Momentum Group Limited · JSE:MTM
Momentum — MMI Holdings — Debt Investor Presentation (February 2019)
44 slides from Momentum's debt investor presentation, Feb 6, 2019
Slide 1: MMI Holdings Ltd Debt Investor Roadshow
MMI Holdings Ltd Debt Investor Roadshow 06 – 08 February 2019
Slide 2: MMI team and key contacts
MMI team and key contacts RMB (Distribution) Delia Patterson Principal: Distribution Delia.Patterson@rmb.co.za 011 282 4162 Leigh Cunningham-Scott Transactor Leigh.Cunningham-Scott@rmb.co.za 011 282 8559 Nick Tunnicliffe Transactor Nick.Tunnicliffe@rmb.co.za 011 282 1092 MMI Group Limited Risto Keto
Slide 3: Agenda
Agenda ▌ Strategic overview ▌ Financial overview ▌ Risk and Capital Management ▌ Instrument structure
Slide 4: Agenda
Agenda ▌ Strategic overview ▌ Financial overview ▌ Risk and Capital Management ▌ Instrument structure
Slide 5: Group structure and leadership
Deputy Group CEO Group CEO Jeanette Marais Momentum Investments Hillie Meyer Momentum Intermediary Solutions Group Marketing Thinus Alsworth-Elvey Momentum Corporate Zureida Ebrahim Operating units Health Multiply India Money management aYo Johann le Roux Herman Schoeman Life insurance Peter Tshiguv
Slide 6: Operating environment
Operating environment 6
Slide 7: Operating environment
Operating environment Tough macroeconomic environment coupled with legislation and industry developments that can impact the market Volatile macroeconomic and political environment Macroeconomic Subdued local and international growth environment Tough economic conditions continue to put consumers un
Slide 8: Reset and Grow Strategy
Reset and Grow Strategy
Slide 9: Reset and grow
Reset and grow Reset Grow Fix the basics Distribution Products Address cost base Service Marketing 9
Slide 10: Earnings reset and grow
Earnings reset and grow R4 billion 4 100 3 900 3 700 R3.6 billion 3 500 3 300 3 100 R2.8 billion 2 900 2 700 R million 2018 2019 2020 2021
Slide 11: Relative contribution to earnings per segment
Relative contribution to earnings per segment 3 000 2 809 (100%) 464 (17%) 2 500 258 (9%) 645 (23%) - 48 (-2%) 2 000 R'bn 1 500 570 (20%) 1 000 920 (33%) 500 - Momentum Metropolitan Momentum Guardrisk International Shareholder Total F2018 Retial Retail Corporate capital CHE 11
Slide 12: Group-wide reset progress
Group - wide Reset progress Strengthen senior leadership Revisit Sandton head office Cost savings
Slide 13: Momentum Retail
Momentum Retail Reset progress Full value chain Momentum advisers footprint growth Momentum Consult footprint growth Reshape distribution channels Grow productive brokers Improve client service Product innovation Increase flows into own funds Scale back UK presence Enhance Multiply offering Wealth p
Slide 14: Metropolitan Retail
Metropolitan Retail Reset progress Stabilise sales force Adviser productivity System migration Improved client value proposition Upgrade points of sale Sales and service efficiencies African Bank JV 14
Slide 15: Momentum Corporate
Momentum Corporate Reset progress Full value chain responsibility Diversify distribution channels Increase underwriting margins Strengthen leadership team Organised Labour and Public Sector Rebuild distribution Retailisation Improve underwriting experience 15
Slide 16: Health
Health Reset progress Systems consolidation Public Sector Low-income health Public sector value proposition Focused distribution BEE transactions 16
Slide 17: Africa
Africa Reset progress Exit selected countries Strengthen distribution Improve product margins In-country governance and control aYo roll-out Strengthen leadership teams Finalise operating model 17
Slide 18: Guardrisk
Guardrisk Reset progress Reprice loss-making schemes Increase underwriting revenue Bolt-on transactions Underwritten investment products Open architecture insurance platform 18
Slide 19: Momentum Short Term Insurance
Momentum Short Term Insurance Reset progress Full value chain responsibility Grow client base SA focus only Improve claims ratio Streamline processes Exit car dealerships Enhance pricing and underwriting capability 19
Slide 20: New Initiatives
New Initiatives 20
Slide 21: New initiatives
| New initiatives ADITYA BIRLA HEALTH exponential
Slide 22: New initiatives F2021 core headline earnings target
New initiatives New initiatives F2021 Core headline earnings target F2014 F2015 F2016 F2017 F2018 -R310 to -R270 MILLION MILLION -26 -30 -70 -217 Roughly R100m improvement on -397 F2018 losses over 3 years Key drivers Key risks • Materially lower India losses expected by F2021 • India projections hi
Slide 23: India has huge potential due to huge scale
India has huge potential due to huge scale… Every 6th Person in the World is Largest Indian Democracy Largest Youth 3rd largest economy (PPP) Population at 600 million Nominal GDP – US$ 2.6tn to US$ 4.6tn by 2023 User Base FY18 Growth 6.7% Forecast FY19 7.4% 1.2 bn* 330m 500m #1 #2 *Mobile phone con
Slide 24: ABHI journey to transform health insurance in India
24 months back ABHI initiated its journey to transform health insurance perception in India Robust Revenue • In a short span of 12 months, ABHI covered 1m+ customers growth • Comprehensive product suite with product launched for all customer Distribution & segments Product journey • All channels act
