Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — 1HF24 Earnings Presentation
51 slides from Momentum's earnings presentation, March 2024
Slide 1: Momentum Metropolitan continues to deliver robust earnings
Momentum Metropolitan continues to deliver robust earnings Operating profit growth illustrates strength of core operations
Slide 2: Overview: Key takeouts
Overview Key takeouts Jeanette Marais Group Chief Executive Officer
Slide 3: Strong increase in normalised headline earnings
Strong increase in normalised headline earnings R’million +42% 3 000 2 500 2 424 2 000 1 704 1 500 1 000 • Key take-outs Key takeouts 500 F2022 dividend of R1.5 billion - 1HF23* 1HF24 1HF24 * Restated figures
Slide 4: Sales volumes at record high
Sales volumes at record high +18% R’million 40 000 39 103 36 995 33 268 29 992 30 000 26 234 20 000 Key takeouts 10 000 - 1HF20 1HF20 1HF21 1HF21 1HF22 1HF22 1HF23 1HF23 1HF24 1HF24 * PVNBP year-on-year is not directly comparable as a change was made to the discount rate due to IFRS 17
Slide 5: Pressure on value of new business
Pressure on value of new business R’million -38% 450 400 400 350 334 324 300 250 200 200 160 150 Key takeouts 100 50 - 1HF20 1HF20 1HF21 1HF22 1HF23 1HF24 1HF21 1HF22 1HF23 1HF24 * VNB for prior periods (incl. F2023) not restated for IFRS 17
Slide 6: A story of 3 businesses
A story of 3 businesses 1 Momentum Investments 2 Momentum Insure 3 Metropolitan Life
Slide 7: Momentum Investments' growth boosts the Group
Momentum Investments’ growth boosts the Group Annuities APE Normalised headline earnings Value of new business +55% +15% +83% R’m R’m R’m 500 476 350 400 450 350 334 300 268 400 300 350 250 307 233 300 250 200 250 200 183 150 200 150 150 100 100 100 50 50 50 0 0 - H1F23 1HF23 H1F24 1HF24 1HF2023 1HF
Slide 8: Momentum Insure's turnaround plan on track
Momentum Insure’s turnaround plan on track Claims ratio 90% Progress 80% Turnaround plan on track 70% 69% 64% • Small profit 60% • Earnings benefited from strong investment returns 50% • Maintained targeted SCR ratio 80.2% 40% Corrective actions showing positive results 73.1% 71.1% 68.4% 66.4% • Mat
Slide 9: Metropolitan Life turnaround progress, but VNB disappoints
Metropolitan Life turnaround progress, but VNB disappoints R’million Normalised headline earnings 416 400 Progress 328 299 300 268 201 200 • NHE increased 49% to R299 million 100 • Negative new business margin 0 1HF20 1HF20 1HF21 1HF21 1HF22 1HF22 1HF23 1HF23* 1HF24 1HF24 * Restated figures Solid pr
Slide 10: IFRS successfully implemented
IFRS 17 successfully implemented Highlights • On time and within budget • Internal resources • Global best practice • Results in line with predictions and what was communicated • New insights and business value from IFRS 17 Key takeouts Thank you to the team!
Slide 11: Reinvent and Grow
Overview 8 Key takeouts Oe Reinvent and Grow Ry, Conclusion
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: Digital transformation accelerating
Digital transformation accelerating Momentum Life • Myriad digital leads grew from 4% to 25% • 25 000 LifeReturns mobile screenings done • 1 of 7 policies underwritten and onboarded digitally Health Guardrisk Reinvent and Grow • Transformation to digital operating model • Agricultural industry • R1b
Slide 14: Momentum Distribution Services – Specialisation drives growth
Momentum Distribution Services – Specialisation drives growth R’billion MDS total APE Myriad IFA market share +20% 2.5 Billions 2.20 1.99 17.5% 2.0 17.3% 16.9% 1.84 15.7% 15.7% 1.66 14.0% 1.5 1.35 Myriad APE 1.0 165 162 Reinvent and Grow 151 145 145 137 0.5 0.0 1HF20 F20H1 1HF21 F21H1 1HF22 F22H1 1H
Slide 15: Momentum Distribution Services – Specialisation drives growth
Momentum Distribution Services – Specialisation drives growth R’billion R’billion Wealth and MWI APE Annuities and GEs APE 0.8 Billions 3.0 +32.3% R’billions +18.8% 2.64 0.7 0.37 2.54 2.5 1.24 0.6 2.0 0.51 0.5 0.44 1.63 0.42 0.4 1.5 1.34 1.35 1.32 1.29 0.3 0.32 Reinvent and Grow 1.0 1.08 0.24 0.23 0
Slide 16: Conclusion
Overview 8 Key takeouts ee Reinvent and Grow RR, Conclusion
Slide 17: Strategy beyond Reinvent and Grow on track
