Momentum Group Limited · JSE:MTM
Momentum — 1HF25 Earnings Presentation
49 slides from Momentum's earnings presentation
Slide 1: Momentum Group delivers excellent results
Momentum Group delivers excellent results Every business performs well Jeanette Marais
Slide 2: Overview
Overview Key takeouts Spotlight on four businesses Impact strategy progress Closing 2
Slide 3: Normalised headline earnings
Key takeouts Normalised headline earnings R’million +44% 3 437 2 389 2 049 1 787 1 704 1HF23* 2HF23* 1HF24 2HF24 1HF25 * F23 restated for IFRS 17 3
Slide 4: Value of new business a key focus
Key takeouts Value of new business a key focus R’million +40% 391 400 389 334 324 276 279 226 200 160 120 1HF20* 2HF20* 1HF21* 2HF21* 1HF22* 2HF22* 1HF23 2HF23 1HF24 2HF24 1HF25 * F20, F21, F22 not restated for IFRS 17 4
Slide 5: New business sales
Key takeouts New business sales R’billion 0% 43.0 39.1 38.9 35.9 36.9 35.6 35.6 33.2 29.9 26.2 24.2 1HF20 2HF20 1HF21 2HF21 1HF22 2HF22 1HF23 2HF23 1HF24 2HF24 1HF25 5
Slide 6: Shareholder value unlocked
Key takeouts Shareholder value unlocked Cents 85 R3.2 billion share buybacks completed 60 50 Further R1 billion share buyback 35 programme approved 25 R2 billion in value created 1HF21 1HF22 1HF23 1HF24 1HF25 Current dividend pay-out ratio 35% of NHE 6
Slide 7: Overview
Overview Key takeouts Spotlight on four businesses Impact strategy progress Closing 7
Slide 8: Momentum Insure achieving sustainable profitability
Spotlight on four businesses Momentum Insure achieving sustainable profitability Strategic focus areas Key highlights Turnaround on track • Highest NHE (R230m) for any half-year • R315m contribution to Group's dividend Profitability Strong operating results • Combined ratio improved from 106% to 90%
Slide 9: Momentum Insure progresses well
Spotlight on four businesses Momentum Insure progresses well Strong recovery in claims ratio due to decisive management actions in F23 and F24 Claims ratio Normalised headline earnings 230 173 80.1% 88 73.1% 77 71.5% 69.8% 7 19 68.4% 2 62.9% 62.3% 62.2% (47) Long-term targeted range (57% - 62%) 52.1
Slide 10: Metropolitan's 5-point plan progressed well
Spotlight on four businesses Metropolitan’s 5-point plan progressed well Product commerciality • Implemented various initiatives that led to better profitability across all products Align cost base • Achieved R40m cost savings year-to-date to revenue • Expecting further R20m in savings from switchin
Slide 11: Momentum Corporate profitable growth
Spotlight on four businesses Momentum Corporate profitable growth Underwriting margin delivery FundsAtWork building on scale • Excellent growth in our Umbrella Book • Margins strong, but under pressure • 49% AUM growth • F23 to H1F25 above target • 14% membership growth over 3.5-year period • Positi
Slide 12: Myriad's VNB success
Spotlight on four businesses Myriad’s VNB success Myriad VNB Overall improvement in VNB of R67m largely driven by: R’million 71 Improved profitability of new business Improved sales volumes (+9%) 4 Channel optimisation 1HF24 1HF25 Further expense savings in the business Lower cost of capital VNB Mar
Slide 13: Myriad digital transformation
Spotlight on four businesses Myriad digital transformation Strategic focus areas Key highlights • Transitioned to digital risk selection mechanism Product IFA MARKET • Free digital fitness and health check on mobiles leadership • Client engagement on proactive health management SHARE 2021 • Transfor
Slide 14: Overview
Overview Key takeouts Spotlight on four businesses Impact strategy progress Closing 14
Slide 15: Strategic objectives
Impact strategy progress Strategic objectives ms | We build & pr rea cial d ote ct o n fina ur cli s’ e nt Design simplified nt e cli and impactful client Unlock the full s’ ur fin experiences as a potential of our to an foundation for businesses tec cia growth pro l dr eam ams | We build & Progress
Slide 16: Plans underway to fix or invest
Impact strategy progress Plans underway to fix or invest Update on turn-around plans • Momentum Insure completed turn-around strategy • Metropolitan made satisfactory progress Africa • Operating model currently under review Unlock the full potential of our Momentum Health businesses • Good open mark
Slide 17: Collaboration and vertical integration paying off
Impact strategy progress Collaboration and vertical integration paying off Great collaboration • Momentum Health and Momentum Corporate – integrated health and employee benefits solutions • Momentum Securities, Momentum Investments and MDS – record net flows and AUM in private client portfolios • Al
