|
Metropolitan - Unaudited Group Results For The Six Months Ended 30 June 2005
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`)
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
ADDING SHAREHOLDER VALUE
- Net funds received from clients of R2.2 billion
- Core headline earnings up 50%
- Core headline earnings per share up 59%
- All four businesses grew core headline earnings in excess of 40%
- 11% increase in recurring premium income
- Annualised return on embedded value of 18% since December 2004
- Dividend per share up 17%
DIRECTORS` STATEMENT
The directors take pleasure in presenting the unaudited interim results of
the Metropolitan Holdings financial services group for the six months ended
30 June 2005.
Basis of presentation of financial information
These results have been prepared in accordance with international accounting
standard 34 (IAS34) - interim financial reporting; guidelines issued by the
Actuarial Society of South Africa; and the disclosure requirements of the
JSE Limited (JSE). International financial reporting standard 1 (IFRS1) -
first time adoption of IFRS - has been applied as these results form part of
the group`s first IFRS financial reporting period, being the year ended 31
December 2005. These results have been prepared in accordance with the
standards issued and effective at the time of preparing these statements.
The accounting policies of the group have been applied consistently to all
the years presented, except for policies relating to the classification and
measurement of financial instruments and insurance contracts. IAS32 -
financial instruments: disclosure and presentation - together with IAS39
(revised) - financial instruments: recognition and measurement - and IFRS4 -
insurance contracts - were only applied from 1 January 2005. The accounting
policies applied to financial instruments and insurance contracts have been
disclosed separately in the accounting policies published on the
Metropolitan website as part of the disclosure on the transition to IFRS.
The 2004 consolidated financial statements of the group were prepared in
accordance with South African generally accepted accounting practice (GAAP),
which differs in some areas from IFRS. The preliminary comparative figures
were therefore restated to reflect the necessary adjustments, except as
described in the accounting policies. Reconciliations and descriptions of
the effect of the transition from GAAP to IFRS on the group`s equity and its
net income and cash flows were published on the Metropolitan website and an
extract published on SENS on 7 September. The transition to IFRS had no
material impact on the group`s equity. The preparation of financial
statements in accordance with IFRS requires the use of certain critical
accounting estimates as well as the exercise of managerial judgement in the
application of the group`s accounting policies. Such judgement, assumptions
and estimates will be disclosed in detail in the annual financial
statements.
Transfer of Lesotho life book
On 25 November 2004 the high court approved the transfer of policies owned
by Lesotho residents from Metropolitan Life Limited to Metropolitan Lesotho
Limited (both wholly-owned subsidiaries), effective 1 January 2004. The
results published at 30 June 2004 did not reflect this transfer and the
segmental analysis for 2004 has therefore been adjusted appropriately.
Integration of ring fenced book
On 9 November 2004 the FSB approved the removal of the 90:10 licence,
effective 1 January 2004. The results published at 30 June 2004 did not
reflect this transaction; the comparatives have therefore been adjusted
accordingly.
REVIEW OF OPERATIONS AND PROSPECTS
Operational performance
Fully diluted core headline earnings per share, the most appropriate measure
of the group`s operational performance, grew by 45% (basic earnings per
share increased by 59% - see table).
All four businesses in the group increased their contribution to core
headline earnings by at least 40%.
Retail, the largest contributor to group profits, increased its operating
profit by 48% while the corporate business grew its profits by 50%.
The health business, having again increased membership under administration,
showed a substantial increase in profits even after the IFRS2 expense
adjustment.
In the international business, Metropolitan Namibia, which now includes
Channel Life Namibia, was the major contributor to the 40% growth in
operating profit.
Investment income on shareholder assets increased by 26% despite the capital
reduction of 100 cents per share (R780m) paid out during January 2005.
Headline earnings and earnings were boosted by the performance of the
investment markets. Excluding the once-off profit relating to the previously
ring-fenced fund in 2004, headline earnings and earnings both increased by
225%.
The unbroken record of positive cashflow from clients continued, with a net
inflow of R2.2 billion being recorded for the period.
