Momentum Metropolitan Holdings’ operating profit from its business units almost tripled in the three months to the end of September, from R511 million in the prior period to R1.239 billion, because of lower death claims in its life insurance businesses.
However, the group’s new business volumes were disappointing. The present value of new business premiums (PVNBP) declined by 3% to R16.7bn compared to the three months to the end of September 2021, mainly because of lower new business volumes in Momentum Investments.
The value of new business (VNB) plunged by 32% compared to first quarter of 2022, to R106m, mainly as a result of a decline in Metropolitan Life’s VNB.
The new business margin shrunk from 0.9% to 0.6% – whereas the margins of rivals Old Mutual and Sanlam are above 2%.
All MMH’s business units, except Momentum Insure, contributed to the growth in the group’s operating profit in the first quarter of its 2023 financial year.
Momentum Insure continued the trend seen over the previous two quarters, reporting an underwriting loss. The claims ratio was 70%, compared to 58% in the first quarter of 2022, because of inflationary pressure on the cost of claims, which was offset slightly by premium rate increases on policy renewals.
Gross written premiums increased by 6% to R747m and persistency experience remains good.
Guardrisk’s operating profit rose 13%, which was supported by good growth in the employee benefit business of Guardrisk Life, a recovery in the volume and affinity business of Guardrisk Insurance, and a 21% increase in Guardrisk General Insurance’s underwriting profits.
Overall, MMH’s non-life businesses’ operating profit declined by 31% to R124m in the first quarter of its 2023 financial year.
Lower death claims benefit life business
Momentum Life went from an operating loss of R3m to a profit of R330m. In the first quarter of FY2022, the business was significantly impacted by the Delta wave of Covid-19, which resulted in a high number of death claims. The current period saw lower death claims, as well as higher investment returns.
Momentum Life’s PVNBP improved by 7% to R1.9bn, reflecting year-on-year growth in the protection (+6%) and the long-term savings (+8%) businesses.
Metropolitan Life, whose market are mainly low-income consumers, saw its operating profit increase by 156% to R161m. This was mainly due to an improvement in investment returns, as well as a significant drop in death claims. Profits were dampened by higher lapses, mainly on income protection products. MMH said the current economic conditions are placing pressure on this segment’s customer base and lapses are expected to remain high in the short term.
Metropolitan Life’s PVNBP improved by 2% to R1.8bn. It saw good growth on single-premium product sales, while recurring premiums from protection and long-term savings business increased marginally.
Momentum Corporate’s new business volumes stand out
Momentum Corporate’s operating profit improved by 129% to R307m, mainly due to strong underwriting results on group risk products. The contribution from group life products was boosted by lower death claims. The improvement in earnings for the quarter was further supported by solid results from its disability business and investment returns.
Momentum Corporate was the standout performer on new business volumes, with its PVNBP more than doubling year-on-year to R3.572bn. Volumes were boosted by strong growth in single and recurring premium flows. Growth in single-premium new business was largely driven by improved investment flows into FundsAtWork, as well as flows into structured investments and annuities.
Momentum Investments’ AUM declines
Momentum Investments’ operating profit improved by 18% from R173m in the prior period to R205m, which was mainly driven by an increase in earnings from annuities.
Assets under management (AUM) of R210bn on the Momentum Wealth investment platform remained flat compared to the prior period, as higher net flows on the local platform business were offset by lower net flows and weak market performance on the offshore platform.
Institutional and retail AUM declined by 3% to R474bn, mainly due to lower net flows and weak market performance.
Momentum Investments’ PVNBP declined by 19% to R9bn, mainly because of a decline in local and offshore platform new business volumes of 20% and 35% respectively. This was partly offset by an increase of 8% in annuity new business volumes.
