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MMI Holdings Unaudited Group Results for the six months ended 31 December 2012
MMI Holdings Limited
Incorporated in the Republic of South Africa
Registration Number: 2000/031756/06
JSE share code: MMI
NSX share code: MIM
ISIN: ZAE000149902
("MMI" or "the company")
MMI HOLDINGS UNAUDITED GROUP RESULTS
for the six months ended 31 December 2012
FOCUSED HIGHLIGHTS
VALUE OF NEW BUSINESS up 18% to R340 million
EXPENSE BASE reduced by R256 million
CORE HEADLINE EARNINGS up 16% to 94 cents per share
Interim DIVIDEND up 16% to 51 cents per share
CAPITAL BUFFER of R3.8 billion
Annualised RETURN on EMBEDDED VALUE of 20%
OVERVIEW OF OPERATIONS AND PROSPECTS
NATURE OF ACTIVITIES
MMI Holdings is a South African-based financial services group that provides a wide range of products and
services to clients locally and in selected African countries. The core activities of MMI are long- and
short-term insurance (upper, middle and lower income groups), investments, employee benefits, healthcare
administration and health risk management.
OPERATING ENVIRONMENT
Equity markets rose strongly during the reporting period while long bond interest rates closed slightly
lower. Overall consumer confidence remained fragile, labour unrest increased and employment levels
continued to be under pressure. Despite some positive economic signals, local operating conditions
remained challenging.
GROUP RESULTS
- The embedded value of R33.5 billion (2 086 cents per share), after allowing for the R2.1 billion final
and special dividend paid to shareholders, generated an impressive annualised return on embedded value
for shareholders of 20%.
- Diluted core headline earnings increased by 16% to R1 501 million for the period. The contribution from
operating divisions increased 39% to R1 106 million.
- A positive net cash flow from policyholders was recorded for the period.
- The transactions to acquire 55% of Eris Properties and the remaining 50% in Momentum Short-Term Insurance
(MSTI) became unconditional during the period.
- The full results of Momentum Namibia and MSTI were included for the first time, while MMI's share of Eris
Properties' results was included from the effective date of acquisition.
MERGER BENEFITS
- The legal amalgamation of the Metropolitan and Momentum long-term insurance licences into MMI Group is
progressing, subject to regulatory approvals.
- The Metropolitan and Momentum client-facing brands remain unchanged.
- Group and divisional strategies have been entrenched and collaboration initiatives between divisions
implemented.
- The targeted merger savings of R500 million are on track, with a reduction of R256 million recorded to
date.
- Overall, the benefits envisaged as part of the merger rationale are being realised.
CAPITAL STRENGTH
- MMI actively manages its capital resources within a defined risk appetite and balances the interests of
all stakeholders.
- The group remains actively involved and committed to the Regulator's Solvency Assessment and Management
(SAM) project.
- A capital buffer of R3.8 billion was recorded at 31 December 2012, after allowing for strategic growth
initiatives and the interim dividend. The impact of SAM on the capital buffer will continually be
assessed.
- The group is comfortable that its present level of capital is appropriate in the current environment;
this position is evaluated on an ongoing basis.
OVERVIEW OF OPERATIONS
MOMENTUM RETAIL
- New business, on an annual premium equivalent (APE) basis and excluding non-covered business, increased
by 10% to exceed R1 billion for the half-year.
- The new business margin, on a present value of premiums (PVP) basis, while boosted by a 10% increase in
volume and controlled expense management, only increased marginally to 1.1% as a result of the mix of
business favouring lower-margin single premium products.
- Good risk experience was recorded during the period.
- As a result, operating profit for the period increased by 38% to R522 million.
METROPOLITAN RETAIL
- Recurring premium new business maintained the high levels recorded in the prior year.
- Single premium income from continuing business increased by 20%.
- The value of new business increased marginally to R153 million, at a PVP margin of 5.3%, on the back of
strong production and good new business expense management.
- The 2011 results included new business and profits from a poor-performing group scheme that was
subsequently terminated.
- At R242 million, operating profit for the period was 19% higher.
MOMENTUM EMPLOYEE BENEFITS
- Total new business of R566 million, on an APE basis, was recorded for the half-year.
- A couple of large single premium new business policies were secured during the period. Recurring premium
new business is traditionally slow in the first half of the year.
- Increased single premium annuity business was a large contributor to the higher value of new business.
- Client retention interventions resulted in better persistency across all product lines while improved
risk profit performance, with a recovery in disability experience, contributed to positive operating
experience variances.
- The division's expense-to-income ratio has improved through merger-related efficiencies.
- Operating profit for the period increased by 65% to R163 million.
METROPOLITAN INTERNATIONAL
- New business increased by 32% to R170 million on an APE basis, with improved contributions from all
operations.
- The value of new business followed the same trend, increasing from R13 million to R28 million.
- Lives under administration in the health business decreased by 3% to 381 000, while claims ratios
improved as a result of successful re-pricing.
- Good progress has been made strategically and operationally and the business is well positioned to
continue growing in the twelve countries outside South Africa.
- Operating profit of R39 million was recorded for the half-year, compared to a R3 million loss in the
prior period.
MOMENTUM INVESTMENTS
- Equity performance showed satisfactory improvement during the period. Further work is required on
the performance of institutional balanced mandates.
- The retail offerings are gaining traction in the market.
- The unconstrained strategies team was launched.
- A transaction to acquire control of the Eris Property Group was concluded.
- Operating profit for the period increased by 19% to R74 million.
METROPOLITAN HEALTH
- Good growth was recorded in both the Momentum Health open scheme and the Government Employees
Medical Scheme.
- Revenue growth was restricted by the loss of a few smaller corporate schemes.
- Merger-related efficiencies contributed to improved operational efficiencies.
- The business continued positioning itself for health reforms.
- Operating profit increased 14% to R66 million.
PROSPECTS
- The strategic focus of the MMI group has shifted from integration to growth initiatives.
- Each division has implemented plans and processes to identify and optimise structures, operations,
target markets,distribution channels and product offerings.
- Growth in new business volumes will, however, remain dependent on the economic environment, including
a recovery in employment and stronger disposable income levels.
- Ongoing uncertainties from local labour and the Eurozone could have a negative impact on business
confidence in the markets where we operate.
- The board of MMI Holdings believes that the group has appropriate strategies to unlock value and
generate a satisfactory return on capital for shareholders over time.
DIRECTORS' STATEMENT
The directors take pleasure in presenting the unaudited abridged interim results of MMI Holdings financial
services group for the period ended 31 December 2012. The preparation of the group's results was supervised
by the group finance director, Preston Speckmann, BCompt (Hons), CA(SA).
Corporate events and amalgamations
The transactions to acquire 55% of Eris Properties and the remaining 50% in Momentum Short-Term Insurance
(MSTI) became unconditional during the current period.
As a preparatory step for the proposed legal amalgamation of the life insurance licences of Metropolitan
Life Limited and Momentum Group Limited, Momentum Group Limited has changed its name to MMI Group Limited.
Basis of presentation of financial information
These results have been prepared in accordance with International Accounting Standard 34 (IAS 34) Interim
financial reporting; the South African Companies Act of 2008; and the Listings Requirements of the JSE
Limited (JSE).
The accounting policies of the group are in terms of International Financial Reporting Standards (IFRS) and
have been applied consistently to all the periods presented. The preparation of financial statements is in
accordance with and contains the information required by IFRS and the AC 500 standards, as issued by the
Accounting Practices Board or its successor, which requires the use of certain critical accounting estimates
as well as the exercise of managerial judgement in the application of the group's accounting policies. Such
critical judgments and accounting estimates are disclosed in detail in the group's integrated report for the
year ended 30 June 2012, including changes in estimates that are an integral part of the insurance business.
The group is exposed to financial and insurance risks, details of which are also provided in the group's
integrated report.
Segmental information
The group operates through the following divisions: Momentum Retail, Metropolitan Retail, Momentum Employee
Benefits, Metropolitan International, Momentum Investments, Metropolitan Health and shareholder capital (which
includes the balance sheet management business unit).
Reclassifications
The December 2011 and June 2012 results have been restated for the following reclassifications:
- Investments in collective investment schemes where the group holds between 20% and 50% of the issued
units were previously disclosed as investments in associates. These investments have always been
designated at fair value through income using the scope exemption in IAS 28 and disclosed as part of the
investment in associates. Totalling R8 376 million as at 31 December 2011, these investments have been
reallocated to financial instruments investments in associates designated at fair value through income as
this better reflects the nature thereof. The investment in associates' balance has therefore been restated
from R8 663 million to R287 million.
- Carry positions of R1 304 million as at 31 December 2011, previously included in financial liabilities
designated at fair value through income, have been set off against the assets designated at fair value through
income as a result of further alignments and judgements related to financial instruments within the MMI group.
The financial liabilities designated at fair value through income have therefore been restated from R13 085
million to R11 781 million and financial assets designated at fair value through income from R230 315 million
to R229 011 million, respectively.
- The liquidity of certain items on the statement of financial position was also re-assessed, which resulted in
reinsurance contracts and insurance and other receivables being moved on the statement of financial
position.
- Further alignments within financial assets, regarding classification, have been made in the current period and
as a result certain 31 December 2011 and 30 June 2012 balances have been restated. These alignments did
not result in a change to the statement of financial position but only to certain detailed financial asset
related tables.