Strong investment markets contributed to improved funding levels and a
particularly sound capital position for the group.
Embedded value per share increased 12% (annualised) from 1 225 cents to 1
296 cents.
Total return on embedded value was an impressive 18% (annualised).
Metropolitan supports all initiatives to address the current negative
perceptions of the insurance industry and is actively exploring ways of
improving product and service offerings.
Market consolidation over the past twelve months means that Metropolitan can
look forward to capitalising on its focused market status, in line with its
stated strategy to be a leader in providing insurance and investment
solutions to people in lower income groups.
The highlights of the operational performance of the businesses in the group
were:
Total recurring premium income, the ultimate measure of sustainable success
in an insurance operation, increased by 11% to R2.8 billion.
Corporate recurring premium income was 23% higher.
Retail single premium income was up 13%.
Retail new recurring premium business was marginally below the very high
levels recorded in 2004. The benefits of management action over the past few
years in terms of product pricing, cost reductions, improved retention and
increased volumes can, however, be seen in the improvement of the new
business margin from 9.6% to 11.2% and the growth in the value of new
business from R39m to R44m.
Similar management action in the international arena saw the new business
margin improve from 2.1% to 13.4% and the value of new business grow from
R1m to R9m.
Lapse and surrender rates continued to improve, with lapses at inception
remaining below 15% during the period and the one-year measure dropping
below 40% for the first time.
Retail business has made good progress with its operational enhancement and
distribution restructuring projects, all aimed at increasing the net level
of new business while at the same time decreasing the unit cost per policy.
Fewer new business opportunities for corporate business and the poor
margins on offer caused management to focus on the profitability and client
service management of the significantly expanded book of existing business.
Core profits grew very satisfactorily as a result despite the lower level of
new business written during the period.
Corporate withdrawals increased substantially as market preference moved
away from smoothed bonus business; some of these funds were retained in
other group products.
The international new business premiums performed very well, with Namibia
and Lesotho being the main contributors to the 40% increase in APE.
Tight control over net life insurance administration expenses means that the
group remains confident that it will meet its target of limiting expense
growth to within 7% over 2004.
The group views asset management as an integral part of its operations and
the success of this function as integral to the success of the group as a
whole. A new management team under the leadership of executive director
Abel Sithole has been appointed. Investment processes have been tightened,
resulting in improved absolute and comparative performance in the short
term. Metam has also relaunched its brand and communicated its turnaround
strategy to the market, with the emphasis on discipline being incremental to
ensure performance sustainability.
Corporate activity during the year
Metropolitan Holdings Limited bought back and cancelled 41 million ordinary
shares from its subsidiary Metropolitan Life Limited. The transaction had no
financial implications for the group or shareholders as the shares have
always been eliminated on consolidation.
Metropolitan Health Group issued new shares to Kagiso Trust Investments
(Proprietary) Limited (KTI), resulting in KTI owning 17.6% of the business.
On 18 August 2005 Metropolitan announced the details of the second phase of
its black economic empowerment transaction. A circular has been distributed
to shareholders and a meeting has been scheduled for 5 October in order to
obtain shareholder approval.
Prospects
Metropolitan remains the largest long-term financial services group in
Southern Africa focused on the low and middle income markets. The benefits
of this focus, enhanced by Metropolitan`s commitment to black economic
empowerment as encapsulated in its brand and reflected in these results,
will continue to give the group a competitive advantage.
The outlook in the group`s target markets is extremely positive, boosted by
the increase in disposable income as a result of reduced interest rates,
lower inflation, rising employment rates, an improved GDP outlook and
growing business confidence.
The board is satisfied that the operational improvements achieved in 2004
and continued into 2005 are sustainable, with a strong focus on
productivity, business retention, cost containment, client service levels
and capital management in the rest of 2005.
CORPORATE GOVERNANCE
The board has satisfied itself that appropriate principles of corporate
governance were applied throughout the period under review.
