MMI Hold­ings loses its mo­men­tum

The Star Early Edition - - COMPANIES - Ka­belo Khu­malo

SHARES of MMI Hold­ings, a com­pany cre­ated af­ter the amal­ga­ma­tion of Mo­men­tum and Metropolitan, tanked 6.2 per­cent yes­ter­day af­ter the group re­leased an un­der­whelm­ing trad­ing up­date for the nine months end­ing March.

The group re­ported a slight im­prove­ment in core head­line earn­ings in the pe­riod un­der re­view, from -5 per­cent in the six months end­ing De­cem­ber to -3 per­cent in the quar­ter end­ing March.

It at­trib­uted the mod­est im­prove­ment to bet­ter un­der­writ­ing ex­pe­ri­ence in the last three months. The com­pany said that while it ex­pects the dif­fi­cult op­er­at­ing en­vi­ron­ment to per­sist in the short term, it would con­tinue to de­ploy its re­sources pru­dently.

It will con­tinue ap­ply­ing strong dis­ci­pline in cap­i­tal al­lo­ca­tion de­ci­sions.

“The group ex­pects to achieve its tar­geted R750 mil­lion an­nual cost sav­ings by the 2019 fi­nan­cial year, with the client-cen­tric op­er­at­ing model en­abling ef­fi­ciency gains across the group.” the com­pany said.

It said that Mo­men­tum short-term in­surance av­er­aged 2 000 pol­icy con­tract sales a month for the last three months.

The group’s di­luted em­bed­ded value per share was recorded at R26.24 at the end of March. The com­pany’s re­cur­ring pre­mium new busi­ness across its Metropolitan Re­tail, Mo­men­tum Re­tail, In­ter­na­tional and Cor­po­rate and Pub­lic Sec­tor in­creased 8 per­cent in the pe­riod, while sin­gle pre­mium new busi­ness fell 14 per­cent. The group’s over­all new busi­ness vol­umes slipped 6 per­cent on a present value of new busi­ness pre­mium ba­sis, while new busi­ness mar­gin for the nine months was 1.1 per­cent and over­all cov­ered value of new busi­ness was R320m.

The com­pany said that in ad­di­tion to the dif­fi­cult eco­nomic en­vi­ron­ment hav­ing weighed neg­a­tively on the op­er­a­tional per­for­mance of the busi­ness, stock mar­ket per­for­mance was flat in the pe­riod

“The JSE all-share in­dex re­mained prac­ti­cally un­changed from July 2016 to March 2017. This put sig­nif­i­cant pres­sure on rev­enue growth for the MMI Hold­ings…”

The group also said its In­dian joint ven­ture, Aditya Birla Health In­surance showed strong early growth with fam­i­lies cov­ered by Mo­men­tum Health hav­ing in­creased to nearly 150 000. Last year, MMI an­nounced it had con­cluded a joint ven­ture agree­ment with Aditya Birla Nuvo to en­ter the health in­surance and well­ness busi­ness in In­dia. As per the terms of the agree­ment, Aditya holds a 51 per­cent stake in Aditya Birla Health In­surance while MMI holds a 49 per­cent stake in the ven­ture.

The group ear­lier this year re­ported a 5 per­cent fall in di­luted core head­line earn­ings to R1.6bn for the six months ended De­cem­ber. It said that was due to it los­ing two ma­jor health­care ad­min­is­tra­tion con­tracts and losses on its group dis­abil­ity book. The com­pany lost about R70m in earn­ings af­ter the loss of the Bankmed and Polmed ad­min­is­tra­tion li­cences.

It said it en­joyed good growth from its rest of Africa op­er­a­tions. “New busi­ness growth in rest of Africa and do­mes­ti­cally through Metropolitan Re­tail re­mained strong, but was off­set by lower growth in Mo­men­tum Re­tail, and the cor­po­rate and pub­lic sec­tor.”

PHOTO: SIMPHIWE MBOKAZI

MMI Hold­ings’s new growth in the rest of Africa has been off­set by poor per­for­mance do­mes­ti­cally, and the cor­po­rate and pub­lic sec­tor.

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