- The comparative segmental information for December 2011 and June 2012 has been restated, where
appropriate, to ensure alignment with the way in which the chief operating decision-maker, being the MMI
executive committee, monitors and evaluates the performance of the various segments of the business.
These restatements had no impact on the current or prior reported earnings, diluted earnings or headline
earnings per share, nor on the net asset value or the statement of cash flows.
Standards and interpretations of published standards effective for the period ended 31 December 2012 and
relevant to the group
- The following amendment to a standard became effective for the first time in the current period and had no
impact on the group's earnings: IAS 1 (amendment) Presentation of financial statements: presentation of
items of other comprehensive income.
- The following amendment to a standard is effective for annual periods beginning on or after 1 January 2012,
but was early adopted by the group for the June 2011 financial period: IAS 12 (amendment) Income taxes:
deferred tax recovery of underlying assets.
Corporate governance
The board has satisfied itself that appropriate principles of corporate governance were applied throughout the
period under review.
Directorate changes and directors' shareholding
John Newbury retired as a non-executive director on 26 November 2012 and we thank him for his invaluable
input and support of the group over many years. On the same date, Ms N Motsei was appointed executive
director to the board. All transactions in listed shares of the company involving directors were disclosed on
SENS as required.
Capital commitments and contingent liabilities
The group had no material capital commitments at 31 December 2012. The group is party to legal proceedings
in the normal course of business, and appropriate provisions are made when losses are expected to materialise.
Events after the reporting period
No material events occurred between the reporting date and the date of approval of the interim results.
Dividend declaration for the interim period
Ordinary shares
The dividend policy for ordinary listed shares, approved by the directors, is to provide shareholders with
stable dividend growth, increasing to reflect the board's long-term view on the expected underlying basic core
headline earnings growth. Exceptions will be made from time to time, in order to account for, inter alia,
volatile investment markets, capital requirements and changes in legislation.
On 5 March 2013 a gross interim dividend of 51 cents per ordinary share was declared, payable out of income
reserves to all holders of ordinary shares recorded in the register of the company at the close of business on
Thursday, 28 March 2013 and will be paid on Tuesday, 2 April 2013. The dividend will be subject to local
dividends withholding tax at a rate of 15% unless the shareholder is exempt from paying dividend tax or is
entitled to a reduced rate. The STC credits utilised per share amount to 0.35597 cents per ordinary share. This
will result in a net dividend, for those shareholders who are not exempt from paying dividend tax, of 43.40340
cents per ordinary share.
MMI's income tax number is 975 2050 147 and the number of ordinary shares in issue at the declaration date was
1 569 803 700. The last day to trade cum dividend will be Wednesday, 20 March 2013. The shares will trade ex
dividend from the start of business on Friday, 22 March 2013. Share certificates may not be dematerialised or
rematerialised between Friday, 22 March and Thursday, 28 March 2013, both days inclusive.
Where applicable, dividends in respect of certificated shareholders will be transferred electronically to
shareholders' bank accounts on payment date. In the absence of specific mandates, dividend cheques will be
posted to certificated shareholders on or about payment date. Shareholders who hold dematerialised shares will
have their accounts with their CSDP or broker credited on the payment date.
Preference share dividend
Dividends of R22.6 million (132 cents per share p.a.) were declared on the unlisted A3 MMI preference shares.
The declaration rate was determined as set out in the company's articles and the total preference dividend
utilised STC credits of R157 949.
Signed on behalf of the board
JJ Njeke Chairman
Nicolaas Kruger Group chief executive officer
Centurion
6 March 2013
DIRECTORS: MJN Njeke (chairman), JP Burger (deputy chairman), NAS Kruger (group chief executive officer),
FW van Zyl (deputy group chief executive officer), PE Speckmann (group finance director), N Motsei (executive),
L Crouse, RB Gouws, F Jakoet, Prof JD Krige, PJ Moleketi, SA Muller, V Nkonyeni, SE Nxasana, KC Shubane,
FJC Truter, BJ van der Ross, JC van Reenen, M Vilakazi
SECRETARY: FD Jooste
www.mmiholdings.com
TRANSFER SECRETARIES: Link Market Services SA (Pty) Ltd (registration number 2000/007239/07)
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein 2001. PO Box 4844, Johannesburg 2000
Telephone: +27 11 713 0800 E-mail: info@linkmarketservices.co.za
SPONSOR: Merrill Lynch South Africa (Pty) Ltd
REGISTERED OFFICE: 268 West Avenue, Centurion
JSE CODE: MMI NSX CODE: MIM ISIN NO. ZAE0001149902
IFRS FINANCIAL INFORMATION
Restated
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
ASSETS
Intangible assets 12 097 11 935 11 998
Owner-occupied properties 1 504 1 446 1 464
Property and equipment 316 321 321
Investment properties 5 766 6 140 5 415
Investment in associates 68 287 127
Employee benefit assets 308 387 302
Financial instrument assets (1) 288 235 246 993 260 883
Reinsurance contracts 1 565 1 337 1 439
Deferred income tax 110 106 107
Properties under development 90 - -
Insurance and other receivables 3 091 2 427 2 657
Current income tax assets 68 309 69
Cash and cash equivalents 21 333 16 527 16 957
Non-current assets held for sale 716 53 865
Total assets 335 267 288 268 302 604
EQUITY
Equity attributable to owners of the parent 23 066 22 311 23 517
Preference shares 500 500 500
23 566 22 811 24 017
Non-controlling interests 416 250 281
Total equity 23 982 23 061 24 298
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 95 787 84 710 88 116
Financial instrument liabilities
Investment contracts 172 422 149 723 156 929
with discretionary participation features 25 445 24 257 23 696
designated at fair value through income 146 977 125 466 133 233
Other financial instrument liabilities (2) 20 926 14 844 18 140
Deferred income tax 4 279 4 049 3 934
Employee benefit obligations 1 136 736 1 206
Other payables 16 324 10 977 9 517
Provisions 164 104 153
Current income tax liabilities 247 64 311
Total liabilities 311 285 265 207 278 306
Total equity and liabilities 335 267 288 268 302 604
1. Financial instrument assets consist of the following:
Securities designated at fair value through income: R264 723 million (31.12.2011: R229 011 million;
30.06.2012: R236 129 million)
Investments in associates designated at fair value through income: R13 137 million (31.12.2011:
R8 376 million; 30.06.2012: R14 333 million)
Derivative financial instruments: R4 461 million (31.12.2011: R2 865 million; 30.06.2012: R3 579 million)
Held-to-maturity assets: R75 million (31.12.2011: R51 million; 30.06.2012: R60 million)
Available-for-sale assets: R1 345 million (31.12.2011: R3 472 million; 30.06.2012: R2 902 million)
Loans and receivables: R4 494 million (31.12.2011: R3 218 million; 30.06.2012: R3 880 million)
2. Other financial instrument liabilities consist of the following:
Liabilities designated at fair value through income: R17 121 million (31.12.2011: R11 781 million;
30.06.2012: R15 246 million)
Derivative financial instruments: R2 837 million (31.12.2011: R1 776 million; 30.06.2012: R2 040 million)
Liabilities at amortised cost: R968 million (31.12.2011: R1 287 million; 30.06.2012: R854 million)
CONDENSED CONSOLIDATED INCOME STATEMENT 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Net insurance premiums received 12 585 9 625 18 694
Fee income (1) 2 689 2 612 5 248
Investment income 6 543 6 925 13 100
Net realised and fair value gains 21 013 4 720 13 989
Net income 42 830 23 882 51 031
Net insurance benefits and claims 10 647 9 345 18 976
Change in liabilities 9 257 1 606 3 354
Change in insurance contract liabilities 7 637 1 779 4 277
Change in investment contracts with DPF liabilities 1 748 (23) (694)
Change in reinsurance provision (128) (150) (229)
Fair value adjustments on investment contract liabilities 12 328 5 258 12 092
Fair value adjustments on collective investment scheme liabilities 967 63 619
Depreciation, amortisation and impairment expenses 566 489 1 008
Employee benefit expenses 2 447 1 948 3 874
Sales remuneration 1 581 1 508 2 850
Other expenses 1 947 1 834 3 711
Expenses 39 740 22 051 46 484
Results of operations 3 090 1 831 4 547
Share of profit/(loss) of associates 9 22 (7)
Finance costs (2) (631) (584) (899)
Profit before tax 2 468 1 269 3 641
Income tax expenses (972) (454) (1 304)
Earnings 1 496 815 2 337
Attributable to:
Owners of the parent 1 468 805 2 301
Non-controlling interests 13 (5) 5
MMI Group Ltd preference shares 15 15 31
1 496 815 2 337
Basic earnings per ordinary share (cents) 94 54 154
Diluted earnings per ordinary share (cents) 94 53 151
1. Fee income consists of the following:
Investment contracts: R662 million (31.12.2011: R699 million; 30.06.2012: R1 455 million)
Trust and fiduciary services: R913 million (31.12.2011: R882 million; 30.06.2012: R1 546 million)
Health administration services: R901 million (31.12.2011: R878 million; 30.06.2012: R1 799 million)
Other fee income: R213 million (31.12.2011: R153 million; 30.06.2012: R448 million)
2. Finance costs consist of the following:
Preference shares issued by MMI Holdings Ltd: R23 million (31.12.2011: R46 million; 30.06.2012: R92 million)
Subordinated redeemable debt: R56 million (31.12.2011: R57 million; 30.06.2012: R114 million)
Cost of carry and derivative financial instruments: R477 million (31.12.2011: R465 million; 30.06.2012:
R624 million)
Other: R75 million (31.12.2011: R16 million; 30.06.2012: R69 million)
Basic earnings Diluted earnings
RECONCILIATION OF HEADLINE EARNINGS
attributable to owners of the parent 6 mths to 6 mths to 12 mths to 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm Rm Rm Rm
Earnings 1 468 805 2 301 1 468 805 2 301
Finance costs convertible
preference shares 23 46 92
Diluted earnings 1 491 851 2 393
Realised gains on available-for-sale
financial assets - (12) - - (12) -
Intangible asset impairments 1 19 67 1 19 67
Profit on step-up of associate (54) - (207) (54) - (207)
Profit on sale of business - - (3) - - (3)
Headline earnings (1) 1 415 812 2 158 1 438 858 2 250
Net realised and fair value gains on
excess (232) (93) (250) (232) (93) (250)
Basis and other changes and investment
variances (10) 153 292 (10) 153 292
Amortisation of intangible assets
relating to business combinations 302 257 516 302 257 516
Secondary Tax on Companies (STC) - 88 144 - 88 144
BEE cost (2) - 25 3 - 25 3
Dilutory effect of subsidiaries (3) (12) (3) (14)
Investment income on treasury shares
contract holders 15 9 14
Core headline earnings (4) 1 475 1 242 2 863 1 501 1 294 2 955
1. Headline earnings consist of operating profit, investment income, net realised and fair value gains,
investment variances and basis and other changes.
