Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — Debt Investor Presentation (September 2023)
44 slides from Momentum's debt investor presentation, Sep 28, 2023
Slide 1: Momentum Metropolitan Debt Investor Roadshow
Momentum Metropolitan Debt Investor Roadshow 21 & 28 September 2023
Slide 2: 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
Slide 3: Momentum Metropolitan Holdings team and key contacts
Momentum Metropolitan Holdings team and key contacts Rand Merchant Bank 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 Jeanette Marais Group
Slide 4: Agenda
Agenda 1 Strategic overview 2 Financial results 3 Capital Management & Solvency 4 Instrument Structure
Slide 5: 1. Strategic overview
1. Strategic overview Key take-outs Reinvent and Grow
Slide 6: Key take-outs: Record high NHE
Record high NHE of R5.1 billion R’million +154% 6 000 5 079 5 000 4 383 4 000 Key take-outs 3 074 3 000 2 003 2 000 1 521 1 000 F20221 dividend 007 of R1.5 billion - F18 F19 F20 F21 F22 F23
Slide 7: Corporate portfolio performs again
Corporate portfolio performs again Strong contribution to earnings Stable contribution to earnings growth growth Momentum Life Momentum Investments Key take-outs Momentum Corporate Challenging year Guardrisk Momentum Metropolitan Africa Momentum Insure Momentum Metropolitan Health Metropolitan Life
Slide 8: Momentum Insure: Turnaround plan
Momentum Insure: Turnaround plan Claims ratio 77% 70% Plans Key take-outs AFI integration completed 64% 63% Strong management actions to curb claims ratio 58% • Premium corrections • Cancellation of policies outside risk appetite • Benefit changes F19 F20 F21 F22 F23
Slide 9: Metropolitan Life: Turnaround plan
Metropolitan Life: Turnaround plan VNB margin 4.3% 3.4% Plans Key take-outs 2.3% 2.1% • Dynamic product and benefit design 1.8% 1.6% • New business quality management • Cost savings F18 F19 F20 F21 F22 F23
Slide 10: Reinvent and Grow
Reinvent and Grow
Slide 11: Reinvent and Grow update
Reinvent and Grow update 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 12: Accelerate digital
Three horizons approach New Digitising digital the Core growth Accelerate digital Invest in digital BAU digitisation enablers Next-generation Example: FNZ businesses Example: Dragonfly Managed evolution Example: Myriad innovation
Slide 13: Grow market share
Overall market share of businesses F2020 to F2023 30% 26% 25% 25% 20% 18% Grow market share 15% 15% 14% 14% 12% 11.5% 11.5% 10% 7% 5% 2.5% 2.4% 0% Momentum Myriad FundsAtWork Momentum Momentum Metropolitan Wealth Insure Metropolitan Life Health
Slide 14: Conclusion
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Slide 15: Strategic overview conclusion
Strategic overview conclusion 1 Significant value added to wide range of stakeholders. 2 Continuing to focus on achieving F2024 Reinvent and Grow targets. 3 Strategic planning for beyond Reinvent and Grow has commenced. 4 Changing of the guard.