DIRECTORATE CHANGES AND DIRECTORS` SHAREHOLDING
Bulelwa Ndamase, Sindisiwe Mabaso and Fatima Jakoet were appointed to the
board of directors of Metropolitan Holdings Limited as non-executive
directors with effect from 11 March 2005. Ntuthukoyezwe Buthelezi, non-
executive director, resigned with effect from 13 September 2005 due to other
responsibilities. Derek Pead, head of Metropolitan Retail, has been
appointed an executive director on the same date. No further changes have
been made to the directorate. All transactions in listed shares involving
directors were disclosed on SENS as required.
CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The group had no material capital commitments at 30 June 2005. The group is
party to legal proceedings in the normal course of business, and appropriate
provisions are made when losses are expected to materialise.
The management of MHG initially acquired 1.5% of the business, with the
option to increase their stake to 15% over a five-year period subject to the
attainment of certain performance-related hurdles. At 1 January 2005, based
on the achievement of certain of these hurdles, management has earned the
right to acquire another 11.0% of the business from Metropolitan. Once
acquired, these shares may only be sold back to Metropolitan.
POST BALANCE SHEET EVENTS
No material post balance sheet events occurred between the balance sheet
date and the date of approval of the interim results.
DIVIDEND DECLARATION
Ordinary listed shares
The dividend policy for ordinary listed shares, approved by the directors
and consistent with prior years, is to provide shareholders with stable
dividend growth that reflects expected growth in underlying earnings in the
medium term, while allowing the dividend cover to fluctuate.
An interim dividend of 24.00 cents per ordinary share has been declared on
13 September 2005. This final dividend is payable to the holders of
ordinary shares recorded in the register of the company at the close of
business on Friday, 7 October 2005 and will be paid on Monday, 10 October
2005. The last day to trade `cum` dividend will be Friday, 30 September
2005. The shares will trade `ex` dividend from the start of business on
Monday, 3 October 2005. Share certificates may not be dematerialised or
rematerialised between Monday, 3 October and Friday, 7 October 2005, both
days inclusive.
Where applicable, dividends in respect of certificated shareholders will be
transferred electronically to shareholders` bank accounts on payment date.
In the absence of specific mandates, dividend cheques will be posted to
certificated shareholders on or about payment date. Shareholders who have
dematerialised their shares will have their accounts with their CSDP or
broker credited on Monday, 10 October 2005.
Preference share dividend
A dividend of R23 million was declared on 13 September 2005, payable on 30
September 2005. The declaration rate of 9.86% was determined as set out in
the company`s articles.
Signed on behalf of the board
Eric Molobi Group chairman
Peter Doyle Group chief executive
Cape Town
13 September 2005
Directors:
Eric Molobi (non-executive group chairman), Peter Doyle (group chief
executive), Derek Pead (executive director), Abel Sithole (executive
director), Preston Speckmann (executive director), Willie Esterhuyse, Fatima
Jakoet, Peter Lamprecht, Sindisiwe Mabaso, Syd Muller, Bulelwa Ndamase, John
Newbury, JJ Njeke, Andile Sangqu (alternate), Marius Smith, Franklin Sonn,
Johan van Reenen
Secretary: Bongiwe Gobodo-Mbomvu
Registration number: 2000/031756/06
Registered office: 7 Parc du Cap, Mispel Road, Bellville 7535
JSE code: MET
NSX code: MTD
ISIN NO. ZAE000050456
Transfer secretaries Sponsor
Ultra Registrars (Proprietary) Limited Merrill Lynch
(Registration number 2000/007239/07)
5th Floor, 11 Diagonal Street,
Johannesburg, 2001
P O Box 4844, Johannesburg, 2000
Telephone: +27 11 834 2266
E-mail: info@ultrareg.co.za
METROPOLITAN HOLDINGS - GROUP RESULTS
CONSOLIDATED BALANCE 30.06.2005 31.12.2004
SHEET Rm Rm
ASSETS
Property, plant and 445 445
equipment
Investment property 2 092 1 996
Intangible assets 543 406
Investment in 10 8
associates
Financial assets (1) 38 673 37 407
Deferred income tax 5 6
Reinsurance contracts 217
Cash and cash 3 950 4 028
equivalents
Total assets 45 935 44 296
EQUITY
Capital and reserves 5 759 5 541
attributable to equity
holders
Minority interests 127 75
Total equity 5 886 5 616
LIABILITIES
Insurance contract 21 305 35 612
liabilities (2)
Financial liabilities
Investment contracts 6 633
- fair value through
income
Investment contracts 9 552
with discretionary
participation
features (3)
Other financial 301 319
liabilities
Other payables and 1 799 2 390
provisions for
liabilities and
charges
Reinsurance contracts 7
Deferred income tax 163 154
Employee benefit 127 103
obligations
Current income tax 162 102
Total liabilities 40 049 38 680
Total equity and 45 935 44 296
liabilities
Financial instruments include equity and debt securities, and loans and
receivables. Equity and debt securities were classified as available-for-
sale assets in 2004 and were designated as fair value through income on 1
January 2005. No adjustments to the fair value of these designated assets
were required.
