Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — FY2021 Earnings Presentation
58 slides from Momentum's earnings presentation, 2021
Slide 1: A year of extremes: Record sales and highest ever death claims
A year of extremes: Record sales and highest ever death claims Profit declines 34% but dividend maintained
Slide 2: Overview
Overview 1 2021: A year of extremes 2 Reset and Grow: 2018 – 2021 3 Reinvent and Grow: 2021 – 2024 Hillie Meyer Group Chief Executive Officer
Slide 3: 2021: A year of extremes
2021 A year of extremes
Slide 4: Covid-19 doubled death claims
COVID-19 DOUBLED DEATH CLAIMS Gross SA death claims 10.7 5.9 5.4 5.5 F2018 F2019 F2020 F2021 R’ Billion
Slide 5: Covid-19 reduced earnings to a record low
COVID-19 REDUCED EARNINGS TO A RECORD LOW Normalised Headline Earnings 3,074 2,407 2,003 1,521 1,007 F2017 F2018 F2019 F2020 F2021 R’ Million
Slide 6: Sales the best in our history
SALES THE BEST IN OUR HISTORY Total PVNBP 66 55 56 50 50 50 50 42 35 32 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 R’ Billion 41 Investments PVNBP 27 23 23 23 F2017 F2018 F2019 F2020 F2021 R’ Billion
Slide 7: Excellent value of new business
EXCELLENT VALUE OF NEW BUSINESS Total VNB 895 779 777 681 725 589 541 536 345 280 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 R’ Million Investments VNB 392 214 134 76 82 F2017 F2018 F2019 F2020 F2021 R’ Million
Slide 8: Momentum Insure – unlocking the power of one
MOMENTUM INSURE – UNLOCKING THE POWER OF ONE Integrated business successfully launched on 1 July 2021 Business and licence 1 Brand and customer value proposition Strategy and culture MSTI cash-flow positive, independent of integration Profit before tax 7.1 (7.9) (38.7) (99.2) F2018 F2019 F2020 F2021
Slide 9: Metropolitan Life continues to set new records
METROPOLITAN LIFE CONTINUES TO SET NEW RECORDS Average policies per week per adviser 2.84 2.00 1.94 1.81 1.71 1.52 1.23 1.14 1.15 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021
Slide 10: Best PHI underwriting result ever
BEST PHI UNDERWRITING RESULT EVER Income disability underwriting profit/(loss) F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021
Slide 11: Guardrisk revenue broke through R1 billion
GUARDRISK REVENUE BROKE THROUGH R1 BILLION Annual revenue 1 083 926 859 763 653 F2017 F2018 F2019 F2020 F2021 R’ Million
Slide 12: Extreme results in extreme circumstances
EXTREME RESULTS IN EXTREME CIRCUMSTANCES Employees working from office 90% 29% 10% 11% Pre-Covid-19 Jun-20 Dec-20 Jun-21
Slide 13: Reset and Grow 2018 – 2021
Reset and Grow 2018 – 2021
Slide 14: Reset and Grow
RESET GROW Fix the basics Distribution Service Address cost base Products Marketing R4 billion R3.6 billion R3.5 billion R2.8 billion F2018 F2019 F2020 F2021 Reset and Grow
Slide 15: Reinvent and Grow 2021 – 2024
Reinvent and Grow 2021 – 2024
Slide 16: Corporate portfolio approach
CORPORATE PORTFOLIO APPROACH We expect our portfolio of empowered businesses to deliver superior performance • Being best in class – product and/or service leaders, leveraging individual and Group strengths and being highly competitive • Creating value – through real earnings growth and contributing
Slide 17: 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% Reinvent and Grow
Slide 18: Transformation
TRANSFORMATION B-BBEE scorecard Maintain Level 1 Improve black senior executive representation 30% 50% in 2025 Black = ACI Reinvent and Grow
Slide 19: Momentum Metropolitan Africa
MOMENTUM METROPOLITAN AFRICA Grow sales (PVNBP) R2,8 bn R4 bn Increase NHE R250 m R500 m Improve VNB -R3 m R35 m Reinvent and Grow
Slide 20: Momentum Life
MOMENTUM LIFE Myriad Investo Grow IFA market share Grow retirement annuity market share 16% 20% 15% 17% Increase new business margin Digitise to realise efficiencies 2,8% 5% Reduce cost base by 20% Reinvent and Grow
