Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — Investor Day (2021)
193 slides from Momentum's investor day presentation, 2021
Slide 1: Investor Conference 2021
momentum SMETROPOLITAN 2021 ‘momentum e momentum multioly AMETROPOLITAN GUARDRISK® EfelS
Slide 2: Contents
CONTENTS 2 PROGRAMME PRESENTATIONS 3 Group strategy overview 33 Capital management to shift gears 57 Metropolitan Life: A turnaround tale to growth 76 Momentum Metropolitan Non-life Insurance: Short-term insurance with a long-term growth strategy 99 Momentum Corporate: Engagement, the future of Empl
Slide 3: Programme
PROGRAMME Welcome and introduction 8:30 - 8:35 Charlene Lackay Group strategy overview 8:35 - 9:15 Hillie Meyer Capital management to shift gears 9:15 - 9:55 Risto Ketola Metropolitan Life: A turnaround tale to growth 9:55 - 10:40 Peter Tshiguvho Q&A 10:40 - 11:00 Charlene Lackay Break 11:00 - 11:25
Slide 4: Group strategy overview
Group strategy overview Hillie Meyer Group Chief Executive Officer
Slide 5: Reset and Grow
RESET AND GROW Reset and Grow 2019 – 2021 Fix the basics Re-establish external focus Address the cost base Increase and improve footprint
Slide 6: Reset and Grow
RESET AND GROW
Slide 7: Reinvent and Grow
REINVENT AND GROW
Slide 8: Reinvent and Grow
REINVENT AND GROW Reinvent and Grow 2022 – 2024 Reposition for the future Transform existing channels Digital transformation Establish new channels Product and service leadership Grow market share
Slide 9: This overview
This overview 1 Reset and Grow 2 Strategic context 3 Reinvent and Grow
Slide 10: This overview: rest of the day
This overview Rest of the day 1 Reset and Grow 1. Risto: Capital management to shift gears 2. Peter: Metropolitan back in the race, with fuel in the tank 2 Strategic context 3. Herman: Short-term business – long-term growth strategy 4. Dumo: The future of Employee Benefits 3 Reinvent and Grow 5. Han
Slide 11: Reset and Grow
1 Reset and Grow
Slide 12: Reset and Grow
RESET AND GROW RESET GROW Fix the basics Distribution Service Address cost base Products Marketing R4 billion R3.6 billion R3.1 billion R1.5 billion R2.8 billion F2018 F2019 F2020 F2021 R million
Slide 13: Reset and Grow achievements
RESET AND GROW ACHIEVEMENTS RESET GROW • Staff buy-in and energy unlock • Increased sales footprint • Re-established external focus • Improved IFA support and engagement • Return of competitive spirit • Metropolitan Life sales force turnaround • Focused on delivery • Health winning business • Financ
Slide 14: Market shares
MARKET SHARES Retail affluent APE MMH Discovery Sanlam 24% 24% 21% 20% 22% 16% 14% 16% 12% 13% 14% 11% 2012 2015 2018 2020 2012 2015 2018 2020 2012 2015 2018 2020 Old Mutual Liberty 34% 32% 31% 30% 21% 18% 16% 14% 2012 2015 2018 2020 2012 2015 2018 2020 Source: © UBS 2021 For the graphs reproduced f
Slide 15: Market shares
MARKET SHARES Low income market 42% 30% 24% 21% 17% 16% 20% 21% MMH Sanlam 2012 2015 2018 2020 57% 2012 2015 2018 2020 51% 51% 36% Old Mutual Liberty 5% 4% 3% 1% 2012 2015 2018 2020 2012 2015 2018 2020 Source: © UBS 2021 For the graphs reproduced from © UBS 2021 publications, all rights reserved. Re
Slide 16: Strategic context
2 Strategic context
Slide 17: Momentum Metropolitan strategy
MOMENTUM METROPOLITAN STRATEGY Our purpose Our approach We enable clients to achieve their financial goals and aspirations Our group portfolio strategy is to build a synergistic portfolio of high-performing financial services businesses that are strategically aligned, value- creating and managed for
Slide 18: Portfolio approach to group strategy
PORTFOLIO APPROACH TO GROUP STRATEGY Corporate portfolio strategy Strategic alignment Value creation Sustainability • Market leadership • Real earnings growth • Diversified portfolio • Competitively positioned • Dynamic capital management • Pipeline of new initiatives • Capital optimisation • Superi
Slide 19: Key market trends
KEY MARKET TRENDS Advances in digital and data analytics What can be automated, will be Evolving consumer landscape Financial services companies will behave more like consumer technology companies New revenue streams emerging Successful innovation and digital transformation have become prerequisites
Slide 20: Key market trends
KEY MARKET TRENDS Advice will remain a key differentiator Technology is enabling new distribution models Weak economy amplified by Covid Ways in which advice is dispensed will change Regulatory burden will not subside Powerful hybrid advice models likely to Pressure to transform will continue emerge
Slide 21: Reinvent and Grow
3 Reinvent and Grow
Slide 22: Reinvent and Grow strategy
REINVENT AND GROW STRATEGY REINVENT AND GROW NHE Grow existing R5 billion channels Stretch >R500 million Establish new Target cost channels efficiencies Non-life insurance contributes Accelerate 20% of digital NHE Market share +1% to +6% Product and service leadership ROE 20% F2021 F2022 F2023 F2024
Slide 23: Reinvent: grow existing channels
REINVENT Digital channel enablement a common theme Grow Momentum retail footprint • MFP from 900 to 1 400 • MC from 300 to 400 • Supporting IFAs from 2 250 to 3 000 Retailisation to change from enabling service to • MI tied agents from 135 to 235 Grow revenue generating distribution existing channel
