Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — H1 FY2021 Earnings Presentation
39 slides from Momentum's earnings presentation, Mar 4, 2021
Slide 1: Momentum Metropolitan's good operating performance dampened by Covid-19 second wave
Momentum Metropolitan’s good operating performance dampened by Covid-19 second wave
Slide 2: Overview and Financial results
Part Hillie Meyer Group CEO 01 Overview Part Risto Ketola Group FD 02 Financial results
Slide 3: Overview
Overview
Slide 4: Highlights
Highlights New business volumes Value of new business +14% +109% to R29 992 million to R334 million Cost control Balance sheet 2% 1.95x SCR year-on-year from 1.85x on 30 June 2020
Slide 5: Momentum Life new business
Momentum Life new business Holding its own in tough market R million R million 2 500 60 2 187 2 077 1 887 2 027 2 013 2 045 40 1 975 1 844 2 000 35 36 29 1 722 34 20 26 21 25 1 500 9 12 0 1 170 -20 1 000 -40 500 -60 -58 - -80 Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F2020 Q1F2021 Q2
Slide 6: Momentum Investments new business
Momentum Investments new business Excellent growth R million R million 12 000 90 10 048 80 10 000 8 698 80 70 8 000 64 60 7 087 7 026 6 679 6 183 6 020 50 6 000 5 557 5 755 5 650 40 41 39 4 000 37 30 30 26 20 2 000 21 4 18 10 - 0 Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F2020 Q1F202
Slide 7: Metropolitan Life new business
Metropolitan Life new business 10% more business with 10% less agents R million R million 1 600 1 451 70 1 400 66 1 302 1 277 1 292 60 1 221 1 234 1 100 1 200 1 172 1 097 50 1 003 51 1 000 40 800 39 37 30 600 30 26 20 400 21 22 19 200 10 5 - 0 Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020
Slide 8: Momentum Corporate new business
Momentum Corporate new business Sales lumpy but pleasing recovery in VNB R million R million 8 000 7 720 180 160 7 000 140 152 6 000 120 4 909 100 5 000 80 4 000 60 2 352 3 000 2 654 40 49 2 442 2 369 2 284 2 064 1 741 33 20 2 000 46 18 1 230 0 3 5 1 000 0 -20 -12 -14 - -40 Q1F2019 Q2F2019 Q3F2019 Q
Slide 9: Momentum Metropolitan Africa new business
Momentum Metropolitan Africa new business Step-up in new business sales R million R million 1 000 30 935 900 25 829 800 782 20 24 700 675 649 648 15 20 600 560 552 507 521 15 10 500 5 400 5 5 2 - 300 ( 5) 200 -13 -13 100 -7 ( 10) -8 - ( 15) Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F
Slide 10: Momentum Short-term Insurance new business
Momentum Short-term Insurance new business AFI transaction delivering according to plan R million 800 700 600 500 442 423 436 400 291 300 200 240 248 255 241 260 273 100 208 220 226 235 - Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F2020 Q1F2021 Q2F2021 MSTI Momentum Insurance (AFI)
Slide 11: Momentum Metropolitan Health members
Momentum Metropolitan Health members Marginal growth in stagnant market Thousands 1 150 1 116 1 118 1 108 1 108 1 111 1 101 1 100 1 091 1 084 1 069 1 071 1 050 1 000 950 900 Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F2020 Q1F2021 Q2F2021 Members
Slide 12: Footprint growth and productivity
Footprint growth and productivity Tracking Reset and Grow targets Metropolitan Life Adviser productivity MDS (IFA distribution) 4.0 Supporting brokers 2 500 3.5 3.4 2 070 3.0 2 000 1 880 1 827 1 812 1 646 2.5 2.1 2.1 1 500 2.0 1.8 1.6 1.5 1 000 1.0 500 0.5 0.0 0 F2017 F2018 F2019 F2020 F2021 F2017 F
Slide 13: Footprint growth
Footprint growth Catch-up required to meet Reset and Grow Momentum agents footprint Momentum Consult footprint 1 000 300 282 898 273 854 255 805 824 250 800 221 686 200 600 159 150 400 100 200 50 0 0 F2017 F2018 F2019 F2020 F2021 F2017 F2018 F2019 F2020 F2021
