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MMI HOLDINGS LIMITED - MMI Posts Solid Results

Release Date: 12/09/2012 07:06
Code(s): MMI     PDF:  
Wrap Text
MMI Posts Solid Results

MMI Holdings Limited Group
Incorporated in South Africa
(Registration number 2000/031756/06)
"MMI Holdings" or "the Company"
JSE share code (primary listing): MMI
NSX share code: MIM
ISIN: ZAE0001149902


Media release

MMI Holdings year-end results
12 September 2012



MMI posts solid results


MMI Holdings Limited (MMI) today posted solid year-end results to June 2012, with core headline 
earnings increasing by 12% to R2.96 billion. The group declared a 10% increase in its final ordinary
dividend to 69 cents per share and a special dividend of 65 cents per share. The special dividend
amounted to R1 billion. Total dividends for the year (including the special dividend) increased by
41% to R2.8 billion.

Nicolaas Kruger, CEO of MMI, said he is very pleased with the overall performance of the group
given the global economic conditions, uncertain markets, and economic indicators that show
consumers remain under pressure.

`From an MMI group perspective, these solid results were achieved during an integration period,
where we have made significant progress to bed down the merger of Metropolitan and Momentum.
We are almost two years into the merger process and have already achieved tangible and
sustainable synergies,' says Kruger.

The group reported recurring cost savings of R201 million per annum over the past year as a direct
result of the merger integration process. `This means that we are on track in meeting the target of
recurring cost savings of R500 million per annum that will ultimately make us a more cost effective
and competitive player' says Kruger.

MMI's capital buffer of R3.7 billion at 30 June 2011, is being put to use through strategic
transactions, including the acquisition of the remaining 50% of Momentum Short-term Insurance
and the purchase of a controlling stake in Eris Properties.

`We have also made good progress in consolidating our African businesses. We recently concluded
the buyout of FNB Namibia's stake in our Namibian operations for R350 million, which creates the
perfect platform for us to grow our presence in Namibia even further,' says Kruger. The group also
announced that it has set aside capital of R500 million to take advantage of further expansion
opportunities in Africa.

`After allowing for these strategic investments and the payment of the final and special dividends,
the group's healthy capital buffer of R3.3 billion at 30 June 2012 positions the group strongly, ahead
of the changes to a new risk based capital regime, Solvency Assessment and Management,' says
Kruger.

Commenting on the solid performance of the group, Kruger says, `Our embedded value has
increased to R32.5 billion. Our return on embedded value, which gives an overall picture of how we
are growing value as a business, was 11.3%.'
These results were supported by strong performance of the operating businesses. Momentum
Employee Benefits delivered stellar results and posted a 33% increase in operating profit to R249
million and more than doubled the value of new business to R130 million on the back of strong new
business and good expense control.

Metropolitan International, which houses the group's African operations, is on a strong growth
trajectory, with the value of new business growing by 36% to R34 million and operating profit
increasing by a significant 78% to R57 million.

Metropolitan Health increased total lives under administration by 6% to 3.2 million, cementing its
position as a significant healthcare administrator in South Africa. Operating profit of Metropolitan
Health increased by 17% to R133 million.

Metropolitan Retail and Momentum Retail remain the biggest contributors to MMI's earnings.
Metropolitan Retail increased its operating profit by 11% to R438 million. Metropolitan Retail's value
of new business increased marginally to R262 million, supported by a 12% increase in new recurring
premiums. Momentum Retail increased its operating profit by 40% to R1 064 million, supported by
improved experience profits as well as a release of discretionary margins as a result of the gradual
shift to more capital efficient products. A change in business mix contributed to a 28% reduction in
the value of new business of Momentum Retail to R207 million.

Unfavourable markets contributed to the decrease of 5% in operating profit for Momentum
Investments, to R125 million. The division was strengthened by the introduction of a contrarian
business to enhance Momentum Asset Management's ability to offer a differentiated solution to a
diverse client base.

MMI increased its total new business annual premium equivalent (the sum of new annual recurring
premiums and 10% of single premiums) by 3% to R6 billion and maintained its value of new business
at R633 million at an overall margin of 1.4%. `We managed to maintain volumes and margins despite
the difficult operating environment; this demonstrates the benefits of our diversified business
portfolio,' says Kruger.

`Looking to the future, further diversification into new products, segments, geographies and
channels will remain a key component of our growth strategy. In South Africa, for example, we aim
to increase our penetration of the South African middle market. We also aim to focus on cross-
selling within the group to provide our clients with holistic financial solutions that meet their
financial services needs,' concluded Kruger.


Ends


On behalf of:    MMI Holdings

Contact:         Lerato Mametse
Telephone:       084 406 8272

Email:           lerato.mametse@mmiholdings.co.za


Sponsor: Merrill Lynch South Africa (Pty) Ltd


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