Slide 16: 2. Financial results
2. Financial results Financial overview Cash generation Other topical matters Conclusion
Slide 17: Financial overview
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Slide 18: Key financial measures
Key financial measures Normalised headline earnings (R’million) Normalised headline earnings per share (cents) +19% +16% 342 5 079 287 4 383 203 3 074 1 521 102 1 007 67 Financial overview F19 F20 F21 F22 F23 F19 F20 F21 F22 F23 Dividend per share (cents) Return on equity (%) +20% 120 22.7% 22.3% 10
Slide 19: Key financial measures
Key financial measures Diluted embedded value per share (R) Present value of new business premiums (R’million) -5% +13% 72 673 33.75 65 898 68 873 29.77 55 783 27.48 25.70 27.08 50 447 Financial overview F19 F20 F21 F22 F23 F19 F20 F21 F22 F23 Value of new business (R’million) New business margin (%
Slide 20: SA life businesses
SA life businesses +74% Normalised headline earnings (R’million) 1 935 +13% 1 330 -4% 1 174 1 110 1 095 883 938 904 -54% Financial overview 672 578 610 512 340 393 435 435 307 177 (552) (859) Momentum Life Momentum Investments Metropolitan Life Momentum Corporate F19 F20 F21 F22 F23
Slide 21: Other businesses
Other businesses Normalised headline earnings (R’million) >100% 596 544 -50% 534 461 +39% 405 317 <-100% 290 262 256 213 209 232 233 166 156 164 167 Financial overview 118 +8% (87) (358) (336) (428) (466) (492) (509) Momentum Non-life Insurance Momentum New Initiatitives Shareholders Metropolitan He
Slide 22: New business volumes down 5%
New business volumes down 5% Present value of new business premiums (PVNBP) (R’billion) -5% 72.7 68.9 -4% 65.9 55.8 50.5 Financial overview 41.5 42.5 40.7 26.8 -15% 23.1 +4% 0% 17.0 -16% 12.3 8.3 9.2 8.2 10.5 7.1 7.5 7.3 7.6 4.9 4.7 5.9 7.2 7.2 2.5 2.7 2.8 3.5 2.9 Momentum Life Momentum Metropolitan
Slide 23: New business margin steady
New business margin steady 4.3% 3.4% 2.3% Financial overview 2.1% 1.8% 1.6% 1.2% 1.1% 1.1% 1.0% 1.0% 0.9% 0.9% 0.9% 0.8% 0.7% 0.6% 0.6% 0.6% 0.5% 0.3% 0.4% 0.2% 0.1% 0.0% (0.1%) (0.3%) (0.3%) (0.6%) (0.9%) Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments Life Corporate Metr
Slide 24: Cash generation
Cash generation
Slide 25: Remittances to MMH from the four cash generating entities
Remittances to MMH from the four cash generating entities 4 476 3 894 3 802 536 449 R’million R’million 1914 330 297 F22 F23 F22 F23 Cash generation SA Life Guardrisk 580 596 R’million R’million 290 239 209 207 204 118 F22 F23 F22 F23 Health business Africa Cash remittances to MMH Normalised headlin
Slide 26: Strong cash generation in F2023
Strong cash generation in F2023 Net capital flow R’million F2023 F2022 SA Life 3 802 1 914 Guardrisk 297 330 Health 207 239 Africa 580 204 M&A disposal 11 192 India - (433) Cash generation Momentum Insure (580) - MM Finance company (153) - Momentum Money (160) - Other operations (56) 62 Preference s
Slide 27: Other topical matters
Other topical matters 1 ABHI journey 2 IFRS17 Transition note IFRS 17 Transition note
Slide 28: India story to date
India story to date 7,000 200% Gross written premium (R’million) Claims and expense ratios (%) 180% 5 941 6,000 160% 5,000 140% 120% Other topical matters 4,000 3 522 100% 3,000 2 710 80% 1 900 60% 2,000 40% 996 1,000 483 20% - 0% F2018 F18 F2019 F19 F2020 F20 F2021 F21 F2022 F22 F2023 F23 F2018 F18
Slide 29: Expected shareholder equity impact on June 2022
Expected shareholder equity impact on 30 June 2022 R’billion Policyholder obligations: R6bn 6.2 19.7 3.5 Other topical matters 0.7 16.5 3.2 0.6 25.0 27.9 Shareholder equity: R3bn + + - - + - - 30 June 2022 IFRS 4 IFRS 4 IFRS 17 Risk IFRS 17 Other Intangibles Tax 1 July 2022 compulsory discretionary
Slide 30: Financial overview conclusion
Financial overview conclusion 1 Underlying earnings evidence of solid progress in operations and on execution of our strategy. 2 Strong balance sheet and liquidity enables concurrent attractive dividends and a buyback. 3 Winning market share remains number one priority in current macro-environment.
