Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — FY2022 Earnings Presentation
55 slides from Momentum's earnings presentation, September 2022
Slide 1: Momentum Metropolitan earnings soar
Momentum Metropolitan earnings soar Main South African businesses drive growth
Slide 2: Overview
Overview 1 Key take-outs 2 Reinvent and Grow Hillie Meyer Group Chief Executive Officer
Slide 3: Key take-outs: F2022 NHE of R4.4 billion
Key take-outs F2022 NHE of R4.4 billion Strong earnings growth 2 000 1 500 1 000 500 - Q1 Q2 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q3 ( 500) Q4 (1 000) F2020 F2021 F2022
Slide 4: Key take-outs: New business sales grow to R72.7 billion
Key take-outs New business sales grow to R72.7 billion Strong earnings growth PVNBP Further sales growth +10% 20 000 +31% 15 000 10 000 5 000 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 F2020 F2021 F2022
Slide 5: Key take-outs: VNB reduces to R626 million
Key take-outs VNB reduces to R626 million Strong earnings growth +159% 250 -14% Further sales growth 200 VNB lower 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 F2020 F2021 F2022
Slide 6: Key take-outs: New business API grows to R627 million
Key take-outs New business API grows to R627 million Strong earnings growth +12% 200 Further sales growth -9% VNB lower 150 Momentum Insure sales recovery 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 F2020 F2021 F2022
Slide 7: Myriad solidifies product leadership
Key take-outs Myriad solidifies product leadership Strong earnings growth Further sales growth Pricing Underwriting Onboarding VNB lower Momentum Insure sales recovery FastTrack Myriad innovation
Slide 8: Focused and product-specific rewards programmes
Key take-outs Focused and product-specific rewards programmes Strong earnings growth Multiply Further sales growth Risk-related discounts Cross-sell discounts Partner discounts VNB lower LifeReturns HealthReturns Safety Returns Momentum Insure sales recovery Momentum Momentum Life Momentum Insure My
Slide 9: Proposed transaction is confirmation of value created
Key take-outs Proposed transaction is confirmation of value created GWP (R’billion) Strong earnings growth 2.0 Abu Dhabi Investment Authority proposes to acquire 10% interest Further sales growth in Aditya Birla Health Insurance 1.5 VNB lower Investment to date: Momentum Insure sales R2.3 billion re
Slide 10: Value unlocked for shareholders
Key take-outs Value unlocked for shareholders Strong earnings growth Further sales growth R750 million share buyback announced VNB lower Momentum Insure sales recovery Buyback programme to continue if conditions favourable Myriad innovation Wellness reinvented F2022 dividend of India JV comes of age
Slide 11: Reinvent and Grow
Reinvent and Grow
Slide 12: 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 13: Grow existing channels
Grow existing Continuous improvement channels MDS MFP Consult by Momentum 160 generalist to 250 290 to 315 active 150 specialist consultants new-to-industry planners advisers Metropolitan Life Momentum Insure 3 540 to 3 610 110 to 105 consultants agents Improved productivity
Slide 14: Establish new channels
Establish new channels Momentum Life Metropolitan Life direct initiatives Telechannel From 1% to 3% of 12% of total Metropolitan Myriad APE Life APE in past two years Momentum Corporate Metropolitan GetUp retailisation From 1% to 2% of total 18% to 42% increase in Metropolitan Life APE Momentum Metr
Slide 15: Guardrisk General Insurance grows to GWP of R2.8 billion
Establish new Guardrisk General Insurance (GGI) grows channels to GWP of R2.8 billion GWP R’million 3 000 2 500 2 000 1 500 1 000 500 - F2019 F2020 F2021 F2022 F2022
Slide 16: Guardrisk third party partnerships
Establish new Guardrisk third party partnerships channels Guardrisk Life GWP Guardrisk Insurance GWP R10.0 billion R6.6 billion 2.5 times 2.3 times Metropolitan Life in-force Momentum Insure GWP protection APE
Slide 17: Accelerate Digital
Accelerate Digital movement gaining traction Digital Adviser Wealth Project Rewire engagement re-platforming Single New savings policy Migration and platform administration consolidation system
Slide 18: Product and service leadership
Product and service leadership Wellness Myriad Momentum reinvented innovation Investments hybrid annuity Metropolitan Life limited Momentum Investo self- underwriting Corporate self- service solutions product service solutions Health4Me leading product in low-income segment
