Meyer’s Covid reset
They say America loves a comeback. If that’s true they would love Hillie Meyer. He came back to Momentum Metropolitan after a 12year sabbatical, during which he dabbled in private equity.
His first stint as head of what was then Momentum lasted for nine years to 2005. He built up the business by offering what many considered to be the best service to brokers, and pushed Momentum into the big four life offices, buying Southern Life and Sage.
The group then bought Metropolitan Life in 2010. This gave it a leading position in the mass market, as Metropolitan is the number three player in funeral policies behind Old Mutual and Sanlam. It was designed to be the engine of long-term growth.
But there’s no doubt that Meyer returned to a group with a much less energetic and customer-focused culture. It had lost the guiding hand of its long-term chair Laurie Dippenaar as it had been unbundled from the Firstrand Group.
And there was a complex matrix of “centres of excellence” which were often divorced from the dirty commercial imperative of making money.
Meyer has focused on what he calls a reset and grow strategy.
He realises insurance is a scale game. There is a fixed cost of R700m to run life distribution, after all. Meyer was fortunate that his deputy, Jeanette Marais, has always worked closely with brokers, at Momentum and then at
Allan Gray.
Since Meyer joined, the number of Momentum agents has increased from 650 to 900 and Momentum Consult — franchise holders who can sell a limited range of third party products — has increased from 150 to 270. There has also been a 15% increase in the number
of brokers who write business regularly for the group, to 2,200.
At Metropolitan the issue is more about sweating the sales force harder. Adviser productivity has increased from 1.5 policies a month to 2.5. Meyer says agents shouldn’t just chase business in the few days around payday.
They can hit their clients in other parts of the month even if the first deduction is only on the next payday. About 55% of Metropolitan agents now have at least two years in the job compared with 40% when Meyer took over.
Gaining market share
Momentum, with larger intermediary support, increased its market share by almost 10% in broker-sold death and disability products in the latest results for the year ended June. It is second only to Discovery in this market. Momentum Investments, its linked platform, increased market share by a quarter and is now the fourth largest in SA.
Meyer has aimed to grow organically for the most part, the important exception being Alexander Forbes Insurance, which immediately put R191m on the bottom line, wiping out Momentum Short-term’s perennial losses.
But he has been forced by Covid19 to reset his reset and grow targets once again. The pandemic cut earnings by more than half to R1.5bn.
New business margins fell sharply at Momentum Life, usually the largest contributor, from 1.2% to a negligible 0.3%. Thanks, however, to increased efficiency, Metropolitan’s margin increased from 1.8% to 2.3%.
The third member of the group troika is Risto Ketola, the finance director, who in his day was the goto analyst as he could make sense of life insurance.
He points out that Momentum has a wide source of earnings, from asset-based fees, admin fees and investment returns as well as underwriting.
Insurance is a scale game. There is a fixed cost of R700m to run life distribution, after all