Slide 25: Environmental, Social and Governance (ESG) & Transformation
Environmental, Social and Governance (ESG) & Transformation
Slide 26: ESG (Environmental, Social and Governance)
ESG (Environmental, Social and Governance) Environmental • Board approved target of 25% reduction in carbon emissions by 2030 • MMI participates in the Carbon Disclosure Project (CDP) • Main sponsor of the University of Pretoria National Hazard Centre for Africa Social Environmental Governance • MMI
Slide 27: ESG (Environmental, Social and Governance)
ESG (Environmental, Social and Governance) Achieved B-BBEE Level 1 B-BBEE ELEMENTS Progress The 1st & Only one in the Insurance Industry 1st time for MMI Equity Ownership Industry Leader Skills Development Preferential Procurement Enterprise & Supplier Development 2019 Socio-Economic Develop
Slide 28: Agenda
Agenda ▌ Strategic overview ▌ Financial overview ▌ Risk and Capital Management ▌ Instrument structure
Slide 29: Overview: Disappointing F2018 results
Overview Disappointing F2018 results
Slide 30: F2018 Core headline earnings by segment
F2018 Core headline earnings by segment Total core headline earnings down 12% -12% 3 208 F2017 F2018 -28% 2 809 1 271 920 -14% 2% -24% 660 635 645 608 570 29% 464 258 200 71% -166 -48 (R’m) Momentum Metropolitan Retail Momentum Guardrisk International Shareholder capital Total Retail Corporate 30
Slide 31: Forward looking overview
Forward looking overview
Slide 32: Core headline earnings past and projected
Core headline earnings Past and projected Core headline earnings R million 4 000 3 836 4 000 3 621 3 600 3 206 3 208 3 000 2 809 2 000 1 000 2014 F2014 2015 F2015 2016 F2016 2017 F2017 2018 F2018 F2021 32
Slide 33: Agenda
Agenda ▌ Strategic overview ▌ Financial overview ▌ Risk and Capital Management ▌ Instrument structure
Slide 34: History of strong capital position
History of strong capital position Track record of strong capital position above regulatory minimum in SVM regulatory regime Composition of MMIGL SVM capital 300% 250% 81% MMI Group Limited 30-Jun-18 30-Jun-17 SVM Basis R’m R’m 200% 9% Statutory excess over liabilities 14 423 15 496 150% 2.7x covera
Slide 35: Solvency Assessment and Management
Solvency Assessment and Management Regulatory developments • The Financial Sector Regulation Act 9 of 2017 commenced on 01 April 2018 • Financial sector regulation now sits within the Prudential Authority (PA), hosted within the South African Reserve Bank (SARB) and the Financial Sector Conduct Auth
Slide 36: Strong capital position under SAM
Strong capital position under SAM As at 30 June 2018, MMIGL had a SCR cover of 1.9x (1.9x at 30-Sept-18) MMI Group Limited 30-Jun-18 SAM basis R’m Eligible own funds 29 851 Solvency Capital Requirement (SCR) 15 874 Excess own funds 13 978 Solvency ratio before foreseeable dividend 1.93x Solvency rat
Slide 37: Composition of debt
Composition of debt As at 30 June 2018, MMIGL’s IFRS gearing position was at 24% (17% as at 30-Jun-17) MMIG Group Limited 30-Jun-17 30-Jun-18 Equity 16 500 13 657 MMI utilises financial gearing as an instrument to Preference shares 500 500 optimise its capital structure and enable MMI’s Unsecured su
Slide 38: Capital distribution
Capital distribution • Complete buyback program by December 2018 • Reinstate interim dividend (early-2019) • Target dividend cover of 2.5x Normalised Headline Earnings (NHE) within target range of 2.0x to 3.0x • New dividend cover range is wider than in the past due to NHE being inherently a more •
Slide 39: Agenda
Agenda ▌ Strategic overview ▌ Financial overview ▌ Risk and Capital Management ▌ Instrument structure
Slide 40: Updated DMTN Programme Memorandum
Updated DMTN Programme Memorandum MMI Group Limited’s Programme Memorandum is in the process of being updated to allow for: Updated JSE listing Requirements • Updating the MMIGL’s business and risk factors; and • Updating the Terms and Conditions with the most recent amendments to the JSE DLRs (04 O
Slide 41: Credit rating
Credit rating MMI Group Limited • Credit rating issued by Moody’s Investor services. • In the latest credit opinion (08-Nov-18), Moody’s noted: “MMI Group Limited's (MMIGL) Baa2 global scale, and Aaa.za national scale, Insurance Financial Strength (IFS) ratings reflect the insurer's top tier market
Slide 42: Instrument structure
Instrument structure Issuer MMI Group Limited Insurer Financial Strength Aaa.za Credit ratings Issuer Aaa.za Subordinated Debt Aa2.za Rating Agency Moody’s Investor Service Programme ZAR5bn Subordinated Note Programme listed on the Interest Rate Market of the JSE Limited Indicative target issue size
Slide 43: Timeline
Timeline Date Action item 06 – 08 February 2019 Investor roadshow 28 February 2019 Termsheet, draft applicable pricing supplement(s) and auction details released to investors 05 March 2019 Moody’s pre-sale rating released on MMIG07 07 March 2019 Updated termsheet with price guidance released to inve
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