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MMI Holdings

Nicolaas Kruger
Chief executive officer
  Nicolaas Kruger

South Africa’s third largest insurer, MMI, was formed from the merger of Momentum and Metropolitan. The strategic rationale for the merger was:

  • to benefit from enhanced growth opportunities through the combination of complementary target markets and resources;
  • to expand an enlarged African footprint;
  • to realise cost synergies over time; and
  • to have a larger and more specialised skills base in many different areas.

Reflecting on this strategic rationale for the merger, it is pleasing to see that it has become a reality in a relatively short period of time. The excellent merger integration progress has positioned MMI for growth, despite the backdrop of continued challenges in the environment.

MMI’s strategic growth initiatives include:

  • geographical diversification, mainly through looking at acquisitive and organic growth opportunities in Africa;
  • product diversification by increasing MMI’s market share in the South African short-term insurance market following the buy-out of OUTsurance’s 50% stake in Momentum Short-term Insurance and providing short-term insurance solutions to MMI’s African businesses;
  • segment diversification by expanding MMI’s representation in the middle-income market;
  • channel diversification in respect of electronic distribution channels; and
  • cross-selling which supports MMI’s vision of becoming a truly client-centric organisation.

MMI subscribes to transformation as a business imperative and in respect of the contribution it can make to South Africa as a country. MMI is proud of the improvement in its B-BBEE contributor status to level 2.

Consumers are currently under pressure as reflected in the widespread incidence of financial vulnerability and the related rise in dissatisfaction and social instability. MMI can make an important contribution in this regard by joining hands with the financially vulnerable members of our society to empower them and give them hope for a more financially sustainable future. MMI does this by offering appropriate solutions to its clients on a basis which also benefits its shareholders, thereby creating shared value for a broader base of stakeholders. An example of such an initiative is the collaboration between Metropolitan Health and Alpha Pharm to put affordable, preventative and primary healthcare within the reach of many more South Africans. This initiative also aligns well with government’s health strategy.

MMI continues with its corporate social investment initiatives, primarily through the MMI Foundation. The two client-facing brands, Momentum and Metropolitan, each has its own committee that deliberates on how the funds allocated from the MMI Foundation to these brands should be distributed towards addressing the various social challenges of our country and to make a positive difference in the lives of the people living in the communities where MMI operates. The focus areas are health, education, disability and sport development. MMI spent in excess of R30 million on corporate social investment initiatives in the 2012 calendar year.

Momentum and Metropolitan each has various sponsorships to enhance the brand and support each brand’s focus on creating prosperity and ensuring financial wellness. Momentum’s sponsorships include oneday international cricket, the 94.7 cycle challenge, the financial wellness index with Unisa, the Momentum household net wealth report and the coming home initiative. Metropolitan has various soccer sponsorships in place.

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 insurance needs of individuals in the lower-, middle- and upper-income markets, principally under the Momentum and Metropolitan brand names.

• Value of new business grew by 19% to R711 million.

• Profits from operating divisions increased strongly by 19% to R2.5 billion, contributing to a 10% increase to R3.2 billion in diluted core headline earnings for the year ended 30 June 2013.

• The merger integration is progressing well and expense savings of R346 million were achieved to date. Total targeted expense savings of R500 million remain on track.

• Total net cash flow from policyholders/clients amounted to R27.3 billion for the year while total assets under management at year-end was R558.9 billion.

• 17% return on embedded value of R35.1 billion was achieved.

RMI Holdings included R803 million of MMI’s earnings in its normalised earnings (2012: R746 million).

For an in-depth review of MMI’s performance, RMI Holdings’ shareholders are referred to www.mmiholdings.com.