Momentum continues to deliver solid results

Momentum Group posted strong annual financial results to end June 2010 with normalised earnings increasing 10 percent to R1.8 billion, supported by solid growth of 15 percent in the group’s after tax operating profit to R1.5 billion.

Nicolaas Kruger, Momentum CEO says, “The recovery in equity markets and a good operational performance supported by sound expense management, all impacted our performance positively”.

Momentum’s embedded value was calculated as R17.7 billion at 30 June 2010 with the operational performance and improved market conditions both making strong contributions to the embedded value profit of R2.4 billion, which includes the value of new business of R549 million.

Momentum attracted total new client flows of R56.8 billion, with record retail single premium new business, but experienced subdued institutional business flows.

‘The record inflows on retail single premium new business (including unit trusts and local and offshore linked products), which grew by 25 percent to R32.9 billion, show increased confidence by consumers’, says Kruger.

The collaboration with FNB Insurance continues to deliver positive results with new recurring premiums at R487 million.

The benefits of the implementation of integrated administration systems in the employee benefits and healthcare funding businesses also positively impacted the performance.

“Momentum’s African operations generated a turnaround to a break even position in the current year. This was despite ongoing investment in our African footprint which over the period grew to eleven countries with total lives covered increasing by 32 percent,” says Kruger.

Momentum further strengthened its capital position to a ratio of 2.1 times the capital adequacy requirement, and the return on capital amounted to a very satisfactory 22 percent.

“On the back of these solid financial results, and with the planned merger with Metropolitan, Momentum is about to enter a new phase of growth,” says Kruger

The merger remains subject to shareholder approval at general meetings that will take place on 28 September 2010, as well as approval by the competition authorities and other regulatory bodies.