Momentum Group Limited · JSE:MTM
Momentum — FY2024 Earnings Presentation
54 slides from Momentum's earnings presentation, September 2024
Slide 1: Reinvent and Grow strategy delivers
Reinvent and Grow 20 strategy delivers 24 Good operational performance sets the base for future growth
Slide 2: Overview
Overview Key take-outs from annual results Reinvent and Grow strategy Impact strategy Closing Jeanette Marais Group Chief Executive Officer
Slide 3: Overview: Key take-outs from annual results
Overview Key take-outs from annual results
Slide 4: Growth in NHE continues
Growth in NHE continues R’million +27% 5 000 4 383 4 438 4 500 Key take-outs from annual results 4 000 3 491 3 500 3 074 3 000 2 500 2 003 2 000 1 521 1 500 1 007 1 000 500 - F18 F19 F20 F21 F22 F23 F24
Slide 5: VNB remains a challenge
VNB remains a challenge R’million -2% 400 400 391 389 334 324 Key take-outs from annual results 300 276 226 200 200 160 120 100 - H1F20 H2F20 H1F21 H2F21 H1F22 H2F22 H1F23 H2F23 H1F24 H2F24 280 725 626 600 589
Slide 6: Another year of strong sales growth
Another year of strong sales growth R’million 19% 82 141 80 000 Key take-outs from annual results 72 673 68 873 70 000 65 898 60 000 55 783 50 447 50 000 40 000 30 000 20 000 10 000 - F19 F20 F21 F22 F23 F24
Slide 7: Corporate portfolio performance: Investments and Retail
Corporate portfolio performance Momentum Investments • Strong life annuity sales lifted Group’s VNB • Further Wealth platform growth Key take-outs from annual results • Strengthened asset management capabilities – IMG and Curate • Improve vertical integration, margins and provide new solutions Momen
Slide 8: Corporate portfolio performance: Corporate and Insure
Corporate portfolio performance Momentum Corporate • Focus on growth and expense management – step change in earnings • Net risk margin – well above 5% target Key take-outs from annual results • Omnichannel member engagement strategy: digital interactions up from 187k in F21 to 2.2m in F24 Momentum
Slide 9: Corporate portfolio performance: Guardrisk
Corporate portfolio performance Guardrisk Key take-outs from annual results • Cemented position as leading cell captive and alternative risk transfer insurer in SA • Successfully established General Insurance business – specialist corporate and commercial insurance • Significant earnings and valuati
Slide 10: Corporate portfolio performance: Health
Corporate portfolio performance Health Key take-outs from annual results • 22 million lives across Africa and India • More health for more people for less • Partnered with Labour Unions to expand to employed-but- uninsured • Health4Me membership • increased by 16% to more than 150k members • largest
Slide 11: Corporate portfolio performance: Metropolitan and Africa
Corporate portfolio performance Metropolitan • Remains a significant business, contributing R600m to earnings – and improving Key take-outs from annual results • Good progress on 5-point turnaround plan • Sales workforce management and VNB challenges Africa • NHE improved due to investment income, o
Slide 12: Corporate portfolio performance: India and Shareholders
Corporate portfolio performance India • Fastest growing health insurance business in India, with 12.5% Key take-outs from annual results market share • Optimistic about growth potential: differentiated business model, strong market share growth, strong partnership • Claims ratio focus Shareholders •
Slide 13: Reinvent and Grow strategy
Overview Reinvent and Grow strategy
Slide 14: Reinvent and Grow
Reinvent and Grow Grow existing NHE channels R4.4 – R4.8 billion Reinvent and Grow strategy Establish new >R500 million channels cost efficiencies Accelerate Non-life insurance digital at 20% of NHE Product and F2021 F2022 F2023 F2024 Market share service leadership +1% to +6% ROE Transformation 20%
Slide 15: Reinvent and Grow: Accelerate digital and market share
Reinvent and Grow Accelerate digital • Health: Straight-through digital processing: more than 750 000 Reinvent and Grow strategy transactions per day, 96% digital Market share • Myriad: FastTrack digital screening and • Wealth platforms grew to 18% underwriting a world-first • Guaranteed life annuit
Slide 16: Reinvent and Grow: Establish new channels, grow existing
Reinvent and Grow Establish new channels • Retail: • Myriad – 28% direct sales, from Reinvent and Grow strategy Grow existing channels <1% APE to 8% APE • IFA market leader • Insure: • Consult by Momentum exceeded • Direct and digital sales footprint growth target increased from 25% in F20 to • Stro
Slide 17: Reinvent and Grow: Product and service leadership
Reinvent and Grow Product and service leadership • Investments • Hybrid annuity sales up 243% • Retail • Launched Curate • Myriad new business on LifeReturns • Machine learning investment decision-making rewards programme, digital FastTrack underwriting a differentiator • Metropolitan Reinvent and G
Slide 18: Reinvent and Grow: Transformation
Reinvent and Grow Transformation • Improved all EE measures • Top management from 36% – 46% • Senior management from 36% – 43% Reinvent and Grow strategy • Middle management from 42% – 49% • Junior management from 84% – 86% • Strong increase in Top management • Maintained B-BBEE Level 1 Reinvent and