Slide 24: Reinvent: establish new channels
REINVENT Momentum well advanced digitising retail client Momentum Corporate combining MRA (large and adviser engagement, which forms the administered pensions schemes) and MCA foundation for broadening service and (Momentum Consultants and Actuaries) into a distribution options holistic direct propo
Slide 25: Reinvent: accelerate digital
REINVENT FundsAtWork member engagement through Better use of data, analytics and insights to digital solutions to increase from 50 000 to improve and manage sales processes 250 000 in F2024 Momentum Life will Health will use digital platforms to • Change from centralised contact centres to • Improve
Slide 26: Reinvent: product and service leadership
REINVENT Continuous product innovation to become a Guardrisk awarded first Micro-insurance cell- habit captive licence Advanced data analytics will be used to improve Metropolitan Life has started to improve its Product Group Risk pricing and efficiency client value proposition offering and service
Slide 27: Grow: NHE R5 billion
GROW NHE R5 billion Target Current annual underlying NHE (R’m) % Increase F2024 Momentum Life 900 – 950 1 200 +26% Momentum Investments 700 – 750 800 +7% Metropolitan Life 600 – 650 750 +15% Momentum Corporate 450 – 500 550 +10% Momentum Metropolitan Health 150 – 200 250 +25% Momentum Metropolitan A
Slide 28: Grow: NHE R5 billion
GROW NHE R5 billion Target Current annual underlying NHE (R’m) % Increase F2024 Momentum Life 900 – 950 1 200 +26% Momentum Investments 700 – 750 800 +7% Metropolitan Life 600 – 650 750 +15% Momentum Corporate 450 – 500 550 +10% Momentum Metropolitan Health 150 – 200 250 +25% Momentum Metropolitan A
Slide 29: Grow: NHE target
GROW NHE R5 billion R million 5,000 Target: R5.0 billion 12% p.a. 19% p.a. 4,000 3,074 3 600 3,000 3 000 2,646 2,407 2,000 2,003 1,521 1,000 0 F2016 F2017 F2018 F2019 F2020 F2021 F2022 F2023 F2024
Slide 30: Grow: non-life share of NHE
GROW Non-life insurance contributes 20% of NHE Non-life insurance as % of total NHE (excluding New Initiatives) 19% 15% 9% F2018 F2021 F2024 Guardrisk Momentum Insure
Slide 31: Grow: market share targets
GROW Market share +1% to +6% Current Target Business Metric Target gain share share New business Myriad 8% +3% 11% APE Wealth platform and DFM New business 7% +6% 13% Guardrisk General Insurance GWP 2% +1% 3% Momentum Insurance GWP 2.5% +1% 3.5% Health (all business) Members 28% +2% 30% New business
Slide 32: Grow: ROE 20%
GROW ROE 20% F2020 actual F2021 base F2024 target NHE R1.5 bn R3.0 bn – R3.6 bn R5 bn NAV R20.5 bn R20 bn – R21 bn R25 bn ROE 7% 15% – 17% 20%
Slide 33: Reinvent 2022-2024
2022 – 2024: 2018: LargeReinvent thesmall truck with truckload while adding load
Slide 34: Capital management to shift gears
Capital management to shift gears Risto Ketola Group Financial Director
Slide 35: Agenda
Agenda 1 Recap: Reset and Grow 2 Earnings targets discussion 3 Cash generation 4 Approach to capital management
Slide 36: Recap: Reset and Grow
1 Recap: Reset and Grow
Slide 37: Recap: Reset and Grow
RECAP: RESET AND GROW • Adjusting for direct Covid-19 impact would get towards the lower Normalised headline earnings end of the target range R3.6 to R4 billion • Normalised headline earnings target to be achieved • By March 21 achieved R900 million (after-tax) savings relative to F2018 Cost efficie
Slide 38: Earnings targets discussion
2 Earnings targets discussion
Slide 39: Where are we now?
Where are we now?
Slide 40: Base normalised headline earnings
BASE NORMALISED HEADLINE EARNINGS Current annual underlying NHE (R’ Million) Momentum Life 900 – 950 70% of earnings base driven by core Life Momentum Investments 700 – 750 Insurance businesses Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 15% of earnings from Non-life Insurance Momentum
Slide 41: Highly profitable mature operations
HIGHLY PROFITABLE MATURE OPERATIONS Businesses representing 50% of NAV 40% - 45% generating ROE of 25% to 30% Return on Equity (%) 25% - 35% Mature SA Life Insurance, Health, and Momentum Investments 20% - 30% Asset Management operations utilise Metropolitan Life R10 billion – R11 billion of capital
Slide 42: Improving returns from non-life and Africa
IMPROVING RETURNS FROM NON-LIFE INSURANCE AND AFRICA Businesses representing 40% of NAV 40% - 45% generating ROE of 10% to 15% Short-term Insurance and Africa utilise Return on Equity (%) 25% - 35% around R9 billion of capital to generate Momentum Investments 20% - 30% roughly R1 billion of earnings
Slide 43: Investing significantly in new initiatives
INVESTING SIGNIFICANTLY IN NEW INITIATIVES Activities representing 10% of NAV 40% - 45% currently generating negative ROE Return on Equity (%) Losses on new initiatives currently equate 25% - 35% Momentum Investments to around 10% of group earnings and 20% - 30% dilute ROE by 3% Metropolitan Life Mo
Slide 44: Cumulative ROE for MMH
CUMULATIVE ROE FOR MMH 50% 40% Momentum Metropolitan Delivering ROE of 30% 15%-17% on a NAV of R21 billion as at 20% 30 June 2020 15% - 17% ROE 10% R5 R10 R15 R20 billion billion billion billion HOW EFFICIENTLY ARE WE USING OUR CAPITAL?
Slide 45: Where to from here?
Where to from here?