Strategy beyond Reinvent and Grow on track Key themes • Collaboration in a federated operating model • Vertical integration • Continued focus on advice and distribution • Digital transformation Conclusion • Optimisation of corporate portfolio and operating performance
Slide 18: In conclusion
In conclusion 1 Strong results in challenging environment 2 High confidence to achieve Reinvent and Grow targets 3 Strategy beyond Reinvent and Grow finalised by year end Conclusion 4 Purpose with impact
Slide 19: Financial results: Financial overview
Financial results Financial overview Risto Ketola Group Finance Director
Slide 20: IFRS 4 to IFRS 17 NHE
IFRS 4 to IFRS 17 NHE (R’million) +42% 2 424 2 230 29 154 104 327 312 Financial overview 1 704 34 1HF23 published New Expected Investment Experience Market Other 1HF23 restated 1HF24 IFRS 4 NHE business profit income variances impacts IFRS 17 NHE
Slide 21: Key financial measures
Key financial measures Normalised headline earnings Normalised headline earnings Dividend per share Return on equity (R’million) per share (cents) (cents) (%) +42% +48% +20% +2.3% 168.0 17.8% 2 424 60 15.5% 50 1 704 113.7 Financial overview 1HF23 1HF24 1HF23 1HF24 1HF23 1HF24 1HF23 1HF24
Slide 22: Key financial measures
Key financial measures Diluted embedded value Present value of new Value of new business New business margin per share (R) business premiums (R’million) (R’million) (%) +12% +18% -38% -0.5% 35.01 39 103 1.0% 31.39 324 33 268 200 0.5% Financial overview 1HF23 1HF24 1HF23 1HF24 1HF23 1HF24 1HF23 1HF24
Slide 23: SA life businesses
SA life businesses Normalised headline earnings (R’million) +86% 709 +22% 624 513 382 +49% +15% 299 268 233 Financial overview 201 Momentum Momentum Metropolitan Momentum Retail Investments Life Corporate 1HF23 1HF24
Slide 24: Other businesses
Other businesses Normalised headline earnings (R’million) +3% 350 360 >100% 284 -5% 130 124 118 >100% <-100% +7% 31 12 Financial overview (70) (122) (153) (165) Momentum Guardrisk Momentum Momentum India Shareholders Metropolitan Insure Metropolitan Health Africa 1HF23 1HF24
Slide 25: New business volumes continue to grow
New business volumes continue to grow Present value of new business premiums (PVNBP) (R’billion) +18% 39.1 +18% 33.3 22.4 19.0 +32% Financial overview +18% -9% 7.7 5.8 +19% 4.3 3.6 3.6 3.2 1.3 1.5 Momentum Momentum Metropolitan Momentum Momentum Momentum Retail Investments Life Corporate Metropolita
Slide 26: New business margin under pressure
New business margin under pressure New business margin (%) 2.4 1.5 1.3 1.0 1.0 0.5 0.1 (0.2) Financial overview (0.8) (0.9) (1.1) (2.6) Momentum Momentum Metropolitan Momentum Momentum Momentum Retail Investments Life Corporate Metropolitan Africa Metropolitan 1HF23 1HF24
Slide 27: Covered EV variances – thematic overview of our business
Covered EV variances – thematic overview of our business R’million 633 606 441 169 34 36 Financial overview (9) (105) (132) (216) Mortality Investment market Expense Termination Assumption variance related variances variance variance changes 1HF23 1HF24
Slide 28: Reduced mortality, although higher than pre-Covid levels
Reduced mortality, although higher than pre-Covid levels Death claims (R’million) 7 813 4 663 4 442 4 298 3 997 3 908 2 381 2 234 2 674 972 2 325 Financial overview 777 751 749 2 178 724 1 284 1 013 875 858 1HF22 2HF22 1HF23 2HF23 1HF24 Momentum Retail Metropolitan Life Momentum Corporate
Slide 29: Capital cover above the upper end of specified target ranges
Capital cover above the upper end of specified target ranges Momentum Metropolitan Life 1.95 1.98 2.11 1.77 Dec 2020 Dec 2021 Dec 2022 Dec 2023 Momentum Metropolitan Holdings 1.6 1.6 1.7 Financial overview 1.5 Dec 2020 Dec 2021 Dec 2022 Dec 2023 Target range
Slide 30: Consistent dividend growth
Consistent dividend growth Cents +20% 60 Interim dividend is 36% of NHE 50 35 Dividend pay-out target range remains at 25 Financial overview 33% to 50% of NHE 1HF21 1HF22 1HF23 1HF24
Slide 31: Continue to unlock shareholder value
Continue to unlock shareholder value EV uplift of R1 958 million since 2018 # of shares Tranche EV bought Value R’million acquired value back created 2HF18 106 2 000 2 685 685 1HF23 45 750 1 334 584 Average share price of 2HF23 28 500 876 376 R18.53 1HF24 24 500 813 313 Total 203 3 750 5 708 1 958 F
Slide 32: Capital management
