| Wed 11 Mar 2009, 8:01 | | MET/MTD - Metropolitan - Metropolitan remains strongly capitalized despite |
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MET
MET
MET/MTD - Metropolitan - Metropolitan remains strongly capitalized despite
unprecedented market turbulence
Metropolitan Holdings Limited
Incorporated in the Republic of South Africa
Registration Number: 2000/031756/06
JSE share code: MET
NSX share code: MTD
ISIN: ZAE000050456
("Metropolitan" or "the company")
Metropolitan remains strongly capitalised despite unprecedented market
turbulence
Metropolitan`s results for the year ended 31 December 2008, the group`s first
set of annual financials under the leadership of Wilhelm van Zyl, were mostly
in line with the expectations of investment analysts covering the life
insurance industry.
Despite tough economic conditions and the turmoil on world equity markets,
Metropolitan posted a solid set of results, with some areas of excellence as
outlined below.
The value of new business written by all the businesses in the group grew
from R336 million in 2007 to R371 million, an increase of 10%, a noteworthy
feat under current conditions. In this regard, the 38% rise in the value of
new insurance business (retail, international and corporate) which grew from
R180 million in 2007 to R248 million, was particularly significant.
Growth in the retail new business annual premium equivalent or APE
(comprising new recurring premium income plus 10% of single premium income)
of 22%, together with a 45% improvement in the profitability of retail new
business (APE margin up from 11.3% to 16.4%), were especially pleasing
achievements in the current extremely tough operating environment and
exceeded the market`s expectations.
"Although consumers were confronted by increasingly difficult conditions
throughout the twelve month period, the persistency of our business overall
proved to be remarkably resilient and we ended the year in a better position
than anticipated in this vitally important area," said Van Zyl.
On the corporate business front, new business inflows followed their normal
volatile pattern, ending the year 33% lower. The margins on risk business
remained under pressure, dampening both operating and new business profits.
Turning to the group`s international cluster, the well-established businesses
in the south of the African continent (Botswana, Lesotho and Namibia)
recorded a strong performance, increasing their new business PVP (present
value of premiums) by 18%, with Lesotho the top achiever amongst them. The
businesses in the west - Ghana and the start-up operation in Nigeria - made
exciting progress.
Although the value of asset management new business, comprising collective
investment inflows and third party mandates, grew by 11% to R39 million,
lower investment market performance in absolute terms was largely responsible
for a 7% drop in operating profit.
Profits at the Metropolitan Health Group (MHG) were 56% higher than in 2007,
increasing to R100 million from R64 million, boosted by the tremendous growth
in membership of the Government Employees Medical Scheme, which is
administered by MHG, as well as enhanced operational efficiencies.
Metropolitan once again stood out in its ability to maintain a positive
cashflow from clients, with net funds received of R8 billion. The group has
succeeded in maintaining a robust cashflow position in marked contrast to
strained industry cashflows in recent years.
At 151 cents (6% higher than 2007`s 142 cents), diluted core headline
earnings per share reflected the strength of the group`s operational
performance. The growth in the `per share` figure has been enhanced
throughout by the reduction in the number of shares in issue due to ongoing
capital management.
The group`s diluted earnings and headline earnings per share, which are
largely determined by investment market conditions, reflected decreases of
112% and 109% respectively, due largely to mark-to-market losses in its
shareholder investment portfolios.
"Despite abnormal volatility on both financial and investment markets,
locally and internationally, which has had a severe negative impact on our
investment returns, we remain in a healthy capital position, with our capital
adequacy requirement at a group level (R2.34 billion) covered 3.1 times,"
points out Van Zyl. "This is largely thanks to our unwavering focus on
balance sheet solvency and capital preservation."
For shareholders, the fact that the total dividend for the year remained flat
at 95 cents is also indicative of Metropolitan`s resilience in the midst of
one of the worst crises on financial markets worldwide. It is confirmation
that the board remains confident about Metropolitan`s medium-term earnings
prospects and capital position while at the same time acknowledging the
ongoing uncertainty that the group is expecting in 2009. Based on core
headline earnings per share, the 2008 dividend is covered 1.6 times and the
dividend yield is 8.8%. The 2008 declaration translates into compound growth
in Metropolitan`s dividend of 14.7% over the past three years.
Wilhelm van Zyl succeeded Peter Doyle as group ceo on 1 April 2008. During
Van Zyl`s first year at the helm, Metropolitan has concentrated on
strengthening its strategic position, remaining focused on creating
prosperity for the people of Africa by providing them with a comprehensive
range of accessible, affordable and appropriate financial products and
services.
Summary of Metropolitan`s results to December 2008
December 2007 December 2008
Diluted core headline earnings R1 003m R1 011m
Diluted core headline earnings per share 142c 151c
Earnings R1 503m (R319m)
Diluted earnings per share 232c (27c)
Return on embedded value (%) 17.8 (2.1%)
Embedded value per share 1 832c 1 709c
Total dividend per ordinary share 95.00c 95.00c
Total premiums received R12bn R12bn
Total assets under management R102.2bn R98bn
Notes
- Core headline earnings are a particularly appropriate measure of the
performance of financial services groups such as Metropolitan in that
they eliminate items of both a once-off and an inherently volatile
nature, such as changes to the valuation basis, investment variances and
capital appreciation/depreciation.
- Diluted core headline earnings have been adjusted for the convertible
redeemable preference shares, the staff share scheme shares and the
treasury shares in issue - all dilutory in nature. The preference shares
were issued to Metropolitan`s strategic empowerment partner, Kagiso
Trust Investments (KTI).
Cape Town
11 March 2009
Sponsor
Merrill Lynch South Africa (Pty) Limited
ISSUED BY SUE SNOW
FINANCIAL MEDIA SPECIALIST
METROPOLITAN HOLDINGS LIMITED
TEL 021 9406119 OR 083 300 9745
DATE 11 MARCH 2009
QUERIES WILHELM VAN ZYL
GROUP CHIEF EXECUTIVE
METROPOLITAN HOLDINGS LIMITED
TEL 021 9406637 OR 082 515 3841
PRESTON SPECKMANN
GROUP FINANCE DIRECTOR
METROPOLITAN HOLDINGS LIMITED
TEL 021 9406634 OR 083 285 6454
Date: 11/03/2009 08:01:02 Produced by the JSE SENS Department.
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