Slide 14: Guardrisk
Guardrisk Underwriting profit tracking Reset and Grow GGI Net Earned Premium Underwriting profit as % of net revenue R million 500 462 25% 450 23% 411 401 22% 400 380 350 338 320 320 294 294 16% 300 251 250 12% 12% 200 150 100 50 0 F2016 F2017 F2018 F2019 F2020 H1F2021
Slide 15: Reset and Grow
Reset and Grow Normalised headline earnings target range RESET GROW Fix the basics Distribution Service Address cost base Products Marketing 4 100 R4 billion 3 900 3 700 R3.6 billion 3 500 3 300 3 100 R3.1 billion 2 900 R2.8 billion 2 700 F2018 F2019 F2020 F2021 R million
Slide 16: Reset and Grow
Reset and Grow Revised normalised headline earnings target range 4 000 4 000 3 900 3 600 3 600 3 400 2 900 2 800 R1 012 million (R2 024 million 2 400 annualised) 1 900 1 500 1 400 F2018 F2019 F2020 F2021 F2022 F2023 Low-road R&G High-road R&G New low-road forecast New high-road forecast
Slide 17: Impact of Covid-19 on profitability
Impact of Covid-19 on profitability Three shocks in last four quarters R million 800 600 400 200 0 -200 Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F2020 Q1F2021 Q2F2021
Slide 18: Impact of Covid-19 on profitability
Impact of Covid-19 on profitability Solid growth in underlying operating profit R million 800 600 400 200 0 -200 Q1F2019 Q2F2019 Q3F2019 Q4F2019 Q1F2020 Q2F2020 Q3F2020 Q4F2020 Q1F2021 Q2F2021
Slide 19: Financial results for the 6 months ended 31 December 2020
Financial results for the 6 months ended 31 December 2020
Slide 20: Key financial measures
Key financial measures Normalised headline earnings (Rm) Normalised headline earnings per share (cents) Dec 2019 1 772 Dec 2019 118 -43% -43% Dec 2020 1 012 Dec 2020 68 Present value of premiums (PVNBP, Rm) Value of new business (Rm) Dec 2019 26 234 Dec 2019 160 +14% +109% Dec 2020 29 992 Dec 2020 3
Slide 21: Normalised headline earnings by business unit
Normalised headline earnings by business unit -45% Dec 2019 Dec 2020 603 Covid impact +56% -21% 440 115 <(100)% +46% 82 416 +80% 332 328 555 308 304 282 +8% 258 208 143 86 -7% <(100)% 80 (28) R million (212) (240) (257) (267) Momentum Momentum Metropolitan Momentum Momentum Non-life Momentum New Sha
Slide 22: Covid-19 provision linked to recent mortality experience
Covid-19 provision linked to recent mortality experience Momentum Metropolitan Momentum R million Total Life Life Corporate Mortality experience (123) (136) (248) (507) Annuity experience - 50 8 58 Release of provision 111 55 138 304 Net mortality experience (12) (31) (102) (145) Additional provisio
Slide 23: Group results
Group results
Slide 24: Sales up by 14% year-on-year
Sales up by 14% year-on-year Present value of premiums (PVNBP, Rm) 16 567 15 205 Year-on-year movements 12 978 13 256 13 425 Momentum Life –11% 12 431 11 788 11 782 Momentum Investments +36% Metropolitan Life +1% Momentum Corporate –26% Africa +40% Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 20
Slide 25: Sales up by 14% year-on-year
Sales up by 14% year-on-year Present value of premiums (PVNBP, Rm) 18 000 250 17 113 16 567 16 000 15 205 228 200 14 000 13 256 13 425 12 978 189 12 431 12 000 11 677 11 788 11 782 150 10 000 146 8 000 124 100 100 106 6 000 90 82 4 000 60 50 2 000 30 - 0 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Sep 2019
Slide 26: New business margin increased to 1.1%
