Profits of life assurance companies are notoriously difficult to assess, with some analysts focusing only on the growth in embedded value, others reckoning profit growth is critical and  look at how the operational assets performed . Depending on which measure you prefer, MMI either did fine, average or poorly. Created through the merger of the FirstRand Group’s Momentum with previously independent Metropolitan, shareholders will probably taking a closer look at this morning’s full SENS announcement to assess whether the now R50bn market cap group will be able to take advantage of its greater heft through moves into new markets like India and short-term insurance. – AH
By Renee Bonorchis and Kevin Crowley
(Bloomberg) – MMI Holdings Ltd., South Africa’s third- largest insurer, said fiscal first-half profit dropped 33 percent after the stock market declined. 
Net income fell to 1.35 billion rand ($115 million) in the six months through December, from 1.8 billion rand a year earlier, the Cape Town-based company said in a statement Wednesday. Profits from operating divisions increased 13 percent to 1.5 billion rand.
The FTSE/JSE Africa All-Share Index fell 2 percent during the six months to December, compared with an increase of 17 percent a year earlier. MMI was formed in 2010 by the merger of Metropolitan Group Ltd. and Momentum Group Ltd.
Total earnings “were negatively impacted by the declining local equity market,” MMI said in the statement. “The group will increase focus on efficiencies, having identified specific cost-savings initiatives, while continuing to pursue top-line growth.”
MMI last year bought stock-broking firm Imara SP Reid (Pty) Ltd. for 120 million rand to take on more high-net-worth customers. The insurance group also sold debt in South Africa, entered into a partnership in India and bought a majority stake in Kenya’s Cannon Assurance Ltd.
MMI increased its first-half dividend 11 percent to 0.63 rand a share. – REUTERS
From MMI
MMI Holdings Limited (MMI) today announced its interim results for the six months to 31 December 2014, delivering a solid performance with an annualised return on embedded value of 12% for shareholders.
Overall core headline earnings grew by 10% to R1 852 million, while the profits from operations were up by 13%. The group declared an interim dividend of 63 cents per share, representing an 11% increase when compared to the same period in 2013.
MMI, which surpassed the R50 billion market capitalisation mark earlier this year, achieved this solid operational performance, after allowing for investment into new growth initiatives. Nicolaas Kruger, MMI CEO, said these results are pleasing given the continuing difficult operating environment.
He said the negative return from equity markets during the six-month period, South Africa’s credit outlook, the ongoing energy crisis, labour challenges and the fact that consumers remain under pressure, contributed to the difficult operating environment.
MMI’s value of new business increased by 11% to R420 million, compared to the same period in 2013. New business on a present value of premiums (PVP) basis grew by 15% to R24 billion.
“Although MMI’s mature businesses are delivering solid results, investments into a number of new initiatives impacted overall profit growth during the reporting period. The new initiatives are aligned to our strategic focus areas of growth, client-centricity and excellence, and support MMI’s vision to be the preferred lifetime financial wellness partner for our clients” says Kruger.
Momentum Short-term Insurance, one of the group’s product diversification initiatives, has increased the number of policies on book from 30 000 in December 2013 to more than 50 000 by December 2014.
The Momentum middle-market initiative, a segment diversification initiative, has opened new branches and launched various products into that market. MMI continues to seek out growth opportunities both inside and outside of South Africa, having announced a partnership in India with financial services group Aditya Birla Group in October 2014 and acquired stock broking firm Imara SP Reid in December 2014.
“Since we successfully bedded down the merger, the implementation of our client-centric strategy has become paramount. For growth, MMI will concentrate on geographical diversification, increasing our client base and increasing the value of existing clients. Client-centricity remains at the centre of everything we do and is focused on MMI’s purpose to enhance the lifetime financial wellness of people, their communities and their businesses. Excellence will be achieved through a focus on efficiencies and delivering a consistently excellent client experience,” says Kruger
“I am pleased with the progress we have made with our client-centric strategy and look forward to maintaining our track record and delivering good results for all stakeholders into the future,” concludes Kruger.
