Momentum Group Limited · JSE:MTM
Momentum — Momentum Metropolitan Holdings — FY2023 Earnings Presentation
53 slides from Momentum's earnings presentation, September 2023
Slide 1: Momentum Metropolitan announces strong results
Momentum Metropolitan announces strong results Shareholders benefit from increased dividends and further share buybacks
Slide 2: Overview: Key take-outs, Reinvent and Grow
Overview Key take-outs Reinvent and Grow Jeanette Marais Group Chief Executive Officer
Slide 3: Record high NHE of R5.1 billion
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 4: PVNBP of R68.9 billion in a challenging environment
PVNBP of R68.9 billion in a challenging environment +38% R’million 72 673 68 873 70 000 65 898 60 000 55 783 50 002 50 447 50 000 Key take-outs 40 000 30 000 20 000 10 000 - F18 F19 F20 F21 F22 F23
Slide 5: Horizontal movement in VNB
Horizontal movement in VNB +74% R’million 725 700 626 600 600 541 Key take-outs 500 400 345 300 280 200 100 - F18 F19 F20 F21 F22 F23
Slide 6: 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 7: 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 8: 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 9: Reinvent and Grow
Reinvent and Grow
Slide 10: 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 11: Further growth in new channels
Further growth in new channels Momentum Life Momentum Insure Metropolitan Life direct initiatives direct channel broker and telechannel Telechannel and broker channel in Increased from <1% to 7% of Increased by 15% in past Myriad APE in past two years combination have grown from 15% year to 20% of t
Slide 12: Three horizons approach
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: Improvement in Employment Equity ACI representation
Improvement in Employment Equity ACI representation Top Management Senior Management F2023: 36% F2023: 44% F2022: 36% F2022: 39% F2021: 36% F2021: 36% Transformation Middle Management Junior Management F2023: 47% F2023: 85% F2022: 45% F2022: 85% F2021: 42% F2021: 84%
Slide 14: Overall market share of businesses
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 15: Winning market share in the IFA space
Winning market share in the IFA space Wealth IFA Myriad IFA market share % market share % 16.6 16.7 19.2 16.3 17.5 15.6 Grow market share 14.6 F19 2019 F20 2020 F21 2021 F22 2022 F23 2023 F22 F23 “Winning back independent financial adviser support and market share will prove that we have fixed our b
Slide 16: Conclusion
Conclusion
Slide 17: Conclusion
Conclusion 1 Significant value added to wide range of stakeholders.
Slide 18: Conclusion
Conclusion 1 Significant value added to wide range of stakeholders. 2 Continuing to focus on achieving F2024 Reinvent and Grow targets.
Slide 19: Conclusion
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.
Slide 20: Conclusion
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 21: Conclusion
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 22: Financial results
Financial results Financial overview Cash generation Other topical matters Conclusion Risto Ketola Group Finance Director
Slide 23: Financial overview
ih th | Financial overview —|—~
Slide 24: 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 25: 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 26: 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 610 672 578 512 340 393 435 435 307 177 (552) (859) Momentum Life Momentum Investments Metropolitan Life Momentum Corporate F19 F20 F21 F22 F23
Slide 27: 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 28: New business volumes down 5%
New business volumes down 5% Present value of new business premiums (PVNBP) (R’billion) -5% 72.7 -4% 68.9 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 29: 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% 0.1% 0.2% 0.0% (0.1%) (0.3%) (0.3%) (0.6%) (0.9%) Momentum Momentum Metropolitan Momentum Momentum Momentum Life Investments Life Corporate Metr
Slide 30: 8% p.a. RoEV per share since F2019
8% p.a. RoEV per share since F2019 Embedded value (R’million) +19% 49 035 R33.75 45 428 EV per share 41 193 41 328 38 524 Financial overview 17% ROEV per share for F23 Jun '19 Jun '20 Jun '21 Jun '22 Jun ‘23 Covered business Non-covered: New Initiatives Non-covered: Established business
Slide 31: Covered EV variances
Covered EV variances Mortality and morbidity Investment variances 1 072 1 983 1 130 R’million 373 R’million 202 61 (451) (617) Financial overview (547) (2 520) Expense variances Terminations R’million 237 42 115 R’million 20 (130) (18) (151) (198) (270) (373) F19 F20 F21 F22 F23
Slide 32: Capital cover remains toward upper end of target ranges
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 Financial overview 0.0 F19 F20 F21 F22 F23 Momentum Metropolitan Holdings 2.0 1.7 1.6 1.6 1.6 1.5 1.5 1.0 0.5 0.0 F19 F20 F21 F22 F23 Target range
Slide 33: Total dividend increased
Total dividend increased Final dividend per share (cents) +20% 120 Total dividend 100 is 35% of NHE Financial overview 70 Final dividend payout target range remains at 33% to 50% of NHE 40 40 F19 F20 F21 F22 F23
Slide 34: Continuing to unlock value for shareholders
Continuing to unlock value for shareholders Concluded R500 million share buyback in last 6 months Average share 20% increase in Financial overview price of R17.20 Approval for further dividend to R500 million R1.8 billion Net EV uplift of R914 million Total of R1 billion made possible by strong earn
Slide 35: Cash generation
Cash generation
Slide 36: 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 37: 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 38: Other topical matters
Other topical matters 1 ABHI journey 2 VNB 3 IFRS 17 Transition note
Slide 39: ABHI journey
ABHI journey
Slide 40: 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 41: VNB
VNB
Slide 42: MML VNB contribution by product type
MML VNB contribution by product type 728 48 638 618 17 26 538 297 Other topical matters 129 361 R’million 349 261 68 156 536 65 154 384 238 252 260 166 56 (21) (59) F18 F19 F20 F21 F22 F23 F2018 F2019 F2020 F2021 F2022 F2023 Protection Annuities and Structured Long-term savings Traditional
Slide 43: IFRS 17
IFRS 17
Slide 44: Expected shareholder equity impact on June 2022
Expected shareholder equity impact on 30 June 2022 Policyholder obligations: R6bn R’billion 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 45: Contractual Service Margin (CSM) on transition
Contractual Service Margin (CSM) on transition Fully Transition approaches retrospective Fair value 1 July 2022 R’billion approach approach Total General measurement model 11.6 1.7 13.3 Other topical matters Variable fee approach 0.4 2.8 3.2 Total 12.0 4.5 16.5
Slide 46: Opening CSM by operating segment
Opening CSM 10 8 7.7 Traditional 6 R’billion Protection 4.3 Long Term Savings Long-Term 4 Annuities and Structured 2.2 2 1.4 0.9 Other topical matters - MomentumLife Momentum Metropolitan Metropolitan Life Momentum Momentum Momentum Momentum Africa Africa Life Life Investments Investments Corporate
Slide 47: Conclusion
Conclusion
Slide 48: In conclusion
In conclusion 1 Underlying earnings evidence of solid progress in operations and on execution of our strategy. Conclusion
Slide 49: In conclusion
In 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. Conclusion
Slide 50: In conclusion
In 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. Conclusion
Slide 51: In conclusion
In 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. Conclusion 4 My
Slide 52: In conclusion
In 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. Conclusion 4 My
Slide 53: In conclusion
In 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. Conclusion 4 My
Momentum Metropolitan Holdings — FY2023 Earnings Presentation on 6ix