Momentum Metropolitan (formerly MMI Holdings) says it is making steady progress on the three-year ‘Reset and Grow’ strategy announced a year ago, after reporting a 53% increase in diluted normalised headline earnings of R3.1 billion for the year ended June 2019.
On a per share basis, diluted normalised headline earnings increased by 61%, reflecting the impact of the share buy-back programme completed in November 2018, it said.
Risto Ketola, group financial director, contextualised what he termed “a pleasing performance” by pointing out that the significant increase in diluted normalised earnings builds on a weak result in the prior year, which was impacted by negative operating basis changes and investment variances at the time.
“However, if these changes and variances are excluded from both years to provide a more accurate illustration of earnings growth, the improvement in diluted normalised headline earnings was a very robust 21%. This is the result of the positive impact of our Reset and Grow strategy,” he said.
Present value of new business premiums increased by 12% year-on-year, while value of new business improved by 57% on the prior year.
Group CEO Hillie Meyer said that he is encouraged by improvements across the group: “A year ago we simplified our structure and created empowered, end-to-end business units. At our previous annual results we presented a roadmap, and this year we are happy to report that we are on track to deliver on our promises. We could not have asked for a better response from our people,” he said.
“The improvement in our earnings growth for the year to June 2019 is the result of financial discipline and a focus on our core activities; we have worked smarter with our money without negatively impacting our market presence,” Meyer said.
Highlights for the financial year include resilient operational performance in most of the group’s businesses, supported by an emphasis on expense management and good underwriting results. Growth in new business was driven by the Group’s distribution capabilities and partnerships, improved client experience, and a comprehensive suite of
attractive product solutions.
Growth in new business volumes in specific areas boosted the group’s performance.
“Momentum Corporate saw strong flows of new business from a range of clients, including good growth in recurring premium inflows for group insurance, as well as a number of large annuity deals in the first and fourth quarters,” it said.
“Going into the next phase of our strategy, we have to continue our focus on growing revenue through advancing our distribution capabilities and visibility of our brands, as well as through continuous improvement of our product solutions and client experience,” said Meyer.
“We remain committed to delivering on our three-year Reset and Grow target to generate profits between R3.6 billion and R4.0 billion by F2021.”
Meyer pointed out that if the current challenging operating environment persists, the pressure on revenue might result in Momentum Metropolitan’s earnings heading for the lower end of the 2021 target range.
He said that the challenging economic environment is expected to put pressure on revenue growth and the board believes that single digit earnings growth for F2020 might be a fair result.
Shares in Momentum climbed 1.25% in trade on Tuesday (4 September).