Slide 18: Optimisation initiatives on track
Impact strategy progress Optimisation initiatives on track Essential for sustainable growth and VNB improvement Group-wide project identified optimisation opportunities of R1 billion Key focus areas Optimise our cost • Duplication base to grow earnings • Procurement • Technology • Business units eff
Slide 19: Boosting advice in several areas
Impact strategy progress Boosting advice in several areas Momentum Retail • MFP: New executive team and operating model • AdviserConnect and ConsultConnect digitally enables self-service for advisers and clients • Digital workspace for adviser practices Momentum Investments Invest aggressively • Acq
Slide 20: Positive strides in expanding addressable market
Impact strategy progress Positive strides in expanding addressable market Momentum Investments • Sizable lead in IFA market share in guaranteed annuities space • Gained market share in post-retirement products and services • Successful launch of Curate – secured R2.9bn in assets Guardrisk • Expands
Slide 21: Group-wide focus on client experience
Impact strategy progress Group-wide focus on client experience Myriad • Fully automated underwriting and new business onboarding simplified client and adviser experience Momentum Investments • Multi-Management business and Curate delivered solid investment performance • Improved digital capabilities
Slide 22: Overview
Overview Key takeouts Spotlight on four businesses Impact strategy progress Closing 22
Slide 23: Strong start to Impact strategy
Closing Strong start to Impact strategy 1 Group’s purpose, strategy and culture (the Why, What and How) Excellent progress, and well positioned to improve VNB, drive sales volume growth, 2 with advice as differentiator and through technology 3 Financial ambitions for F2027 remain achievable 4 Great
Slide 24: Financial Results: Financial overview
Financial Results Financial overview Risto Ketola
Slide 25: Key financial measures
Financial overview Key financial measures Normalised headline Normalised headline Interim dividend per Return on earnings earnings per share share equity R’million cents cents % +44% +48% +42% +7.2 24.6 17.4 3 437 245 85 2 389 166 60 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 25
Slide 26: Key financial measures
Financial overview Key financial measures Diluted embedded Present value of Value of New business value per share new business premiums new business margin Rands R’million R’million % +12% 0% +40% +0.2 39.29 34.93 39 103 38 928 279 0.7 200 0.5 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 26
Slide 27: SA life businesses
Financial overview SA life businesses Normalised headline earnings (R’million) +38% -3% 857 697 149 674 619 +71% 100 80 +47% 10 475 438 145 105 278 297 708 597 594 609 52 78 330 333 200 245 Momentum Momentum Metropolitan Momentum Retail Investments Corporate 1HF24 (earnings ex markets) 1HF25 (earnin
Slide 28: Other businesses
Financial overview Other businesses Normalised headline earnings (R’million) +33% 380 -18% +>100% 286 289 238 230 14 +1% 69 124 125 +>100% 220 224 +59% 68 19 (48) (117) (103) Health Guardrisk Momentum Africa India Shareholders Insure 1HF24 (earnings ex markets) 1HF25 (earnings ex markets) Market var
Slide 29: New business volumes largely flat
Financial overview New business volumes largely flat R’billion Present value of new business premiums (PVNBP) 0% 39.1 38.9 +6% 22.4 23.7 -26% +4% +2% 7.7 +19% 4.3 4.4 5.7 3.2 3.3 1.5 1.8 Momentum Momentum Metropolitan Momentum Africa Momentum Retail Investments Corporate Group 1HF24 1HF25 29
Slide 30: New business profitability
Financial overview New business profitability New business margin (%) 1.5 1.3 1.1 0.7 0.5 0.1 (0.4) (0.9) (0.9) (1.1) (1.2) (2.6) Momentum Momentum Metropolitan Momentum Africa Momentum Retail Investments Corporate Group 1HF24 1HF25 30
Slide 31: Onerous contracts
Covered business analysis Onerous contracts R’million (Gross of reinsurance and tax) 1HF25 1HF24 Momentum Retail 32 65 Momentum Investments 93 105 Metropolitan Life 143 190 Momentum Corporate 38 48 Africa (193) 124 80 430 488 31
Slide 32: New business CSM to VNB
Covered business analysis New business CSM to VNB 764 14 430 178 178 33 36 114 24 279 New business Onerous Loss recovery Risk IFRS 17 out IFRS 17 IFRS 9 Tax Cost of capital VNB CSM contracts component Adjustment of standard allowance business (LoRC) cash flows for risk 32
Slide 33: CSM growth driven by annuity sales and positive variances