Capital management 40% - 45% 35% - 40% 25% - 30% Momentum Return on equity (%) Corporate Momentum Retail 15% - 20% Metropolitan Life 10% -15% Health Momentum Guardrisk Investments Health Africa Financial overview 0% - 5% Insure (4.4%) (24.5%) 33 200 200 33800 800 700 22100 700 100 33000 000 33 100 1
Slide 33: Cash generation
Financial results Cash generation
Slide 34: Continued strong cash generation
Continued strong cash generation Net capital flow R’million 1HF24 2HF23 1HF23 SA Life businesses 1 463 2 138 1 407 Guardrisk 172 139 158 Momentum Investments 117 164 93 Health 87 131 76 Africa 65 495 85 Other 8 (41) 69 VC fund investment (179) (13) (30) Momentum Insure - (380) (200) Momentum Money (
Slide 35: Other topical matters
Financial results Other topical matters
Slide 36: Other topical matters: IFRS
Other topical matters 1 IFRS 17 2
Slide 37: CSM driven by higher annuity sales and underlying accretion
CSM driven by higher annuity sales and underlying accretion Contractual service margin (CSM) R’billion +3% 1% 5% 6% 18.5 17.9 4% 17.9 8.8 8.8 Momentum Retail Momentum Investments Other topical matters Metropolitan Life 3.3 Momentum Corporate 2.8 Africa 3.8 3.9 1.0 1.0 1.4 1.6 June New Expected Chang
Slide 38: Covered business earnings (excl. Africa)
Covered business earnings (excl. Africa) R’million 1HF24 1HF23 Δ% New business (421) (320) (32)% Existing business 1 767 1 661 6% Expected profit 1 611 1 569 3% Experience variances 177 144 23% Assumption changes - (18) 100% Development expenses (21) (34) 38% Investment market related variances 176
Slide 39: Other topical matters: VNB
ical matters Other top IFRS 17 @ VNB
Slide 40: Impact of IFRS and EV methodology change on VNB
Impact of IFRS 17 and EV methodology change on VNB Rebased for Jun’ 23 Risk-neutral Revised risk IFRS 17 and EV R’million Reported discounting* adjustment methodology change Momentum Retail (69) (10) (58) (138) Momentum Investments 466 79 (26) 519 Metropolitan Life 154 59 (144) 50 Momentum Corporate
Slide 41: Group VNB analysis
Group VNB analysis R’million 363 97 35 31 200 Other topical matters 1HF24 Changes in EV Residual 1HF24 old basis estimates methodology reported
Slide 42: Metropolitan Life VNB
Metropolitan Life VNB R’million 69 96 Other topical matters 47 11 (85) 1HF24 Changes in EV Residual 1HF24 old basis estimates methodology reported
Slide 43: Momentum Retail VNB
Momentum Retail VNB R’million 11 (40) (40) 39 29 1HF24 Changes in EV Residual 1HF24 old basis estimates methodology reported
Slide 44: Momentum Investments VNB
Momentum Investments VNB R’million 335 6 308 34 13 Other topical matters 1HF24 Changes in EV Residual 1HF24 old basis estimates methodology reported
Slide 45: Conclusion
Financial results Conclusion
Slide 46: In conclusion
In conclusion 1 High level of current earnings from diversified portfolio of assets Conclusion
Slide 47: In conclusion
In conclusion 1 High level of current earnings from diversified portfolio of assets 2 Strong balance sheet and excellent cash generation Conclusion
Slide 48: In conclusion
In conclusion 1 High level of current earnings from diversified portfolio of assets 2 Strong balance sheet and excellent cash generation 3 Leading market position in IFA channels, Corporate business and Guardrisk Conclusion
Slide 49: In conclusion
In conclusion 1 High level of current earnings from diversified portfolio of assets 2 Strong balance sheet and excellent cash generation 3 Leading market position in IFA channels, Corporate business and Guardrisk 4 VNB remains our Achilles heel and is the number one priority to fix Conclusion
Slide 50: In conclusion
In conclusion 1 High level of current earnings from diversified portfolio of assets 2 Strong balance sheet and excellent cash generation 3 Leading market position in IFA channels, Corporate business and Guardrisk 4 VNB remains our Achilles heel and is the number one priority to fix Conclusion 5 Cong
Slide 51: In conclusion
In conclusion 1 High level of current earnings from diversified portfolio of assets 2 Strong balance sheet and excellent cash generation 3 Leading market position in IFA channels, Corporate business and Guardrisk 4 VNB remains our Achilles heel and is the number one priority to fix Conclusion 5 Cong
Momentum Metropolitan Holdings — 1HF24 Earnings Presentation on 6ix