MMI expects lower headline earnings

FINANCIAL services group MMI Holdings expects its core headline earnings per share to be down by 10 percent for the six months to end December.

Its core headline earnings continued to be affected by weak underwriting experience on group disability business, the group said in a trading statement yesterday.

The disability business was expected to be down by R60 million as compared with the same period a year ago.

A decline in earnings in health administration operating earnings was also expected following the loss of two large clients. The amount expected to be lost was R70m.

Decrease “Interim period basic earnings per share are expected to be between 59 cents and 69c compared to 98.7c, a decrease of between 30 and 40 percent to the comparative period. Basic headline earnings per share are expected to be between 59c and 68c,” the group said.

MMI Holdings stated that the difference between the expected decline in core headline earnings and in basic earnings was largely driven by two items.

“Firstly, a significant (R130m) decline in level of fair value gains earned on shareholders’ investment portfolio.

“The decline in fair value gains includes the impact of currency movements on foreign assets over the two relevant time periods,” the group said.

A second factor was a material (R140m) year-on-year change in earnings arising from the technical International Financial Reporting Standards treatment of MMI shares.

MMI’s core businesses are long and short-term insurance, asset management, savings, investment, health care administration and employee benefits.

At the end of June MMI Holdings said it remained in a strong capital position with a capital buffer of R4bn.

The group is expected to release the results on March 2.

MMI Holdings shares dropped 2.22 percent to close at R25.59 on the JSE yesterday.