Slide 19: Transformation
Improvement in Employment Equity ACI representation Transformation Top Management Senior Management F2022: 36% F2022: 39% F2021: 36% F2021: 36% Middle Management Junior Management F2022: 45% F2022: 85% F2021: 42% F2021: 84% First full year of iSabelo iSabelo ESOP 3% shareholding 11 500 participants
Slide 20: >R500 million cost efficiencies
>R500 million Main contributors cost efficiencies Project Fit for Wealth AFI synergies Migration Growth re-platforming MDS and MFP Single Reduction in sales- Project Rewire + platform related costs Investo self- service
Slide 21: Market share
Market share F2020 to F2022 +1% to +6% 30% 25% 20% 15% 10% 5% 0% Momentum Myriad FundsAtWork Momentum Momentum Metropolitan Wealth Insure Metropolitan Life Health
Slide 22: 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 23: Momentum Metropolitan earnings soar
Momentum Metropolitan earnings soar Declares strong dividend and solidifies competitive position
Slide 24: Financial results
Financial results 1 Financial year ended 30 June 2022 2 Other topical matters 3 Conclusion Risto Ketola Group Finance Director
Slide 25: Key financial measures
Normalised headline earnings Present value of premiums (R’million) (R’million) Key financial >100% +10% measures 4 383 72 673 65 898 3 074 55 783 50 447 1 521 1 007 F2019 F2020 F2021 F2022 F2019 F2020 F2021 F2022 Value of new business (R’million) New business margin (%) -14% -0.2% 725 1.1% 1.0% 626
Slide 26: Key financial measures
Diluted embedded value per share (R) Dividend per ordinary share (cents) Key >100% financial +10% 100 measures 29.77 27.48 27.08 25.70 70 40 40 F2019 F2020 F2021 F2022 F2019 F2020 F2021 F2022 Return on embedded value per share (%) Return on equity (%) +17.8% +5.4% 11.7% 22.7% 9.4% 6.3% 15.0% 7.5% 4.
Slide 27: Normalised headline earnings: SA life businesses
Normalised headline earnings (R’million) >100% SA life >100% -14% businesses 1 174 1 110 1 095 938 883 +54% 672 610 578 512 435 435 393 340 177 (552) (859) Momentum Life Momentum Investments Metropolitan Life Momentum Corporate F2019 F2020 F2021 F2022
Slide 28: Normalised headline earnings: Other businesses
Normalised headline earnings (R’million) Other -15% businesses 544 534 461 405 -54% -2% 317 -28% 262 256 233 213 209 166 156 164 167 118 -30% (336) (358) (492) (509) (466) Momentum Momentum Non-life Insurance New Initiatives Shareholders Metropolitan Health Metropolitan Africa F2019 F2020 F2021 F202
Slide 29: Present value of new business premiums (PVNBP)
Present value of new business premiums (PVNBP) Broad new (R’billion) +10% business growth 72.7 65.9 55.8 +2% 50.5 42.5 41.5 26.8 23.1 +49% 17.0 -3% +22% 12.2 +22% 8.3 7.1 7.5 7.3 9.2 8.2 7.2 4.9 4.7 5.9 2.5 2.7 2.8 3.5 Momentum Life Momentum Metropolitan Life Momentum Corporate Momentum Momentum Inv
Slide 30: New business margin
New business margin (%) New business -0.9% margins 4.3% weakened 3.4% 2.3% 1.8% 1.6% -0.2% -1.3% 1.2% -0.1% 1.1% 1.0% +0.5% 1.0% 0.9% 0.9% 0.8% 0.7% 0.6% 0.6% 0.5% 0.4% 0.3% 0.1% 0.2% -0.2% 0.0% -0.1% -0.3% -0.3% Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments Life Corpora
Slide 31: VNB now more consistent with volumes
VNB now PVNBP and VNB more (R’million) consistent with 22 000 243 volumes 228 219 203 20 000 189 146 124 172 18 000 100 157 90 106 82 16 000 60 30 23 14 000 12 000 10 000 8 000 6 000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 F2019 F2020 F2021 F2022 PVNBP VNB
Slide 32: Steady embedded value growth
Steady Embedded value EV Breakdown embedded (R’million) value growth 43 906 45 428 5% 40 407 41 328 5% 38 524 4% 5% 4% 22% 23% R29.77 16% 23% EV per share 17% 11.7% ROEV per share 79% 80% 72% 73% 73% Jun '20 Dec '20 Jun '21 Dec '21 Jun '22 Covered business Non-covered: Established business Non-cover
Slide 33: R301 million uplift for remaining shareholders
R301 million uplift for Pro-forma impact of the buyback on EV remaining shareholders Jun '22 Actual Buyback Pro-forma Embedded value (R’million) 45 428 (382) 45 046 Shares (million) 1 526 (23) 1 503 Diluted EV per share (Rands) 29.77 0.20 29.97
Slide 34: Capital cover remains within or above target levels
Capital cover remains within or Momentum Metropolitan Life above target levels 2.5 2.08 2.03 1.85 2.0 1.73 1.5 1.0 0.5 0.0 F2019 F2020 F2021 F2022 Target range
Slide 35: Dividend increased to 2.5x F2021 level
