Momentum Group (MTM) Q3 2024 earnings summary

Executive summary

• Present value of new business premiums rose 20% year-over-year to ZAR 60.3 billion, driven by strong annuity sales and improved business quality.

• Most business units delivered robust earnings despite a lower third quarter run rate and challenging economic and political conditions.

• Positive investment variances and favourable mortality experience supported results, though third quarter variances were lower due to rising yields.

• Continued focus on cost reduction, sales mix improvement, and margin enhancement, with a new strategy launch planned for July.

• Notable progress on Metropolitan Life's turnaround plan, improving new business quality and reducing expenses.

Financial highlights

• Quarterly earnings were slightly lower than the first half run rate, at about ZAR 1 billion compared to ZAR 1.2 billion per quarter previously.

• Solvency cover ratio at Momentum Metropolitan Life increased to 2.21x SCR (pre-dividend) at 31 March 2024, up from 2.11x at 31 December 2023.

• Direct expenses grew slightly above inflation, mainly due to investments in capabilities and client services, reaching ZAR 9.35 billion, up 8%.

• Assets under management on the Momentum Wealth platform grew 14% to ZAR 265 billion; total institutional and retail AUM rose 15% to ZAR 602.6 billion, including the Crown Agents acquisition.

• Share repurchase program ongoing, with 20 million shares bought back for ZAR 426 million at a 40% discount to embedded value.

Outlook and guidance

• Operating environment expected to remain challenging due to weak economic growth, political uncertainty, and inflationary pressures.

• Management remains optimistic about year-end capital decisions, including dividends and potential buybacks.

• Focus remains on driving new business volumes, improving sales mix and margins, and reducing costs to enhance value of new business.

• On track to deliver on year-end targets for the reinvent and growth strategy, with a new strategy to be shared in July 2024.