Metropolitan’s new business up 152% on new strategy

Insurer MMI has doubled new business volumes at Metropolitan Retail, its underperforming division targeting the lower- to middle-income end of the market. The division is now performing at close to its 2014 levels as it reaps the benefits of a refreshed distribution strategy and a better products mix.

“Doubling of new business was to do with additional 1,000 agents and more funeral plan sales than in the comparative period,” said Risto Ketola, MMI’s head of investor relations.

In an operational update on Friday, MMI said the value of new business at Metropolitan had risen 152% to R58m during the three months to September. This was on a margin of 4.1%, an improvement on the previous period’s 1.8%.

Metropolitan’s margins fell from 4.8% in the 2015 financial year as new business volumes declined markedly.

“They are seeing the benefits arising from the distribution channel restructuring they did,” said Adrian Cloete, portfolio manager at PSG Wealth.

“The new business margin of 4.1% is a much better reflection of the new business profitability, but higher new business volumes driven by further agency productivity could lead to higher [value of new business] margins as better scale is achieved.”

Metropolitan’s performance for the quarter drove the 24% increase in MMI’s overall value of new business.

But MMI’s corporate and public sector division, which provides employee benefit solutions and was the group’s largest income generator in the year to June, saw the value of its new business halve to just R12m.

In 2015, it lost large contracts to administer the Polmed and Bankmed medical schemes to Medscheme and Discovery, respectively.

MMI is now attempting to cut costs in the corporate and public sector division, which it expects to show up in its third-quarter financial performance.

The international segment, which includes countries such as Lesotho, Swaziland, Kenya and Namibia, was the only division other than Metropolitan to report an increase – 33% to R20m – in new business volumes.

Its health and insurance venture with Aditya Birla in India was incorporated at the end of the reporting period in November. It also launched Ayo Insurance, a joint venture with telecoms provider MTN, during that month.

Value of new business at the corporate and public sector division