Covered business analysis CSM growth driven by annuity sales and positive variances +4% R’billion 0.4 1.0 1.4 20.2 18.5 19.4 0.8 17.9 9.3 9.2 Momentum Retail Momentum Investments Metropolitan 4.1 Momentum Corporate 3.7 Africa 3.9 4.0 1.0 1.1 1.6 1.7 June 2024 CSM New Expected Change in Release Decem
Slide 34: CSM by operating segment and product
Covered business analysis CSM by operating segment and product R’billion 0.5 0.8 8.7 8.0 Traditional 0.1 0.1 1.1 1.3 Protection Long-term savings 4.1 0.9 0.8 3.4 0.5 Annuities 0.3 0.3 0.5 1.7 1.8 0.6 0.7 0.1 0.1 0.7 0.8 0.4 0.5 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 1HF24 1HF25 1HF25 Moment
Slide 35: MML IFRS 17 and IFRS 9 earnings
Covered business analysis MML IFRS 17 and IFRS 9 earnings IFRS 17 IFRS 9 R’million 1HF25 1HF24 Δ 1HF25 1HF24 Δ New business (181) (229) 21% (166) (174) 5% Existing business 1 693 1 626 4% 304 196 55% Expected profit 1 512 1 264 20% 241 263 (8)% Experience variances 204 375 (46)% 72 (61) >100% Develo
Slide 36: Financial Results: Capital management
Financial Results Capital management
Slide 37: Solvency above upper end of target range
Capital management Solvency above upper end of target range MML solvency cover 2.11 2.10 2.15 2.0 1.6 1HF24 F24 1HF25 37 Target range
Slide 38: Shareholder value unlocked
Capital management Shareholder value unlocked Current dividend payout ratio # of shares Tranche EV bought Value 35% of NHE R’million acquired value back created 1HF23 45 750 1 334 584 Cents 85 2HF23 28 500 876 376 70 65 60 1HF24 24 500 813 313 50 2HF24 24 500 888 388 1HF25 31 934 1 217 283 Total 152
Slide 39: Solid ROEs in mature businesses
Capital management Solid ROEs in mature businesses 55% - 60% 45% - 50% Return on equity (%) Momentum 30% - 35% Metropolitan Life Corporate 25% - 30% Momentum Momentum Momentum Health Investments Health Retail Momentum 10% - 15% Guardrisk Insure Africa 2% Shareholders (8.5%) 3 200 2 000 3 500 2 900 9
Slide 40: Strong cash generation
Capital management Strong cash generation R’million 1HF24 2HF24 1HF25 SA Life businesses 1 463 998 1 992 Insure - - 315 Guardrisk 172 245 141 Momentum Investments 117 160 103 Health 87 91 88 Other 73 (60) (24) Dividend inflow to Momentum Group 1 912 1 434 2 615 M&A (179) (187) (11) India - (168) (24
Slide 41: Financial Results: Other topical matters
Financial Results Other topical matters
Slide 42: Performance optimisation progress
Other topical matters Performance optimisation progress Heading R1bn target Actively working on • Procurement efficiencies across cleaning services, courier operations, marketing and employee verifications • Reviewing and refining software licensing models • New global operating model in Momentum In
Slide 43: Policies in-force
Other topical matters Policies in-force July ’24 New Dec ’24 Life business Opening business Exit Closing Risk business – Individual 436 536 20 248 (20 162) 436 622 Risk business – Funeral 848 550 94 118 (105 286) 837 382 Endowments 1 159 704 42 701 (48 482) 1 153 923 Retirement annuities 580 437 25
Slide 44: Premiums in-force
Other topical matters Premiums in-force July ‘24 New Dec ‘24 Life business (R’000) Opening business Alterations Exits Closing Risk business – Individual 9 579 197 327 324 448 663 (410 017) 9 945 167 Risk business – Funeral 3 973 002 482 277 66 741 (450 744) 4 071 276 Endowments 2 930 307 365 547 97
Slide 45: Financial Results: Conclusion
Financial Results Conclusion
Slide 46: In conclusion
Conclusion In conclusion 1 Excellent financial results 2 Operating conditions were favourable, but we also make our own luck 3 Good improvement in Momentum Retail VNB but broader focus on VNB continues 4 Good cash generation and strong balance sheet 5 Congratulations to our employees and thank you t
Slide 47: Appendix
Appendix The information in this results announcement and any non-IFRS financial measures (which are presented for additional information purposes only), is the responsibility of the directors and, has not been reviewed and reported on by Momentum Group Limited’s external auditors. 47
Slide 48: Detailed VNB breakdown
Covered business analysis Detailed VNB breakdown Momentum Momentum Momentum R’million Retail Investments Metropolitan Corporate Africa Total Future revenue 609 701 1 051 162 504 3 027 Future expenses (123) (253) (223) (89) (213) (901) Present value of future cash flows 486 448 828 73 291 2 126 Commi
Slide 49: General model CSM – market impacts
Other topical matters General model CSM – market impacts Interest accretion Expected Investment R’million Opening CSM at locked-in rates 2.6 Asset return return variance Momentum Retail 8 642 (324) 290 (34) - Momentum Investments 3 704 (140) 158 18 52 Metropolitan Life 2 600 (94) 101 7 27 Momentum C