Momentum Group's third-quarter performance showcases resilience in challenging times

IOL News

2 days ago

Momentum Group's earnings run rate in the third quarter was in line with the first two quarters, excluding the substantial positive market-related variances of the first six months
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Momentum Group's positive financial trajectory at the half-year stage continued into the third quarter, the insurance, investment, and healthcare financial services group said in an operating update on Monday.
'The group delivered solid operational performance despite escalating geopolitical tensions and subdued economic growth, with normalised headline earnings (NHE) of R4.8 billion for the nine months ended 31 March 2025,' its directors said.
Recurring premiums increased by 5% in the quarter to R3.1bn. Single premiums fell by 7% to R43.66bn. New business present value premiums fell by 4% to R58.04bn. Total expenses were up by 5%. The number of health members under administration increased by 4%.
'The earnings run rate in the third quarter was in line with the first two quarters, excluding the substantial positive market-related variances of the first six months (of approximately R500 million),' the directors said.
They said the results were underpinned by 'disciplined execution across the business units and a continued focus on profitable growth.'
The decline in the third-quarter new business present value premiums experience was in line with the trend in the first two quarters.
The value of new business (VNB) continued to grow in the third quarter, albeit slower than in the first half. VNB was supported by a shift in new business mix toward more profitable lines and improved performance from Metropolitan Life.
Credit spreads on annuity portfolios contributed positively to earnings. Stronger equity market performance supported higher fee income from investment contracts.
Direct expenses increased marginally above inflation, largely due to the long-term incentive plan awards on the back of the group's strong share price gains.
Other contributing factors on expenses included increased spending to meet compliance requirements from regulatory changes, and IT investment to implement the two-pot retirement system reforms.
Benefits from a group-wide performance optimisation project were expected to become more pronounced in the 2026 financial year. To date, R116 million in savings was expected to be realised over the next year.
In Momentum Metropolitan Life, the main life insurance entity in the group, the solvency cover ratio (SCR) decreased from 2.15 times at December 31, 2024, to 2.02 times at March 31, with the decrease reflecting strong operational earnings, offset by dividend payments to the group and an increase in the SCR.
Momentum Retail's earnings benefited from a solid performance from the protection business and higher investment income on required capital. Favourable market variances contributed positively to earnings. Although still positive, mortality and morbidity experience variances were lower than in the prior period. Momentum Retail's new business premium value improved by 2%.
Metropolitan Life's earnings were primarily driven by the improvement in new business profitability, notably on the protection business, following product commerciality and distribution optimisation initiatives. Earnings continued to benefit from positive persistency experience variance.
Momentum Corporate's new business premium values fell by 29% to R8.2bn, mainly due to lower FundsAtWork single and recurring premium new business and the impact of sizable single premium large flows in the prior period.
'We are pleased with the performance the Momentum Group achieved over the period. We remain focused on delivering on the Impact strategy, with continued progress on strategic initiatives gaining momentum,' directors said.
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