Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — H1 FY2023 Earnings Presentation
57 slides from Momentum's earnings presentation, 2023
Slide 1: Momentum Metropolitan reports strong earnings growth
Momentum Metropolitan reports strong earnings growth Reinvent and Grow strategy on track
Slide 2: Agenda
Agenda 1 Overview: Hillie Meyer (Group CEO) 2 Guardrisk update: Herman Schoeman (CEO: Guardrisk Group & Non-Life Insurance) 3 Financial overview: Risto Ketola (Group FD)
Slide 3: Quality earnings in challenging environment
Salient Quality earnings in challenging environment features R’million 2 858 2 230 1 772 1 618 1 525 1 456 1 012 (5) (251) H1F19 H2F19 H1F20 H2F20 H1F21 H2F21 H1F22 H2F22 H1F23 - - - Dotted line represents underlying earnings (excluding fluctuations not under management control)
Slide 4: Disciplined capital management bearing fruit
Salient Disciplined capital management bearing fruit features Return on equity (%) Dividend per share (cents) 50 18.1 18.4 15.9 40 35 10.1 25 H1F20 H1F21 H1F22 H1F23 H1F20 H1F21 H1F22 H1F23 Capital cover Share buyback Momentum Metropolitan Holdings R750 million share 1.77 buyback completed 1.62 1.51
Slide 5: Value of New Business (VNB) below target
Salient Value of New Business (VNB) below target features R’million 400 391 335 334 324 226 206 160 120 H1F19 H2F19 H1F20 H2F20 H1F21 H2F21 H1F22 H2F22 H1F23
Slide 6: Reinvent and Grow
REINVENT AND GROW Grow existing NHE channels R5 billion 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 7: Progress indicators
Reinvent and Progress indicators Grow progress 100% On track to achieve F2024 target 125% On track to exceed F2024 target 75% Not on track to achieve F2024 target
Slide 8: Transformation
Reinvent and Transformation Grow progress EE targets cascaded B-BBEE scorecard 100% to business unit level Maintain Level 1 90% of new senior Improve black senior executive representation 105% managers from ACI 30% 50% in 2025 groups Black = ACI
Slide 9: Momentum Metropolitan Africa
Reinvent and Momentum Metropolitan Africa Grow progress Exited Kenya to further Grow sales (PVNBP) 85% optimise portfolio R2.8bn R4bn Increase NHE 65% R250m R500m Improve VNB 0% -R3m R35m
Slide 10: Momentum Life Myriad
Reinvent and Momentum Life Myriad Grow progress Myriad launched Grow IFA market share world-first mobile 96% 16% 20% underwriting solution Leading market share Increase new business margin 0% in IFA protection 2.8% 5% market* *Source: NMG
Slide 11: Momentum Life Investo
Reinvent and Momentum Life Investo Grow progress Already exceeded F2024 market share Grow retirement annuity market share 115% target 15% 17% Significant improvement Digitise to realise efficiencies 100% in service levels Reduce cost base by 20%
Slide 12: Momentum Investments Retail Investments
Reinvent and Momentum Investments Retail Investments Grow progress Breached R100bn Re-platform system 100% AUM in unit trusts Digitise to realise efficiencies Our DFM assets at R15bn Grow GWP 102% R35bn R45bn Annuity sales increased to R5bn p.a.
Slide 13: Momentum Investments Institutional and UK business
Reinvent and Momentum Investments Institutional business Grow progress Increasing NHE while Grow net cash flows reducing CTI ratio 135% Net inflow R8bn Reduce cost-to-income ratio 105% 85% 75% Momentum Investments UK business Successful integration Grow net new business 30% of Seneca acquisition Net
Slide 14: Momentum advice channels: Distribution Services
Reinvent and Momentum advice channels Momentum Distribution Services Grow progress Transform Increased APE by 13.9% p.a. over past Advice-led specialised 100% 4 years distribution Investments sales Grow APE increased by 17.5% 125% p.a. over past 4 years 10% p.a. Leading market share Reduce acquisiti
Slide 15: Momentum advice channels: Consult by Momentum
Reinvent and Momentum advice channels Consult by Momentum Grow progress R6bn assets in Grow adviser footprint Consult solutions 85% 300 450 >20% increase in Double AUM in Consult solutions GWP for short-term 110% insurance R3.5bn R7bn
Slide 16: Momentum advice channels: Financial Planning
Reinvent and Momentum advice channels Momentum Financial Planning Grow progress Attractive efficiency Grow planners 85% gains 818 1 360 Grow APE 60% 10% p.a. Reduce acquisition cost (partly through digitisation) 120% > 5% p.a.
