Momentum Group Limited · JSE:MTM
Momentum — H1 2022 Earnings Presentation
56 slides from Momentum's earnings presentation, March 2022
Slide 1: Momentum Metropolitan delivers double-digit sales growth
Momentum Metropolitan delivers double-digit sales growth Focus on clients and advisers reaps rewards
Slide 2: Overview
Overview 1 Highlights 2 Business view - Momentum Investments - Metropolitan Life - Guardrisk Hillie Meyer Group Chief Executive Officer
Slide 3: Highlights
Highlights
Slide 4: Strong new business sales
Strong new business sales Growth in new business sales, VNB recovered (R’million) 40 000 PVNBP 450 VNB 35 000 400 350 30 000 300 25 000 250 20 000 200 15 000 150 10 000 100 5 000 50 - - Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 18 18 19 19 20 20 21 21 18 18 19 19 20 20 21 21
Slide 5: NHE recovered to about 80% of desired trendline
Strong new business sales NHE recovered to about 80% of desired trendline (R’million) Credible NHE NHE 2,000 1 772 1 618 1 525 1,500 1 456 1 012 1,000 500 409 0 ( 5) ( 251) -500 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
Slide 6: Fourth consecutive B-BBEE Level 1 rating
Strong new business sales Fourth consecutive B-BBEE Level 1 rating Credible NHE Scorecard Element Score Transformation Equity Ownership 28 / 28 on track Management Control 11 / 20 Skills Development 15 / 23 Preferential Procurement 19 / 19 Enterprise and Supplier Development 14 / 14 Socio-Economic D
Slide 7: Second consecutive Top Employer certification
Strong new business sales Second consecutive Top Employer certification Credible NHE Transformation on track External recognition
Slide 8: Successfully implemented single adviser platform
Strong new business sales Successfully implemented single adviser platform Advisers Credible NHE Transformation on track External recognition Product and service functions Progress with digital strategy Data and App control environment Product 1 Product 2 Product 3 Product 4 Product 5
Slide 9: Group-wide support for digital transformation
Strong new business sales Group-wide support for digital transformation Credible NHE Transformation on track External recognition Progress with digital strategy Progressed from Reset to Reinvent MetHub
Slide 10: 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%
Slide 11: Business view
Business view Momentum Investments Metropolitan Life Guardrisk
Slide 12: Momentum Investments: Won back adviser support
Momentum Investments Won back adviser support
Slide 13: Momentum Investments Results speak for themselves
Momentum Investments Results speak for themselves (R’million) Guaranteed annuity sales Platform new business 3,500 20,000 18,000 3,000 16,000 2,500 14,000 12,000 2,000 10,000 1,500 8,000 1,000 6,000 4,000 500 2,000 0 0 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 18 Dec 18 Jun 19 Dec
Slide 14: Momentum Investments Behind the results
Momentum Investments Behind the results 1 External focus, competitive spirit 2 Improved service experience 3 Deliberate distribution enablement 4 Dynamic pricing 5 Took advantage of good industry flows 6 Excellent DFM growth 7 Support from MFP and Consult
Slide 15: Momentum Investments Key Reinvent and Grow initiatives
Momentum Investments Key Reinvent and Grow initiatives Grow existing Specialised distribution channels Product and Service initiatives service leadership Re-platforming Accelerate digital
Slide 16: Business view
Business view Momentum Investments Metropolitan Life Guardrisk
Slide 17: Metropolitan Life: What you measure is what you get
Metropolitan Life What you measure is what you get
Slide 18: Metropolitan Life Sales reaching new highs
Metropolitan Life Sales reaching new highs (R’million) 4 000 PVNBP 3 555 3 500 3 335 3 000 2 523 2 526 2 550 2 500 2 374 2 171 2 175 2 000 1 500 1 000 500 - Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
Slide 19: Metropolitan Life Science of Sales
Metropolitan Life Science of Sales 1 Manpower: Minimum number of viable advisers 2 Turnover: Adviser tenure and retention Toolkit for branch management 3 Productivity: Case count and product mix 4 Quality: % payroll collection and lapse rates
