MOMENTUM Metropolitan Holdings achieved really strong growth in its investment returns in the six months to December 31 due to firmer equity market returns generally and the growing success of its fintech-focused private equity investments, chief executive Hillie Meyer said yesterday.
Momentum’s Investment returns increased to R740 million from R122m, and had compensated for net mortality losses of R378m, results released yesterday showed.
Meyer said in a telephone interview the group had invested R700m in two venture capital funds about seven years ago, one in the UK and one in South Africa. Each of these funds had invested in about 10 to 12 companies, and some two to three of these companies in each of the funds were currently performing very well, he said.
Consequently, some R300m in the increase in investment returns in the past six was attributable to the write-up in value of these companies, and the value of these funds to Momentum was currently already about R2 billion, said Meyer.
The normalised headline earnings growth increased by 51 percent to R1 53bn, comprising a 12 percent decline in operating profit, offset by the substantial increase in investment returns. New business premiums increased 23 percent to R37 billion.
Meyer said the results were pleasing given the limitations of the Covid-19 pandemic.
He said part of the result was delivered by the group focusing on turning its Reinvent and Grow strategy into action.
“I’m especially pleased we achieved double-digit growth for both new business value and volumes. Our teams delivered on what they could control, and we maintained a proactive external focus on advisers and clients," he said.
An interim dividend of 35 cents per share was declared, representing a 40 percent increase compared with the prior period. Normalised headline earnings per share increased by 50 percent to 101.7 cents.
The value of new business grew 20 percent to R400m, driven by strong new business volumes and expense management.
There were strong positive contributions from various divisions: Momentum Investments lifted normalised headline earnings improving by 11 percent to R489m. Its value of new business increased from R144m to R232m, on the back of good annuity sales.
Momentum Corporate’s normalised headline earnings increased from a loss of R212m to a R370m profit aided by strong earnings growth in underwriting results. New business volumes of R4.9bn increased by 37 percent compared to the prior period, attributable to a strong 94 percent growth in recurring premium volumes on group risk products.
Guardrisk’s normalised headline earnings increased by 73 percent to R295m.
Metropolitan Life saw the present value of new business premiums increase by 39 percent to R3.6bn. This included a 45 percent growth in protection for new business.
Momentum Metropolitan Health’s normalised headline earnings of R94m were 9 percent higher, mainly driven by fee income generated from continued growth in the low‑cost product (Health4Me) and public sector membership.
Momentum Metropolitan Africa improved new business volumes by 38 percent to R2.1bn.
Meyer was cautious about the pace of economic recovery across its operations, as disposable income remained under pressure. He also anticipated a slight tapering in the investment side of the business, as investment flows were at historical highs and “probably won’t last.”
BUSINESS REPORT ONLINE