Sharenet Sites 
Sharenet Sites
Trading update for the three months ended 30 September 2012
MMI HOLDINGS LIMITED
Incorporated in the Republic of South Africa)
Registration number: 2000/031756/06
ISIN Code: ZAE000149902
JSE Share Code: MMI
NSX Share Code: MIM
("MMI" or "the company")
Trading update for the three months ended 30 September 2012
Group overview and operational highlights
• The current economic environment in which the group operates
remained difficult.
• Total new business APE increased by 13% compared with the same
quarter in the prior year, reflecting the strength of the
diverse distribution channels and the comprehensive product
offerings in the group.
• Increased competitive forces and the mix of new business
continue to dampen the overall new business margins.
• Investment markets, while still volatile, remained strong for
the quarter under review.
• Good progress has been made with the Solvency Assessment and
Management project (SAM).
• The group has strengthened the internal resources and is
building new system capabilities in the short-term insurance
operation.
• Expense management and merger efficiencies remain one of the top
priorities over the short-to-medium term.
• The integration is on schedule and merger-related expense-
savings are being realised.
Momentum Retail *
3 months to 3 months to Change
30-Sept-11 30-Sept-12 vs 2011
Rm Rm %
New business
Recurring premiums 257 247 (4)
Single premiums 2 305 2 667 16
Annual premium equivalent
(APE) 488 514 5
Present value of premiums
(PVP) 3 681 4 054 10
* Momentum Retail includes Odyssey but excludes new markets and FNB Life.
* Covered business includes on-balance sheet business only, as disclosed at year
end.
• The operating environment in the upper-income market remained
very competitive.
• New business volumes (APE) for the quarter were 5% better than
those recorded in the prior year.
• The mix of new business continues to favour single premium
investments with lower inherent margins; therefore the overall
new business margin remains below the medium-term target.
• Client service remained at very satisfactory levels.
• Business efficiency initiatives have progressed; however, the
benefits will only emerge fully in later reporting periods.
Metropolitan Retail #
3 months to 3 months to Change
30-Sept-11 30-Sept-12 vs 2011
Rm Rm %
New business
Recurring premiums 285 255 (11)
Single premiums 401 299 (25)
Annual premium equivalent (APE) 325 285 (12)
Present value of premiums (PVP) 1 445 1 350 (7)
# Metropolitan Retail includes new markets and FNB Life, but excludes Odyssey.
• Recurring premium new business was below that of the comparative
period, dampened by lower production in the traditional agency
channels.
• Metropolitan Retail also re-priced certain unprofitable
products, implemented stricter quality controls over group
scheme activities and introduced new anti-fraud measures – all
of which had a dampening impact on the volume of new business
written during the quarter.
• Increased sales were recorded in the expanding call centre
business.
• Time committed to the regulatory exams for financial advisers
had a further negative impact on production.
• Stronger new business sales have been recorded since the cut-off
for this quarter.
• Recurring premium figures for 2011 have been restated for errors
picked up and corrected during the 2012 financial year.
• The reduction in single premium income was the result of certain
distribution channels being discontinued; good growth has
continued in the remaining channels.
• Early duration persistency across most lines of business, while
marginally lower than the prior period, remained within the
pricing assumptions.
• The process and systems renewal projects are proceeding as
planned.
• Expenses were well managed during the period under review.
Momentum Employee Benefits
3 months 3 months
Change
to to
30-Sept-11 30-Sept-12 vs 2011
Rm Rm %
New business
Recurring premiums 116 112 (3)
Single premiums 403 1 919 >100
Annual premium equivalent
(APE) 156 304 95
Present value of premiums
(PVP) 1 255 2 771 >100
• Group risk profits for the first quarter were satisfactory and
in line with expectations
• Excellent single premium production was recorded during the
quarter boosted by a large pensioner outsourcing annuity
contract.
• Securing new business in the group insurance and investment
markets remains highly competitive; however, the overall new
business pipeline is encouraging.
• Client retention remains at satisfactory levels.
• The migration of the risk and umbrella business to a single
platform remains on track.
• Expense efficiency initiatives are continually being
investigated and implemented.
