MMI trading update – nine months to 31 March 2013

MMI Holdings CEO, Nicolaas Kruger.

Integration reaching final stages and increased focus on growth initiatives.

MMI Holdings released its results for the nine months to 31 March 2013 in a trading update issued today. The group reported an 11% increase in new business PVP (present value of premiums) for the quarter as compared to the same period in 2012.

The main drivers of this growth are Momentum Employee Benefits (new business PVP up 18%) and Metropolitan International (up 45%). ‘Our employee benefits business has had an excellent performance and the international business (including our operation in Namibia) is delivering very good growth,’ says MMI Holdings CEO, Nicolaas Kruger.

The integration process of the group is progressing well. This is supported by the successful completion of the amalgamation of the two main long-term insurance licences of Metropolitan and Momentum into MMI Group Limited, as well as the transfer of the Metropolitan Odyssey book to Momentum Retail.

‘These are significant milestones in our merger journey. The amalgamation of the two long-term insurance licences will help to simplify our group structure and can enhance the efficiencies that we originally envisaged when we merged,’ says Kruger.

The migration of the Odyssey business (Metropolitan Retail’s business aimed at the higher income market) involved transferring 180 000 policies onto the Momentum Retail administration platform. ‘The migration will reduce costs and help to entrench our market segmentation strategy where Momentum Retail focuses on the middle to upper income segment and Metropolitan Retail on the entry to middle income market,’ says Kruger.

‘With the integration progressing well, the group remains well positioned to take advantage of cross-selling opportunities that exist. For example, a number of medical schemes in Metropolitan Health, which is the largest healthcare administration business in South Africa, have begun rolling out the Momentum Multiply rewards programme. The rewards programme will offer these Metropolitan Health clients discounts on products and services such as gym membership, fitness assessments, travel and leisure and online shopping,’ says Kruger.

Growth opportunities continue to receive increasing focus. MMI sees potential for growth in the South African middle market, where it believes there is room to increase its market share. MMI previously announced that it had set aside R500 million for opportunities in Africa. ‘We have finalised the acquisition of a small life insurance company in Mauritius and we are in the process of developing two new life insurance operations in Zambia and Tanzania,’ says Kruger.

‘The current economic environment is a challenging one with declining job numbers and pressure on the disposable income of consumers. However, the need for investment and protection products remains very important across all the markets MMI services. We believe that MMI’s focused strategy and increased focus on client-centricity will ensure sustained progress and growth for our clients and for our business into the future,’ concludes Kruger.