Group overview

MMI Holdings

Nicolaas Kruger //
Chief executive officer
  Nicolaas Kruger


Despite the potential distractions of the merger integration, MMI’s maiden set of full year results reflected strong growth in core headline earnings, new business volumes, new business margins, value of new business and embedded value.

MMI Holdings (MMI) was listed on the Johannesburg Stock Exchange ("JSE") on 1 December 2010, following the merger of Metropolitan and Momentum, thereby creating the third largest insurer in South Africa with a vision of being a leader in meeting financial services needs.

The combination of Metropolitan and Momentum expanded the respective companies' target markets and created a diversified financial services group with businesses in life insurance (upper, middle and low income markets), asset management, healthcare administration, employee benefits and short-term insurance. Both the Metropolitan and Momentum brands have been retained for focused usage in the appropriate divisions and target markets within the group.

The post-merger integration process is progressing according to plan. As a result of the fact that the best of both entities are incorporated as part of the integration process, MMI enjoys greater product diversity, a stronger capital position, an expanded geographic footprint (MMI has a footprint in 12 African countries outside South Africa) and an enhanced skills base and ability to add shareholder value by way of revenue synergies and cost savings. MMI estimates cost savings to reach R500 million per annum over the next three years.

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. After the finalisation of the new strategy, MMI embarked on a process of vesting the new strategy with its 15 500 staff members, mainly via a countrywide CEO roadshow.

On the empowerment front, MMI entered into a strategic empowerment partnership with Kagiso Tiso Holdings, with an 8,5% direct stake in MMI via its holding of preference shares. A further 4,6% of MMI is held by other black economic empowerment shareholders.

Corporate social investment (“CSI”) is an imperative where MMI believes it can make a practical and enduring difference in the lives of people who live in the communities where it operates. A decision was made to combine the work of the respective CSI initiatives of Metropolitan and Momentum in the Metropolitan Foundation, and to change the name of this CSI vehicle to the MMI Foundation. The new combined foundation will focus primarily on Aids, disability and education.

Despite the potential distractions of the merger integration, MMI's maiden set of full year results reflected strong growth in core headline earnings, new business volumes, new business margins, value of new business and embedded value.

Core headline earnings increased by 12% to R2,6 billion, driven mainly by the performance of the Momentum Retail division and investment income on shareholders' assets. In the Momentum Retail division, client retention initiatives had a positive impact on the lapse and surrender experience, and positive mortality experience contributed to the increase in profits.

The new business annual premium equivalent ("APE") increased by 15% to R5,8 billion. In the Metropolitan Retail division, the new business APE increased by 24%, driven by good production by the traditional agency channels and a move to better quality lines of business. New business sourced through the agency force at Momentum Retail presented 30% of total new recurring premium business sold during the year. The new business margin improved from 1,2% to 1,4%. The largest contributor to this improvement was Metropolitan Retail, where underperforming products were removed, coupled with good expense management, strong new business flows and satisfactory persistency. The value of new business for MMI increased by 35% to R632 million, reflecting both the increase in the new business margin and the new business APE.

Total embedded value amounted to R30,7 billion as at 30 June 2011, up 6% from the prior year. An embedded value profit of R3,3 billion was achieved for the year, equating to a return on embedded value of 11,4%.

Given the uncertain economic environment and volatile investment markets, as well as the ongoing developments in respect of the Financial Services Board's Solvency Assessment and Management project, a prudent level of capital is deemed to be appropriate. The capital adequacy requirement was covered 2.3 times as at 30 June 2011.

RMI Holdings included R223 million of MMI's earnings in its normalised earnings for the four month period.

For an indepth review of MMI’s performance, RMI Holdings’ shareholders are referred to




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