The group did not early adopt IFRS4 and therefore has not restated its
comparative information, which is based on SA GAAP. The disclosed
comparative for insurance contract liabilities includes liabilities for
insurance and investment contracts. If IFRS4 had been adopted early, the
value of the liabilities would have been R35 627m at 31 December 2004
(insurance liabilities R19 904m, investment contract liabilities R5 660m and
investment contracts with discretionary participation features liabilities
R10 063m). The total liabilities are R15m greater than those disclosed in
2004 as a result of the implementation of IFRS4 and IAS39. Under IFRS4, the
group continues to account for insurance contracts using SA GAAP.
Investment contracts with discretionary participation features continue to
be accounted for using SA GAAP.
STATEMENT OF ACTUARIAL VALUES OF 30.06.2005 31.12.2004
ASSETS AND LIABILITIES ON REPORTING Rm Rm
BASIS
Total assets per balance sheet 45 935 44 296
Actuarial value of policy (37 497) (35 612)
liabilities per balance sheet
Other liabilities per balance sheet (2 552) (3 068)
Minority interests (127) (75)
Excess - group per reporting basis 5 759 5 541
Net assets - other businesses (41) (174)
Excess - long-term insurance 5 718 5 367
business *
Change in excess of long-term 351 672
insurance business *
Increase in share capital (5) (113)
Exchange differences 8 9
Change in other reserves (16)
Dividend paid 281 475
Release from 90:10 ring-fenced book 661
Total surplus arising 619 1 704
Operating profit 236 332
Investment income on excess 101 164
Basis and other changes 18 249
Investment variances 9 25
First time implementation of IFRS4 (15)
and IAS39 (revised)
Shareholders` share of 90:10 ring- 295
fenced book
Capital appreciation on excess 270 639
Consolidation adjustments (105) (184)
Income tax expense 173 305
Adjustment for other expenses 2 71
Results of long-term insurance 689 1 896
business *
Results of other businesses 97 189
Results of operations 786 2 085
METROPOLITAN HOLDINGS - GROUP RESULTS
STATEMENT OF ACTUARIAL VALUES OF 30.06.2005 31.12.2004
ASSETS AND LIABILITIES ON STATUTORY Rm Rm
BASIS
Excess - group per reporting basis 5 759 5 541
Disallowed assets in terms of FSB (27) (40)
requirements
Net assets - other businesses (41) (174)
Statutory excess - long-term 5 691 5 327
insurance business *
Capital adequacy requirement 1 620 1 563
Capital adequacy multiple 3.5 3.4
Second-tier margins 1 503 1 537
* Long-term insurance business includes both insurance and investment
contract business and is the simple aggregate of all the life insurance
companies in the group.
