Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — Debt Investor Presentation (April 2022)
45 slides from Momentum's debt investor presentation, April 2022
Slide 1: Momentum Metropolitan Debt Investor roadshow
Momentum Metropolitan Debt Investor roadshow 11 – 13 April 2022
Slide 2: Momentum Metropolitan Holdings team and key contacts
Momentum Metropolitan Holdings team Rand Merchant Bank and key contacts 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 Metropolitan Holdings Ltd Risto Ketola Finance D
Slide 3: Agenda
Agenda 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument structure
Slide 4: Strategic overview
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Slide 5: 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 6: Strong new business sales
Strong new business sales Growth in new business sales, VNB recovered (R’million) 40 000 PVNBP 450 VNB 35 000 400 350 30 000 300 25 000 250 20 000 200 15 000 150 10 000 100 5 000 50 - - Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 18 18 19 19 20 20 21 21 18 18 19 19 20 20 21 21
Slide 7: Strong new business sales: NHE recovered to about 80% of trendline
Strong new business sales NHE recovered to about 80% of desired trendline (R’million) Credible NHE NHE 2,000 1 772 1 618 1 525 1,500 1 456 1 012 1,000 500 409 0 ( 5) ( 251) -500 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
Slide 8: Business view
Business view Momentum Investments Metropolitan Life Guardrisk
Slide 9: Momentum Investments: Results speak for themselves
Momentum Investments Results speak for themselves (R’million) Guaranteed annuity sales Platform new business 3,500 20,000 18,000 3,000 16,000 2,500 14,000 12,000 2,000 10,000 1,500 8,000 1,000 6,000 4,000 500 2,000 0 0 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 18 Dec 18 Jun 19 Dec
Slide 10: Business view
Business view Momentum Investments Metropolitan Life Guardrisk
Slide 11: Metropolitan Life: What you measure is what you get
Metropolitan Life What you measure is what you get
Slide 12: Metropolitan Life: Sales reaching new highs
Metropolitan Life Sales reaching new highs (R’million) 4 000 PVNBP 3 555 3 500 3 335 3 000 2 523 2 526 2 550 2 500 2 374 2 171 2 175 2 000 1 500 1 000 500 - Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
Slide 13: Metropolitan Life Branch rating
Metropolitan Life Branch rating Branch rating Average number of branches in rating categories 350 300 250 200 150 100 50 0 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Poor Average Good Exceptional
Slide 14: Business view
Business view Momentum Investments Metropolitan Life Guardrisk
Slide 15: Consistent NHE growth
Consistent NHE growth (R’million) 295 300 250 198 200 183 178 163 146 150 133 100 64 50 - Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
Slide 16: Successful diversification into underwriting
Successful diversification into underwriting (R’million) 1 200 Underwriting contribution and revenue 30% 29% 1 081 26% 1 000 926 25% 23% 22% 800 756 20% 653 721 693 17% 588 16% 600 15% 400 10% 8% 200 5% - 0% F2016 F2017 F2018 F2019 F2020 F2021 HY Dec 21 Revenue Underwriting contribution (%)
Slide 17: Guardrisk: Increase in ROE
Increase in ROE Guardrisk 19.9% 20% 18.7% 16.6% 16.0% 15.0% 15% 13.2% 11.3% 10% 5% 0% F2016 F2017 F2018 F2019 F2020 F2021 Dec 21
Slide 18: Financial results for the six months ended 31 December 2021
Financial results for 2 the six months ended 31 December 2021
Slide 19: Key financial measures
Normalised headline earnings Present value of premiums (R’million) (R’million) Key financial +23% measures 1 772 +51% 36 995 1 525 29 992 26 234 1 012 Dec 2019 Dec 2020 Dec 2021 Dec 2019 Dec 2020 Dec 2021 Value of new business (R’million) New business margin (%) +20% 400 1.1% 1.1% 334 0.6% 160 Dec 2
Slide 20: Key financial measures