2. This represents the cost of the BEE transaction in Namibia in the prior periods in terms of IFRS 2 Share
based payments.
3. Metropolitan Health, Metropolitan Namibia and Metropolitan Kenya are consolidated at 100%, 96% and 96%,
respectively, in the results. For the purposes of diluted core headline earnings, non-controlling interests
and investment returns are reinstated.
4. Core headline earnings disclosed comprise operating profit and investment income on shareholder assets. It
excludes net realised and fair value gains on investment assets, investment variances and basis and other
changes which can be volatile, STC (prior periods), certain non-recurring items, as well as the amortisation
of intangible assets relating to business combinations as this is part of the cost of acquiring the business.
EARNINGS PER SHARE (cents)
attributable to owners of the parent 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012
Basic
Core headline earnings 95 83 192
Headline earnings 91 54 145
Earnings 94 54 154
Weighted average number of shares (million) 1 558 1 489 1 491
Diluted
Core headline earnings 94 81 184
Weighted average number of shares (million) (1) 1 604 1 605 1 605
Headline earnings 90 54 142
Earnings 94 53 151
Weighted average number of shares (million) (2) 1 592 1 590 1 590
1. For diluted core headline earnings per share, treasury shares held on behalf of contract holders are deemed
to be issued.
2. For diluted earnings and headline earnings per share, treasury shares held on behalf of contract holders
are deemed to be cancelled.
DIVIDENDS 2013 2012
Ordinary listed MMI Holdings Limited shares (cents per share)
Interim March 51 44
Final September 69
Total 113
A special dividend of 65 cents per share was declared in September 2012.
MMI Holdings convertible redeemable preference shares (issued to Kagiso Tiso Holdings (KTH))
The A1 and A2 MMI preference shares were converted into MMI ordinary shares on a one-for-one basis in
June 2012.
The A3 MMI preference shares are redeemable in June 2017 at a redemption value of R9.18 per share unless
converted into MMI ordinary shares on a one-for-one basis. Dividends are payable at 132 cents per annum
(payable March and September).
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE 6 mths to 6 mths to 12 mths to
INCOME 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Earnings 1 496 815 2 337
Other comprehensive income for the period, net of tax 69 80 121
Items that may be reclassified subsequently to income 17 48 68
Exchange differences on translating foreign operations 15 55 71
Available-for-sale financial assets 2 (7) (3)
Items that will not be reclassified to income 52 32 53
Land and buildings revaluation 59 34 63
Change in non-distributable reserves - 1 1
Income tax relating to items that will not be reclassified (7) (3) (11)
Total comprehensive income for the period 1 565 895 2 458
Total comprehensive income attributable to:
Owners of the parent 1 532 877 2 414
Non-controlling interests 18 3 13
MMI Group Ltd preference shares 15 15 31
1 565 895 2 458
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Changes in share capital
Balance at beginning 13 814 13 421 13 421
Staff share scheme shares released - 1 3
Treasury shares held on behalf of contract holders 31 21 2
Conversion of preference shares (1) - - 388
Share buy-back (7) - -
Balance at end 13 838 13 443 13 814
Changes in other reserves
Balance at beginning 1 572 1 466 1 466
Total comprehensive income 64 71 113
BEE cost - 25 3
Transfer to retained earnings (3) (8) (10)
Balance at end (2) 1 633 1 554 1 572
Changes in retained earnings
Balance at beginning 8 131 7 454 7 454
Total comprehensive income 1 468 806 2 301
Dividend paid (2 095) (942) (1 603)
Transactions with non-controlling interests 88 (12) (31)
Transfer from other reserves 3 8 10
Balance at end 7 595 7 314 8 131
Equity attributable to owners of the parent 23 066 22 311 23 517
MMI Group Ltd preference shares
Balance at beginning 500 500 500
Total comprehensive income 15 15 31
Dividend paid (15) (15) (31)
Balance at end 500 500 500
Changes in non-controlling interests
Balance at beginning 281 298 298
Total comprehensive income 18 3 13
Dividends paid (9) (5) (3)
Transactions with owners 11 (46) (27)
Business combinations 115 - -
Balance at end 416 250 281
Total equity 23 982 23 061 24 298
1. The conversion of the preference shares in the year ended 30 June 2012 represents the conversion of the A1
and A2 MMI preference shares into ordinary shares on a one-for-one basis.
2. Other reserves consist of the following:
Land and buildings revaluation reserve: R580 million (31.12.2011: R513 million; 30.06.2012: R533 million)
Foreign currency translation reserve: R85 million (31.12.2011: R58 million; 30.06.2012: R74 million)
Fair value adjustment for preference shares issued by MMI: R940 million (31.12.2011: R940 million;
30.06.2012: R940 million)
Fair value reserve: R12 million (31.12.2011: R7 million; 30.06.2012: R11 million)
Non-distributable reserve: R13 million (31.12.2011: R11 million; 30.06.2012: R11 million)
Equity-settled share-based payments reserve: R3 million (31.12.2011: R25 million; 30.06.2012: R3 million)
6 mths to 6 mths to 12 mths to
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Net cash inflow/(outflow) from operating activities 7 384 (2 534) (1 142)
Net cash outflow from investing activities (910) (474) (697)
Net cash outflow from financing activities (2 098) (1 136) (1 875)
Net cash flow 4 376 (4 144) (3 714)
Cash resources and funds on deposit at beginning 16 957 20 671 20 671
Cash resources and funds on deposit at end 21 333 16 527 16 957
PRINCIPAL ASSUMPTIONS (South Africa) (1) 31.12.2012 31.12.2011 30.06.2012
% % %
Pre-tax investment return
Equities 10.5 11.8 11.3
Properties 8.0 9.3 8.8
Government stock 7.0 8.3 7.8
Other fixed interest stocks 7.5 8.8 8.3
Cash 6.0 7.3 6.8
Risk free return 7.0 8.3 7.8
Risk discount rate (RDR) 9.4 10.6 10.1
Investment return (before tax) smoothed bonus 9.2 10.5 10.0
Expense inflation rate
MMI Group Ltd 5.9 7.3 6.8
Metropolitan Life Ltd 4.9 6.8 5.8
1. The principal assumptions relate only to the South African life insurance business. Assumptions relating to
international life insurance businesses are based on local requirements and can differ from the South African
assumptions.