Slide 21: Momentum Investments
MOMENTUM INVESTMENTS Retail Investments Institutional business UK business Re-platform system Grow net cash flows Grow net new business Digitise to realise Net outflow R8 bn Net outflow $400 m efficiencies Grow GWP Reduce cost-to-income ratio R35 bn R45 bn 85% 75% Reinvent and Grow
Slide 22: Momentum Advice Channels
MOMENTUM ADVICE CHANNELS Momentum Momentum Distribution Service Momentum Consult Financial Planning Transform Grow adviser footprint Grow planners Advice-led specialised 300 450 818 1 360 distribution Grow APE Double AUM in Grow APE 10% p.a. Consult solutions 10% p.a. R3,5 bn R7 bn Reduce acquisitio
Slide 23: Momentum Corporate
MOMENTUM CORPORATE FundsAtWork Other Increase AUM Reduce cost-to-income ratio R60 bn R80 bn 78% 70% Increase digital member Improve group insurance margin engagement 50% 80% Negative 5% Reinvent and Grow
Slide 24: Momentum Metropolitan Health
MOMENTUM METROPOLITAN HEALTH Grow membership Open schemes Digitisation to realise efficiencies 260 000 360 000 Reduce cost base by R150 m Public sector 750 000 850 000 Corporate schemes 35 000 40 000 Reinvent and Grow
Slide 25: Metropolitan Life
METROPOLITAN LIFE Increase gross new business APE R2 bn R3 bn Policy migration and automation Annual savings of R90 m Digitisation to realise efficiencies Reduce acquisition cost per policy by 10% Increase Metropolitan GetUp contribution 5% of new business Reinvent and Grow
Slide 26: Guardrisk
GUARDRISK Guardrisk Group Guardrisk Non-life Guardrisk Life (including GGI) Double 2018 NHE Grow net revenue Increase net revenue R510 m R800 m R1,1 bn R250 m R300 m Increase UW profits 26% 33% of revenue Establish micro-insurance initiative Reinvent and Grow
Slide 27: Momentum Insure
MOMENTUM INSURE Complete AFI integration by mid 2022 Cumulative savings of R160 m p.a. by 2024 Grow GWP 8% p.a. Double NHE R330 m Distinctive client value proposition Anchored in “Safety” Reinvent and Grow
Slide 28: Overview
Overview 1 Financial results 30 June 2021 2 Impact of Covid-19 on earnings 3 Non-covered business valuations 4 Guardrisk and Group capital 5 Conclusion Risto Ketola Group Finance Director
Slide 29: Financial results for the year ended 30 June 2021
Financial results for the year ended 30 June 2021
Slide 30: Key financial measures
KEY FINANCIAL MEASURES Normalised headline earnings Present value of premiums (R’Million) (R’Million) +31% 3,074 65,898 55,783 50,447 -34% 1,521 1,007 F2019 F2020 F2021 F2019 F2020 F2021 Value of new business New business margin (R’Million) (%) +0.5% >100% 1.1% 725 1.0% 541 0.6% 280 F2019 F2020 F202
Slide 31: Key financial measures
KEY FINANCIAL MEASURES Diluted embedded value per share (R) Dividend per share (cents) +5% 27.48 27.08 70 25.70 0% 40 40 F2019 F2020 F2021 F2019 F2020 F2021 Return on embedded value per share (%) Return on equity (%) +11% 15.0% 8.0% 7.3% -2.6% 7.5% 4.9% -3.7% F2019 F2020 F2021 F2019 F2020 F2021
Slide 32: Normalised headline earnings – mature businesses
NORMALISED HEADLINE EARNINGS – MATURE BUSINESSES R’Million F2019 >100% F2020 F2021 1,095 883 <(100)% +11% 578 610 512 393 435 436 435 +37% 340 <(100)% 177 213 166 156 (552) (859) (859) Momentum Life Momentum Investments Metropolitan Life Momentum Corporate Momentum Metropolitan Health In F2019, inve
Slide 33: Normalised headline earnings – growing businesses
NORMALISED HEADLINE EARNINGS – GROWING BUSINESSES R’Million F2019 +34% F2020 F2021 544 534 -19% 405 >100% 317 262 256 233 164 +30% (358) (336) (492) (509) Non-life Insurance Momentum Metropolitan Africa New Initiatives Shareholders In F2019 investment return on shareholder assets are included in Sha
Slide 34: Excellent new business across the Group