Slide 46: Reinvent and Grow strategy
REINVENT AND GROW STRATEGY REINVENT AND GROW NHE Grow existing R5 billion channels Stretch >R500 million Establish new Target cost channels efficiencies Non-life insurance contributes Accelerate 20% of digital NHE Market share +1% to +6% Product and service leadership ROE 20% F2021 F2022 F2023 F2024
Slide 47: Earnings targets: Momentum Life
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 1 150 – 1 200 5 – 10% p.a. Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (3
Slide 48: Earnings targets: Momentum Investments
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 750 – 800 0 – 5% p.a. Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (350) S
Slide 49: Earnings targets: Metropolitan Life
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 700 – 750 5 – 10% p.a. Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (350)
Slide 50: Earnings targets: Momentum Corporate
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 500 – 550 0 – 5% p.a. Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (350) S
Slide 51: Earnings targets: Health
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 200 – 250 5 – 10% p.a. Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (350)
Slide 52: Earnings targets: Africa
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 500 – 550 5 – 10% p.a. Non-Life 550 – 600 New Initiatives (400) – (350)
Slide 53: Earnings targets: Non-Life
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 850 – 900 15 – 20% p.a. New Initiatives (400) – (350)
Slide 54: Earnings targets: New Initiatives
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (350) 100 – 150 > 100% Shareh
Slide 55: Earnings targets: Shareholders
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 Momentum Investments 700 – 750 Metropolitan Life 600 – 650 Momentum Corporate 450 – 500 Health 150 – 200 Africa 400 – 450 Non-Life 550 – 600 New Initiatives (400) – (350) Shareholders (200) – (1
Slide 56: Earnings targets: total
REINVENT AND GROW TARGETS R’Million Current F24 target Expected underlying growth Momentum Life 900 – 950 1 150 – 1 200 Momentum Investments 700 – 750 750 – 800 Metropolitan Life 600 – 650 700 – 750 Momentum Corporate 450 – 500 500 – 550 Health 150 – 200 200 – 250 Africa 400 – 450 500 – 550 Non-Life
Slide 57: ROE targets for F2024
Return on Equity (%) 500 Health 40% - 45% 2 600 Momentum Investments 30% - 35% 2 700 Metropolitan Life 25% - 30% Momentum 2 200 Corporate 20% - 25% 5 000 Momentum Life Net Asset Value (R’million) as at 30 June 2024 6 200 Non- Life REINVENT AND GROW TARGETS 10% - 15% 3 700 Africa New 1 100 Initiative
Slide 58: Key earnings drivers
REINVENT AND GROW TARGETS F2024 F2024 targeted annual underlying NHE R4.6 billion – Momentum Life 1 150 – 1 200 18% – 20% R5.0 billion Momentum Investments 750 – 800 ROE NHE Metropolitan Life 700 – 750 Momentum Corporate 500 – 550 Profit from protection business to increase by Momentum Metropolitan
Slide 59: Cash generation
3 Cash generation
Slide 60: How do we define cash generation
HOW DO WE DEFINE CASH GENERATION We define cash generation as: Dividends that can be paid up to Holdings after taking into account: • Business unit earnings • Business unit “business as usual” reinvestment needs • Regulatory capital requirements • Internal capital targets (this is a critical item) •
Slide 61: Understanding key life capital targets
UNDERSTANDING KEY LIFE CAPITAL TARGETS R31.4 New work on capital has resulted in R14.9 billion billion some changes: R31.4bn • Quantitative work suggests that MML can operate on slightly lower capital targets than previously R4.5 assumed billion R12.0 billion • Qualitative review shows that we R9.5
Slide 62: Cash generation from SA life business
CASH GENERATION FROM SA LIFE BUSINESS We expect Target Capital Needed to grow slowly (less than R500 million p.a.) over the next three years We need to retain less than R500 million p.a. of the earnings generated in the next few years Maturity of the book, diversified mix of business, conservative n
Slide 63: Cash generation from other operations
CASH GENERATION FROM OTHER OPERATIONS 60% – 80% Mature businesses converts 60% – 80% of normalised headline earnings to cash Growing businesses converts 0% – 30% of 0% – 30% 0% – 30% normalised headline earnings to cash New initiatives are 100% cash funded i.e. negative conversion (100%) IMPROVING C
Slide 64: Group cash generation
GROUP CASH GENERATION 50% – 60% Cash generation 33% – 50% pay-out from dividend policy Around R500 million surplus capital generation p.a. on current dividend policy Dividend policy to be reconsidered once LifeLife Mature Mature Growing New Growing New initiatives HeadHead officeoffice Total & prefs
Slide 65: Approach to capital management
4 Approach to capital management
Slide 66: Approach to capital management
APPROACH TO CAPITAL MANAGEMENT We will not hoard capital – will distribute surplus arising regularly Any buybacks will be in addition to ordinary dividends rather than in lieu of ordinary dividends Have adopted a more dynamic hurdle rate framework for capital allocation decisions Have developed an i
Slide 67: Metropolitan Life: A turnaround tale to growth
Metropolitan Life: A turnaround tale to growth Peter Tshiguvho CEO Metropolitan
Slide 68: Agenda
Agenda 1 Our business 2 Our Reset and Grow journey 3 Our strategy
Slide 69: Our business
BN Our business
Slide 70: Our vision and purpose
Our vision and purpose Our vision: To be a household name, with a product in every emerging market home. Our purpose: To help clients achieve their financial life goals. To create value for all our stakeholders.
