| Thu 31 May 2007, 14:00 | | MET/MTD-Metropolitan - Operational performance: th |
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MET
MET
MET/MTD-Metropolitan - Operational performance: three months ended 31 March 2007
METROPOLITAN HOLDINGS LTD
(Incorporated in the Republic of South Africa)
Registration number: 2000/031756/06
ISIN: ZAE000050456
JSE Share Code: MET
NSX Share Code: MTD
("Metropolitan")
Operational performance for the three months ended 31 March 2007
Group overview
* Group annual premium equivalent (APE) increased by a remarkable 64% as a
result of the management interventions introduced to the business over the
past few years.
* Retail new business APE grew by 17% with healthy contributions from both
recurring and single premiums.
* The ongoing all-round successes in the corporate business resulted in a
257% growth in APE.
* The international businesses increased their APE by 21% while making
further progress with their new ventures.
* Metropolitan Health continued to increase the number of members under
administration, once again highlighting the sound underlying business
model.
* Overall net positive cashflow of almost R5bn for the quarter.
* Further refinement of the capital management process remains a focus area.
* Putting clients and their needs first continues to enjoy the highest
priority in all facets of the group`s business.
Retail business
3 months 3 months 3 months 3 months
to to to to
31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07
Rm Rm Rm Rm
New business
Recurring premiums 171 168 153 175
Single premiums 202 266 375 485
APE 191 195 191 224
Cashflow
Recurring premiums 747 829 908 1 011
Single premiums 209 276 374 492
Claims paid 705 650 801 875
Net 251 455 481 628
* As expected, total new business increased significantly over 1Q06. The
factors contributing to this increase were:
* Continued focus on the quality of new business being issued
* Improved new business flows from direct writer, direct marketing and broker
channels
* Increased single premiums from third party distribution channels
* Single premium re-investments trebled over the reporting period
* Higher proficiency levels amongst the sales force in using new business
interventions such as the retail enhancement initiative (REI), which
introduced a more cost-effective and speedier way of capturing and issuing
new business
* Metropolitan Retail remains on track with the implementation of the
statement of intent (SOI) and related communication is being sent to
affected clients.
* The business remains well-positioned for growth because:
* Claims experience is in line with expectations
* Retention rates remain within acceptable limits, with lapses at inception
below the group target of 15%
* Both recurring and single premium income continue their healthy increase,
confirming the growth of the in-force book.
Corporate business
3 months 3 months 3 months 3 months
to to to to
31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07
Rm Rm Rm Rm
New business
Recurring premiums 54 17 34 58
Single premiums 245 79 161 1 209
APE 79 25 50 179
Cashflow
Recurring premiums 317 358 374 442
Single premiums 244 79 161 1 209
Claims paid 420 791 1 090 670
Net 141 (354) (555) 981
* While the market conditions during 1Q07 remained challenging, cognizance
must be taken of the following:
* Unique opportunities continue to exist for solution-driven suppliers
* The group insurance business market responded positively to players with
strong rating expertise and high service ratings
* Certain funds are again recognising the value of investment protection,
given current share price levels
* Record 2006 bonus rates and product enhancements on our smoothed bonus
product range were well received by clients, especially in view of the
continued strong funding position of these products.
Performance
* Total premium income is substantially higher than 2006, driven by recurring
premiums and boosted by single premiums
* Positive recurring new business flows (up 71%), mainly from group risk
insurance business
* Single premiums (up 651%) were underpinned by another large solution-based
contract
* Claims paid reduced significantly (down 38%), driven largely by reduced
investment outflows, resulting in net inflows of almost R1 billion for the
quarter
* Innovative products to meet the needs of risk-averse clients continue to be
developed
* MetEB`s ability to tailor solutions for individual retirement funds is
gaining increased recognition
* Claims experience on all risk schemes remained within pricing parameters
* Independently, and together with KTI, MetEB continues to explore new
business opportunities
* Metropolitan`s leading empowerment credentials, together with the excellent
track record, are being recognised by the market.
Acquisitions
* The take-on of the administration of the Transnet Funds, as well as the
staff and infrastructure of the old Transnet Pension Fund Administrators
(TPFA), was successfully completed. The contract effective date was 1
April 2007, after Competition Commission approval was obtained on 9 March
2007. A new subsidiary by the name of Metropolitan Retirement
Administrators (MRA) was launched at the same time to house Metropolitan`s
scale retirement fund administration business.