CONSOLIDATED INCOME STATEMENT 6 mths to 6 mths to 12 mths to
30.06.2005 30.06.2004 31.12.2004
Rm Rm Rm
Net insurance premiums received (4) 3 047 3 465 7 754
Fee income 311 198 368
Investment income 886 960 1 969
Net realised gains on financial 1 006 646 1 263
assets
Net fair value gains on financial 1 272 (992) 3 748
assets (5)
Net income 6 522 4 277 15 102
Net insurance benefits and claims 3 466 2 641 5 685
(4)
Change in insurance contract 894 (134) 5 215
provisions (4)
Change in investment contract 185
provisions
Amortisation and impairment of 70 57 85
intangible assets
Expenses for marketing and 1 121 1 038 2 032
administration
Expenses 5 736 3 602 13 017
Results of operations 786 675 2 085
Share of profit of associates 3 4
Finance costs (9) - (7)
Profit before tax 780 675 2 082
Income tax expenses (225) (64) (381)
Earnings for period 555 611 1 701
Attributable to:
Equity holders of the company 537 601 1 681
Minority interests 18 10 20
555 611 1 701
METROPOLITAN HOLDINGS - GROUP RESULTS
For 2004 total premiums received and claims paid for insurance and
investment contracts are disclosed on the face of the income statement as
comparative information. Similarly, the comparatives for the change in
insurance contract liabilities include both insurance and investment
contracts.
Under SA GAAP, net fair value gains on available-for-sale assets were
recognised in the income statement. The 2004 comparative figures therefore
reflect net fair value gains on available-for-sale assets while the 2005
figures reflect gains on assets at fair value through income. Refer (1)
above.
RECONCILIATION OF HEADLINE 6 mths to 6 mths to 12 mths to
EARNINGS 30.06.2005 30.06.2004 31.12.2004
attributable to equity Rm Rm Rm
holders of the company
Earnings for period 537 601 1 681
Goodwill impaired - 36 36
Headline earnings (6) 537 637 1 717
Capital appreciation on (221) (14) (639)
excess
Basis changes and (28) (136) (274)
investment variances
Shareholders` share of (295) (295)
90:10 fund
Core headline earnings (7) 288 192 509
Headline earnings consist of operating profit, investment income, capital
appreciation, investment variances and basis and other changes.
Realised and fair value changes of investments can be volatile, therefore
core headline earnings have been disclosed that comprise operating profit
and investment income on shareholder assets.
METROPOLITAN HOLDINGS - GROUP RESULTS
EARNINGS PER SHARE (cents) 6 mths to 6 mths to 12 mths to
attributable to equity holders of 30.06.2005 30.06.2004 31.12.2004
the company
Basic
Core headline earnings 49.06 30.87 81.83
Headline earnings 91.48 102.41 276.05
Earnings 91.48 96.62 270.26
Weighted average number of shares 587 622 622
(million)
Diluted (8)
Core headline earnings 41.00 28.36 73.13
Headline earnings 86.20 94.09 247.27
Earnings 86.20 88.77 242.10
Weighted average number of shares 739 677 696
(million) (9)
Diluted earnings, headline earnings and core headline earnings have been
adjusted for the finance charge relating to the liability component of the
convertible redeemable preference shares and the investment return relating
to the treasury shares held on behalf of contract holders. The finance
charge and the investment return for the 6 months to 30.06.2005 were R7
million (30.06.2004: Rnil) and R93 million (30.06.2004: Rnil) respectively.
Weighted average number of shares takes into account all issued shares,
assuming conversion of the convertible redeemable preference shares, the
release of staff share scheme shares and includes the treasury shares held
on behalf of contract holders.
DIVIDENDS 2005 2004
Ordinary listed shares Cents per share
Interim 24.00 20.50
Final 31.50
Convertible redeemable Rm
preference shares
Paid - 31 March @ 9.2% 25
Payable - 30 September @ 23
9.9%
METROPOLITAN HOLDINGS - GROUP RESULTS
ANALYSIS OF CORE HEADLINE 6 mths to 6 mths to 12 mths to
EARNINGS 30.06.2005 30.06.2004 31.12.2004
Rm Rm Rm
Corporate business (10) 66 44 105
Operating profit 93 62 150
Tax (27) (18) (45)
Retail business (10) 148 100 259
Operating profit 205 144 370
Tax (57) (44) (111)
International business 28 20 52
(10)
Operating profit 32 24 56
Tax (4) (4) (4)
Metropolitan Health Group 19 1 7
Operating profit 32 10 28
Tax (13) (9) (21)
Shareholders` equity 27 27 86
Holding company expenses (28) (23) (46)
Investment income on 116 92 214
shareholder assets
Income tax on investment (61) (42) (82)
income
Core headline earnings 288 192 509
Comparative information was adjusted for the transfer of the Lesotho life
book and the integration of the 90:10 ring-fenced book.
