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Metropolitan-Operational performance for the nine months ended 30 September 2005
Metropolitan Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 2000/031756/06
JSE Code: MET
NSX Code: MTD
ISIN Code: ZAE000050456
("Metropolitan")
Operational performance for the nine months ended 30 September 2005
Comments
All figures are provisional and unaudited.
The basis on which the 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.
Metropolitan Botswana was 76% owned throughout the period.
Metropolitan Namibia was 81% owned throughout the period.
Retail business
9 months to 9 months Change 9 months to Change
to
30-Sept-03 30-Sept-04 30-Sept-05
Rm Rm % Rm %
New business
Recurring 430 566 35 527 (7)
premiums
Single premiums 622 947 52 947 -
APE 492 661 37 622 (6)
Rm Rm % Rm %
Cashflow
Recurring 2 089 2 325 11 2 599 12
premiums
Single premiums 621 946 52 954 1
Payments to 1 851 2 385 29 2 110 (12)
policyholders
Net cashflow 859 886 3 1 443 63
New business added to the in-force book across most distribution channels was
below that of the corresponding period in 2004, primarily because an increased
focus on the quality of new business resulted in proportionately fewer
applications being accepted.
Structural and processing changes within the direct writer channel have impacted
on productivity in the short term, but management remains confident that the
long-term benefits will be significant.
The outlook for the full year is positive because:
Recurring premium income is increasing well in excess of inflation
Outflow levels dropped while claims experience was in line with expectations,
resulting in a substantial improvement in the net cash flow position
KTI"s pro-active involvement in developing new business opportunities
Overall persistency continues to improve on ordinary business, with lapses at
inception remaining below the group target of 15%
Promising initial experience on new third party distribution ventures in our
target markets
Corporate business
9 months 9 months Change 9 months Change
to to to
30-Sept-03 30-Sept-04 30-Sept-05
Rm Rm % Rm %
New business
Recurring 143 347 143 35 (90)
premiums
Single premiums 370 588 59 309 (47)
APE 180 406 126 66 (84)
Rm Rm % Rm %
Cashflow
Recurring 698 958 37 1 087 13
premiums
Single premiums 372 588 58 309 (47)
Payments to 1 466 1 610 10 2 829 76
policyholders
(396) (64) - (1 433) -
2005 does not compare favourably with the exceptional performance of 2004 due
to:
Extremely difficult market conditions
Negative sentiment towards smoothed bonus products
No significant single premium mandates were secured
Faced with an extremely competitive pricing environment, MetEB continued to
avoid loss-making business, especially in the risk arena
On the positive side:
Significant reduction in scheme terminations since June 2004
An increase in single premium business relative to 1H05
Total recurring premium income showed a healthy increase over 2004
A portion of the outflows was re-invested with MetAm under separate investment
mandates
Improved new business experience in 4Q05
Independently, and together with KTI, MetEB continues to explore new business
opportunities
The fundamentals remain sound; growth continues, resulting in the business
making a positive contribution to group profits.
Metropolitan Asset Managers
3Q05 and year-to-date performance ranked in the top quartile of the Alexander
Forbes Large Manager Watch
All funds have exceeded their performance benchmarks to date
Fund 3 months 6 months 12 months
Metropolitan 10/50 12/49 34/46
General Equity
Metropolitan 2/8 1/8 7/8
Resources
Metropolitan 2/7 3/7 6/7
Industrial
Source: Financial Mail, 7 October 2005
The table above illustrates that there has been a dramatic improvement in
investment performance over the shorter term.
International business
9 months 9 months Change
to to
30-Sept- 30-Sept-
04 05
Rm Rm %
New business
Recurring 66 83 26
premiums
Individual 47 60 28
life
Employee 19 23 21
benefits
Single premiums 114 133 17
APE 77 96 25
Rm Rm %
Cashflow
Recurring 483 575 19
premiums
Single premiums 143 160 12
Payments to 332 394 19
policyholders
Net cashflow 294 341 16
Conditions remain challenging in all the markets in which we operate
During 2005 certain credit life business in Botswana was reclassified from
recurring premiums to single premiums. The 2004 comparatives have been adjusted
accordingly
Recurring premium new business growth was boosted by the acquisition of Channel
in Namibia
Pleasing improvement in single premium business for the year to date
Both recurring and single premium income showing a respectable increase over
2004
Net positive cashflow position continues to improve
Integration of Channel Life in Namibia has exceeded all expectations;
international"s new administration system has been fully rolled out on the
individual life side, which augurs well for its implementation in other
international markets
Metropolitan"s Kenyan life license has been approved, new business premises
secured, recruitment for key positions is progressing well and this operation is
scheduled to go live on 1 January 2006
Health business
The main focus during the third quarter was the tendering process for the
Government Employees Medical Scheme (GEMS).
MHG and Qualsa (the managed care subsidiary) together tendered for four of the
seven contracts and was elected the preferred supplier of administrative and
medicine clearing house services for GEMS
The administration contract covers the first 200 000 members of the new scheme
and early indications are that this can be reached within one year.
Metropolitan is particularly proud to have been selected as a preferred partner
on the basis of GEMS stringent criteria relating to service capability, price
and empowerment credentials.
2005 performance remains robust with projected forecasts likely to be met.
Group perspective
Administration expenses
Administration expenses remain a key area of focus. Overall life insurance
administration expenses were well contained and are on target.
Corporate developments
Directors
Sindi Mabaso resigned in October following her appointment as a partner in an
auditing firm.
Capital management
During the third quarter Metropolitan re-initiated its share buy-back programme
as the share was trading at a significant discount to embedded value.
13 075 000 ordinary shares, representing 1.77% of Metropolitan"s total issued
shares, were repurchased by the company during the period 19 September 2005 to
11 October 2005 at prices ranging from 1060 to 1139 cents per ordinary share,
for a total consideration (excluding dealing and other associated costs) of
approximately R145 million. These shares will be cancelled and delisted from the
JSE.
The group continues to actively monitor the capital position throughout its
operations with a view to increasing the return on shareholder investments while
keeping the capital adequacy risk at acceptable levels.
End
Issued By Nico Oosthuizen
Manager: Investor Relations
Metropolitan Holdings Limited
Tel 021 9406111 Or 083 285 7092
Date 10 November 2005
Queries Preston Speckmann
Group Finance Director
Metropolitan Holdings Limited
Tel 021 9406634 Or 083 285 6454
Tyrrel Murray
General Manager: Group Finance & Investor Relations
Metropolitan Holdings Limited
Tel 021 940 5083 Or 082 889 2167
Date: 10/11/2005 12:04:07 PM Produced by the JSE SENS Department
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