Slide 20: Metropolitan Life Branch rating
Metropolitan Life Branch rating Branch rating Average number of branches in rating categories 350 300 250 200 150 100 50 0 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Poor Average Good Exceptional
Slide 21: Metropolitan Life Key Reinvent and Grow initiatives
Metropolitan Life Key Reinvent and Grow initiatives Grow existing Sales force moat channels Metropolitan GetUp Accelerate digital Product and Client value proposition service leadership
Slide 22: Business view
Business view Momentum Investments Metropolitan Life Guardrisk
Slide 23: Guardrisk: Sustained market leadership
Sustained market leadership
Slide 24: Consistent NHE growth
Consistent NHE growth (R’million) 295 300 250 198 200 183 178 163 146 150 133 100 64 50 - Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21
Slide 25: Successful diversification into underwriting
Successful diversification into underwriting (R’million) 1 200 Total revenue and % underwriting contribution 30% 29% 1 081 26% 1 000 926 25% 23% 22% 800 756 20% 653 721 693 17% 588 16% 600 15% 400 10% 8% 200 5% - 0% F2016 F2017 F2018 F2019 F2020 F2021 HY Dec 21 Revenue Underwriting contribution (%)
Slide 26: Increase in ROE Guardrisk
Increase in ROE Guardrisk 19.9% 20% 18.7% 16.6% 16.0% 15.0% 15% 13.2% 11.3% 10% 5% 0% F2016 F2017 F2018 F2019 F2020 F2021 Dec 21
Slide 27: Behind the results
Behind the results 1 Commercial client partnering 2 Cell captive business provides steady annuity income Identified new revenue opportunities • GGI 3 • Bolt-on acquisitions • Micro-insurance 4 Thought leadership 5 Entrepreneurial culture
Slide 28: Key Reinvent and Grow initiatives
Key Reinvent and Grow initiatives ROE Capital efficiencies 22% IT modernisation project Accelerate digital Beyond cell captives Product and service leadership
Slide 29: Strategy is not what you talk about, it is what you do
“ Strategy is not what you talk about, it is what you do Johann le Roux, CEO of Momentum Life ”
Slide 30: Thank you
Thank you &
Slide 31: Financial results for the six months ended 31 December 2021
Financial results for the six months ended 31 December 2021
Slide 32: Overview
Overview 1 Financial overview 2 Other current topical matters 3 Conclusion Risto Ketola Group Finance Director
Slide 33: Key financial measures
Normalised headline earnings Present value of premiums (R’million) (R’million) Key financial +23% measures 1 772 +51% 36 995 1 525 29 992 26 234 1 012 Dec 2019 Dec 2020 Dec 2021 Dec 2019 Dec 2020 Dec 2021 Value of new business (R’million) New business margin (%) +20% 400 1.1% 1.1% 334 0.6% 160 Dec 2
Slide 34: Key financial measures
Diluted embedded value per share Dividend per ordinary share (R) (cents) Key financial +4% +40% 40 measures 28.56 28.39 35 27.39 25 Dec 2019 Dec 2020 Dec 2021 Dec 2019 Dec 2020 Dec 2021 Return on embedded value (%) Return on equity (%) 13.2% 15.9% 18.1% 10.7% 10.8% 10.1% Dec 2019 Dec 2020 Dec 2021 D
Slide 35: Mature businesses Normalised headline earnings
Normalised headline earnings Mature (R’million) businesses 603 +11% Dec 2019 489 Dec 2020 440 >100% 416 Dec 2021 -91% -18% 370 332 328 308 282 268 +9% 86 94 80 30 (212) Momentum Momentum Metropolitan Momentum Momentum Metropolitan Life Investments Life Corporate Health
Slide 36: Growing businesses Normalised headline earnings
Normalised headline earnings Growing (R’million) Dec 2019 businesses Dec 2020 +17% -98% >100% Dec 2021 303 304 258 263 208 143 -16% 7 (28) (240) (257) (267) (299) Non-life Insurance Momentum Metropolitan New Initiatives Shareholders Africa
Slide 37: 23% year-on-year increase in sales
23% year-on-year increase in sales PVNBP and value of new business (R’million) 25,000 300 19 748 Year-on-year growth 16 567 243 250 20,000 18 917 228 Metropolitan Life 16 989 219 17 247 +39% 200 15,000 13 256 13 425 172 Momentum Metropolitan 12 978 12 431 157 11 782 150 Africa +38% 10,000 106 100 10
Slide 38: New business margin in line with prior period
New business New business margin (%) margin in line with prior -0.3% period Dec 2019 4.6% Dec 2020 4.3% Dec 2021 2.7% -1.2% 0.0% 1.4% +0.2% 1.3% 1.1% 1.1% 1.0% 0.8% -0.4% -0.3% 0.6% 0.5% 0.5% 0.4% 0.2% 0.1% 0.1% -0.2% -0.7% Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments L