Slide 71: Our solutions
Our solutions Funeral Life cover Discretionary savings Retirement savings Annuities and capital Hospital plan protection
Slide 72: Our Reset and Grow journey
BN Our Reset and Grow journey
Slide 73: Where we started
Internal realities Where we started Operating model changes Distribution channel restructure Reputation for exceptional New sales remuneration model client service Productivity In-force clients > 2m Less experienced advisers Strong union relationships Under-investment in points of presence Committed
Slide 74: Reset and Grow
Reset and Grow Reset Grow Stabilise sales force Improve adviser productivity Upgrade points of presence Improve market access Legacy system migration Improve client value proposition Sales and service efficiencies Metropolitan GetUp
Slide 75: H1 F2021 financial highlights
H1 F2021 financial highlights Present value of new Value of new business business premiums +1% +70% to R2.6 billion to R117 million Cost control Operating profit (excl. Covid-19 provision) -1% +9% year-on-year to R382 million
Slide 76: Market share – new business APE
Market share – new business APE Clawing back market share in traditional insurance market over the last two halves | Sanlam strengthened by Capitec Source: Internal analysis using published financial results for the period ending 31 December 2020
Slide 77: Number of advisers
Number of advisers Stabilisation of key management roles | Improved adviser recruitment criteria | Fit-for-purpose development programmes | Digital training | Enhanced debit order collection mechanisms
Slide 78: Productivity
Productivity Digital enablement and adoption | Daily cadence | Disciplined execution | Market access and long-standing partnerships with unions | New solution offerings
Slide 79: Improving profitability
Improving profitability The performance categories below take into account a combination of performance levers and look at a rating per branch. The improvement in the number of branches / teams in the top categories bears testimony that the disciplined execution of the Reset and Grow strategy is yie
Slide 80: Reset and Grow
Reset and Grow Cumulatively doing the right things that make a big difference in terms of efficiently achieving higher volumes of more profitable products >> scale benefits Q1 F2019 Q2 F2019 Q3 F2019 Q4 F2019 Q1 F2020 Q2 F2020 Q3 F2020 Q4 F2020 Q1 F2021 Q2 F2021 Salary deduction ratio of 32.5% 34.6%
Slide 81: Our strategy
Our strategy
Slide 82: Our strategy
Our strategy Metropolitan Life will deliver on its growth How? expectations through the implementation of a distribution-centric strategy: Reinvent Metropolitan Core entrenching its 1 • Reduce acquisition cost per policy current discipline, continued focus on • Talent management and transformation m
Slide 83: Broker distribution
Broker distribution Create opportunity to Diversification of the Diverse product offering Increase single Metropolitan brand achieve sustainable channel mix to reduce supports broker value premiums through affinity already exists in growth reliance on tied agents proposition experienced brokers the
Slide 84: Metropolitan GetUp
Metropolitan GetUp Digital value chain • Create “buyable” financial solutions that attract younger consumers within our target market Chatbot • Use digital technologies to personalise market access and distribution and engagement while keeping products simple and intuitive Market access service • Be
Slide 85: Tied agency
Tied agency Managed growth of adviser force to 4000 Expand market access opportunities Enhanced client value proposition K
Slide 86: Momentum Metropolitan Non-life Insurance cluster
Momentum Metropolitan Non-life Insurance cluster Our long-term GROWTH story Herman Schoeman Brand Pretorius Lourens Botha CEO Guardrisk CEO MSTI & MI Financial Director, Guardrisk
Slide 87: Agenda
Agenda Momentum Metropolitan Non-life Insurance 1 • Key aspects | Guardrisk and Momentum Reinvent and grow 2 • Guardrisk | Reinvent and grow • Guardrisk | Right to win Reinvent and grow 3 • Momentum Short-term Insurance • Momentum Insurance (AFI) 4 Financial projections 5 Conclusion
Slide 88: Momentum Metropolitan Non-life Insurance
Part 01 Momentum Metropolitan Non-life Insurance 3
Slide 89: Momentum Metropolitan Non-life Insurance | June 2020
Momentum Metropolitan Non-life Insurance | June 2020 GWP | R27bn Earnings | R405m Market share | 10% Momentum Metropolitan Non-life Insurance | At June 2020 Employees | 1280 GWP | R24.5bn GWP | R2.8bn Policy count | 158k Earnings | R335m Earnings | R70m Cell Momentum Captive General | Micro MSTI Ins
Slide 90: Key aspects | Guardrisk and Momentum
Key aspects | Guardrisk and Momentum How do we differ? What is the same? Synergies • Distribution & market • Dynamic and innovative • Limited segments • Product range • Organic and in-organic • Knowledge sharing growth strategies • Governance structures • Procurement • Line of business systems • Str
Slide 91: Guardrisk
Part 02 Guardrisk Reinvent and Grow
Slide 92: Guardrisk | Reinvent and Grow
Guardrisk | Reinvent and Grow GGIIncrease and GR Life GGI GGI| Digital Digital REINVENT GROW | Increase underwriting Broker Broker transformation transformation underwriting revenue enablement enablement revenue Bolt-on Technical Underwriting Bolt-on transactions Micro Micro underwriting skills tran
Slide 93: Guardrisk | Right to win | Differentiators
Guardrisk | Right to win | Differentiators Future competitive advantage | Reinvent Current competitive advantage | Grow Capital efficiencies Holistic client value Revenue Ability to (RoE) beyond cell captives diversification innovate (digital) Monetise data assets Improved technical Superior cell De
Slide 94: Reinvent and Grow
Part 3 Momentum Short-term Insurance Momentum Insurance (AFI) Reinvent and Grow
Slide 95: Reinvent and Grow
Reset successfully concluded Reinvent and Grow But some challenges remain Where have we come from? Momentum Short-term Insurance (MSTI) Momentum Insurance (MI) (formerly Alexander Forbes Insurance) Full value chain Profitable business SA focus only Sizeable in terms of premium income Exit unprofitab
Slide 96: Reinvent and Grow
Reinvent and Grow What does the reinvented business look like? A sustainably profitable insurer, leading the way in keeping South Africans safe, beyond insurance One combined & integrated business – stronger together Broader set of product & Momentum brand, with service solutions, aimed at clear & d
Slide 97: Reinvent and Grow: product and channel mix
Reinvent and Grow Product and distribution channel mix Improved new business diversification What does the reinvented business look like? By product 15% 22% Targeted medium-term combined ratio Commercial 10% 85% 78% Personal 20% Targeted range between 18% and 22% F2020 F2024 By distribution channel
Slide 98: Reinvent and Grow: focus areas