NON-CONTROLLING INTERESTS 31.12.2012 31.12.2011 30.06.2012
% % %
Metropolitan
Metropolitan Health Group 17.6 17.6 17.6
Metropolitan Namibia 10.3 20.8 13.8
Metropolitan Health Namibia Administrators 49.0 49.0 49.0
Metropolitan Botswana 24.2 24.2 24.2
Metropolitan Kenya 33.7 33.7 33.7
Metropolitan Ghana 5.0 7.8 7.8
Metropolitan Nigeria 50.0 50.0 50.0
Metropolitan Swaziland 33.0 33.0 33.0
Eris Property Group (acquired in the current period) 45.7 - -
Momentum
Momentum Mozambique 25.0 25.0 25.0
Momentum Tanzania 33.0 33.0 33.0
Momentum Zambia 35.0 35.0 35.0
Momentum Health Ghana 4.8 20.0 20.0
Momentum Health Mauritius 5.0 5.0 5.0
Momentum Health Botswana 28.0 28.0 28.0
Restated Restated
FINANCIAL INSTRUMENT ASSETS 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Equity securities 79 177 74 334 64 754
Debt securities 85 618 75 601 82 020
Funds on deposit and other money market instruments 13 048 13 131 12 477
Unit-linked investments 88 300 69 468 79 840
Derivative financial instruments 4 461 2 865 3 579
Loans and receivables 4 494 3 218 3 880
Investments in associates designated at fair value 13 137 8 376 14 333
Total financial instrument assets 288 235 246 993 260 883
Restated Restated
ANALYSIS OF ASSETS UNDER MANAGEMENT 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
On-balance sheet assets
Managed and/or administered by Momentum Investments 195 020 167 366 173 627
Investment assets 133 205 114 154 113 325
Collective investment schemes 54 545 45 627 53 423
Properties 7 270 7 585 6 879
Linked product assets under administration 56 421 45 859 50 412
Managed internally or by other managers within MMI 23 372 18 686 20 195
Managed by external managers 37 561 35 518 34 990
Other assets 22 893 20 839 23 380
335 267 288 268 302 604
Off-balance sheet assets
Managed and/or administered by Momentum Investments 144 726 98 189 125 458
Collective investment schemes 73 063 52 379 65 585
Segregated assets and linked products 53 006 45 810 59 873
Properties 18 657 - -
Managed internally or by other managers within MMI 4 522 3 878 4 161
Momentum Employee Benefits segregated assets and linked
products 531 170 498
Metropolitan Health 10 773 11 830 11 624
Linked product assets under administration 39 135 33 415 35 640
Total assets under management 534 954 435 750 479 985
Restated Restated
ANALYSIS OF ASSETS BACKING 31.12.2012 31.12.2011 30.06.2012
SHAREHOLDER EXCESS Rm % Rm % Rm %
Equity securities 1 080 4.6 1 202 5.3 1 121 4.7
Preference shares 374 1.6 1 479 6.5 1 492 6.2
Collective investment schemes 535 2.3 1 232 5.4 966 4.0
Debt securities 4 393 18.6 3 956 17.3 4 900 20.4
Properties 1 991 8.5 1 794 7.9 1 906 7.9
Owner-occupied properties 1 290 5.5 1 165 5.1 1 172 4.8
Investment properties 701 3.0 629 2.8 734 3.1
Cash and cash equivalents and funds on
deposit 9 126 38.7 7 220 31.7 7 608 31.7
Intangible assets 7 654 32.5 7 342 32.1 7 425 30.9
Other net assets 311 1.3 845 3.7 487 2.0
25 464 108.1 25 070 109.9 25 905 107.8
Redeemable preference shares (313) (1.3) (712) (3.1) (316) (1.3)
Subordinated redeemable debt (1 585) (6.8) (1 547) (6.8) (1 572) (6.5)
Shareholder excess per reporting basis 23 566 100.0 22 811 100.0 24 017 100.0
Business combinations December 2012
Momentum Short-term Insurance
As at 30 June 2012 MMI Group Limited (MGL) and OUTsurance Holdings Limited (OUTsurance) each owned 50% of the
ordinary share capital of Momentum Short-term Insurance Company Limited (MSTI). As OUTsurance controlled MSTI,
MGL accounted for the investment as an associate.
On 13 July 2012, MGL acquired the remaining 50% shareholding for R125 million in cash, which was based on the
embedded value of MSTI. No goodwill was recognised on the transaction.
Eris Property Group
On 29 October 2012, MMI Holdings Ltd (MMI) acquired 55% in Eris Property Group (Eris) for R329 million in cash.
The group's property portfolio is currently managed by Eris and Momentum Properties. The transaction resulted in
R191 million goodwill being recognised (not tax deductible).
Eris management and Kagiso Tiso Holdings Proprietary Limited (KTH), who were existing shareholders in Eris, also
acquired further shares from MMI, resulting in an effective controlling interest for MMI of 54%.
The purchase price consideration, the net assets acquired and any relevant goodwill relating to the above two
transactions are as follows:
Rm
Purchase consideration 454
Fair value of net assets
Intangible assets 276
Tangible assets 332
Financial instrument assets 353
Cash and cash equivalents 43
Other assets 17
Insurance contract liabilities (50)
Financial instrument liabilities (85)
Other liabilities (368)
Net identifiable assets acquired 518
Fair value step-up of associate - MSTI (recognised in net fair value gains/(losses)) (67)
Derecognise investment in associate - MSTI (carrying value at acquisition date) (73)
Non-controlling interests (115)
Goodwill recognised 191
454
The above two transactions contributed net income of R208 million and earnings of R22 million to the group
results for the current period.
SEGMENTAL INFORMATION
Metro-
Metro- Momentum politan Momentum Metro-
6 mths to 31.12.2012 Momentum politan Employee Inter- Invest- politan
Retail Retail Benefits national ments Health
Rm Rm Rm Rm Rm Rm
Revenue
Net insurance premiums 8 842 3 141 6 624 1 267 11 406 15
Recurring premiums 3 740 2 606 3 417 1 069 - 15
Single premiums 5 102 535 3 207 198 11 406 -
Fee income 1 028 45 384 100 746 873
Fee income 1 028 45 384 100 746 873
Inter-segmental fee income - - - - - -
Expenses
Net payments to contract holders
External payments 9 036 2 230 4 338 668 11 100 15
Other expenses 1 611 1 060 531 545 633 779
Sales remuneration 813 469 74 167 - 9
Administration expenses (2) 798 591 457 377 506 762
Amortisation due to business
combinations and impairments - - - 1 1 8
Direct property expenses - - - - - -
Asset management and other
fee expenses - - - - 126 -
Holding company expenses - - - - - -
Inter-segmental expenses - - - - - -
Diluted core headline earnings 522 242 163 39 74 66
Operating profit 727 337 235 54 81 86
Tax on operating profit (205) (95) (72) (15) (23) (24)
Investment income - - - - 22 6
Tax on investment income - - - - (6) (2)
Actuarial liabilities 146 381 28 794 50 191 7 127 33 015 1
1. The 'other reconciling items' column includes: an adjustment to reverse investment contract premiums
(R18 948 million) and claims (R16 904 million); FNB Life adjustments reconciling the 10% of FNB Life
included in each of the relevant lines to the accounting treatment of the reinsurance arrangement
(premiums R93 million, claims R1 million, sales remuneration R36 million and expenses R61 million);
direct property and asset management fees that are set off against investment income and fee income,
respectively for management reporting purposes but shown as an expense for accounting purposes; the
amortisation of intangibles relating to business combinations; and other minor adjustments to expenses
(R71 million), sales remuneration (R3 million) and fee income (R33 million).
2. Administration expenses for the current period include: Metropolitan International - R68 million
relating to Momentum Namibia; Momentum Investments R104 million relating to Eris Property Group and;
Shareholder capital R32 million relating to Momentum Short-Term Insurance.
Other
6 mths to 31.12.2012 Shareholder Segmental reconciling IFRS
continued capital total items total
(1)
Rm Rm Rm Rm
Revenue
Net insurance premiums 145 31 440 (18 855) 12 585
Recurring premiums 144 10 991 (2 026) 8 965
Single premiums 1 20 449 (16 829) 3 620
Fee income 59 3 235 (546) 2 689
Fee income 59 3 235 33 3 268
Inter-segmental fee income - - (579) (579)
Expenses
Net payments to contract holders
External payments 163 27 550 (16 903) 10 647
Other expenses 350 5 509 1 032 6 541
Sales remuneration 16 1 548 33 1 581
Administration expenses (2) 168 3 659 132 3 791
Amortisation due to business
combinations and impairments 19 29 409 438
Direct property expenses - - 103 103
Asset management and other fee
expenses - 126 928 1 054
Holding company expenses 147 147 - 147
Inter-segmental expenses - - (573) (573)
Diluted core headline earnings 395 1 501 - 1 501
Operating profit (11) 1 509 - 1 509
Tax on operating profit 64 (370) - (370)
Investment income 438 466 - 466
Tax on investment income (96) (104) - (104)
Actuarial liabilities 3 188 268 697 (488) 268 209
1. The 'other reconciling items' column includes: an adjustment to reverse investment contract premiums
(R18 948 million) and claims (R16 904 million); FNB Life adjustments reconciling the 10% of FNB Life
included in each of the relevant lines to the accounting treatment of the reinsurance arrangement
(premiums R93 million, claims R1 million, sales remuneration R36 million and expenses R61 million);
direct property and asset management fees that are set off against investment income and fee income,
respectively for management reporting purposes but shown as an expense for accounting purposes; the
amortisation of intangibles relating to business combinations; and other minor adjustments to expenses
(R71 million), sales remuneration (R3 million) and fee income (R33 million).
2. Administration expenses for the current period include: Metropolitan International - R68 million
relating to Momentum Namibia; Momentum Investments R104 million relating to Eris Property Group and;
Shareholder capital R32 million relating to Momentum Short-Term Insurance.