Diluted embedded value per share Dividend per ordinary share (R) (cents) Key financial +4% +40% 40 measures 28.56 28.39 35 27.39 25 Dec 2019 Dec 2020 Dec 2021 Dec 2019 Dec 2020 Dec 2021 Return on embedded value (%) Return on equity (%) 13.2% 15.9% 18.1% 10.7% 10.8% 10.1% Dec 2019 Dec 2020 Dec 2021 D
Slide 21: Mature businesses: Normalised headline earnings
Normalised headline earnings Mature (R’million) businesses 603 +11% Dec 2019 489 Dec 2020 440 >100% 416 Dec 2021 -91% -18% 370 332 328 308 282 268 +9% 86 94 80 30 (212) Momentum Momentum Metropolitan Momentum Momentum Metropolitan Life Investments Life Corporate Health
Slide 22: Growing businesses: Normalised headline earnings
Normalised headline earnings Growing (R’million) Dec 2019 businesses Dec 2020 +17% -98% >100% Dec 2021 303 304 258 263 208 143 -16% 7 (28) (240) (257) (267) (299) Non-life Insurance Momentum Metropolitan New Initiatives Shareholders Africa
Slide 23: 23% year-on-year increase in sales
23% year-on-year increase in sales PVNBP and value of new business (R’million) 25,000 300 19 748 Year-on-year growth 16 567 243 250 20,000 18 917 228 Metropolitan Life 16 989 219 17 247 +39% 200 15,000 13 256 13 425 172 Momentum Metropolitan 12 978 12 431 157 11 782 Africa 150 +38% 10,000 106 100 10
Slide 24: New business margin in line with prior period
New business New business margin (%) margin in line with prior -0.3% period Dec 2019 4.6% Dec 2020 4.3% Dec 2021 2.7% -1.2% 0.0% 1.4% +0.2% 1.3% 1.1% 1.1% 1.0% 0.8% -0.4% 0.5% 0.6% 0.5% 0.7% 0.4% 0.2% 0.1% 0.1% -0.2% -0.7% Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments Li
Slide 25: Embedded value per share up 4%
Embedded Embedded value (R’million) value per share up 4% 126 183 760 Strong operational EV profit, aided by less severe Covid-19 1 291 mortality impact 43 322 41 328 R28.39 EV per share 10.8% annualised ROEV per share Opening EV Operational Impact of Profit from Capital flows Closing EV EV profit i
Slide 26: Interim ordinary dividend up 40% to 35 cents per share
Interim ordinary dividend up to 35 cents Dividend per ordinary share (cents) per share +40% 35 40% increase from 25 cents per share 25 2.9 times NHE 15 2.0 to 3.0 times NHE dividend cover target range 0 Jun 2020 Dec 2020 Jun 2021 Dec 2021
Slide 27: Mortality claims experience
Mortality claims experience
Slide 28: Third wave proportionally more severe for Momentum Life
Third wave proportionally Amount of death claims (gross of reinsurance) more severe for (R’million) Momentum Life 1 738 1 723 1 654 1 628 1 400 711 1 216 961 1 051 1 050 1 015 1 066 735 971 659 861 797 795 282 540 712 634 535 190 371 495 204 207 506 158 182 393 158 661 126 134 127 587 140 461 465 43
Slide 29: Momentum Metropolitan mortality impact on NHE
Momentum Metropolitan mortality impact Mortality experience variance on NHE Momentum Momentum Metropolitan Momentum R’million Total Life Investments Life Corporate Excess mortality – Protection (903) (35) (137) (513) (1 588) Excess mortality – Annuities - 137 51 37 225 Excess mortality (903) 102 (86
Slide 30: Capital management & Solvency
3 Capital management & Solvency
Slide 31: Efficient capital management
Efficient capital management 1 Capital managed efficiently according to well defined framework 2 MML cover remained within the target cover range 3 Ongoing balance sheet projections and stress testing Strategic: Target solvency cover ranges revised in prior year. Focus on 4 optimising cost of capita
Slide 32: Capital coverage strength and resilience
Capital Momentum Metropolitan Life coverage strength and 2.5 2.20 resilience 2.08 2.0 1.95 Target solvency 1.85 range 1.73 1.77 Capital cover remains 1.5 within target levels 1.0 MML cover improved due to positive 0.5 investment experience and strong contribution 0.0 from new business Jun 2019 Dec 2
Slide 33: Consistent application of the sustainable dividend policy