Slide 31: 3. Capital management and solvency
3. Capital management and solvency Capital & Solvency level Assets backing Capital Gearing position Maturity profile
Slide 32: Capital management and solvency highlights
Capital management and solvency highlights 1 Capital managed efficiently according to a well-defined framework. 2 Strong solvency position with regular stress testing and balance sheet projections. 3 Natural balance sheet de-gearing from earnings growth and conservative debt issuance. 4 Maturity pro
Slide 33: MML solvency level
Capital cover remains toward the upper end of specified target ranges Momentum Metropolitan Life 2.5 2.1 1.9 2.0 2.1 2.0 1.7 1.5 1.0 0.5 MML solvency level 0.0 F19 F20 F21 F22 F23 Regulatory solvency position (R billion) 30 June 2023 Eligible own funds (pre-dividend) 31.5 Solvency Capital Requiremen
Slide 34: Strong and resilient solvency position under different stresses
Strong and resilient solvency position under different stresses R’billion Regulatory Stress Tests: MML - 30 June 2022 35.0 2.03x 2.10x 30.0 1.80x 1.82x 1.90x 1.70x 25.0 1.70x 20.0 1.50x 15.0 1.30x 10.0 1.10x 5.0 0.90x 0.0 0.70x Base position EqDown 30% Mkt comb shock - int down Mkt comb shock - int
Slide 35: Consistent application of the sustainable dividend policy
Consistent application of the sustainable dividend policy NHE ordinary dividend cover (history) Final dividend per share (cents) +20% 2.90x 120 3.0x 2.9x 2.9x 100 70 1.7x 40 40 F2019 F2020 F2021 F2022 F2023 F2019 F2020 F2021 F2022 F2023 NHE dividend cover Total dividend is 35% of NHE Final dividend
Slide 36: Approach to investment of assets backing the Capital
Approach to investment of assets backing the Capital Available capital: The assets backing the MML capital adjusted for goodwill, holdings in strategic subsidiaries and inter group loans Available capital is invested to back the Required capital and excess capital Conservative investment manda
Slide 37: Capital management – Gearing
Capital management – Gearing MML Capital Structure 100% 25% 27% 27% 21% 80% 60% 40% 75% 79% 73% 73% 20% 0% June 2023 Jun 2020 Jun 2021 Jun 2022 Equity Preference shares Debt Gearing ratio decreased due to increase in equity while gross debt levels remained constant
Slide 38: Debt maturity profile well managed
Debt maturity profile well managed Subordinated debt maturity profile Proposed bond issuance
Slide 39: Momentum Metropolitan Life credit rating
Momentum Metropolitan Life credit rating • Credit rating issued by Moody’s Investor services. • In the February 2023 report, Moody’s commented that “Momentum Metropolitan Life Limited's (MML) Ba1 global scale and Aaa.za national scale, Insurance Financial Strength (IFS) ratings reflect the insurer's
Slide 40: 4. Instrument Structure
4. Instrument Structure MML06 tap / MML07 Indicative timelines
Slide 41: MML06 tap indicative terms
MML06 tap indicative terms Issuer Momentum Metropolitan Life Limited Insurer Financial Strength Aaa.za Credit ratings Issuer Aa1.za Subordinated Debt Aa3.za Rating Agency Moody’s Investor Service Programme ZAR10bn Subordinated Note Programme listed on the Interest Rate Market of the JSE Limited Indi
Slide 42: MML07 indicative terms
MML07 indicative terms Issuer Momentum Metropolitan Life Limited Insurer Financial Strength Aaa.za Credit ratings Issuer Aa1.za Subordinated Debt Aa3.za Rating Agency Moody’s Investor Service Programme ZAR10bn Subordinated Note Programme listed on the Interest Rate Market of the JSE Limited Indicati
Slide 43: Indicative timelines
Indicative timelines Date Action item 21 & 28 September 2023 Investor roadshow Termsheet, draft applicable pricing supplement(s) and auction details released to 28 September 2023 investors TBU Moody’s pre-sale rating released on MML07 4 October 2023 Updated termsheet with price guidance released to
Slide 44: Thank you
Thank you
Momentum Metropolitan Holdings — Debt Investor Presentation (September 2023) on 6ix