Momentum Group Limited · JSE:MTM
Momentum — Debt Investor Presentation (October 2024)
46 slides from Momentum's debt investor presentation, Oct 14, 2024
Slide 1: Momentum Group Debt Investor Roadshow
Momentum Group Debt Investor Roadshow 10 & 14 October 2024
Slide 2: Disclaimer
Disclaimer The information contained in this presentation is confidential and is intended solely for this presentation This presentation may contain information proprietary to Momentum Group Limited (“the Company”) and may not be reproduced or disseminated in whole or in part without the Company’s p
Slide 3: Momentum Group team and key contacts
Momentum Group team and key contacts Rand Merchant Bank Delia Patterson DCM Distribution Delia.Patterson@rmb.co.za Leigh Buckley DCM Origination Leigh.Buckley@rmb.co.za Sinethemba Cele DCM Origination Sinethemba.Cele@rmb.co.za Momentum Group Limited Risto Ketola Finance Director Risto.Ketola@mmltd.c
Slide 4: Overview
Overview 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument Structure
Slide 5: Overview
Overview 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument Structure
Slide 6: Strategic overview
Strategic overview Reinvent and Grow strategy
Slide 7: Reinvent and Grow implementation update
Reinvent and Grow implementation update 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%
Slide 8: Strategic overview: Impact strategy
Strategic overview Impact strategy
Slide 9: Group F2025 to F2027 strategy
group F2025 to F2027 STRATEGY
Slide 10: 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 Impact strategy of collaboration our addressable within our market where we have a right to win TARGETS federated oper
Slide 11: 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 12: Strategic overview: Closing
Strategic overview ® Closing
Slide 13: 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
Slide 14: Overview
Overview 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument Structure
Slide 15: Financial results
Financial results Financial overview
Slide 16: Financial overview
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 17: 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 18: Key financial measures
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 19: 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 20: 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 21: 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 22: 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 23: 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 24: Covered business analysis
Financial results Covered business analysis
Slide 25: 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 26: 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 27: 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 28: 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% Covered business analysis Experience variances 206 336 (39)% Assumption changes (192) (398) (52)% Development expenses (137) (68) <
Slide 29: Conclusion
Financial results Conclusion
Slide 30: 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
Slide 31: Overview
Overview 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument Structure
Slide 32: Capital Management & solvency
3. Capital Management & solvency Solvency level Asset backing capital Cash generation Gearing position Debt maturity profile Credit rating
Slide 33: Capital cover above the upper end of the target range
Capital cover above the upper end of the specified target range Momentum Metropolitan Life solvency June 2022 June 2023 June 2024 R'bn R'bn R'bn Own Funds (pre foreseeable dividend) 30 32 34 Capital management & solvency SCR 15 15 16 SCR cover (times, pre‐foreseeable dividend) 2.03x 2.07x 2.1x Targe
Slide 34: Strong and resilient solvency position under different stresses
Strong and resilient solvency position under different stresses Regulatory Stress Tests: MML ‐ 30 June 2023 Rbn 35.0 2.30x 30.0 2.07x 2.10x 1.99x 1.88x 1.86x 25.0 1.90x Capital management & solvency 20.0 1.70x 15.0 1.50x 10.0 1.30x 5.0 1.10x 0.0 0.90x Base position EqDown 40% Domestic adverse Global
Slide 35: Approach to investment of assets backing the Capital
Approach to investment of assets backing the Capital Available capital: The assets backing the MML capital adjusted for goodwill, holdings in strategic subsidiaries and inter group loans Capital management & solvency Available capital is invested to back the Required capital and excess capital
Slide 36: 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 Capital management & solvency Dividend inflow to Momentum Group 2 771 4 916 3 5
Slide 37: Consistent application of the sustainable dividend policy
Consistent application of the sustainable dividend policy Momentum Group Historical Ordinary Dividend (cps) 140 3.00x 120 2.50x cents per share 100 Capital management & solvency 65 80 70 2.00x 65 1.50x 60 35 40 1.00x 15 60 20 40 50 0.50x 35 25 35 0 0.00x F2019 F2020 F2021 F2022 F2023 F2024 Interim d
Slide 38: Organic de-gearing due to an increase in IFRS NAV
Organic de-gearing due to an increase in IFRS NAV MML Capital Structure 100% 25% 27% 27% 21% 19% 80% Capital management & solvency 60% 40% 75% 73% 73% 79% 81% 20% 0% Jun 2020 Jun 2021 Jun 2022 June 2023 Jun 2024 Equity Debt • The gearing ratio decreased due to an increase in equity while gross debt
Slide 39: Debt maturity profile well managed
Debt maturity profile well managed Subordinated debt maturity profile Capital management & solvency Proposed bond issuance
Slide 40: Momentum Metropolitan Life credit rating
Momentum Metropolitan Life credit rating • Credit rating issued by Moody’s Investor Services. • In the January 2024 report, Moody’s commented that “Momentum Metropolitan Life Limited's (MML) Capital management & solvency Ba1 global scale and Aaa.za national scale, Insurance Financial Strength (IFS)
Slide 41: In conclusion
In conclusion 1 Strong solvency position with regular stress testing. Capital Management & Solvency 2 Strong cash generation and balance sheet has never been healthier 3 Natural balance sheet de‐gearing from earnings growth and conservative debt issuance. 4 Maturity profile managed conservatively wi
Slide 42: Overview
Overview 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument Structure
Slide 43: Instrument Structure: MML08 and MML09 bond
4. Instrument Structure MML08 and MML09 bond Indicative timelines
Slide 44: Indicative terms
Indicative terms Issuer Momentum Metropolitan Life Limited Insurer Financial Strength Aaa.za Credit ratings Issuer Aa1.za Subordinated Debt Aa3.za Rating Agency Moody’s Investor Service Programme ZAR 10bn Subordinated Note Programme listed on the Interest Rate Market of the JSE Limited ZAR 750m to Z
Slide 45: Indicative timelines
Indicative timelines Date Action item 10 & 14 October 2024 Investor roadshow 24 October 2024 Termsheet with auction details released to investors Updated termsheet with price guidance released to investors, Applicable Pricing 31 October 2024 Supplements released to investors 7 November 2024 Proposed
Slide 46: Thank you
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