Slide 19: Impact strategy
Overview d @©) Impact strategy s)
Slide 20: Momentum Group
group
Slide 21: Impact strategy
Impact strategy Design simplified and impactful client Unlock the full experiences as a potential of our foundation for businesses growth Harness synergies Selectively expand IMPACT of collaboration Impact strategy our addressable within our market where we have a right to win TARGETS federated oper
Slide 22: Impact strategy targets
Impact strategy targets By 20 2 7 % % bn Impact strategy New We will Return on business Earnings achieve equity margin Through execution of our Impact strategy Delivery of Objectives and Key Results (OKRs) tracked per strategic objective in each business unit
Slide 23: Closing
Overview Closing
Slide 24: In closing: Two-pot feedback
Two-pot feedback 1 Ready to serve clients from day one, processed payments from day one 2 About 150 000 withdrawal requests worth R2.5 billion 3 Our interactions were 80% digital In closing 4 Age of applicants: 80% between 30 to 49, 16% between 50 to 59 year old group 5 More than 98% take maximum wi
Slide 25: In closing
In closing 1 New Group purpose, strategy and brand 2 Amidst a tough economy, we had strong earnings and remarkable employee energy In closing 3 Disciplined capital management: invest in great businesses, fix underperformers 4 Thank you
Slide 26: Financial results: Financial overview
Financial results Financial overview Risto Ketola Group Finance Director
Slide 27: Performance against Reinvent and Grow targets
Performance against Reinvent and Grow targets Original target IFRS 17 adjusted target NHE R4.6 – R 5 billion R4.4 – R 4.8 billion Financial overview ROE 18% – 20% 14% – 16% Non-life Insurance Cost efficiency 20% contribution to NHE R500 million saving
Slide 28: IFRS 4 to IFRS 17 NHE
IFRS 4 to IFRS 17 NHE (R’million) 5 079 118 +27% 335 132 367 4 438 Financial overview 1 136 3 491 F23 IFRS 4 NHE New Expected Investment Experience Market F23 restated F24 business profit income variance impacts IFRS 17 NHE
Slide 29: Key financial measures
Key financial measures Normalised headline Normalised headline Dividend per Return on earnings earnings per share share equity R’million cents cents % +27% +32% +4% +2.8% 4 438 Financial overview 309.7 15.5 3 491 120 125 12.7 238.2 F23 F24 F23 F24 F23 F24 F23 F24
Slide 30: Key financial measures: embedded value and new business
Key financial measures Diluted embedded Present value of Value of New business value per share new business premiums new business margin Rands R’million R’million % +10% +19% -2% -0.2 36.94 82 141 33.75 600 589 Financial overview 68 873 0.9 0.7 F23 F24 F23 F24 F23 F24 F23 F24
Slide 31: SA life businesses
SA life businesses Normalised headline earnings (R’million) +4% -3% 1 182 1 144 1 109 1 137 Financial overview +90% +14% 595 533 469 313 Momentum Momentum Metropolitan Momentum Retail Investments Corporate F23 F24
Slide 32: Other businesses
Other Otherbusinesses businesses Normalised headline earnings (R’million) +33% 653 +48% 491 +4% >100% 376 Financial overview 245 255 254 192 -23% <-100% (31) (183) (222) (274) (309) Health Guardrisk Momentum Africa India Shareholders Insure F23 F24
Slide 33: New business volumes up 19%
New business volumes up 19% Present value of new business premiums (PVNBP) R’billion +19% 82.1 68.9 +19% Financial overview 48.5 40.7 +47% +11% 15.4 -4% 8.5 10.5 -3% 7.6 7.2 6.9 2.9 2.8 Momentum Momentum Metropolitan Momentum Africa Momentum Retail Investments Corporate Group F23 F24
Slide 34: New business profitability
New business profitability New business margin (%) 2.1 1.5 1.1 0.9 0.7 0.6 Financial overview 0.1 (0.2) (0.6) (0.6) (0.9) (1.0) (1.8) Momentum Momentum Metropolitan Momentum Africa Momentum Retail Investments Corporate Group F23 F24
Slide 35: Detailed VNB breakdown
Detailed VNB breakdown Momentum Momentum Momentum R’million Retail Investments Metropolitan Corporate Africa Total Future revenue 1 121 1 559 2 016 466 813 5 975 Future expenses (243) (498) (359) (247) (325) (1 672) Present value of future cash flows 878 1 061 1 657 219 488 4 303 Financial overview
Slide 36: Covered business analysis
Financial results Covered business analysis
Slide 37: CSM driven by annuity sales and interest accretion
CSM driven by annuity sales and interest accretion R’billion +10% 1.0 1.8 2.6 19.4 18.5 Covered business analysis 17.6 1.6 17.9 9.2 8.7 Momentum Retail Momentum Investments Metropolitan 3.7 Momentum Corporate 2.7 Africa 3.9 3.8 1.0 1.0 1.4 1.6 June New Expected Change in Release June 2023 CSM busine
Slide 38: CSM increased 10%
CSM increased 10% Closing CSM New business CSM CSM release Change in estimates R’million R’million R’million R’million +10% +34% +6% -19% Covered business analysis 2 597 1 606 2 446 19 398 17 644 1 209 1 175 955 F23 F24 F23 F24 F23 F24 F23 F24
Slide 39: CSM by operating segment and product
CSM by operating segment and product R’billion 0.6 Covered business analysis 8.5 0.1 Traditional 1.3 Protection 0.7 Long-term savings 3.7 Annuities 0.5 1.8 0.3 0.6 0.7 0.4 0.1 Momentum Momentum Momentum Operating segment Metropolitan Africa Retail Investments Corporate CSM (R’billion) 9.2 3.7 3.9 1.