METROPOLITAN HOLDINGS - GROUP RESULTS
CONSOLIDATED STATEMENT OF 6 mths to 6 mths to 12 mths to
CHANGES IN EQUITY 30.06.2005 30.06.2004 31.12.2004
Rm Rm Rm
Changes in share capital
Balance at beginning 1 144 1 781 1 781
Preference shares issued 356
Preference shares issue (6)
costs
Capital reduction (684)
Treasury shares held on (156)
behalf of contract holders
Staff scheme shares 16 (7) (8)
reversed
Shares acquired and (1) (294) (295)
cancelled
Balance at end 1 003 1 480 1 144
Changes in other reserves
Balance at beginning 425 45 45
Revaluation of owner- 8 - -
occupied properties
Revaluation of owner- - 60
occupied properties -
transfer from retained
earnings
Shadow accounting of owner- 4 - -
occupied properties
Foreign currency (5) (6) (8)
translation differences
Employee share schemes - 5 16 33
value of services provided
Distribution from 90:10 - 295 295
fund
Balance at end (11) 437 350 425
Changes in retained income
Balance at beginning 3 972 2 936 2 936
Earnings for period 537 601 1 681
Dividends paid (190) (169) (290)
Transfer to other reserves - (295) (355)
Balance at end 4 319 3 073 3 972
Capital and reserves 5 759 4 903 5 541
attributable to equity
holders
Changes in minority
interest
Balance at beginning 75 72 72
Earnings for period 18 10 20
Change in minority interest 37 (2) (14)
Dividend paid (1) (1) (1)
Foreign currency (2) (2) (2)
translation differences
Balance at end 127 77 75
Total equity 5 886 4 980 5 616
METROPOLITAN HOLDINGS - GROUP RESULTS
Other reserves consists of the following:
Land and buildings revaluation reserve: R72m (30.06.2004: Rnil; 31.12.2004:
R60m)
Translation reserve: (R10m) (30.06.2004: (R3m); 31.12.2004: (R5m))
Fair value reserve: R80m (30.06.2004: R58m; 31.12.2004: R75m)
Non-distributable reserve: R295m (30.06.2004: R295m; 31.12.2004: R295m)
CONSOLIDATED CASH FLOW STATEMENT 6 mths to 6 mths to
30.06.2005 30.06.2004
Rm Rm
Net cash inflow from operating activities 872 (274)
(12)
Net cash outflow from investing (49) (25)
activities
Net cash inflow from financing activities (901) (294)
Net cash flow (78) (593)
Cash and cash equivalents at beginning 4 028 3 903
Cash and cash equivalents at end 3 950 3 310
The group classifies the cash flows for the purchase and disposal of
financial assets in its operating cash flows, as the purchases are funded
from the cash flows associated with the origination of insurance and
investment contracts, net of the cash flows for payments of insurance
benefits and claims and investment contract benefits. The comparative
figures have been adjusted accordingly.
METROPOLITAN HOLDINGS - GROUP RESULTS
SEGMENTAL REPORT 6 mths to 6 mths to
30.06.2005 30.06.2004
Rm Rm
Segmental revenue
Retail - South Africa 3 401 2 270
Corporate - South Africa 1 897 1 329
Employee benefits 1 826 1 275
Asset management and 71 54
administration
Shareholders` return - South 367 173
Africa (13)
Health 260 180
South Africa 260 162
Namibia - 18
International (14) 648 483
Holding company and consolidation (51) (158)
adjustments
Net income per income statement 6 522 4 277
Segmental results
Retail - South Africa 268 124
Corporate - South Africa 93 99
Employee benefits 69 85
Asset management and 24 14
administration
Shareholders` return - South 378 466
Africa (13)
Health 39 17
South Africa 39 10
Namibia - 7
International (14) 80 46
Holding company and consolidation (72) (77)
adjustments
Results from operations per income 786 675
statement
Shareholders` return in South Africa is not split between retail and
corporate.
