Momentum Metropolitan’s share price on the JSE inched up 4% on Wednesday after the insurance group lifted its annual dividend by 2.5 times over the previous year, despite deputy CEO Jeanette Marais saying the life and health insurance group remained worried about volatility in the South African economy.
The company’s share price on the JSE was 4.2% stronger by 5.15pm, at R17.63. Marais said this reflected investor confidence in the company, adding that the market had not expected the stronger financial performance.
“The market was not expecting this performance coming out of Covid-19 and this pleasing set of results shows us getting back to a pre-pandemic trajectory. This also adds to our share buyback scheme, demonstrating that we are able to give a lot of the cash generated by the business back to shareholders.”
Covid-19 had caused difficulties for many companies but after the pandemic, corporates now had to contend with a difficult economic environment characterised by high inflation, unemployment and increased power outages among other headwinds.
“We remain very worried about the economy and the unfriendly business environment in South Africa,” Marais said in a phone interview yesterday.
However, Marais told Business Report that Momentum was reaping the fruits of a diversified strategy in a difficult economy.
And despite a difficult operating framework, for the full year to the end of June, Momentum said its main South African businesses performed well.
“The strong growth was supported by improved mortality results and positive growth in investment variances. Normalised headline earnings per share grew from 67.1c to 287.2c per share and return on equity increased to 22.7% from 4.9% the previous year,” Momentum reported.
New business volumes for the period increased by 10% to R72.7 billion, driven by strong growth in Momentum Corporate’s recurring premiums “on group risk products and single premium investments” from large corporate clients.
The Metropolitan Life unit also had a stronger period in protection and annuity new business volumes, while Momentum Metropolitan Africa also saw growth from corporate business. Marais said the Botswana unit was healthy, though the Namibian division had a “tough year”.
Group finance director Risto Ketola said of the share buyback scheme: “Given our strong capital position, we have initiated a share buyback programme of R750 million. Subject to the capital and liquidity requirements of the group, and provided ordinary shares can be bought back at an attractive discount to embedded value per share, it is anticipated that the share repurchase programme could be increased once the current R750m programme has been completed.”
After the pandemic, Momentum has begun to see employees “returning to the office in much larger numbers”. It, however, foresees that the hybrid way of work will be the new normal.
Looking ahead, Momentum said it would focus on bumping up Momentum Myriad, an underwriting innovation that relies on digital screening processes using clients’ smart phones.
BUSINESS REPORT