Momentum scales back on offices
• CEO Hillie Meyer says that a lot of the large insurance group’s staff can work from home
Momentum Metropolitan, one of the country’s biggest insurers, will scale back on office space, dealing a blow to property companies after the pandemic emptied workplaces and convinced executives that some work can be done remotely. “A lot of us can work from home,” CEO Hillie Meyer said after the company issued its annual earnings report.
Insurer Momentum Metropolitan will scale back on office space, dealing a blow to property companies after the pandemic emptied workplaces and convinced executives that some work can be done remotely.
“A lot of us can work from home,” CEO Hillie Meyer said in an interview with Business Day after the company issued its annual earnings report. “We anticipate we will probably require only two-thirds to 60% of the office space that we have even if we have the same number of people working for us.”
Meyer’s comments come at an awkward time for property companies, hammered on the JSE after scrapping dividends as lockdown-hit tenants struggle to pay rent.
Momentum joins other businesses choosing not to renew leases amid a vaccination programme hampered by millions of people who are hesitant to be inoculated.
The Centurion-headquartered company’s rival, Discovery, last week made vaccination compulsory for all its staff, sparking debate that other companies may follow in its footsteps.
But Meyer said that Momentum would not introduce mandatory staff vaccination.
“I think Discovery explained their rationale, [but] we come from a different place. We are quite tolerant of individuals’ circumstances and I think in line with that we won’t make vaccination compulsory,” he said.
Meyer was speaking after Momentum issued an earnings report, which showed a more than one-third drop in profit as the company topped up Covid19 provisions to cover potential death and other related claims.
Momentum Metropolitan, SA’s fourth-largest insurer, on Wednesday reported a 34% drop in normalised annual earnings.
The group’s SA life insurance businesses paid R10.7bn in mortality claims in the year to end-June, compared with an average of R5.6bn a year over a three-year period before the pandemic.
Last week, mortality claims statistics from the insurance industry showed that more than 1-million policyholders died between April 2020 and March 2021, an increase of 43% year on year.
The figures from the Association for Savings and Investment SA (Asisa) suggest that Covidrelated deaths are much higher than the national death toll, which stood at 83,899 on Monday. “The financial year ... was a year of extremes. Given Momentum Metropolitan’s strong presence in life insurance, the abnormally high number of deaths experienced during this year, and the need for additional provisions against adverse mortality experience for an extended period had a significant negative impact on our results,” Meyer said in a statement
“Despite the adverse impact of Covid-19, many of our businesses continued to perform very well.
“A highlight was the excellent new business performance in our investments and life insurance retail businesses, where both Momentum Investments and Metropolitan Life experienced record years.
Normalised headline earnings declined to R1bn, consisting of a 93% decline in operating profit, which was partly offset by an 80% increase in investment returns.
Momentum Life and Momentum Corporate reported operating losses, as they were hit hardest by the pandemic.
The group ’ s total mortality loss for the year under review was R2.83bn.
However, Momentum Investments, Momentum Metropolitan Health and NonLife Insurance showed strong operating profit growth during the year. Metropolitan Life and Momentum Metropolitan Africa both produced operating profit.
A final dividend of 15c per share was declared, bringing the total to 40c, which was steady compared with the year-ago period.