International includes investment return.
METROPOLITAN HOLDINGS - GROUP RESULTS
EMBEDDED VALUE 30.06.2005 31.12.2004
Rm Rm
Statutory excess - long-term 5 691 5 327
insurance business
Adjustments for: 175 101
Asset management 159 140
Health administration (15) 268 213
Holding company expenses (252) (252)
Adjustment to statutory excess 706 710
Net assets - other businesses 41 174
Staff share scheme shares 365 460
Liability component of convertible 169 184
redeemable preference shares
Treasury shares held on behalf of 242
contract holders
Goodwill (111) (108)
Adjusted net asset value 6 572 6 138
Net value of in-force business 3 003 2 915
Individual life 2 387 2 288
Gross value of in-force business 2 542 2 444
Less: Cost of capital (155) (156)
Employee benefits 616 627
Gross value of in-force business 701 714
Less: Cost of capital (85) (87)
Fully diluted embedded value 9 575 9 053
Fully diluted embedded value per 1 296 1 225
share (cents) (16)
Fully diluted adjusted net asset 889 831
value per share (cents) (16)
Diluted number of shares in issue 739 739
(million)
The value of the health business is net of R95 million, being the total
value of the option held by MHG management (2004: R85 million).
2004 figures are disclosed after the capital reduction of 100 cents per
share.
METROPOLITAN HOLDINGS - GROUP RESULTS
EMBEDDED VALUE ATTRIBUTABLE Net asset Value of 30.06.2005 31.12.2004
TO GROUP value in-force
Rm Rm Rm Rm
Metropolitan Life Ltd 4 882 2 517 7 399 7 081
Metropolitan Odyssey Ltd 225 163 388 352
Metropolitan International 97 - 97 95
Ltd
Metropolitan Namibia 244 164 408 354
Metropolitan Life of 76 48 124 115
Botswana Ltd
Metropolitan Lesotho Ltd 173 111 284 261
Metropolitan Health Group 204 268 472 325
Methealth Namibia - - - 19
Administrators (Pty) Ltd
Asset management 68 159 227 202
Metropolitan Holdings (after 539 (252) 287 357
consolidation adjustments)
Goodwill (111) (111) (108)
Total embedded value 6 397 3 178 9 575 9 053
Adjustments to group excess (706)
Statutory excess - long-term 5 691
insurance business
VALUE OF LONG-TERM INSURANCE 6 mths to 6 mths to 12 mths to
NEW BUSINESS 30.06.2005 30.06.2004 31.12.2004
Rm Rm Rm
Retail business 44 39 135
Gross value of new 47 41 140
business
Less: Cost of capital (3) (2) (5)
Corporate business (11) 23 54
Gross value of new (10) 32 67
business
Less: Cost of capital (1) (9) (13)
International business * 9 1 16
Gross value of new 13 1 20
business
Less: Cost of capital (4) (0) (4)
Total value of long-term 42 63 205
insurance new business
* Net of outside shareholders
METROPOLITAN HOLDINGS - GROUP RESULTS
NEW BUSINESS PREMIUMS 6 mths to 6 mths to 12 mths to
30.06.2005 30.06.2004 31.12.2004
Rm Rm Rm
Recurring premiums
Retail business 338 351 762
Corporate business 28 170 448
International business * 57 44 101
Individual life 40 42 78
Employee benefits 17 2 23
423 565 1 311
Single premiums
Retail business 604 535 1 258
Corporate business 147 403 1 059
International business * 101 39 210
852 977 2 527
Annual premium equivalent 508 663 1 564
(APE)
* Net of outside shareholders
PROFITABILITY OF NEW 6 mths to 6 mths to 12 mths to