Metropolitan International §
3 months 3 months
Change
to to
30-Sept-11 30-Sept-12 vs 2011
Rm Rm %
New business
Recurring premiums 64 71 11
Single premiums (incl EB) 53 35 (34)
Annual premium equivalent
(APE) 69 74 7
Present value of premiums
(PVP) 331 399 21
Health membership (‘000) 126 381 >100
§ New business includes MMI’s share of life insurance new business written by
all Metropolitan International subsidiaries.
• Strong new business volumes were recorded in Namibia and Lesotho
during the period under review.
• Slower single premium production was experienced in Botswana.
• New life insurance operations are being established in Zambia
and Tanzania as part of the strategy to make more products
available throughout the operating footprint.
• The medical claims ratio has improved as a result of appropriate
re-pricing and improved claims controls.
• The increase in the health membership arose largely as a result
of the acquisition of a majority interest in Metropolitan Health
Namibia.
Momentum Investments
• Net flows for the business are positive overall.
• Positive contributors to net flows include the Momentum Manager
of Managers business, as well as the Momentum Collective
Investments business. Net flows into the asset management
business were positive.
• On the back of positive inflows, increased market levels,
performance fees and controlled costs, the Momentum Investment
division’s cost-to-income ratios improved for the quarter.
• The Momentum unconstrained strategies team has settled into the
business and is actively marketing its capability.
• Building competitive investment management capabilities for the
MMI group as well as third parties remain core to the growth
strategy.
• Relative to peers, institutional and retail equity performance
in the asset manager business is performing well and although
the local and global balanced funds did not perform to
expectation their performance has improved for the quarter.
• Good progress is being made with the integration of Momentum
Properties into ERIS.
Metropolitan Health
• Members under administration increased by 6% to 1.2 million
principal members (3.1 million lives) over the year to September
2012.
• Strong growth was recorded in the Government Employees Medical
Scheme.
• The Momentum Health open scheme continues to provide an
attractive offering to clients, increasing membership over the
period while strengthening the reserves in the scheme.
• The business is confident that key administration and managed
care contracts will be successfully renewed.
• Good progress has been made with the strategic repositioning of
the health risk management business.
• Business efficiency initiatives remain on track.
• The business continues to position itself for national health
insurance (NHI).
Consolidation of MMI Holdings Limited’s largest long-term
insurance subsidiaries
Holders of the listed, unsecured, subordinated, callable notes
(“the callable notes”) issued by Momentum Group Limited (MGL01)
and Metropolitan Life Limited (MET01) are notified that these two
subsidiaries of MMI Holdings Limited are in the process of
consolidating the business of Metropolitan Life Limited (including
the MET01 callable notes) with the business of Momentum Group
Limited (to be renamed MMI Group Limited). The consolidation will
be done in terms of Section 38 of the Long-term Insurance Act of
1998. The two note-issuers envisage that the intended
consolidation will be heard by the High Court in May or June 2013.
If the consolidation of the two note-issuers is approved by the
High Court, the obligations under the MET01 callable note will be
transferred to Momentum Group Limited (to be renamed MMI Group
Limited). No action is therefore required from the holders of the
two callable notes.
Opportunities and challenges
• MMI is a well diversified life insurance group with scale in all
the established operations.
• Merger synergies will continue to emerge as projects are
completed.
• Growth in new business volumes will, however, remain dependent
on the economic environment, including a recovery in employment
and stronger disposable income levels in a highly competitive
sector.
Comments / qualifications
• All figures are provisional and unaudited.
• All figures are for the period 1 July to 30 September as
presented in the current internal management accounts.
• All figures for 2011 have been presented on the same basis as
those for 2012, taking into account the current operational
structure.
• The basis on which the new business 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.
• The new business figures are all net of outside shareholder
interests.
End
Date
26 November 2012
Queries
NICOLAAS KRUGER
GROUP CHIEF EXECUTIVE
MMI Holdings
TEL 012 673 7438
PRESTON SPECKMANN
GROUP FINANCE DIRECTOR
MMI Holdings
TEL 012 673 7446
Sponsor
Merrill Lynch South Africa Proprietary Limited
Date: 26/11/2012 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
