METROPOLITAN OLD HAND
NEW ZIMELE-APPROVED insurance products for the lower income market will change the way South Africa’s life companies do business. Who is best placed to benefit? It will ultimately come down to which company has the most efficient, cost- effective distribution system. Profit margins on the Zimele products are wafer thin and broker commissions will be much smaller, probably ruling out the traditional broker network.
Some life companies will rely on bank partner branch networks, and groups such as Hollard have been quite innovative in moving “ starter pack” insurance through Pep Stores.
However, our money is on Metropolitan Life. Using a dual approach of direct marketing and a combination of agents in the field who refer clients back to a call centre, they seem to have the distribution network right. And they also have a lot of brand credibility in this market. OPPORTUNITIES • The share has one of the lowest ratings in the sector and trades at a discount to embedded value, signifying upside potential if Metropolitan gets Zimele right. • Up to 95% of policies are being issued over the phone
and processed within 24 hours. RISKS • Growth in new business comes at a cost. Interim results showed the new retail business margin down to 8,2% and the lapse rate at nearly 16%. Watch those trends when annual results come out next week. • Long- time CEO Peter Doyle retires in a year’s time.