Metro-
Restated Metro- Momentum politan Momentum Metro-
6 mths to 31.12.2011 Momentum politan Employee Inter- Invest- politan
Retail Retail Benefits national ments Health
Rm Rm Rm Rm Rm Rm
Revenue
Net insurance premiums 7 649 3 009 4 731 945 4 755 14
Recurring premiums 3 633 2 423 2 907 796 - 14
Single premiums 4 016 586 1 824 149 4 755 -
Inter-segmental premiums - - - - - -
Fee income 1 058 73 319 20 480 852
Fee income 1 058 73 319 20 480 852
Inter-segmental fee income - - - - - -
Expenses
Net payments to contract holders 7 724 2 386 4 557 580 5 794 11
External payments 7 724 2 386 4 557 580 5 794 11
Inter-segmental payments - - - - - -
Other expenses 1 652 958 500 419 416 775
Sales remuneration 813 435 80 127 1 -
Administration expenses 820 523 420 292 350 768
Amortisation due to business
combinations and impairments 19 - - - 6 7
Direct property expenses - - - - - -
Asset management and other
fee expenses (2) - - - - 59 -
Holding company expenses - - - - - -
Inter-segmental expenses - - - - - -
Diluted core headline earnings 377 204 99 (3) 62 58
Operating profit 520 282 124 (2) 71 74
Tax on operating profit (143) (78) (25) (1) (22) (24)
Investment income - - - - 18 9
Tax on investment income - - - - (5) (1)
Actuarial liabilities 125 209 30 672 42 448 4 786 29 003 2
1. The 'other reconciling items' column includes: an adjustment to reverse investment contract
premiums (R11 567 million) and claims (R12 492 million); FNB Life adjustments reconciling the
10% of FNB Life included in each of the relevant lines to the accounting treatment of the
reinsurance arrangement (premiums R104 million, fee income R1 million, claims R2 million, sales
remuneration R57 million and expenses R55 million); direct property and asset management fees that
are set off against investment income and fee income, respectively for management reporting purposes
but shown as an expense for accounting purposes; the amortisation of the intangibles relating to
business combinations; Namibian BEE cost (R30 million) and other minor adjustments to expenses
(R37 million), sales remuneration (R5 million) and fee income (R6 million).
2. Momentum Investments asset management fee expense of R38 million has been off-set against fee income
in the above table.
Restated Other
6 mths to 31.12.2011 Shareholder Segmental reconciling IFRS
continued capital total items total
(1)
Rm Rm Rm Rm
Revenue
Net insurance premiums - 21 103 (11 478) 9 625
Recurring premiums - 9 773 (2 081) 7 692
Single premiums - 11 330 (9 382) 1 948
Inter-segmental premiums - - (15) (15)
Fee income 26 2 828 (216) 2 612
Fee income 26 2 828 (5) 2 823
Inter-segmental fee income - - (211) (211)
Expenses
Net payments to contract holders 799 21 851 (12 506) 9 345
External payments 799 21 851 (12 490) 9 361
Inter-segmental payments - - (16) (16)
Other expenses 236 4 956 823 5 779
Sales remuneration - 1 456 52 1 508
Administration expenses 109 3 282 48 3 330
Amortisation due to business
combinations and impairments 19 51 322 373
Direct property expenses - - 262 262
Asset management and other fee expenses (2) - 59 382 441
Holding company expenses 108 108 - 108
Inter-segmental expenses - - (243) (243)
Diluted core headline earnings 497 1 294 - 1 294
Operating profit 121 1 190 - 1 190
Tax on operating profit 62 (231) - (231)
Investment income 386 413 - 413
Tax on investment income (72) (78) - (78)
Actuarial liabilities 2 313 234 433 - 234 433
1. The 'other reconciling items' column includes: an adjustment to reverse investment contract
premiums (R11 567 million) and claims (R12 492 million); FNB Life adjustments reconciling the
10% of FNB Life included in each of the relevant lines to the accounting treatment of the
reinsurance arrangement (premiums R104 million, fee income R1 million, claims R2 million, sales
remuneration R57 million and expenses R55 million); direct property and asset management fees that
are set off against investment income and fee income, respectively for management reporting purposes
but shown as an expense for accounting purposes; the amortisation of the intangibles relating to
business combinations; Namibian BEE cost (R30 million) and other minor adjustments to expenses
(R37 million), sales remuneration (R5 million) and fee income (R6 million).
2. Momentum Investments asset management fee expense of R38 million has been off-set against fee income
in the above table.
Metro-
Restated Metro- Momentum politan Momentum Metro-
12 mths to 30.06.2012 Momentum politan Employee Inter- Invest- politan
Retail Retail Benefits national ments Health
Rm Rm Rm Rm Rm Rm
Revenue
Net insurance premiums 17 148 6 042 9 712 1 960 10 661 29
Recurring premiums 7 376 4 760 5 990 1 639 - 29
Single premiums 9 772 1 282 3 722 321 10 661 -
Inter-segmental premiums - - - - - -
Fee income 1 751 130 932 129 1 099 1 701
Fee income 1 751 130 932 129 1 099 1 701
Inter-segmental fee income - - - - - -
Expenses
Net payments to contract holders 16 095 5 049 9 033 1 099 12 772 24
External payments (2) 16 095 5 049 9 033 1 099 12 772 24
Inter-segmental payments - - - - - -
Other expenses 3 217 1 863 991 841 959 1 560
Sales remuneration 1 582 778 166 247 4 -
Administration expenses 1 616 1 085 819 574 730 1 507
Amortisation due to business
combinations and impairments 19 - 6 20 12 53
Direct property expenses - - - - - -
Asset management and other fee
expenses - - - - 213 -
Holding company expenses - - - - - -
Inter-segmental expenses - - - - - -
Diluted core headline earnings 1 064 438 249 57 125 133
Operating profit 1 472 609 351 77 146 170
Tax on operating profit (408) (171) (102) (20) (40) (51)
Investment income - - - - 27 17
Tax on investment income - - - - (8) (3)
Actuarial liabilities 131 252 31 064 43 898 6 326 30 055 1
1. The 'other reconciling items' column includes: an adjustment to reverse investment contract premiums
(R26 580 million) and claims (R25 868 million); FNB Life adjustments reconciling the 10% of FNB Life
included in each of the relevant lines to the accounting treatment of the reinsurance arrangement
(premiums R186 million; fee income R1 million, claims R3 million, sales remuneration R90 million and
expenses R103 million); direct property and asset management fees that are set off against investment
income and fee income, respectively for management reporting purposes but shown as an expense for
accounting purposes; the amortisation of intangibles relating to business combinations; Namibian BEE
cost (R3 million) and other minor adjustments to expenses (R41 million), sales remuneration
(R17 million) and fee income (R8 million).
2. The R799 million payments to contract holders in shareholder capital relates to the maturity of certain
corporate policies administered by balance sheet management division.
Restated Other
12 mths to 30.06.2012 Shareholder Segmental reconciling IFRS
continued capital total items total
(1)
Rm Rm Rm Rm
Revenue
Net insurance premiums - 45 552 (26 858) 18 694
Recurring premiums - 19 794 (4 547) 15 247
Single premiums - 25 758 (21 847) 3 911
Inter-segmental premiums - - (464) (464)
Fee income 82 5 824 (576) 5 248
Fee income 82 5 824 (7) 5 817
Inter-segmental fee income - - (569) (569)
Expenses
Net payments to contract holders 799 44 871 (25 895) 18 976
External payments (2) 799 44 871 (25 865) 19 006
Inter-segmental payments - - (30) (30)
Other expenses 477 9 908 1 535 11 443
Sales remuneration - 2 777 73 2 850
Administration expenses 236 6 567 65 6 632
Amortisation due to business combinations
and impairments 40 150 614 764
Direct property expenses - - 302 302
Asset management and other fee expenses - 213 1 050 1 263
Holding company expenses 201 201 - 201
Inter-segmental expenses - - (569) (569)
Diluted core headline earnings 889 2 955 - 2 955
Operating profit 218 3 043 - 3 043
Tax on operating profit (28) (820) - (820)
Investment income 855 899 - 899
Tax on investment income (156) (167) - (167)
Actuarial liabilities 2 902 245 498 (453) 245 045
1. The 'other reconciling items' column includes: an adjustment to reverse investment contract premiums
(R26 580 million) and claims (R25 868 million); FNB Life adjustments reconciling the 10% of FNB Life
included in each of the relevant lines to the accounting treatment of the reinsurance arrangement
(premiums R186 million; fee income R1 million, claims R3 million, sales remuneration R90 million and
expenses R103 million); direct property and asset management fees that are set off against investment
income and fee income, respectively for management reporting purposes but shown as an expense for
accounting purposes; the amortisation of intangibles relating to business combinations; Namibian BEE
cost (R3 million) and other minor adjustments to expenses (R41 million), sales remuneration
(R17 million) and fee income (R8 million).
2. The R799 million payments to contract holders in shareholder capital relates to the maturity of certain
corporate policies administered by balance sheet management division.
Metro-
Metro- Momentum politan Momentum Metro-
Analysis of reclassification Momentum politan Employee Inter- Invest- politan
Retail Retail Benefits national ments Health
Rm Rm Rm Rm Rm Rm
The comparative segmental information has been restated where appropriate to ensure alignment with the way in
which the chief operating decision-maker, being the MMI executive committee, monitors and evaluates the
performance of the various segments of the business. Refer to table below for detail. These restatements had
no impact on core headline earnings.
