Momentum has strong balance sheet for claims
Covid-19 impact evident only in the past two weeks of the quarter to the end of March
MOMENTUM Metropolitan Holdings said yesterday that it had a strong balance sheet to deal with the claims as a result of death due to Covid-19.
Momentum Metropolitan Life had 12 Covid-19-related claims, five death claims and seven income protection claims as of yesterday, the group said.
Chief executive Hillie Meyer said the five deaths represented about 2 percent of the total number of more than 300 deaths countrywide.
“If you look at the projected 40 000 deaths the country would suffer from Covid-19, we expect to account for about 7 percent or 10 percent of those death claims. The group has a strong balance sheet to withstand the impact of the pandemic,” Meyer said.
However, he said the group was more concerned about the economic impact on livelihoods.
“The expected job losses will result in a spike in the unemployment rate and will result in a loss of income for many. We are already in recession, and the economy is under extreme pressure as it is,” Meyer said.
In the nine months to the end of March, Momentum Metropolitan felt the impact of Covid-19 on its operations during the third quarter.
The group said the disruptive impact of Covid-19 was evident only in the past two weeks of the quarter to the end of March.
“In line with global financial markets, the South African markets reacted sharply, with the JSE falling by 22 percent and liquidity coming under severe strain in various funding markets.
“The impact of Covid-19 on operations, however, was muted,” the group said.
After a good start to the ninemonth period, the negative impact of investment markets nullified the good operational performance and moved the group’s normalised headline earnings for the quarter into a loss of R284 million.
The loss in the third quarter resulted in year-to-date normalised headline earnings falling 39 percent to R1.49 billion compared with last year.
Meyer said Momentum Metropolitan had business continuity plans in place for dealing with the crisis before the pandemic broke out, and the activation of these plans led to minimal disruption.
“More than 90 percent of our employees were fully enabled to continue serving our clients from home during level 5 of the lockdown,” Meyer said.
Before the pandemic, Momentum Metropolitan said it showed good operational performance during the third quarter, and it was slightly better than the previous two quarters.
“Excluding the impact of market-related items in March, earnings from operations for the quarter were R947m.
Meyer said the impact of Covid-19 on the economy and the financial services industry would be severe, but it was too early to arrive at any final conclusions given the uncertainty.
“The long-term impact will largely depend on the country’s ability to limit the depth of the economic recession. We do not foresee a rapid economic recovery and we expect this to cause lower new business volumes and weaker persistency over the next 12 to 18 months, perhaps even longer,” Meyer said.
As a result, Momentum Metropolitan was not expecting to achieve its Reset and Grow target for financial year 2021, which is to deliver normalised headline earnings of between R3.6bn and R4bn.