EXCELLENT NEW BUSINESS ACROSS THE GROUP Present value of premiums (R’Million) 18 917 17 113 16 989 Year-on-year growth in F2021 16 567 15 205 Momentum Life +6% 13 425 13 256 12 978 12 431 Momentum Investments +55% 11 677 11 788 11 782 Metropolitan Life +25% Momentum Corporate –11% Africa +7% F2019 F
Slide 35: Sales up by 31% year-on-year
SALES UP BY 31% YEAR-ON-YEAR F2019 PVNBP and value of premiums (R’Million) F2020 20,000 250 16 567 18 917 F2021 18,000 228 17,113 16 989 219 16,000 15,205 200 189 14,000 13 256 13 425 172 11,677 12 978 12 431 11,788 11 782 12,000 150 146 10,000 124 106 8,000 100 100 90 82 6,000 60 4,000 50 2,000 30
Slide 36: New business margin increased to 1.1%
NEW BUSINESS MARGIN INCREASED TO 1.1% F2019 +2.0% F2020 F2021 4.3% 2.3% 1.8% 1.6% -0.8% +0.5% +0.7% +0.4% 1.2% 1.1% 1.0% 1.0% 0.9% 0.7% +0.1% 0.6% 0.5% 0.4% 0.3% 0.2% 0.1% 0.0% -0.1% Momentum Life Momentum Metropolitan Life Momentum Corporate Momentum Momentum Investments Metropolitan Metropolitan A
Slide 37: Embedded value per share up 5%
EMBEDDED VALUE PER SHARE UP 5% Embedded value (R’Million) 15 1,666 Strong operational EV profit before Covid-19 2,383 mortality impact 2,828 1,598 41 328 R27.08 EV per share 38 524 (Jun 2021) 6.3% ROEV per share (Jun 2021) Opening Operational Covid-19 Impact of Profit for Capital flows Closing embed
Slide 38: Total dividend per share flat on previous year
TOTAL DIVIDEND PER SHARE FLAT ON PREVIOUS YEAR Dividend per share (cents) 70 40 cents per ordinary share translates to 1.7 times normalised headline earnings 0% 40 40 Represents a distribution of special remittances from entities in Momentum Metropolitan Africa Dividend cover target range remains at
Slide 39: Investment return for the group increased substantially
INVESTMENT RETURN FOR THE GROUP INCREASED SUBSTANTIALLY Investment return (R’Million) +80% 934 Shareholders investment return include: 442 • Venture capital returns improved from 14 (R63m) in F2020 to R268m in F2021 673 520 673 • R170m gain from first time recognition of 478 call option on MoneyHub
Slide 40: Impact of Covid-19 on earnings
Impact of Covid-19 on earnings
Slide 41: Negative mortality variance for the year
NEGATIVE MORTALITY VARIANCE FOR THE YEAR Mortality experience variance Momentum Momentum Metropolitan Momentum R’Million Total Life Investments Life Corporate Excess mortality – Protection (673) (29) (396) (932) (2 030) Excess mortality – Annuities - 85 159 47 291 Excess mortality variance (673) 56
Slide 42: Mortality loss inclusive of additional provisions
MORTALITY LOSS INCLUSIVE OF ADDITIONAL PROVISIONS Mortality experience variance Momentum Momentum Metropolitan Momentum R’Million Total Life Investments Life Corporate Excess mortality – Protection (673) (29) (396) (932) (2 030) Excess mortality – Annuities - 85 159 47 291 Excess mortality (673) 56
Slide 43: NHE strong in the absence of excess claims and provisions
NHE STRONG IN THE ABSENCE OF EXCESS CLAIMS AND PROVISIONS Mortality experience variance Momentum Momentum Metropolitan Momentum R’Million Total Life Investments Life Corporate Excess mortality – Protection (673) (29) (396) (932) (2 030) Excess mortality – Annuities - 85 159 47 291 Excess mortality (
Slide 44: Earnings excluding Covid-19 and investment variance
EARNINGS EXCLUDING COVID-19 AND INVESTMENT VARIANCE 1,026 2,004 275 57 238 38 524 2,129 3,543 Net mortality losses of R2.8bn 1,007 Actual Covid-19 provison Actual excess Release of Annuity Net non-mortality Investment F2021 Earnings NHE F2021 - mortality deaths Covid-19 experience Covid-19 provision
Slide 45: Non-covered business valuations
Non-covered business valuations
Slide 46: Recovery of non-covered business valuations
RECOVERY OF NON-COVERED BUSINESS VALUATIONS % change % change R’Million F2019 F2020 F2021 F2021 on F2021 on F2020 F2019 Established business 7 958 8 872 10 914 23% 37% New Initiatives 1 014 1 462 1 876 28% 85% Head Office items (1 313) (2 339) (1 360) -42% 4% Total non-covered business 7 659 7 995 1