December 2011
Fee income
Published December 2011 840 73 294 20 480 847
Reclassifications 218 - 25 - - 5
Restated December 2011 1 058 73 319 20 480 852
Net payments to contract holders
Published December 2011 7 719 2 386 4 557 580 5 794 11
Reclassifications 5 - - - - -
Restated December 2011 7 724 2 386 4 557 580 5 794 11
Other expenses
Published December 2011 1 610 958 515 422 416 775
Reclassifications 42 - (15) (3) - -
Restated December 2011 1 652 958 500 419 416 775
June 2012
Fee income
Published June 2012 1 797 130 938 129 1 099 1 701
Reclassifications (46) - (6) - - -
Restated June 2012 1 751 130 932 129 1 099 1 701
Other
Analysis of reclassifications Shareholder Segmental reconciling IFRS
continued capital total items total
Rm Rm Rm Rm
The comparative segmental information has been restated where appropriate to ensure alignment with the way in
which the chief operating decision-maker, being the MMI executive committee, monitors and evaluates the
performance of the various segments of the business. Refer to table below for detail. These restatements had
no impact on core headline earnings.
December 2011
Fee income
Published December 2011 219 2 773 (161) 2 612
Reclassifications (193) 55 (55) -
Restated December 2011 26 2 828 (216) 2 612
Net payments to contract holders
Published December 2011 804 21 851 (12 506) 9 345
Reclassifications (5) - - -
Restated December 2011 799 21 851 (12 506) 9 345
Other expenses
Published December 2011 245 4 941 838 5 779
Reclassifications (9) 15 (15) -
Restated December 2011 236 4 956 823 5 779
June 2012
Fee income
Published June 2012 30 5 824 (576) 5 248
Reclassifications 52 - - -
Restated June 2012 82 5 824 (576) 5 248
RECONCILIATION OF MOMENTUM INVESTMENTS 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Revenue
Fee income 746 480 1 099
Expenses and finance costs 639 423 970
Other expenses 633 416 959
Finance costs 6 7 11
Less non-controlling interest 27 - -
80 57 129
Core adjustments 1 14 17
Impairments and amortisation of intangibles relating to business
combinations 1 6 12
Other - 8 5
Operating profit before tax 81 71 146
RECONCILIATION OF METROPOLITAN HEALTH 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Revenue 888 866 1 730
Net insurance premiums (excluding investment business) 15 14 29
Fee income 873 852 1 701
Expenses and finance costs 794 787 1 587
Net payments to contract holders (excluding investment business) 15 11 24
Other expenses 779 775 1 560
Finance costs - 1 3
94 79 143
Core adjustments (8) (5) 27
Impairments and amortisation of intangibles relating to business
combinations 8 7 53
Adjustments for dilution (7) (5) (17)
Other (9) (7) (9)
Operating profit before tax 86 74 170
Restated
PAYMENTS TO CONTRACT HOLDERS 6 mths to 6 mths to 12 mths to
1.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Momentum Retail 9 036 7 724 16 095
Death and disability claims 1 624 1 291 2 940
Maturity claims 2 649 2 209 4 844
Annuities 1 914 1 687 3 420
Withdrawal benefits 71 19 48
Surrenders 3 331 2 802 5 684
Re-insurance recoveries (553) (284) (841)
Metropolitan Retail 2 230 2 386 5 049
Death and disability claims 683 644 1 030
Maturity claims 836 682 1 512
Annuities 268 375 761
Withdrawal benefits 33 19 37
Surrenders 626 829 1 796
Re-insurance recoveries (216) (163) (87)
Momentum Employee Benefits 4 338 4 557 9 033
Death and disability claims 1 531 1 350 2 791
Maturity claims 203 204 471
Annuities 581 478 938
Withdrawals and surrenders 1 609 1 272 2 344
Terminations 74 293 676
Disinvestments 637 1 236 2 382
Re-insurance recoveries (297) (276) (569)
Metropolitan International 668 580 1 099
Death and disability claims 270 218 455
Maturity claims 121 123 209
Annuities 43 26 51
Withdrawal benefits 40 54 95
Surrenders 173 140 266
Terminations 33 24 39
Disinvestments 1 4 5
Re-insurance recoveries (13) (9) (21)
Momentum Investments
Withdrawals 11 100 5 794 12 772
Metropolitan Health
Claims 15 11 24
Shareholder capital
Claims 163 799 799
Total payments to contract holders 27 550 21 851 44 871
Adjustment for payments to investment contract holders (16 944) (12 559) (25 991)
Transfers between insurance, investment and investment with DPF
contracts 40 67 123
FNB Life adjustment 1 2 3
Inter-segmental - (16) (30)
Net insurance benefits and claims per income statement 10 647 9 345 18 976
Restated Restated
6 mths to 6 mths to 12 mths to
NET FUNDS RECEIVED Gross Gross 31.12.2012 31.12.2011 30.06.2012
FROM CLIENTS single recurring Gross Gross Net inflow/ Net inflow/ Net inflow/
inflows inflows inflow outflow (outflow) (outflow) (outflow)
Rm Rm Rm Rm Rm Rm Rm
Momentum Retail 5 102 3 740 8 842 (9 036) (194) (75) 1 053
Metropolitan Retail 535 2 606 3 141 (2 230) 911 623 993
Momentum Employee Benefits 3 207 3 417 6 624 (4 338) 2 286 174 679
Metropolitan International 198 1 069 1 267 (668) 599 365 861
Momentum Investments 11 406 - 11 406 (11 100) 306 (1 039) (2 111)
Shareholder capital 1 144 145 (163) (18) (799) (799)
Long-term insurance business
cash flows 20 449 10 976 31 425 (27 535) 3 890 (751) 676
Momentum Retail 6 528 - 6 528 (5 541) 987 1 293 2 542
Momentum Employee Benefits 12 48 60 (114) (54) 5 332
Metropolitan International 495 - 495 (361) 134 (57) (5)
Momentum Investments 36 161 4 499 40 660 (48 092) (7 432) 847 1 019
Momentum Investments Eris
Property acquisition 18 678 - 18 678 - 18 678 - -
Metropolitan Health - 20 118 20 118 (11 888) 8 230 3 517 6 171
Total net funds received
from clients 82 323 35 641 117 964 (93 531) 24 433 4 854 10 735
NUMBER OF EMPLOYEES Restated
31.12.2012 31.12.2011 30.06.2012
Indoor staff 9 908 9 631 9 418
Momentum Retail 1 859 1 954 1 948
Metropolitan Retail 1 462 1 397 1 431
Momentum Employee Benefits 966 995 980
Metropolitan International 781 716 720
Momentum Investments 798 509 519
Metropolitan Health 3 109 3 091 2 961
Shareholder capital
Balance sheet management 56 50 54
Group services 732 793 751
Short-term insurance 139 - -
Redeployment centre 6 126 54
Field staff 5 844 5 585 5 694
Momentum Retail 387 489 433
Metropolitan Retail 4 344 3 899 4 179
Metropolitan International 1 113 1 197 1 082
Total 15 752 15 216 15 112
- The increase in the number of employees of Momentum Investments is mainly due to the acquisition of Eris
with 280 employees.
- The June 2012 employees in the table above have been restated to exclude contractors and temporary
employees.
Restated Restated
STATEMENT OF ASSETS AND LIABILITIES ON REPORTING BASIS 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Total assets 335 267 288 268 302 604
Actuarial value of policy liabilities (268 209) (234 433) (245 045)
Other liabilities (43 076) (30 774) (33 261)
Non-controlling interests (416) (250) (281)
Group excess per reporting basis 23 566 22 811 24 017
Net assets other businesses (1 503) (1 143) (1 334)
Fair value adjustments on Metropolitan acquisition
and other consolidation adjustments (5 675) (5 901) (5 901)
Excess long-term insurance business, net of
non-controlling interests (1) 16 388 15 767 16 782
RECONCILIATION OF CHANGE IN LONG-TERM INSURANCE EXCESS
TO THE INCOME STATEMENT
Change in excess of long-term insurance business (1) (394) (144) 871
Increase in share capital (21) (65) (345)
Change in other reserves (37) (39) (60)
Dividend paid ordinary shares 2 289 1 495 2 502
Change in non-controlling interests (7) (66) (53)
Acquisition of Momentum Namibia - - (117)
Other (29) - -
Total surplus arising, net of non-controlling interests 1 801 1 181 2 798
Operating profit 1 237 997 2 309
Investment income on excess 377 238 520
Net realised and fair value gains on excess 179 124 242
Investment variances 189 6 (54)
Basis and other changes (181) (184) (219)
Consolidation adjustments (27) 1 (12)
Earnings after non-controlling interest of long-term
insurance business 1 774 1 182 2 786
Earnings after non-controlling interests of other group
businesses and consolidation adjustments (83) (154) (39)
Amortisation of intangibles relating to the merger (223) (223) (446)
Earnings attributable to owners of the parent as per
income statement 1 468 805 2 301
1. The long-term insurance business includes both insurance and investment contract business and is the
simple aggregate of all the life insurance companies in the group, including life insurance companies in
Africa. It is after non-controlling interests but excludes certain items which are eliminated on
consolidation. It also excludes non-insurance business.