New business margin increased to 1.1% +1.9% Dec 2019 4.6% Dec 2020 2.7% -0.1% +0.5% 1.4% 1.3% +0.4% +0.7% +1.2% 1.1% 0.8% 0.5% 0.5% 0.6% 0.4% -0.2% -0.7% Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments Life Corporate Metropolitan Metropolitan Africa
Slide 27: ROEV per share up to 13.6%
ROEV per share up to 13.6% Embedded value (R million) 143 R1 887 million 571 Operational EV profit 631 838 (Dec 2019) 1 679 R27.39 EV per share 38 524 (Dec 2020) 40 838 R28.56 EV per share 38 524 (Dec 2019) Opening Operational Covid-19 Impact of Profit for Capital flows Closing embedded EV profit pr
Slide 28: Capital cover ratio remains within target range
Capital cover ratio remains within target range Solvency Capital Requirement (SCR, times) 2.5 Impact of yield curve at medium to 2.20 longer term durations was observable 2.08 Upper end 2.00 2.0 1.93 1.95 Recovery in markets had a positive 1.85 impact on capital cover Lower end Covid-19 provisions a
Slide 29: Interim dividend up to 25 cents per share
Interim dividend up to 25 cents per share Dividend per share (cents) 40 Interim ordinary dividend has been reinstated 35 35 for the six months 25 25 cents per ordinary share translates to 2.7 times normalised headline earnings Dividend cover target range remains at 2.0 to 3.0 times normalised headli
Slide 30: Investment return for the Group
Investment return for the Group Investment return (R million) -75% Fall in share price caused a decline in 486 performance of share scheme hedge Returns from credit assets negatively impacted by low interest rate environment Yields on short dated variable assets were lower than 1H20 122 71 Dec 2019
Slide 31: Other current topical matters
Other current topical matters
Slide 32: Other current topical matters
Other current topical matters 1 Covid-19 trends across segments 2 Business interruption update 3 Impact of operational gearing on VNB
Slide 33: Covid-19 trends across segments
Covid-19 trends across segments 16 000 Total death claims within segments 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021 Momentum Corporate Momentum Life Metropolitan Life
Slide 34: Business interruption update
Business interruption update Gross There are Our conservative claims of only another reinsurance strategy means R335 121 total net cost million claims on BI estimated at have been that still need paid out to to be finalised R64 our clients million to Guardrisk
Slide 35: Impact of operational gearing on VNB
Impact of operational gearing on VNB Distribution overheads R million Momentum Life Momentum Investments Operational gearing of around 5.3x Marginal gross VNB Operational gearing of around 1.5x 500 500 450 450 400 8.5% 400 8.5% 9.1% 350 350 1.6% 300 300 250 250 1.7% 7.1% 200 200 1.3% 150 150 1.2% 10
Slide 36: In closing
In closing
Slide 37: In closing
In closing We are very proud of the results with most operational metrics (volumes, margins, sales 1 activity, expenses, persistency) trending in the right direction.
Slide 38: In closing
In closing We are very proud of the results with most operational metrics (volumes, margins, sales 1 activity, expenses, persistency) trending in the right direction. 2 The few disappointments include (i) Wave 2 and (ii) the impact of remote work.
Slide 39: In closing
In closing 1 We are very proud of the results with most operational metrics (volumes, margins, sales activity, expenses, persistency) trending in the right direction. 2 The few disappointments include (i) Wave 2 and (ii) the impact of remote work. Big thank you to all of our staff for yet another si
Momentum Metropolitan Holdings — H1 FY2021 Earnings Presentation on 6ix