Slide 47: Non-covered business valuations deliver reasonable PE ratios
NON-COVERED BUSINESS VALUATIONS DELIVER REASONABLE PE RATIOS Momentum Investments profitability F2021 Implied has recovered with improved markets R’Million Valuation NHE PE Established business 10 914 996 11 Guardrisk continue to grow strongly New Initiatives 1 876 228 (7) Head Office items (1 360)
Slide 48: Non-covered business as % of embedded value
NON-COVERED BUSINESS AS % OF EMBEDDED VALUE 11 430 14,000 8 762 12,000 7 995 7 927 7 659 10,000 5 563 6 135 8,000 6,000 4,000 2,000 - (2 ,000) (4 ,000) Non-covered EV 15% 14% 19% 19% 21% 21% 28% as % of total EV Jun 2018 Dec 2018 Jun 2019 Dec 2019 Jun 2020 Dec 2020 Jun 2021 Asset Management Healthca
Slide 49: Guardrisk and Group capital
Guardrisk and Group capital
Slide 50: Regulatory solvency cover for the main insurance licenses
REGULATORY SOLVENCY COVER FOR THE MAIN INSURANCE LICENSES Momentum Metropolitan Holdings 2.30 Momentum Metropolitan Life 2.20 1.9 2.20 2.08 1.8 2.10 1.8 1.7 2.00 1.95 1.7 1.6 1.6 1.90 1.85 1.6 1.80 1.73 1.5 1.5 1.70 1.4 1.60 1.3 1.50 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Jun-19 Dec-19 Jun-20 Dec-20 Jun
Slide 51: Guardrisk assets – including excess own funds
GUARDRISK ASSETS – INCLUDING EXCESS OWN FUNDS 12.0 11.0 10.0 1.8 8.0 3.4 5.8 6.0 1.8 0.8 4.0 1.5 1.8 5.8 2.0 3.2 3.2 0.0 Available Capital Eligible Regulatory Capital Required Capital Life insurance clients Short-term insurance clients Own risk Include own funds in excess of SCR attributable to cell
Slide 52: Guardrisk cells well capitalised
GUARDRISK CELLS WELL CAPITALISED 12.0 11.0 10.0 1.8 8.0 3.4 6.6 5.8 6.0 1.8 0.8 4.0 1.5 1.8 5.8 2.0 3.2 3.2 0.0 Available Capital Eligible Regulatory Capital Required Capital Life insurance clients Short-term insurance clients Own risk Include own funds in excess of SCR attributable to cell owners (
Slide 53: Guardrisk regulatory solvency cover ratio
GUARDRISK REGULATORY SOLVENCY COVER RATIO 12.0 11.0 10.0 1.8 8.0 3.4 6.6 5.8 6.0 1.8 0.8 4.0 1.5 1.8 5.8 2.0 3.2 3.2 0.0 Available Capital Eligible Regulatory Capital Required Capital Life insurance clients Short-term insurance clients Own risk Excess own funds of R4.4 billion are disregarded
Slide 54: Group solvency – impact of Guardrisk
GROUP SOLVENCY – IMPACT OF GUARDRISK 2.0 1.9 1.9 1.8 1.8 1.8 1.8 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.5 1.5 1.4 1.3 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Momentum Metropolitan Holdings group SCR Upper limit Momentum Metropolitan Holdings group SCR Lower limit including Guardrisk excess own funds From 30 June
Slide 55: In conclusion
In conclusion
Slide 56: In conclusion
IN CONCLUSION 1 This has been an incredibly demanding year and our resilience has been tested 2 Operational delivery and quality of strategic planning remained high despite the environment 3 The business is in better shape than a few years ago – especially in respect of its distribution capabilities
Slide 57: Non-covered business valuations recovered in F2021
NON-COVERED BUSINESS VALUATIONS RECOVERED IN F2021 % change % change F2019 F2020 F2021 F2021 on F2021 on Non-covered subsidiaries F2020 F2019 Established Businesses 7 958 8 872 10 914 23% 37% Momentum Investments 2 078 1 639 2 559 Momentum Metropolitan Health 1 144 866 1 234 Guardrisk 3 725 3 536 4
Slide 58: Non-covered business valuations deliver reasonable PE ratios
NON-COVERED BUSINESS VALUATIONS DELIVER REASONABLE PE RATIOS Non-covered subsidiaries Valuation F2021 NHE Implied PE Momentum Investments profitability has recovered with improved markets Established Businesses 10 914 996 11 Momentum Investments 2 559 210 12 Momentum Metropolitan Health 1 234 213 6
Momentum Metropolitan Holdings — FY2021 Earnings Presentation on 6ix