RECONCILIATION OF REPORTING EXCESS TO STATUTORY EXCESS 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Reporting excess long-term insurance business (1) 16 388 15 767 16 782
Disregarded assets (2) (977) (1 106) (998)
Difference between statutory and published valuation
methods (452) (270) (436)
Write down of subsidiaries and associates for
statutory purposes (871) (772) (1 209)
Unsecured subordinated debt 1 576 1 538 1 563
Consolidation adjustments (150) (69) (56)
Statutory excess long-term insurance business 15 514 15 088 15 646
Capital adequacy requirement (CAR) (Rm) (3) 6 581 6 521 6 641
Ratio of long-term insurance business excess
to CAR (times) 2.4 2.3 2.4
Discretionary margins 11 041 9 785 9 974
1. The long-term insurance business includes both insurance and investment contract business and is the
simple aggregate of all the life insurance companies in the group, including life insurance companies in
Africa. It is after non-controlling interests but excludes certain items which are eliminated on
consolidation. It also excludes non-insurance business.
2. Disregarded assets are those as defined in the South African Long Term Insurance Act and are only
applicable to South African Long Term insurance companies. Adjustments are also made for the international
insurance companies from reporting excess to statutory excess as required by their regulators. It includes
Sage intangible assets of R576 million (31.12.2011: R604 million; 30.06.2012: R590 million).
3. Aggregation of separate company CAR's, with no assumption of diversification benefits.
EMBEDDED VALUE RESULTS AS AT 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Covered business
Reporting excess long-term insurance business 16 388 15 767 16 782
Reclassification to non-covered business (1 306) (943) (1 388)
15 082 14 824 15 394
Disregarded assets (1) (726) (850) (688)
Difference between statutory and published valuation
methods (452) (270) (436)
Dilutory effect of subsidiaries (2) (31) (52) (30)
Consolidation adjustments (3) (202) (133) (30)
Momentum Namibia adjustment (4) - (38) (247)
Value of MMI Group Ltd preference shares issued (483) (500) (480)
Diluted adjusted net worth covered business 13 188 12 981 13 483
Net value of in-force business 16 547 13 843 14 910
Diluted embedded value covered business 29 735 26 824 28 393
Non-covered business
Net assets non-covered subsidiaries of life insurance
companies 1 306 943 1 388
Net assets non-covered subsidiaries of the holding company 1 503 1 143 1 334
Consolidation adjustments (3) (835) (175) (200)
Adjustments for dilution (5) 637 1 077 610
Diluted adjusted net worth non-covered business 2 611 2 988 3 132
Write up to directors' value 1 107 999 947
Non-covered businesses 2 447 1 929 2 110
Holding company expenses (6) (998) (813) (953)
International holding company expenses (6) (342) (117) (210)
Diluted embedded value non-covered business 3 718 3 987 4 079
Diluted adjusted net worth 15 799 15 969 16 615
Net value of in-force business 16 547 13 843 14 910
Write up to directors' value 1 107 999 947
Diluted embedded value 33 453 30 811 32 472
Required capital covered business (adjusted for qualifying
debt and preference shares) 8 095 8 107 7 858
Surplus capital covered business 5 093 4 874 5 625
Diluted embedded value per share (cents) 2 086 1 920 2 023
Diluted adjusted net worth per share (cents) 985 995 1 035
Diluted number of shares in issue (million) (7) 1 604 1 605 1 605
1. Disregarded assets include Sage intangible assets of R576 million (31.12.2011: R604 million;
30.06.2012: R590 million), goodwill and various other items.
2. For accounting purposes, Metropolitan Health has been consolidated at 100%, while Metropolitan Namibia and
Metropolitan Kenya have been consolidated at 96% for the current period, in the statement of financial
position. For embedded value purposes, disclosed on a diluted basis, the non-controlling interests and
related funding have been reinstated.
3. Consolidation adjustments include mainly goodwill and intangibles in subsidiaries that are eliminated.
4. The carrying value of Momentum Namibia included in the reporting excess for the prior period was written
down to the company's net asset value. For December 2012 this adjustment is already included in the
reporting excess.
5. Adjustments for dilution are made up as follows:
Dilutory effect of subsidiaries (note 2): R121 million (31.12.2011: R165 million; 30.06.2012: R74 million)
Staff share scheme loans: Rnil (31.12.2011: R2 million; 30.06.2012: Rnil)
Treasury shares held on behalf of contract holders: R203 million (31.12.2011: R198 million;
30.06.2012: R220 million)
Liability MMI convertible preference shares issued to KTH: R313 million (31.12.2011: R712 million;
30.06.2012: R316 million)
6. The holding company expenses reflect the present value of projected recurring head office expenses. The
International holding company expenses reflect the allowance for support services to the international life
assurance and health businesses.
7. The diluted number of shares in issue takes into account all issued shares, assuming conversion of the
convertible redeemable preference shares and the release of staff share scheme shares, and includes the
treasury shares held on behalf of contract holders.
ANALYSIS OF NET VALUE OF IN-FORCE BUSINESS Restated
PER DIVISION 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Momentum Retail (1) 8 588 7 973 8 029
Gross value of in-force business 10 036 9 529 9 587
Less cost of required capital (1 448) (1 556) (1 558)
Metropolitan Retail 3 532 3 278 3 323
Gross value of in-force business 4 203 3 804 3 968
Less cost of required capital (671) (526) (645)
Momentum Employee Benefits 2 386 1 365 1 992
Gross value of in-force business 3 079 2 145 2 609
Less cost of required capital (693) (780) (617)
Metropolitan International 1 445 922 1 268
Gross value of in-force business 1 527 950 1 321
Less cost of required capital (82) (28) (53)
Shareholder capital (1) 596 305 298
Gross value of in-force business (2) 596 315 298
Less cost of required capital - (10) -
Net value of in-force business 16 547 13 843 14 910
Notes
1. Net value of in-force of R93 million was transferred from Momentum Retail to Shareholder capital for
June 2012, reflecting a change in the responsibility for managing financial options and guarantees
(Advisory Practice Note 110).
2. The value of in-force in the Shareholder capital represents discretionary margins managed by Balance
Sheet Management.
Adjusted net Net value
EMBEDDED VALUE worth of in-force 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm Rm Rm
Covered business
MMI Group Ltd 6 777 10 479 17 256 16 239 16 644
Metropolitan Life Ltd 5 392 4 624 10 016 8 682 9 471
Metropolitan Odyssey Ltd 49 - 49 47 48
Metropolitan International 970 1 444 2 414 1 856 2 230
Metropolitan Life International 98 - 98 85 89
Metropolitan Namibia (1) 151 429 580 513 927
Momentum Namibia (1) 253 478 731 - -
Metropolitan Botswana 109 94 203 202 215
Metropolitan Lesotho 218 354 572 487 539
Metropolitan Kenya 13 1 14 19 18
Metropolitan Ghana 27 17 44 42 26
Metropolitan Swaziland 20 2 22 19 21
Metropolitan Nigeria 73 (2) 71 54 59
Metropolitan Zambia 1 - 1 - -
Other international businesses (1) 7 71 78 435 336
Total covered business 13 188 16 547 29 735 26 824 28 393
Write up to
Adjusted net directors' Restated
worth value 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm Rm Rm
Non-covered business
Momentum Investments (2) 820 866 1 686 1 514 1 453
Metropolitan Health (3) 287 1 237 1 524 1 435 1 603
Momentum Retail (Wealth) (4) 266 165 431 - 408
Shareholder capital (Momentum Short-
Term Insurance) 157 139 296 136 160
Metropolitan International Holdings (5) 119 (302) (183) (117) 78
MMI Holdings (after consolidation
adjustments) (5) 962 (998) (36) 1 019 377
Total non-covered business 2 611 1 107 3 718 3 987 4 079
Total embedded value 15 799 17 654 33 453 30 811 32 472
Diluted net asset value non-covered
business (2 611)
Adjustments to covered business
adjusted net worth 3 200
Reporting excess long-term insurance
business 16 388
1. The Momentum international businesses were transferred from non-covered to covered business at 30 June
2011. At 31 December 2012 Momentum Namibia has been shown separately, reflecting the conclusion of the
purchase transaction.
2. Momentum Investments subsidiaries are valued using forward Price Earnings multiples applied to the
relevant sustainable earnings bases. December 2012 includes the valuation of Eris Properties Group.
3. Metropolitan Health subsidiaries have been valued using Embedded Value methodology.
4. Momentum Retail (Wealth) embedded value was included under covered business as at 31 December 2011.
5. The holding company expenses reflect the present value of projected recurring head office expenses. The
International holding company expenses reflect the allowance for support services to the international
life assurance and health businesses.