BUSINESS 30.06.2005 30.06.2004 31.12.2004
% % %
Retail business 11.2 9.6 15.2
Corporate business (25.6) 10.9 9.7
International business 13.4 2.1 13.1
SOURCE OF NEW BUSINESS 30.06.2005 31.12.2004
APE % Total % APE % Total %
General intermediary channel 13 9 15 9
Direct writers 35 29 36 30
Group schemes 7 4 8 5
Direct mail and 14 8 11 6
telemarketing
Odyssey broker channel 20 39 19 39
International 11 11 11 11
VALUE OF NEW BUSINESS - 6 mths to 6 mths to 12 mths to
OTHER BUSINESSES 30.06.2005 30.06.2004 31.12.2004
Rm Rm Rm
Health administration 20 18 173
Asset management 10 10 11
PRINCIPAL ASSUMPTIONS 30.06.2005 31.12.2004
% %
Pre-tax investment return
Equities 10.3 10.3
Properties 10.3 10.3
Government stock 8.3 8.3
Cash 6.3 6.3
Risk discount rate 10.8 10.8
Investment return (before 9.7 9.7
tax) - smoothed bonus
Expense inflation rate 5.0 5.0
OUTSIDE SHAREHOLDERS` INTEREST 30.06.2005 31.12.2004
% %
Metropolitan Namibia 19.1 19.1
Metropolitan Botswana 24.2 24.2
Metropolitan Health Group 18.8 1.5
METROPOLITAN HOLDINGS - GROUP RESULTS
LONG-TERM INSURANCE In-force New business written
BUSINESS: business
SENSITIVITIES -
30.06.2005
Net Gross Cost Net Gross Cost of
value value of value value CAR
CAR
Rm Rm Rm Rm Rm Rm
Base value 3 003 3 243 (240) 42 50 (8)
1% increase in risk 2 701 3 059 (358) 30 42 (12)
discount rate
% change (10) (6) (49) (29) (16) (47)
1% reduction in 3 353 3 454 (101) 56 59 (3)
risk discount rate
% change 12 6 58 33 18 58
10% increase in 2 784 3 024 (240) 32 40 (8)
future expenses
% change (7) (7) - (24) (20) -
1% increase in 2 932 3 172 (240) 39 47 (8)
expense and salary
inflation
% change (2) (2) - (7) (6) -
10% increase in 2 929 3 169 (240) 27 35 (8)
policy
discontinuance
% change (2) (2) - (36) (31) -
10% increase in 2 519 2 759 (240) 20 28 (8)
mortality and
morbidity
% change (note 1) (16) (15) - (52) (45) -
1% reduction in 2 492 2 881 (389) 29 42 (13)
gross investment
return
% change (note 2) (17) (11) (62) (31) (16) (57)
10% fall in market 2 771 3 011 (240) 42 50 (8)
value of assets
% change (8) (7) - - - -
10% reduction in 2 955 3 195 (240) 38 46 (8)
premium indexation
take-up rate
% change (2) (1) - (10) (8) -
10% reduction in 3 003 3 243 (240) 23 30 (7)
new business
volumes
% change - - - (45) (39) 10
10% increase in non- 3 003 3 243 (240) 26 34 (8)
commission related
acquisition
expenses
% change - - - (38) (32) -
Notes:
Mortality decreases by 10% for annuities; mortality and morbidity increase
by 10% for assurance.
Bonus rates are decreased commensurate with the drop in returns.
METROPOLITAN HOLDINGS - GROUP RESULTS
The change in the value of cost of CAR is assumed to be nil where the
sensitivity test causes an insignificant change in the value.
ANALYSIS OF CHANGES IN Other Long-term 6 mths to 12 mths
GROUP EMBEDDED VALUE businesses insurance 30.06.2005 to
Rm business Total 31.12.20
Rm Rm 04
Total
Rm
Profit from new 31 43 74 401
business
Point of sale 30 42 72 389
Expected return 1 1 2 12
to end of year
Profit from existing 40 229 269 814
business
Expected return 22 158 180 300
Operating 4 31 35 96
experience
variance
Operating 14
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