International business
3 months 3 months 3 months 3 months to
to to to
31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07
Rm Rm Rm Rm
New business
Recurring premiums 25 23 16 19
Individual life 20 19 15 19
Employee benefits 5 4 1 -
Single premiums (incl 6 67 24 32
EB)
APE 26 30 18 22
Cashflow
Recurring premiums 164 190 184 204
Single premiums 22 74 30 38
Claims paid 104 123 161 203
Net 82 141 53 39
* Conditions remain challenging in all the markets in which we operate
* The new operations that were started in Kenya and Ghana during the previous
year are progressing well but are not included in these new business
figures
* Due to outstanding regulatory approvals, the joint venture between
Metropolitan and United Bank for Africa in Nigeria has not commenced
* A temporary insurance licence has been obtained in Swaziland, and the group
is in the process of applying for a permanent one
* Net cashflow position remained positive, but reduced.
Asset management business
3 months 3 months 3 months to
to to
31-Mar- 31-Mar-06 31-Mar-07
05
Rm Rm Rm
Cashflow
Third party mandates - net (51) (298) 58
Collective investments - net 968 1 297 3 169
* Improved performance over the longer term continues
* Overall net cashflow remained positive
* Most funds exceeded their performance benchmarks in 1Q07
* The industrial fund was the winner in the domestic-equity-industrial
portfolio sector at the prestigious Standard & Poor`s awards in March 2007
* Collective investment`s performance was boosted by a significant once-off
inflow during the period.
Health business
* Main focus is on managing existing clients and the smooth take-on of
members joining the GEMS scheme
* GEMS
* At 31 March membership stood at 110,000 and at 30 April 122,000. A *
constant growth pattern has emerged, with approximately 700 new members
joining per day.
* In total, principal members under administration rose to 555 000, vs 440
000 in 2006
* Contract renewal
* Transmed has commenced a tender process in respect of administration and
managed care services. This action forms part of their standard governance
processes. MHG remains highly competitive in terms of service, price and
black economic empowerment and thus stands an excellent chance of renewing
existing contracts.
* Qualsa continued to increase its managed healthcare business by being
awarded new mandates
* Performance levels across the board are in line with service level
agreements
* Graduate Management Development Programme
* This programme was launched with a first intake of 18 predominantly black
graduates who are being rotated through a series of placements within the
business. In addition, a series of action learning tasks will be assigned
to them.
* Outlook remains positive.
Group perspective
Administration expenses
Administration expenses continue to be a key area of focus. Overall life
insurance administration expenses remain well-controlled.
Capital management
The group`s capital management initiatives are ongoing. The final R360m and
special dividends R535m were paid out on 10 April 2007.
Corporate developments
2007 empowerment rankings
Metropolitan was ranked first amongst the country`s life insurers, 3rd in the
financial services sector and 9th overall out of the top 200 companies listed on
the JSE in the 2007 Top Empowerment Companies Survey, conducted by independent
rating agency Empowerdex in conjunction with the Financial Mail. In the
employment equity dimension, the group was ranked 2nd overall while it achieved
10th position overall in the management transformation category.
Open day at Parc du Cap
An open day for members of the investment community is being planned for 1
August 2007. This one-day conference will give delegates the opportunity to
meet management of the different businesses and find out more about their
challenges and strategies. Invitations with further detail will be distributed
towards the middle of June.
Comments / qualifications
All figures are provisional and unaudited.
The basis on which the new business figures have been calculated is the same as
that used for embedded value purposes. Premium income is included from the date
on which policies come into force as opposed to the date on which they are
accepted. (Figures calculated on the latter basis are normally referred to as
production figures). It should be noted that there can be a delay of up to three
months between these two dates.
* The new business figures are all net of outside shareholders` interests.
End
DATE 31 MAY 2007
QUERIES PETER DOYLE
GROUP CHIEF EXECUTIVE
METROPOLITAN HOLDINGS LIMITED
TEL 021 9405681 OR 082 880 2690
PRESTON SPECKMANN
GROUP FINANCE DIRECTOR
METROPOLITAN HOLDINGS LIMITED
TEL 021 9406634 OR 083 285 6454
TYRREL MURRAY
GENERAL MANAGER FINANCE & INVESTOR RELATIONS
METROPOLITAN HOLDINGS LIMITED
TEL 021 940 5083 OR 082 889 2167
Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 31/05/2007 14:00:00 Produced by the JSE SENS Department.