Slide 17: Momentum Corporate FundsAtWork
Reinvent and Momentum Corporate FundsAtWork Grow progress Increasing contribution Increase AUM to APE through direct 110% R60bn R80bn distribution 2022 FIA Product Increase digital member engagement 150% Provider winner 50 000 250 000
Slide 18: Momentum Corporate Financial metrics
Reinvent and Momentum Corporate Financial metrics Grow progress Exceeded F2024 cost-to-income ratio Reduce cost-to-income ratio 110% target 78% 70% Continuation of Improve group insurance margin 85% positive PHI and Negative 5% Group Life results
Slide 19: Momentum Metropolitan Health
Reinvent and Momentum Metropolitan Health Grow membership Grow progress Market leader in low- Open schemes 90% income health solutions 260 000 360 000 Launched virtual doctor capability Public sector 101% >35 000 consultations 750 000 850 000 per month Corporate schemes 85% 140 000 150 000 Digitisat
Slide 20: Metropolitan Life
Reinvent and Metropolitan Life Grow progress Telechannel increased Increase gross new business APE 115% APE contribution from R2bn R3bn 9% to 13% over past 4 years Policy migration and automation 100% Broker channel sales Annual savings of R90m increased by 58% over past year Digitisation to realise
Slide 21: Guardrisk Group
Reinvent and Guardrisk Group Grow progress UW profits now at Double 2018 NHE 105% 30% of revenue R510m Six new micro- insurance cells Increase UW profits 115% 26% 33% of revenue Establish micro-insurance initiative 100%
Slide 22: Guardrisk Non-life and Guardrisk Life
Reinvent and Guardrisk Non-life (including GGI) Grow progress Grow net revenue 100% R800m R1.1bn Guardrisk Life Increase net revenue 110% R250m R300m
Slide 23: Momentum Insure
Reinvent and Momentum Insure Grow progress Excellent client Complete AFI integration by mid 2022 50% retention Cumulative savings of R160m p.a. by F2024 Double digit sales Grow GWP growth year to date 100% 8% p.a. Data migration tracking revised plan Double NHE 65% R330m Launched free, fully digital
Slide 24: In conclusion
Reinvent and In conclusion Grow progress 1 Competitively positioned 2 Focus on execution 3 Reinvent and Grow on track
Slide 25: Guardrisk
Guardrisk
Slide 26: Guardrisk ~ a growth story
2014 2022 Guardrisk ~ a growth story Annual GWP (14% annualised growth) Total R9.3 billion R26.4 billion 3x increase Valuation R1.6 billion R4.5 billion (2.8x increase) (Accumulated dividends paid R1.3bn) 6% Other Other 30% Revenue mix 70% 94% Underwriting profit Underwriting profit Contribution to
Slide 27: The right to win
Non-life market 2014 Non-life market 2022 The right to win 12% 15% Cell captive demand 85% continuing 88% Cell Captive market Other Cell Captive market Other Cell captive market 2014 Cell captive market 2022 • Recognition in insurance laws • Conduct Standards 48% 41% Guardrisk growth in • SCR 52% em
Slide 28: The right to win
BI claims (Covid-19) KZN flood claims The right to win 8% 2% Net Reinsurance Net partnerships 92% Gross Gross 98% • Microinsurance Continuous • General insurance innovation • Launchpad • Reinsurance Synergies • AUM • Retail investments
Slide 29: Revenue sustainability beyond F2024
Revenue sustainability beyond F2024 Guardrisk Life: Guardrisk reinsurance Selected risk vehicle retention and “bolt-on” transactions Launchpad: Investment in Embedded startup and insurance 2.0 scale-up Insurtech
Slide 30: Financial results
Financial results 1 Financial overview 2 Other topical matters 3 Conclusion
Slide 31: Financial overview
Financial overview Et
Slide 32: Key financial measures
Key Normalised headline earnings (R’million) Normalised headline earnings per share (cents) financial +46% +49% measures 2 230 148.8 1 772 118.2 1 525 99.9 1 012 67.6 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Dec 2019 Dec 2020 Dec 2021* Dec 2022 Dividend per share (cents) Return on equity (%) +43% 50 18.1
Slide 33: Key financial measures
Key Diluted embedded value per share (R) Present value of new business premiums (R’million) financial +11% -10% measures 28.56 28.39 31.39 36 995 27.39 33 268 29 992 26 234 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Value of new business (R’million) New business margin (
Slide 34: SA life businesses normalised headline earnings
SA life Normalised headline earnings (R’million) >100% businesses 689 +50% 556 -10% 489 441 370 0% 268 268 30 Momentum Life Momentum Investments Metropolitan Life Momentum Corporate Dec 2021 Dec 2022
Slide 35: Other businesses normalised headline earnings
Other Normalised headline earnings (R’million) businesses -20% 303 -97% 263 243 +55% >100% 146 122 94 +18% 7 9 (244) (299) Momentum Non-life Insurance Momentum New Initiatives Shareholders Metropolitan Health Metropolitan Africa Dec 2021 Dec 2022
Slide 36: The Group's investment return
The Group’s Investment return (R’million) investment return - 47% 630 309 332 49 478 338 307 -17 -24 Dec 2021 Dec 2022 Shareholders investment income Business unit investment return Shareholders fair value gains
