R7bn are Guardrisk, Momentum Investments and Momentum Corporate, units the group describes as its “unicorns”.
The group expects Guardrisk to lift its earnings from R700m to R1bn in the next three years, while Momentum Investments is expected to grow earnings by R400m in the period, with Momentum Corporate pencilled in to contribute R1bn.
Metropolitan is expected to reduce its cost base by R150m in the next three years, and increase public and private sector penetration to more than 20%.
The group’s health business has set a target of adding 350,000 clients by 2027 that it said was achievable despite SA’s stagnant medical aid industry.
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