Reinvent and Grow Focus areas Sustainable profitability through scale and value beyond traditional insurance 1 Deliver integrated business by F2022 1 Grow gross premium income to R3.6bn – R4bn by F2024 2 Own Safety as distinctive customer value proposition Ø Tied agency force Ø Direct & digital 3 Sh
Slide 99: Reinventing the business
Reinvent and Grow Reinventing the business Sustainable profitability through scale and value beyond traditional insurance 1 • Implementation done in two phases, to be concluded by 30 June 2022 • Financial results tracking well against key business case metrics Deliver an integrated • All key managem
Slide 100: Reinventing the business
Reinvent and Grow Reinventing the business Sustainable profitability through scale and value beyond traditional insurance 3 • Enhanced, more comprehensive product and service offering in key Shift towards a targeted segments, based on deeper client insights High net worth / Specific (women, market-l
Slide 101: Growing the business
Reinvent and Grow Growing the business Focused solutions, providing more choice, across more channels • Increase headcount Tied agents • Improve productivity • Higher average premium values • Distinctive positioning Direct & Digital • Increased marketing investment • Digitally native solutions • Imp
Slide 102: Financial perspective
Part 04 Financial perspective 18
Slide 103: Guardrisk | Financial
Guardrisk | Financial • Projected annual growth rate of 11% p.a. • Biggest driver – increase in general insurance through GGI • Foundation still earnings from cell captive management fees
Slide 104: Guardrisk General Insurance underwriting profit contribution
Guardrisk General Insurance Underwriting profit contribution Medical (Gap cover) 37% Assets 31% Motor 11% Construction & Engineering 10% Marine 6% Liability 2% Personal Accident 2% Miscellaneous 1%
Slide 105: MSTI & MI combined
MSTI & MI combined Integrated financial perspective 4 350 6% CAGR 3 300 250 R ‘Billion 2 200 17% CAGR R ‘Million 150 1 100 50 0 0 F2020 F2024 F2020 F2024 Gross written premium Normalised headline earnings
Slide 106: Non-life normalised headline earnings target
Momentum Metropolitan Non-life Insurance cluster Normalised Afetr Taxheadline Earnings earnings target (R million) Forecast (RMillion) 1 000 900 High road 800 • Positive market growth 700 • Quick Covid-19 recovery 600 R' Million • Bolt-on transactions 500 15% CAGR 400 300 Low road 200 • Prolonged Co
Slide 107: Risks in achieving growth targets
Part Risks in achieving growth targets 5 Prolonged Covid-19 impact Attraction, retention and Slow rate of due to challenges with cost associated with economic recovery vaccination programme key talent / skills Hardening reinsurance New business targets markets not being met
Slide 108: Conclusion
Conclusion Non-life insurance a growth area Organic growth Inorganic growth Business well positioned to achieve growth targets Continue to improve risk and earnings diversification
Slide 109: Momentum Corporate: Engagement, the future of Employee Benefits
Momentum Corporate: Engagement, the future of Employee Benefits Dumo Mbethe CEO Momentum Corporate
Slide 110: Agenda
Agenda 1 Overview of Momentum Corporate 2 Current strengths: FundsAtWork and Group Insurance 3 The future: delivering sustainable growth through engagement-rich solutions
Slide 111: Overview of Momentum Corporate
Overview of Momentum Corporate
Slide 112: Momentum Corporate is a significant business in the employee benefits industry
| Momentum Corporate is a significant business in the employee benefits industry In F2020 we paid Our standalone retirement We look after 6 600 In F2020 we received R1.2 billion in income In F2020 we paid administration business employers and their ±R 5 billion in annual disability benefits and R2.6
Slide 113: Our solutions
| Our solutions 1 FundsAtWork umbrella funds 2 Group Insurance 3 Structured Investments & Annuities 4 Momentum Corporate Advice & Administration We provide a wide range of solutions to organisations, leading with our FundsAtWork 5 Member Solutions umbrella funds and Group Insurance
Slide 114: Normalised headline earnings
| Normalised headline earnings Our normalised headline earnings performance has been reasonably strong. F2020 was significantly impacted by Covid-19 reserving and a large increase in the investment guarantee reserve. Normalised headline earnings (NHE), R million 1,000 50% 714 36% 582 435 30% 500 310
Slide 115: F2024 normalised headline earnings range
| F2024 normalised headline earnings range We target an improvement in normalised headline earnings to a range of R500 million – R550 million by F2024, with ±80% coming from FundsAtWork and group insurance. Normalised headline earnings (NHE) target, R million Percentage contribution to normalised R6
Slide 116: Revenue composition
| Revenue composition We expect our underwriting revenue to stabilise following the impact of Covid-19 in F2021, as our asset-based fee income and administration fee income streams strengthen. Revenue composition by type, % 140% 120% 37% 100% 41% 34% 80% 33% 23% 60% 27% 40% 24% 29% 33% 17% 20% 14% 2
Slide 117: Current strengths: FundsAtWork and Group Insurance
Current strengths: FundsAtWork and Group Insurance
Slide 118: FundsAtWork umbrella funds
| FundsAtWork umbrella funds FundsAtWork has doubled assets under management in the last 7 years at healthy margins. Market share has remained relatively consistent during the same period. Assets under management 2014 – 2020 Market share by assets under management 70 1.5% 7-year 59 100% 12% 60 CAGR:
Slide 119: FundsAtWork digital journey
| FundsAtWork digital journey 2000 2005 2016 Smart 2021/2022 Underwriting Launch of Smart Solutions Silver Loerie Award Service Design category: 2018 • Corporate adviser self-service portal employer are launched Used by 23% of claims • Data quality and client engagement strategy 4.07/5 2020 communic
Slide 120: FundsAtWork key success factors
| FundsAtWork key success factors Surveys with clients and financial advisers showed that there are least five factors that have mostly contributed to our success to date. Flexibility and Strong relationships, 1 openness to co-craft solutions with clients 2 support and ease of 3 Value for money doin
Slide 121: Group Insurance
| Group Insurance In 2018, we implemented a risk selection & pricing strategy that focused on writing and retaining business at sustainably profitable levels to ensure improvement and stability in margins while improving client experience. Market share has also remained strong during this period. Gr
Slide 122: Group Insurance key success factors
| Group Insurance key success factors Our approach to disability management, the income disability turnaround and innovation are some of the reasons there is an improvement in profitability. Turnaround in income disability Innovation: Tax-adjusted benefit – Disability management benefit business Dis
Slide 123: The future: delivering sustainable growth through engagement-rich solutions
The future: delivering sustainable growth through engagement-rich solutions
