Chief executive officer, MMI Holdings
MMI was formed from the merger of Momentum and Metropolitan, sizeable insurance-based financial services players in South Africa to form South Africa’s third largest insurer. The core businesses of MMI are long-term insurance, asset management, investment, healthcare administration and employee benefits. Product solutions are provided to all market segments.
MMI operates in 12 countries outside of South Africa. It provides for the financial needs of individuals in the lower, middle and upper income markets, principally under the Momentum and Metropolitan brand names.
MMI’s strategy rests on four pillars, being in-depth market knowledge, innovative solutions, effective distribution and an entrepreneurial culture. In striving to achieve its vision, MMI is focusing its efforts on developing strong client relationships, building market leading divisions, maximising integration benefits, optimising capital management, competing in profitable markets and growing its people.
The MMI group is accelerating the shift in strategic focus from integration to growth. The key growth initiatives
that have been recognised include cross-selling, increasing of market share in the middle income market, enhancing
the capacity, growth potential and profitability of the short-term insurance business, further expansion in the rest
of Africa, investigating the growth potential of India, innovation and increased alternative distribution channels.
MMI has established the MMI Foundation to provide strategic oversight and governance as well as to play an
advisory role regarding all corporate social investment (“CSI”) initiatives. The two client-facing brands, Momentum
and Metropolitan, each has its own committee deliberating on how funds should be utilised towards addressing
the various social challenges of South Africa. Collectively the MMI group spent over R28 million on CSI initiatives
in the 2012 financial year.
The three major pillars and deliverables for the Momentum brand include people with disabilities, children with
vulnerabilities and post-graduate bursaries. The areas of focus under the Metropolitan brand include education
which includes financial education in the workplace and community, community projects and health, with specific
focus on HIV/AIDS and life skills.
Under the Momentum and Metropolitan brands, MMI has various sponsorships to enhance the brands and support the creation of prosperity and financial wellness. Momentum sponsors all one-day events under Cricket South Africa’s jurisdiction, the 94.7 cycle challenge, the household financial wellness index and net worth report and the coming home initiative. The Metropolitan soccer sponsorships are used for community development and engaging with and thanking the people it does business with.
MMI continued to realise the strategic benefits of the merger, providing a solid platform for its growth initiatives. MMI
remains on track to achieve its total targeted expense savings of R500 million per annum by June 2014 and realised
expense savings of R201 million during the financial year ended 30 June 2012. The merger integration process is on
track in respect of all six its key objectives, which includes product strategy, IT strategy and brand, channel, structure
and systems consolidation.
Core headline earnings for the year ended 30 June 2012 increased strongly by 12% to R3.0 billion. Except for a small
reduction in earnings at Momentum Investments, all MMI’s divisions increased their earnings. Total new business grew
by 3% to R6.0 billion while new business margins were maintained at 1.4%. The value of new business remained in
line with the prior year at R633 million. Total embedded value increased by 6% to R32.5 billion, with a return on
embedded value (excluding dividends paid) of 11%.
Given the uncertain economic environment and volatile investment markets, together with the ongoing developments
in respect of the Financial Services Board’s Solvency Assessment and Management (“SAM”) project, MMI decided to
maintain a relatively prudent level of capital. SAM may result in an increase in the economic capital required and a
corresponding reduction in MMI’s capital buffer, but its implementation is only scheduled for 2015. As a result of the
solid earnings growth and MMI’s ability to improve capital efficiencies, its capital buffer increased during the year
ended 30 June 2012. As part of an ongoing capital management programme, the MMI board decided to declare a
special dividend of 65 cents per share or R1 billion. MMI’s total capital buffer, after allowing for economic capital
requirements, amounted to R3.3 billion at 30 June 2012.
RMI Holdings included R746 million of MMI’s earnings in its normalised earnings (2011: R228 million for the four-month
For an indepth review of MMI’s performance, RMI Holdings’ shareholders are referred to www.mmiholdings.co.za.