Dividend increased to 2.5x Dividend per share (cents) F2021 level +150% 100 Dividend cover of 2.9 times NHE 70 Dividend cover target range remains at 40 40 2.0 to 3.0 times NHE F2019 F2020 F2021 F2022
Slide 36: Other topical matters
Other topical matters 1 Mortality claims experience 2 India proposed transaction 3 Cash generation
Slide 37: Mortality claims experience
Mortality claims experience
Slide 38: Mortality levels remain elevated
Amount of death claims (R’million) Mortality levels 5 091 remain elevated 4 231 3 028 2 080 2 785 2 723 2 535 2 273 2 185 2 257 1 889 1 441 1 071 1 668 644 1 635 1 126 580 1 146 1 235 945 829 500 436 414 393 267 374 403 286 1 507 1 483 964 908 677 733 695 665 619 553 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 F2
Slide 39: India proposed transaction
< } = a) o 7) = My -_ 3 d wo ° 2. ° i= a. & 3 £
Slide 40: India proposed transaction
India proposed transaction 1 ABHI shareholding: 45.91% held by ABCL | 44.10% held by MMH | 9.99% held by ADIA 2 Funds raised will be used to fund accelerated growth. 3 Capital infusion reduces planned capital injection by R600 – R700 million. 4 Transaction terms value MMH stake at R6 billion, a prem
Slide 41: Cash generation
of Gk oo 4 jim) ira [anye}e) Coo} oo | Cash generation
Slide 42: The cash generating entities
The 4 cash generating entities
Slide 43: Remittances in the last 2 years
3 706 Remittances in the last 2 years 1 914 375 408 R’m R'm 330 134 21 39 F2021 F2021 F2022 F2022 F2021 F2021 F2022 F2022 SA Life Guardrisk 545 239 209 R'm R'm 213 256 204 35 118 F2021 F2021 F2022 F2022 F2021 F2021 F2022 F2022 Health Africa Cash remittances to MMH Normalised headline earnings
Slide 44: Normal remittances to MMH
Normal remittances to SA Life Guardrisk MMH R1.8bn to R2.0bn ±R300m Normal year should see ± R2.5bn ±R200m ±R200m Health Africa
Slide 45: Additional dimensions to consider
Additional dimensions to consider 1 Momentum Insure expected to pay decent remittances once profitability is restored. 2 Earnings from VC funds only convert to cash on realisation. Investment phase is largely over. 3 Investment management operations paying small remittances, amount should increase g
Slide 46: India JV the largest investment for the Group
India JV the India JV – MMH capital injections and share of NHE largest (R’million) investment for the Group F2022 F2021 F2021 F2022 (230) (343) (338) (433) Capital injections Normalised headline earnings
Slide 47: We like to pay dividends
We like to pay MMH dividend paid and NHE (R’million) dividends 4 383 1 983 1 498 1 007 2 400 599 592 415 F2021 F2022 Dividend paid Cash generated to MMH Other
Slide 48: How it all comes together
Net capital flow How it all comes together R’million SA Life 1 914 Guardrisk 330 Health 239 Africa 204 Other 62 Net M&A 192 India (433) Preference shares (108) Cash generated to MMH 2 400 Ordinary dividend (1 498) Net of dividend payment 902 Approved buyback (750) Net of buyback & dividend 152
Slide 49: In conclusion
< 2 wo = rT} < ° rs) =
Slide 50: In conclusion
In conclusion 1 Strong financial results reflective of the focus over the past few years.
Slide 51: In conclusion
In conclusion 1 Strong financial results reflective of the focus over the past few years. 2 Privileged to be in a financial position to implement a buyback and to pay decent dividends concurrently.
Slide 52: In conclusion
In conclusion 1 Strong financial results reflective of the focus over the past few years. 2 Privileged to be in a financial position to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go where the next 18 months will be telling.
Slide 53: In conclusion
In conclusion 1 Strong financial results reflective of the focus over the past few years. 2 Privileged to be in a financial position to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go where the next 18 months will be telling. 4 It h
Slide 54: In conclusion
In conclusion 1 Strong financial results reflective of the focus over the past few years. 2 Privileged to be in a financial position to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go where the next 18 months will be telling. 4 It h
Slide 55: In conclusion
In conclusion 1 Strong financial results reflective of the focus over the past few years. 2 Privileged to be in a financial position to implement a buyback and to pay decent dividends concurrently. 3 Several exciting projects and initiatives on the go where the next 18 months will be telling. 4 It h
Momentum Metropolitan Holdings — FY2022 Earnings Presentation on 6ix