Slide 124: End-to-end digitalisation
| 1. End-to-end digitalisation Deliver service experiences that delight and empower our clients and financial advisers. 2021 strategic choice: Smart Onboarding: Connecting with members at the very start of their Use digitalisation to enhance member 1 journey to success, ensuring they can navigate th
Slide 125: Enhance FundsAtWork
| 2. Enhance FundsAtWork Growing competition in the umbrella funds’ space is leading to increased pressure on margins. Winners will be organisations that operate at an efficient cost base, offering value for money and flexible umbrella solutions through exceptional client experience. 2021 strategic
Slide 126: Improved use of data
| 3. Improved use of data Our focus and the opportunity we see in the market going forward is to understand our clients and members better, to improve price, service and management through data analytics. 2021 strategic choice: Improve turnaround times and consistency in disability claim Leverage ad
Slide 127: Summary: business with scale and growth target
We are a business with scale and a 1 significant contributor to the Group Through engagement-rich solutions, 2 improve outcomes for all key stakeholders On a digital journey to enhance stakeholder 3 experience, while driving efficiencies Leverage data analytics for more scientific 4 underwriting, in
Slide 128: Momentum Metropolitan Health Solutions: More health for more people for less
Momentum Metropolitan Health Solutions: More health for more people for less Hannes Viljoen Damian McHugh CEO Health CMO Health
Slide 129: Agenda
Agenda 1 Transformation of our health business 2 Innovation 3 Digital capabilities 4 Growing market share 5 Conclusion
Slide 130: Transformation of our health business
1 Transformation of our health business
Slide 131: More health for more South Africans for less
Our purpose: More health for more South Africans for less
Slide 132: The size of our health business
The size of our health business More than R800 million 11 million 2.5 million lives worth of claims claim lines per paid weekly week
Slide 133: Transformation – Our family tree
Transformation – Our family tree PGC 30% Thebe 19% PGC Thebe Thebe 30% 19% 48%
Slide 134: Innovation: A key to reinvent
2 Innovation: A key to reinvent
Slide 135: Innovation – A key to reinvent
Innovation – A key to reinvent More demanding More youth Increased expectations: Millennials have different convenience, flexibility needs and want to and personalisation engage digitally Burden of Health Market disease Inquiry More geriatrics More self-indulgent Ageing population needs It’s all abo
Slide 136: Innovation – music industry revenue analogy
Innovation – A key to reinvent U.S. recorded music revenues from 1980 – 2019, by format (adjusted for inflation) $25,000 1999: $ 21.3 b $20,000 Revenue in Millions $15,000 2019: $ 8.5 b $10,000 2014: $ 5.8 b $5,000 $- 1980 1985 1990 1995 2000 2005 2010 2015 8-Track Vinyl Cassette CD Downloads Ringto
Slide 137: Interesting stats on millennials
Innovation – A key to reinvent Interesting stats on millennials What millennials purchase Check their phones 150 98% smart phones times a day 64% energy drinks 90% of millennials will 54% organic food stay in a job for 10 years 50% home or more if it came with annual pay 40% on tattoos increases and
Slide 138: Millennials: what do they want?
Innovation – A key to reinvent Why make it so to inflexible? Why do I have Built for me on’t pay for stuff I d need? Millennials: Why is there no what do Happy to help my community tech here? they want? I don’t care about Why is it so Cover my your legislation expensive? trauma problems
Slide 139: Innovation – A key to reinvent
Innovation – A key to reinvent Flexible solution Incentivising for benefit design behaviour change • 62 993 HealthSaver accounts • 13 464 Members earn HealthReturns • Average balance R7 300 • R41.5 million HealthReturns paid in 2020 • R25 million paid monthly • Average earning R300 per month A docto
Slide 140: Digital capabilities: Creating compelling client engagement
3 Digital capabilities: Creating compelling client engagement
Slide 141: Digital capabilities
Digital capabilities Your Health Saver account helps you save for your medical expenses. Earn Health Returns by living a healthy lifestyle and spend when you need them. Get your monthly repeats, or once off meds delivered straight to your door. Request an authorisation View and track your most Reque
Slide 142: Digital capabilities
Digital capabilities Get your monthly repeats, or Download your benefit brochure Download your benefit brochure once off meds delivered straight to your door.
Slide 143: Digital capabilities
Digital capabilities Good Morning Lebo! 2 3 2% - multiply Order medicine Health Saver R500 a | —
Slide 144: Digital capabilities
Digital capabilities My health tracker Hello ! Healthy heart My health profile @ testingwemecoza Health results oaaserr7es Medication Events timeline Current treatment plan Healthy heart Healthy Heart Score GREEN Health results Medication y health tracker Healthy heart score Health results @ n10)80
Slide 145: Digital capabilities
Digital capabilities 8104239067079 New: Members can now get all their pre-authorisation including a Covid-19 test via WhatsApp
Slide 146: Growing market share
4 Growing market share
Slide 147: Market share and growth
Market share and growth Administration – beneficiaries 6.8% 1.3% 31.7% Public sector Open schemes Restricted schemes growth growth growth 2,050,000 400,000 300,000 2,000,000 250,000 300,000 200,000 1,950,000 200,000 150,000 1,900,000 100,000 100,000 1,850,000 50,000 1,800,000 0 0 2017 2019 year to d
Slide 148: Market share and growth
Market share and growth Administration – beneficiaries 7.8% Total MHS Business growth 2,600,000 2,550,000 2,500,000 2,450,000 Market share: 28% 2,400,000 2,350,000 2,300,000 2,250,000 2017 2019 year to date 2021 Data as reported in the CMS Sept 2020 report with altered Public and Restricted split Ou
Slide 149: Growth in health insurance
Growth in health insurance Health4Me – Health insurance 160,000 140,000 120,000 100,000 Growth: 82% 80,000 60,000 40,000 20,000 0 2017 2019 year to date 2021 Diversification into new markets
Slide 150: Conclusion
5 Conclusion
Slide 151: Conclusion
Conclusion Transformed Innovative Growth from Digital and AI health integrated new and capabilities that company solutions that existing change health cater for channels experience changing market So much more than administration
Slide 152: Less health for South Africans for more
Sadly what we see in this mature non-growing market is: Less health for South Africans for more Our purpose: More health for more South Africans for less
Slide 153: Momentum retail: Embracing advice-led distribution
Momentum retail: Embracing advice-led distribution Jeanette Marais Group Deputy Chief Executive Officer
Slide 154: Where were we three years ago?
