Momentum Group has lifted its interim dividend almost 30% after a strong first half characterised by disciplined strategic execution and the continued resilience of its diversified portfolio.
The group reported an 8% rise in normalised headline earnings to R3.7bn in the six months ended December, while operating profit increased 10% to R3.1bn, which Momentum said was underpinned by solid performances across its business units.
Normalised HEPS was 12% higher at 274.9c.
An interim dividend of 110c per share was declared, up 29% from a year ago, which represents a payout ratio of 40% of normalised headline earnings (NHE), towards the lower end of the group’s new payout range of 40%-60% of NHE.
It said the decision to declare a dividend towards the lower end of the payout range was considered prudent given the recent market volatility.
Return on equity (ROE) at 24% remained comfortably above the group’s target of 20%.
Momentum said notable contributions to earnings were from life annuity profits in Momentum Investments, improved new business profitability in Metropolitan Life, higher earnings from group risk in Momentum Corporate, continued strong underwriting performance in Momentum Insure and excellent results from Guardrisk.
Earnings were lower in Momentum Retail due to notable yield curve movements.
“Our earnings were further supported by overall favourable mortality, persistency and alterations experience variances, and positive investment market returns,” it said.
CEO Jeanette Marais said three clear trends boosted the group’s financial performance.
“First, underwriting profitability remained at high levels. Second, rising markets and solid investment performance lifted assets under management and asset-based fee income. And third, persistency stayed strong across all business areas, further aiding earnings.”
The present value of new business premiums increased by 11% to R43.3bn, driven by strong performances from Momentum Investments, Momentum Corporate and Momentum Africa.
However, the value of new business (VNB) was down 15% year on year to R238m, owing to a shift from higher-margin guaranteed annuity sales to living annuities, the group said.
Increasing the value of new business remained a strategic priority.
“Although we are encouraged that VNB increased in all businesses except one, and that VNB improved by 25% when compared to the previous sequential six-month period, it is a key focus for us to further improve the value of new business across all business units,” Marais said.
“It is encouraging that as the VNB contribution from guaranteed annuities continue to reduce as sales volumes decrease, other businesses are starting to compensate,” she added.
Marais said digital innovation is a core driver of performance. “Our practical application of digital and AI creates a compounding structural advantage for the future. AI is not an emerging capability for us; it is already delivering measurable value. We have 60 active digital initiatives focused on risk mitigation, cost efficiency and adviser enablement.”
She added that just seven of these had already generated R40m in savings by automating processes and unlocking capacity for higher-value client support.
“The next step is to continue scaling the initiatives that work, and to embed AI and intelligent automation as a compounding structural advantage for the group.”
In January, South Africa’s second-biggest medical scheme, Bonitas, ended its more than 40-year relationship with Medscheme, and appointed Momentum and Private Health Administrators to take over its contracts.
Marais said the transaction added more than 750,000 beneficiaries under Momentum’s administration and shifted its market share from 22% to 30%, establishing Momentum Health as the second-largest medical scheme administrator in the country.
On Wednesday Momentum appointed Tyrone Soondarjee as independent chair of the group boards with immediate effect. Soondarjee had been interim chair since November after the resignation of former chair Paul Baloyi.
The group said it was steadfast in delivering on its “Impact” strategy and had made notable progress on strategic initiatives. It said its financial ambitions for the 2027 financial year of NHE of R7bn, ROE of 20% and a VNB margin of 1%-2% remained achievable.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.