Slide 40: Covered business earnings – IFRS profit deferral
Covered business earnings – IFRS 17 profit deferral R’million F24 F23 Δ% New business (858) (805) (7)% Existing business 3 738 3 358 11% Expected profit 3 651 3 117 17% Experience variances 206 336 (39)% Covered business analysis Assumption changes (192) (398) (52)% Development expenses (137) (68) <
Slide 41: Capital management
Financial results Capital management
Slide 42: Capital covers above upper end of target ranges
Capital covers above upper end of specified target ranges MML solvency cover 2.07 2.10 2.0 1.6 Capital management F23 F24 Target range
Slide 43: Continue to unlock shareholder value
Continue to unlock shareholder value Current dividend pay-out ratio Board approved a further share buyback of R1 billion 40% of NHE # of shares Tranche EV bought Value Cents +4% R’million acquired value back created Capital management 125 120 1HF23 45 750 1 334 584 2HF23 28 500 876 376 1HF24 24 500
Slide 44: Strong ROEs in mature businesses
Strong ROEs in mature businesses 35% - 40% 30% - 35% Return on equity (%) Capital management 20% - 25% 15% - 20% Momentum Health Momentum Metropolitan Guardrisk Momentum Corporate Investments Momentum Retail Shareholders 10% - 15% Health Momentum Africa Insure (3)% (21)% 3 000 700 3 500 2 000 2 900
Slide 45: Strong cumulative cash generation
Strong cumulative cash generation R’million F22 F23 F24 Cumulative SA Life businesses 1 787 3 545 2 461 7 793 Guardrisk 330 297 417 1 044 Africa 198 580 186 964 Momentum Investments 271 287 277 835 Health 185 207 178 570 Dividend inflow to Momentum Group 2 771 4 916 3 519 11 206 Capital management O
Slide 46: Conclusion
Financial results Conclusion
Slide 47: In conclusion
In conclusion 1 Delivered strong results, especially operating profit 2 Improving our VNB remains top priority Conclusion 3 Actions to deliver on Impact strategy gaining momentum 4 Strong cash generation and balance sheet has never been healthier 5 Congratulations to our employees and thank you to o
Slide 48: Appendix
group Appendix
Slide 49: VNB analysis
VNB analysis 44 106 264 357 589 79 359 Appendix 1 515 91 91 (825) IFRS 17 Loss Reinsurance Direct Risk IFRS 17 out IFRS 17 IFRS 9 Tax Cost of VNB onerous recovery CSM after contract Adjustment of standard allowance business capital contracts component LoRC CSM cash flows for risk (LoRC)
Slide 50: New business CSM and onerous contracts
New business CSM and onerous contracts R’million (Gross of reinsurance and tax) Onerous contracts (-R843 million) (106) 243 (187) Momentum Retail Appendix -R650 million Momentum Investments 945 (278) Metropolitan Life Momentum Corporate Africa (79) 192 (193) 223 New business CSM (R1 606 million)
Slide 51: MML interest rate sensitivity
MML interest rate sensitivity 1% increase in nominal yields → -R150m earnings impact • Insurance liabilities more closely Annuity CSM contributes c90% of impact matched and aligned with economic needs under IFRS 17 • Residual mismatch exposure: o MML annuity CSM matching Appendix o MML required capi
Slide 52: Indian GAAP to IFRS earnings reconciliation
Indian GAAP to IFRS 17 earnings reconciliation R’million 42 (222) 14 (107) (1) (274) Appendix F23 NHE ABHI - Indian GAAP IFRS adjustments Support and other cost IT services F24 NHE R’million F24 F23 ABHI – Indian GAAP (182) (224) IFRS adjustments (81) 26 Support and other costs (39) (38) Group IT an
Slide 53: Guardrisk sources of earnings
Guardrisk sources of earnings F24 F23 Δ% Fee revenue 957 855 12% Investment income 262 206 27% Appendix Underwriting profit 605 417 45% Expenses (1 171) (987) 19% Normalised headline earnings 653 491 33%
Slide 54: Thank you
Thank you