Momentum Group has delivered record earnings in the year ended June, reflecting the strength of the group’s diversified portfolio and disciplined execution of its Impact strategy.
Normalised headline earnings increased 41% to R6.26bn with normalised headline earnings per share up 46% at 451c.
Headline earnings per share improved 50% to 446.9c.
The group said a solid operational performance across its various business units underpinned the results, with notable contributions from annuity profits in Momentum Investments, improved new business profitability in Metropolitan Life, higher earnings from the group risk business in Momentum Corporate, a significantly improved underwriting result in Momentum Insure and strong underwriting performance in Guardrisk.
Earnings were further supported by positive actuarial assumption changes, and investment market returns.
Operating profit increased by 52% to R5.48bn.
The group’s results also benefited from positive investment market returns and higher market variances following favourable yield curve shifts over the year.
The decline in Africa’s operating profit followed lower market variances, higher new business strain and an increase in support costs. The operating loss in India narrowed, supported by strong gross written premium growth, a reduction in the loss component and an improved combined ratio.
The group's new business sales, as measured by the present value of new business premiums, decreased by 3% to R79.8bn. Momentum Retail delivered growth in long-term savings new business volumes, outpacing the more modest growth in protection new business volumes, it said.
Africa delivered strong new business volumes following increased corporate protection new business volumes in Lesotho and Namibia, along with increased retail new business volumes in Namibia and Botswana.
Return on equity (ROE) increased to 21.2% from 15.5% in the prior year, reflecting the higher normalised headline earnings reported for the year.
Given the group’s strong capital and liquidity position, the board approved a further R1bn for its share buyback programme. By September 12, Momentum had completed share buybacks totalling R2bn, which includes the R1bn buyback communicated at the 2024 annual results announcement and the R1bn announced at the interim results.
The board approved an updated dividend policy that targetted an ordinary dividend payout range of 40%-60% of normalised headline earnings (NHE). The previous dividend policy targeted a range of 33%-50% of NHE. This revised policy underscored the group’s strengthened cash generation and robust financial position, it said,
Momentum declared a final dividend of 90c per share, bringing the total dividend for the financial year to 175c.
The group said in SA the high cost of living was expected to continue affecting new business volumes, which placed pressure on margins. The combination of lower inflation, easing interest rates and improved energy availability could gradually restore consumer confidence, support employment and boost disposable income.
"We are encouraged by the excellent earnings delivered by Momentum Group, underpinned by the strong operational performance of our empowered, accountable business units. While pleased with the earnings performance, we recognise the importance of sustaining this momentum and have enhanced our focus on improving VNB (value of new business) and driving sales volume growth of profitable products," it said.
"Our Impact strategy positions us well to achieve this. Advice continues to differentiate us in the market, enabling us to deepen client relationships and strengthen our financial adviser channels," it said.
Momentum said it believed the targets for the 2027 financial year of NHE of R7bn, ROE of 20% and VNB margin of 1%-2% were achievable.
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