| Thu 26 May 2011, 11:19 | | MMI - MMI Holdings Limited - Trading update for the nine months ended 31 March |
|
MMI
MMI
MMI - MMI Holdings Limited - Trading update for the nine months ended 31 March
2011
MMI HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 2000/031756/06
ISIN Code: ZAE000149902
JSE Share Code: MMI
NSX Share Code: MIM
("MMI" or "the company")
Trading update for the nine months ended 31 March 2011
Merger update
* The merged group has the following operating divisions:
* Momentum Retail
* Metropolitan Retail
* Momentum Employee Benefits
* Metropolitan International
* Momentum Investments
* Metropolitan Health
* All management reporting is currently prepared on a segmental basis using
the abovementioned divisions.
* The operating structures in each division have been finalised, the
executive teams have been appointed and certain systems integration
projects are already in progress.
* The branding strategy was finalised and published during April 2011.
* The strategic plans for each division have been presented to the MMI
Holdings board, and are in the process of being implemented.
Group overview and operational highlights
* New business continued to grow, reflecting the comprehensive product
offering and strong distribution capabilities across the group.
* Investment markets, while still volatile, remained relatively strong for
the last quarter of the period under review.
* Expense management remains a top priority.
Momentum Retail
9 months to 9 months to Change
31-March-10 31-March-11 vs 2010
Rm Rm %
New business
Recurring premiums 870 939 8
Single premiums 14 945 17 392 16
Annual premium equivalent (APE) 2 365 2 678 13
Present value of premiums (PVP) 19 675 22 008 12
* Includes Odyssey but excludes new markets and FNB Life.
* New business volumes (APE) rose by 13%, with good growth in discretionary
savings products and retirement annuities.
* New business sourced through the agency force increased in line with
Momentum`s objective to grow this channel.
* Early terminations (surrenders and lapses) continued to reduce, resulting
in a further improvement in persistency.
* The overall new business margin remains under pressure as a result of the
product mix continuing to favour lower margin investment and savings
products.
Metropolitan Retail
9 months to 9 months to Change
31-March-10 31-March-11 vs 2010
Rm Rm %
New business
Recurring premiums 557 680 22
Single premiums 673 1 441 114
Annual premium equivalent (APE) 624 823 32
Present value of premiums (PVP) 2 785 4 247 52
*Includes new markets and 10% of FNB Life, excludes Odyssey.
* New business APE ended 32% higher, driven by good production in the
traditional agency channels and strong single premium production.
* Persistency across all lines of business continued to hold up very well.
* Extensive preparatory work is being done to address the potential negative
impact of the upcoming regulatory exams amongst advisers in the entry level
market.
* Claims paid during the period under review were in line with expectations.
Momentum Employee Benefits
9 months to 9 months to Change
31-March-10 31-March-11 vs 2010
Rm Rm %
New business
Recurring premiums 360 546 52
Single premiums 2 273 2 062 (9)
Annual premium equivalent (APE) 587 752 28
Present value of premiums (PVP) 4 627 5 839 26
* The division continues to focus on forging strategic distribution
partnerships, product innovation, improved operational efficiencies and
satisfactory service levels.
* Strong new business growth was achieved in risk and investment business.
* Securing new business in the group insurance, investment and administration
markets remains highly competitive, resulting in pressure on new business
margins.
* New umbrella fund products have been successfully rolled out and were well
received by the market.
* Metropolitan Retirement Administrators secured 41 000 new members under
administration.
Metropolitan International
9 months to 9 months to Change
31-March-10 31-March-11 vs 2010
Rm Rm %
New business
Recurring premiums 110 112 2
Single premiums (incl EB) 68 103 51
Annual premium equivalent (APE) 117 122 5
Present value of premiums (PVP) 492 619 26
* New business includes MMI`s share of life insurance new business written by
all international life insurance subsidiaries.
* Namibia and Lesotho recorded good new business growth. New business volumes
across the African insurance businesses showed a modest increase.
* Overall, the risk experience in the life businesses remained favourable.
* Although still in the developmental phase, the health business has shown
steady growth in lives under administration of about 6% year to date.
Momentum Investments
* Good progress has been made in developing the various business plans, and
key management appointments have been announced.
* Equity performance continues to be a focus area while fixed interest has
maintained its good longer-term performance track record.
* The business experienced further outflows of third-party business during
the period.
* While the long-term outlook for the investment management businesses in
general remains positive, earnings will be dependent on the level of assets
under management.
* Building competitive investment management capabilities, especially third
party asset management, continue to form the core of Momentum Investments`
growth strategy.
Metropolitan Health
* The number of members under administration continued to grow, assisted by
the highly successful Government Employees Medical Scheme (GEMS).
* At 31 March 2011 GEMS had in excess of 550 000 principal members, with
membership continuing to increase at around 500 members per day.
* The total principal members under administration stood at 1.13 million
(2.85 million lives) as at 31 March 2011.
* All schemes under administration are in a sound financial position.
* A business unit has been established to focus exclusively on the open
scheme market, with a primary focus to grow the Momentum Health open
scheme.
* Performance levels across the board are in line with or exceed contracted
service level agreements.
Opportunities and challenges
* Merger synergies are expected to start flowing through during the second
half of the 2011 calendar year.
* Growth in new business volumes remains dependent on the economic
environment, including a continued recovery in employment and further
increases in disposable income levels.
* Africa, although a complex market, is still largely untapped and provides a
number of opportunities for the group throughout its footprint in 12
countries outside of South Africa.
* All business units face opportunities and threats posed by ongoing changes
in the highly regulated environments in which they operate, including the
regulatory exams, the national health insurance and national social
security reform proposals.
Comments / qualifications
* All figures are provisional and unaudited.
* All figures are for the period 1 July 2010 to 31 March 2011 as presented in
the current internal management accounts, and not from the effective date
of the merger (1 December 2010).
* All figures for 2010 have been presented on the same basis as those for
2011, taking into account the current operational structure.
* 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 shareholder interests.
End
Date
26 May 2011
Sponsor:
Merrill Lynch SA (Pty) Limited
Queries:
NICOLAAS KRUGER PRESTON SPECKMANN TYRREL MURRAY
GROUP CHIEF GROUP FINANCE GROUP FINANCE & INVESTOR
EXECUTIVE DIRECTOR RELATIONS
MMI Holdings MMI Holdings MMI Holdings
TEL 012 673 7438 TEL 012 673 7446 TEL 021 940 5083 OR 082 889
2167
Date: 26/05/2011 11:19:04 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