Consistent NHE capital distribution cover (history) application of the sustainable dividend policy 2.90x 3.0x 2.9x 3.0x 2.0x 1.7x 1.46x 1.05x 0.96x 0.97x F2015* F2016* F2017* F2018 F2019 F2020 F2021 F2022H1 NHE capital distribution cover 40% interim dividend increase to 35 cents per share 2.9 times
Slide 34: Investment of available capital matches capital requirements with assets backing capital
Investment of available capital Approach to investment of assets backing the Capital matches capital requirements Available capital: The assets backing the MML capital adjusted for goodwill, holdings in with assets strategic subsidiaries and inter group loans backing capital Available capital is
Slide 35: Strong and resilient solvency position under different stresses
Strong and Regulatory Stress Tests: MML ‐ 30 June 2021 resilient R bn solvency 36.0 1.80x position under 1.73 different 27.0 1.48 1.60x stresses 1.40 18.0 1.40x 9.0 1.20x 0.0 1.00x Base position Mkt comb shock ‐ int down Mkt comb shock ‐ int up SCR Excess Own Funds (pre dividend) Cover ratio (pre di
Slide 36: Capital management – Gearing
Capital management – Gearing MML Capital Structure 100% 13% 13% 9% 3% 16% 16% 17% 17% 24% 22% 25% 27% 4% 4% 3% 2% 80% 2% 2% 3% 3% 60% 89% 40% 83% 83% 82% 81% 80% 80% 74% 75% 75% 73% 20% 0% Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 Jun 2018 Jun 2019 Jun 2020 Jun 2021 Equity Prefe
Slide 37: Gearing – Maturity profile well managed
Gearing – Maturity profile SUBORDINATED DEBT MATURITY PROFILE Proposed bond well managed issuance R980M R750M R500M MML05 MML06 R270M 2022 2023 2024 2025 2026 2027 2028 2029 12 AUG 19 OCT 18 SEP 12 AUG 10 DEC JUNE 15 MAR JUNE BOND MMIG05 MMIG06 MMIG07 MMIG04 MML01 MML05 MML03 MML06 CODE & MML02 & MM
Slide 38: MML Credit rating
MML Credit rating • Credit rating issued by Moody’s Investor services. • On 05 April 2022, Moody’s issued a press release with an update on MML credit rating. In the presss release, Moody’s affirmed the MML credit ratings and changed the credit outlook on the credit rating from negative to stable. M
Slide 39: Instrument structure
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Slide 40: Key features of the MML subordinated programme
Key features of the MML Issuer Momentum Metropolitan Life Limited subordinated Programme type Unsecured Subordinated Callable Note Programme programme Programme size R10 billion The Issuer is required to defer payment of principal if a Regulatory Deficiency Deferral of Principal Redemption Deferral
Slide 41: Indicative Terms – 5 year note
Indicative Terms – 5 year Issuer Momentum Metropolitan Life Limited note Insurer Financial Strength Aaa.za Credit ratings Issuer Aa1.za Subordinated Debt Aa3.za Rating Agency Moody’s Investor Service ZAR10bn Subordinated Note Programme listed on the Interest Rate Market of the JSE Programme Limited
Slide 42: Indicative Terms – 7 year note
Indicative Terms – 7 year Issuer Momentum Metropolitan Life Limited note Insurer Financial Strength Aaa.za Credit ratings Issuer Aa1.za Subordinated Debt Aa3.za Rating Agency Moody’s Investor Service ZAR10bn Subordinated Note Programme listed on the Interest Rate Market of the JSE Programme Limited
Slide 43: Indicative timelines
Indicative timelines Date Action item 11 – 13 April 2022 Investor roadshow Termsheet, draft applicable pricing supplement(s) and auction details 25 April 2022 released to investors May 2022 Moody’s pre-sale rating released on MML05 and MML06 12 May 2022 Updated termsheet with price guidance released
Slide 44: Thank you
Thank you
Slide 45: 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 Metropolitan Holdings Limited (“the Company”) and may not be reproduced or disseminated in whole or in part without
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