Slide 37: New business volumes
New business Present value of new business premiums (R’billion) volumes -10% down 10% 37.0 33.3 30.0 -17% 26.3 22.9 18.7 19.0 13.8 +19% 0% +3% 5.8 -38% 4.8 4.9 4.1 3.6 3.6 3.5 3.5 3.5 3.6 2.5 2.5 2.1 1.1 1.5 1.3 Momentum Life Momentum Metropolitan Life Momentum Momentum Momentum Investments Corporat
Slide 38: New business margin
New business New business margin margin slightly 3.3% lower than 3.2% prior period 2.7% 2.4% 1.4% 1.3% 1.3% 1.1% 1.1% 1.0% 1.0% 1.0% 0.8% 0.6% 0.5% 0.5% 0.4% 0.2% 0.1% 0.1% -0.2% -0.2% -0.7% -0.8% Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments Life Corporate Metropolitan
Slide 39: Good embedded value growth
Good embedded Embedded value (R’million) value growth EV Breakdown 46 483 45 428 43 332 2 271 2 242 41 328 1 933 40 407 R31.39 38 524 1 749 1 876 10 299 EV per share 1 462 9 628 9 956 6 412 9 554 6 533 15.6% ROEV per share 33 230 33 913 32 246 31 771 30 529 29 898 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22
Slide 40: Capital cover remain toward the upper end
Momentum Metropolitan Life Capital cover 2.5 remain toward the 2.20 1.95 1.98 upper end 2.0 1.77 of specified target 1.5 ranges 1.0 0.5 0.0 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Momentum Metropolitan Holdings 2.0 1.77 1.62 1.51 1.56 1.5 1.0 0.5 0.0 Dec 2019 Dec 2020 Dec 2021 Dec 2022 Target range
Slide 41: Interim dividend increased
Interim dividend increased Interim dividend per share (cents) Interim dividend is 35% of NHE +43% 50 Interim dividend pay-out target range remains at 40 33% to 50% of NHE 35 25 R500m will be utilised to buy back shares over the next 4 months Dec 2019 Dec 2020 Dec 2021 Dec 2022
Slide 42: Other topical matters
Other topical matters 1 Cash generation 2 Share buybacks 3 IFRS 17
Slide 43: Cash generation
Sooo (= li= t= | BESEaesue | iS) eiSiSi= ‘ N S Fa de Cash generation
Slide 44: The four cash generating entities
The four cash generating entities
Slide 45: Remittances to MMH from the four cash generating entities
Remittances to MMH from the four 1 963 cash generating 1 420 1 500 entities R’million R’million 295 289 426 240 158 Dec 2021 Dec 2022 Dec 2021 Dec 2022 SA Life Guardrisk R’million R’million 146 110 94 119 122 76 85 7 Dec 2021 Dec 2022 Dec 2021 Dec 2022 Health Business Africa Cash remittances to MMH
Slide 46: Cash generation for the six months ending 31 Dec 2022
Cash generation for Net capital flow the six months R’million ending SA Life 1 500 31 Dec 2022 Guardrisk 158 Health 76 Africa 85 Other 28 M&A disposal 11 India - Momentum Insure (200) MM Finance company (153) Preference shares (53) Cash generated to MMH 1 452 Ordinary dividend (749) Net of dividend
Slide 47: Share buybacks
Share buybacks
Slide 48: Value created from buyback
Pro-forma Value created from buyback impact of the buyback Completed tranche: R583 million EV uplift programme on EV Jun '22 Actual Buyback Pro-forma Embedded value (R’million) 45 428 (750) 44 678 Shares (million) 1 526 (45) 1 481 Diluted EV per share (Rands) 29.77 0.40 30.17 Proposed tranche: R279
Slide 49: IFRS 17
IFRS 17
Slide 50: Key expected IFRS17 impacts
Key • Small negative impact on overall earnings level expected Earnings • New business strain under IFRS17 will be lower IFRS17 impacts Equity • Net increase in equity (prudence in IFRS4 liabilities released) • Lower return on equity in the future Embedded • Insignificant impact on embedded value an
Slide 51: In conclusion
In conclusion
Slide 52: In conclusion
In conclusion 1 Good earnings performance reflects focus over the past few years.
Slide 53: In conclusion
In conclusion 1 Good earnings performance reflects focus over the past few years. 2 Privileged to be able to implement a buyback and to pay decent dividends concurrently.
Slide 54: In conclusion
In conclusion 1 Good earnings performance reflects focus over the past few years. 2 Privileged to be able to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go; the next eighteen months will be defining for the Group.
Slide 55: In conclusion
In conclusion 1 Good earnings performance reflects focus over the past few years. 2 Privileged to be able to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go; the next eighteen months will be defining for the Group. 4 The difficult m
Slide 56: In conclusion
In conclusion 1 Good earnings performance reflects focus over the past few years. 2 Privileged to be able to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go; the next eighteen months will be defining for the Group. 4 The difficult m
Slide 57: In conclusion
In conclusion 1 Good earnings performance reflects focus over the past few years. 2 Privileged to be able to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go; the next eighteen months will be defining for the Group. 4 The difficult m
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