Where were we three years ago? “Winning back independent financial adviser support and market share will prove that we have fixed our business.” Hillie Meyer 2018
Slide 155: Winning back market share with independent financial advisers
Winning back market share with independent financial advisers Myriad Wealth platform 17.3% 17.4% 12.0% 15.5% 11.1% 12.7% 10.5% 10.2% 10.3% 9.9% 9.8% 8.9% 9.6% 7.6% 8.8% 6.0% 4.4% A B C D Mom F G H I Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2019 2020 Reclaiming our position as market leader More than 3% market share
Slide 156: Double digit APE growth
Double digit Annual Premium Equivalent (APE) growth R million 1040 890 732 728 651 649 686 617 606 618 577 581 582 610 313 299 313 295 312 297 329 318 317 314 296 324 267 185 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 F2018 F2019 F2020 F2021 Momentum Life Momentum Investments Momentum Investments com
Slide 157: Momentum Investments
Momentum Investments Momentum Wealth and Wealth International Life and Guaranteed Annuities R million R million 3,563 24,025 16,538 13,658 13,307 1,564 1,003 707 1,016 7,723 5,674 5,406 6,023 590 236 403 F2018 F2019 F2020 F2021* F2018 F2019 F2020 F2021* * F2021 annualised MFP MDS * F2021 annualised
Slide 158: We’re in the advice business
We’re in the advice business Advice channels Client relationships Product leadership Evolution from adviser-led to advice-led supported by digital transformation Maximising the lifetime value of the client Product houses are integral to advice value chain
Slide 159: Our strategic response: Reinvent and Grow
Our strategic response: REINVENT and GROW Channel focus Product leadership Digital processing and service model Finding growth Legacy and IT reset Reporting and analytics Brand and culture
Slide 160: Channel focus
Channel focus Delivering advice through strong channels
Slide 161: Advice landscape in South Africa is evolving
Advice landscape in South Africa is evolving Registered Financial Adviser Product Supplier Agent Traditional IFAs Networks Banks Insurer Agencies Momentum competes across the Add SFP entire landscape Need for segmentation and specialisation Vertically integrated advice models
Slide 162: Momentum Financial Planning
Momentum Financial Planning Advice-led agency of the future
Slide 163: Momentum Financial Planning footprint growth
Momentum Financial Planning footprint growth Number of planners 1000 900 408 800 328 370 700 321 600 257 310 227 176 189 500 330 210 400 244 391 379 368 366 313 327 300 280 200 210 100 149 32 26 28 34 34 42 0 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 New to industry (Tier 1) Semi-experie
Slide 164: Momentum Financial Planning strategic objectives
Momentum Financial Planning strategic objectives Footprint growth (attract and retain) Transform planner footprint - expand target market Business continuity partnerships Career in financial planning Give planners the right knowledge, skills, tools & solutions Momentum Institute of Financial Plannin
Slide 165: Agency of the future
Agency of the future Strategic focus on channels Contracted Employed Franchise channel channel channel I-Channel Red-Channel M-Channel Experienced advisers New-to-industry advisers Experienced and new-to-industry advisers Business continuity partnerships Vertical integration
Slide 166: Momentum Distribution Services
Momentum Distribution Services Advice-led specialised distribution force
Slide 167: Momentum Distribution Services two-year growth strategy
Momentum Distribution Services two-year growth strategy 2000 Productive* independent financial advisers up from 1900 200 Consultants 20 1:30 1:10 Regional General Consultant to IFAs RM to consultants Managers 5 Heads of Sales *Productive defined as 10 000 PCs on a rolling 12-month basis Growth in pr
Slide 168: Momentum Distribution Services strategic objectives
Momentum Distribution Services strategic objectives Establish advice-led strategy Execute on partnership model with IFAs and Networks Keeping Independent Financial Advisers (IFAs) sustainable and relevant • Advice know-how, advice enablement and value add solutions • Deep IFA practice knowledge Mult
Slide 169: Momentum Consult
Momentum Consult Advice-led network
Slide 170: Momentum Consult growth trends
Momentum Consult growth trends Assets under advice Assets with Momentum R28bn 43% R2bn F2014 – F2021 R12bn of R28bn Momentum Wealth APE as % of IFA APE net flows 28% 9% R1.1bn 1% R0.8bn F2014 - F2021 F2018 – F2021
Slide 171: Momentum Consult strategic objectives
Momentum Consult strategic objectives Growth in financial advisers Adviser specialisation • Retail advisers • Private Wealth managers • Commercial short-term advisers Target: From 273 in F2020 to 400 in F2024 Client focus Ambition to be the preferred advice provider Market-leading client value propo
Slide 172: Finding growth
Finding growth Advice-led product leadership
Slide 173: Momentum retail investments
Momentum retail investments Advice-led go-to-market strategy Be the leading long-term investments and savings partner to financial advisers and their clients by partnering closer and offering personalised and tailored solutions Momentum Financial Investment specialist Planning Momentum Consult IFAs
Slide 174: Reinvent and Grow strategic objectives
Reinvent and Grow strategic objectives Platform and balance sheet products Retail investments Digital platform operating model Vertically integrate MFP houseview New generation structured and annuity solutions Bespoke DFM solutions for wealth advisers Regain platform market share Single-asset capabi