Slide 39: Embedded value per share up 4%
Embedded Embedded value (R’million) value per share up 4% 126 183 760 Strong operational EV profit, aided by less severe Covid-19 1 291 mortality impact 43 322 41 328 R28.39 EV per share 10.8% annualised ROEV per share Opening EV Operational Impact of Profit from Capital flows Closing EV EV profit i
Slide 40: Interim ordinary dividend up to 35 cents per share
Interim ordinary dividend up to 35 cents Dividend per ordinary share (cents) per share +40% 35 40% increase from 25 cents per share 25 2.9 times NHE 15 2.0 to 3.0 times NHE dividend cover target range 0 Jun 2020 Dec 2020 Jun 2021 Dec 2021
Slide 41: Capital cover remains within target levels
Capital cover remains within target levels Momentum Metropolitan Life 2.5 MML cover improved from 2.20 positive investment experience 2.08 1.95 and strong contribution from 2.0 1.85 1.77 1.73 new business 1.5 Guardrisk Insurance cover increased from 1.13 to 1.28 1.0 0.5 Guardrisk Life cover increase
Slide 42: Other current topical matters
Other current topical matters 1 Mortality claims experience 2 Non-covered business valuations 3 Venture capital funds
Slide 43: Mortality claims experience
Mortality claims experience
Slide 44: Third wave proportionally more severe for Momentum Life
Third wave proportionally Amount of death claims (gross of reinsurance) more severe for (R’million) Momentum Life 1 738 1 723 1 654 1 628 1 400 711 1 216 961 1 051 1 050 1 015 1 066 735 971 659 861 797 795 282 540 712 634 535 190 371 495 204 207 506 158 182 393 158 661 126 134 127 587 140 461 465 43
Slide 45: Momentum Metropolitan mortality impact on NHE
Momentum Metropolitan mortality impact Mortality experience variance on NHE Momentum Momentum Metropolitan Momentum R’million Total Life Investments Life Corporate Excess mortality – Protection (903) (35) (137) (513) (1 588) Excess mortality – Annuities - 137 51 37 225 Excess mortality (903) 102 (86
Slide 46: Non-covered business valuations
Non-covered business valuations
Slide 47: Non-covered business valuations recovery continues
Non-covered business valuations recovery Non-covered valuation as % of total EV continues Momentum Investments RoEV Valuation EV Earnings RoEV +17.6% Non-covered subsidiaries 1HF2021 1HF2022 1HF2021 1HF2022 1HF2021 1HF2022 Guardrisk RoEV Established Businesses 9 353 10 404 900 (22) 21.8% (0.4)% +17.
Slide 48: Venture capital funds
Venture capital funds i
Slide 49: Investment in venture capital funds
Investment in venture capital funds R’million Investment Current valuation 4Di Exponential Technology 140 185 Insights and learnings from Anthemis Exponential Ventures 470 1 593 participation in investment processes Anthemis Venture Fund 63 215 Total 673 1 993 Expanded the network of start-ups invol
Slide 50: In conclusion
In conclusion
Slide 51: In conclusion
In conclusion 1 1 Mood / energy / spirit in the team much better than 12 months ago
Slide 52: In conclusion
In conclusion 1 Mood / energy / spirit in the team much better than 12 months ago 2 Need to leverage off our culture and ensure ongoing collaboration
Slide 53: In conclusion
In conclusion 1 1 Mood / energy / spirit in the team much better than 12 months ago 2 Need to leverage off our culture and ensure ongoing collaboration 3 Focus on delivery to maintain near 100% buy-in for Reinvent & Grow
Slide 54: In conclusion
In conclusion 1 1 Mood / energy / spirit in the team much better than 12 months ago 2 Need to leverage off our culture and ensure ongoing collaboration 3 Focus on delivery to maintain near 100% buy-in for Reinvent & Grow 4 My top 3 priority list; (1) Myriad sales (2) Insure GWP and (3) Africa
Slide 55: In conclusion
In conclusion 1 1 Mood / energy / spirit in the team much better than 12 months ago 2 Need to leverage off our culture and ensure ongoing collaboration 3 Focus on delivery to maintain near 100% buy-in for Reinvent & Grow 4 My top 3 priority list; (1) Myriad sales (2) Insure GWP and (3) Africa 5 Empl
Slide 56: Thank you
Thank you &