Momentum Metropolitan looks at share buybacks

Momentum Metropolitan – one of South Africa’s big four insurance and financial services groups – is eyeing a further share buyback of R500 million, following buybacks to the tune of R1.75 billion over the last 18 months.

Publishing its latest half-year results yesterday, the group confirmed that its board has approved the further buyback considering its “strong capital and liquidity position”.

Momentum reported a 48% jump in normalised headline earnings per share (Heps), to 168 cents for the six-month ended 31 December last year.

The group noted that on a restated basis, it “delivered normalised headline earnings of

R2 424 million” for the period, up 42% on the prior interim period.

It said the latest results is its first under the new accounting standard for insurance contracts, IFRS (International Financial Reporting Standard) 17.

“Normalised Heps continued to benefit from the share repurchases and increased by 48% from 113.7 cents to 168 cents,” Momentum conceded in its Sens results statement.

It declared an interim dividend of 60 cents per ordinary share, adding that the interim dividend represents a payout ratio of 36% of normalised headline earnings.

“In line with the approach followed since we instituted a share buyback programme, the interim dividend is towards the lower end of the dividend payout range. The group’s dividend policy to declare dividends within a payout range of 33% to 50% of normalised headline earnings, remains unchanged,” Momentum said.

Share buyback programme

Momentum’s planned additional R500 million share buyback will take its total share buybacks to R2.25 billion.

“The group has completed R1.75 billion in share buyback programmes through three tranches over the past 18 months, with the first R750 million tranche being completed on 26 October 2022, the second R500 million tranche on 31 May 2023 and the third R500 million tranche on 26 November 2023,” it highlighted in its Sens.

“For the third tranche, the group bought back 24 million shares [1.69% of the shares in issue as at 30 June 2023], at an average price of R20.70 per share.

“In line with our capital management framework, and in consideration of the strong capital and liquidity position, the board has approved a further R500 million for the buyback programme of the group’s ordinary shares,” Momentum added.

Financial performance

For its latest financial results, the group said: “Most business units performed in line with expectations, delivering robust operating earnings. Many of the business unit results were further bolstered by a strong improvement in investment income on the back of higher interest rates.

“Earnings were further positively impacted by a favourable change in the shape of the yield curve in Momentum Retail and Momentum Metropolitan Africa, improved persistency experience in Metropolitan Life, continued record life annuity sales volumes in Momentum Investments and strong underwriting experience in Momentum Corporate.”

Momentum reported that the group’s half-year operating profit improved by 69%, to just over R2 billion, “supported by increased investment income from the assets in the portfolios backing policyholder liabilities and the benefit of a favourable change in the shape of the yield curve in Momentum Retail”.

However, it noted that investment return from the group’s shareholder assets declined by 22% to R399 million.

Momentum posted strong sales, with the group’s present value of new business premium increasing by 18% to R39.1 billion. But it pointed out that the group’s value of new business declined by 38% to R200 million.