Slide 175: Reinvent and Grow strategic objectives
Reinvent and Grow strategic objectives Myriad Momentum Trust Onboarding innovation Expand capabilities to do high value estates New generation risk selection Grow estate liquidity benefit Grow direct-to-client Grow direct-to-client Investo Traditional Digital-first processing Effective product manag
Slide 176: Advice-led partnerships in action
Advice-led partnerships in action Momentum’s performance in relationship management has been excellent, with strong and consistent improvements Lead1 Momentum rank1 Insurer performance – relationship management 1st 2nd 20 19 18 Senior mgmt. relations MOM LIB 1 4 5 “Franchise owner is phenomenal” Bro
Slide 177: Momentum retail: Enabling digital-led distribution
Momentum retail: Enabling digital-led distribution Johann Le Roux CEO Momentum Life
Slide 178: Connecting the advice and digital world
Connecting the advice and digital world Advice channels Client relationships Product leadership Advice and digital working together
Slide 179: Connecting the digital ecosystem
Connecting the digital ecosystem Multi channel integration Adviser Clients Employee Fully empowered by product houses Digital engagement demands a well-aligned business, systems and data architecture
Slide 180: Our strategic response: Reinvent and Grow
Our strategic response: Reinvent and Grow Channel focus Product leadership Digital processing and service model Finding growth Legacy and Reporting and IT reset analytics Brand and culture
Slide 181: Channel focus in a digital context
Channel focus in a digital context Clients Adviser Channel Call centre momentum.co.za CCF+ Multi channel integration Traditional IFAs Adviser networks Insurer agencies Creating a consistent client and adviser experience
Slide 182: Product leadership in a digital context
Product leadership in a digital context Onboarding and service innovation Enhance CX through analytics Direct-to-consumer digital advice-led sales Digital underwriting capabilities Optimise the process value chain Vertical integration In the future we build for digital first Page | 7
Slide 183: Digital processing enhancing our service model
Digital processing enhancing our service model From contact centre Eliminate the Process is Build once; connect to decentralised post-box your product multiple platforms digital Reinvent our service model
Slide 184: Finding growth – digital-driven leads flow
Finding growth – digital-driven leads flow Online leads Momentum Life Momentum Investments Momentum Insurance 10,000 8,000 80,000 8,000 6,000 60,000 6,000 4,000 40,000 4,000 2,000 2,000 20,000 0 0 0 F2020 F2021 An nualis ed F2020 F2021 An nualis ed F2020 F2021 Annualis ed Momentum Financial Planning
Slide 185: Finding growth – digital wills
Finding growth – digital wills 6 200 wills More than drafted 20 000 since online visits launch 2/3 of 1 700 wills these in use clients are self- fulfilling Client-led digital change
Slide 186: Legacy and IT reset – coming of age
Legacy and IT reset – coming of age 1 3 5 7 Reset business Establish a new delivery Switch off Streamlining quote accountability framework – new way of work legacy systems engines in product houses 2 4 6 8 Re-configure Reconfigure client data Leverage new Everyone to build for VIA IT governance foru
Slide 187: Culture and analytics
Culture and analytics Use analytics and new data Accountability Adapt Value add New way of work Continuous improvement Digitalisation Remove complexity Collaboration Empowered Innovative Automation Speed Connecting Good value Machine learning Outside-in thinking Culture change Partnership mindset Di
Slide 188: Driving digital the Momentum way
Driving digital the Momentum way Digital and advice No significant connecting our world investment Connecting people through a new way of work Empower our federal business model Consistent experience in a complex community Digital only advice delivery
Slide 189: Speaker Bios
1 Hillie Meyer 2 Risto Ketola 3 Peter Tshiguvho 4 Dumo Mbethe 5 Herman Schoeman 6 Lourens Botha 7 Brand Pretorius 8 Hannes Viljoen 9 Damian McHugh 10 Jeanette Marais 11 Johann le Roux Speaker Bios 2021 INVESTOR CONFERENCE | 179
Slide 190: Speaker Bios
SPEAKER BIOS Hillie Meyer 1 Risto Ketola 2 Peter Tshiguvho 3 Group Chief Executive Officer: Group Finance Director: CEO: Metropolitan Life Qualifications: Qualifications: Qualifications: BCom (Econometrics), Fellow of the Actuarial BSc, CFA Charterholder, Fellow of the Institute and BA (Psychology),
Slide 191: Speaker Bios
Dumo Mbethe 4 Herman Schoeman 5 Lourens Botha 6 CEO: Non-Life Insurance Financial Director: Guardrisk Group CEO: Momentum Corporate CEO: Guardrisk Group Qualifications: Qualifications: Qualifications: BCom, MBA CA (Chartered Accountant), BCompt (Hons) degree BCom (Accounting and Information Systems)
Slide 192: Speaker Bios
SPEAKER BIOS Brand Pretorius 7 Hannes Viljoen 8 Damian McHugh 9 CEO: MSTI & MI CEO: Momentum Metropolitan Health CMO: Momentum Health Solutions Qualifications: Qualifications: Qualifications: BCom (Law) and LLB graduate MChD (Public Health Care), DHA (Health Bcom, Post-Graduate in business from GIBS
Slide 193: Speaker Bios
Jeanette Cilliers (Marais) 10 Johann Le Roux 11 CEO: Momentum Life Group Deputy Chief Executive Officer and CEO: Momentum Investments Qualifications: Qualifications: BSc (Mathematics and Statistics), MBA (cum laude) BSc (Mathematical Statistics) (Hons), MBA, Fellow (IMD Switzerland), PED of the Actu