6 mths to 6 mths to 12 mths to
ANALYSIS OF CHANGES IN GROUP Covered business 31.12.2012 31.12.2011 30.06.2012
EMBEDDED VALUE Notes Gross
Adjusted Value of
net worth in-force Cost of
(ANW) (VIF) CAR Total EV Total EV Total EV
Rm Rm Rm Rm Rm Rm
Profit from new business (684) 1 128 (82) 362 333 723
Embedded value from new
business A (684) 1 106 (82) 340 311 633
Expected return to end of
period B - 22 - 22 22 90
Profit from existing business 1 675 (473) 65 1 267 402 2 350
Expected return unwinding of
RDR B - 886 (180) 706 736 1 518
Release from the cost of required
capital C - - 278 278 200 411
Expected (or actual) net of tax
profit transfer to net worth D 1 471 (1 471) - - - -
Operating experience variances E 361 146 (3) 504 123 711
Operating assumption changes F (157) (34) (30) (221) (657) (290)
Embedded value profit from operations 991 655 (17) 1 629 735 3 073
Investment return on adjusted net
worth G 507 - - 507 369 870
Investment variances H 225 638 126 989 (169) (364)
Economic assumption changes I 37 268 (130) 175 (37) 110
Acquisition of covered business - - - - - 5
Exchange rate movements 6 4 - 10 26 18
Embedded value profit covered
business 1 766 1 565 (21) 3 310 924 3 712
Transfer of business from/(to) non-
covered business 20 - - 20 (5) (523)
Capital transferred from/(to)
non-covered business J 186 93 - 279 (7) (48)
Changes in share capital 21 - - 21 13 365
Dividend paid (2 301) - - (2 301) (1 495) (2 498)
Change in reserves 13 - - 13 37 28
Change in embedded value covered
business (295) 1 658 (21) 1 342 (533) 1 036
Non-covered business
Change in directors' valuation
and other items (38) 106 4
Holding company expenses (177) (16) (248)
Secondary Tax on Companies allowance - 62 6
Embedded value profit non-covered
business (215) 152 (238)
Changes in share capital (21) (13) (365)
Dividend paid 197 548 889
Finance costs preference shares (23) (46) (92)
Transfer of business (to)/from covered
business (20) 5 510
Capital transferred (to)/from covered
business J (279) 7 41
Change in embedded value non-
covered business (361) 653 745
Total change in group embedded value 981 120 1 781
Total embedded value profit 3 095 1 076 3 474
Return on embedded value (%) - internal rate of return 20.0% 7.1% 11.3%
A. VALUE OF NEW BUSINESS
Momentum
VALUE OF NEW BUSINESS Momentum Metropolitan Employee Metropolitan
Retail Retail Benefits International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2012
Value of new business (1) 93 153 66 28 340
Gross 118 167 108 30 423
Less cost of required capital (25) (14) (42) (2) (83)
New business premiums 5 965 1 090 3 381 300 10 736
Recurring premiums 539 557 253 156 1 505
Single premiums 5 426 533 3 128 144 9 231
New business premiums (APE) 1 083 610 566 170 2 429
New business premiums (PVP) 8 459 2 866 4 977 874 17 176
Profitability of new business as
a % of APE 8.6 25.1 11.7 16.5 14.0
Profitability of new business as
a % of PVP 1.1 5.3 1.3 3.2 2.0
Restated
6 mths to 31.12.2011
Value of new business (1) 73 151 52 13 289
Gross 97 163 70 13 343
Less cost of required capital (24) (12) (18) - (54)
New business premiums 5 126 1 113 2 083 225 8 547
Recurring premiums 525 562 433 118 1 638
Single premiums 4 601 551 1 650 107 6 909
New business premiums (APE) 985 617 599 129 2 330
New business premiums (PVP) 7 503 2 826 4 503 707 15 539
Profitability of new business as
a % of APE 7.4 24.5 8.7 10.1 12.4
Profitability of new business as
a % of PVP 1.0 5.3 1.2 1.8 1.9
Restated
12 mths to 30.06.2012
Value of new business (1) 173 262 130 34 599
Gross 235 284 173 34 726
Less cost of required capital (62) (22) (43) - (127)
New business premiums 11 518 2 282 4 458 497 18 755
Recurring premiums 1 054 1 035 790 228 3 107
Single premiums 10 464 1 247 3 668 269 15 648
New business premiums (APE) 2 100 1 159 1 157 255 4 671
New business premiums (PVP) 16 384 5 371 9 421 1 332 32 508
Profitability of new business as
a % of APE 8.2 22.6 11.2 13.3 12.8
Profitability of new business as
a % of PVP 1.1 4.9 1.4 2.6 1.8
- Value of new business and new business premiums are net of non-controlling interests.
- The cost of capital for the international business for December 2011 and June 2012 is less than
R1 million.
- The value of new business has been calculated on closing assumptions. Investment yields at the point of
sale have been used for fixed annuity and guaranteed endowment business, for other business the investment
yields at the end of the year have been used.
1. The Wealth off-balance sheet business has been excluded from covered business in the current period. The
comparative value of new business information has been restated but the analysis of changes in embedded
value has not been restated.
Momentum
Momentum Metropolitan Employee Metropolitan
Retail Retail Benefits International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2012
Value of new business 93 153 66 28 340
Gross 118 167 108 30 423
Less cost of required capital (25) (14) (42) (2) (83)
New business premiums 5 965 1 090 3 381 300 10 736
Recurring premiums 539 557 253 156 1 505
Risk 269 390 110 - 769
Savings/Investments 270 167 143 - 580
International - - - 156 156
Single premiums 5 426 533 3 128 144 9 231
Savings/Investments 5 179 250 1 548 - 6 977
Annuities 247 283 1 580 - 2 110
International - - - 144 144
New business premiums (APE) 1 083 610 566 170 2 429
Risk 270 390 110 - 770
Savings/Investments 788 192 298 - 1 278
Annuities 25 28 158 - 211
International - - - 170 170
New business premiums (PVP) 8 459 2 866 4 977 874 17 176
Profitability of new business as a % of APE 8.6 25.1 11.7 16.5 14.0
Profitability of new business as a % of PVP 1.1 5.3 1.3 3.2 2.0
Momentum
Momentum Metropolitan Employee Metropolitan
Retail Retail Benefits International Total
Rm Rm Rm Rm Rm
Restated
6 mths to 31.12.2011
Value of new business 73 151 52 13 289
Gross 97 163 70 13 343
Less cost of required capital (24) (12) (18) - (54)
New business premiums 5 126 1 113 2 083 225 8 547
Recurring premiums 525 562 433 118 1 638
Risk 294 394 277 - 965
Savings/Investments 231 168 156 - 555
International - - - 118 118
Single premiums 4 601 551 1 650 107 6 909
Savings/Investments 4 248 299 859 - 5 406
Annuities 353 252 791 - 1 396
International - - - 107 107
New business premiums (APE) 985 617 599 129 2 330
Risk 294 394 278 - 966
Savings/Investments 655 198 242 - 1 095
Annuities 36 25 79 - 140
International - - - 129 129
New business premiums (PVP) 7 503 2 826 4 503 707 15 539
Profitability of new business as a % of APE 7.4 24.5 8.7 10.1 12.4
Profitability of new business as a % of PVP 1.0 5.3 1.2 1.8 1.9
Momentum
Momentum Metropolitan Employee Metropolitan
Retail Retail Benefits International Total
Rm Rm Rm Rm Rm
Restated
12 mths to 30.06.2012
Value of new business 173 262 130 34 599
Gross 235 284 173 34 726
Less cost of required capital (62) (22) (43) - (127)
New business premiums 11 518 2 282 4 458 497 18 755
Recurring premiums 1 054 1 035 790 228 3 107
Risk 566 735 419 - 1 720
Savings/Investments 486 300 368 - 1 154
Annuities 2 - 3 - 5
International - - - 228 228
Single premiums 10 464 1 247 3 668 269 15 648
Savings/Investments 9 699 659 2 397 - 12 755
Annuities 765 588 1 271 - 2 624
International - - - 269 269
New business premiums (APE) 2 100 1 159 1 157 255 4 671
Risk 566 734 419 - 1 719
Savings/Investments 1 456 366 608 - 2 430
Annuities 78 59 130 - 267
International - - - 255 255
New business premiums (PVP) 16 384 5 371 9 421 1 332 32 508
Profitability of new business as a % of APE 8.2 22.6 11.2 13.3 12.8
Profitability of new business as a % of PVP 1.1 4.9 1.4 2.6 1.8
Restated Restated
RECONCILIATION OF LUMP SUM INFLOWS 6 mths to 6 mths to 12 mths to
31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Total lump sum inflows 82 323 36 906 105 090
Inflows not included in value of new business (73 453) (30 500) (90 352)
Momentum Retail (6 582) (5 672) (13 063)
Momentum Employee Benefits (53) (180) (66)
Metropolitan International (573) (47) (1 122)
Momentum Investments
On-balance sheet inflows (11 406) (4 755) (10 661)
Off-balance sheet inflows (54 839) (19 846) (65 440)
Term extensions on maturing policies 379 427 885
Retirement annuity proceeds invested in living annuities - 151 -
Non-controlling interests and other adjustments (18) (75) 25
Single premiums included in value of new business 9 231 6 909 15 648
B. EXPECTED RETURN UNWINDING OF RDR
The expected return is determined by applying the risk discount rate applicable at the beginning of the
reporting period to the present value of in-force covered business at the beginning of the reporting period
and adding the expected return on new business, which is determined by applying the current risk discount
rate to the value of new business from the point of sale to the end of the period.
C. RELEASE FROM THE COST OF REQUIRED CAPITAL
The release from the cost of required capital represents the difference between the risk discount rate and
the expected after tax investment return on the assets backing the required capital over the year.
D. EXPECTED (OR ACTUAL) NET OF TAX PROFIT TRANSFER TO NET WORTH
The expected profit transfer for covered business from the present value of in-force to the adjusted net
worth is calculated on the statutory valuation method. While investment returns on certain explicit
discretionary margin reserves were retained in the past, expected investment returns of R55 million
(31.12.2011: R86 million; 30.06.2012: R146 million) on the statutory basis after tax (R68 million
(31.12.2011: R101 million; 30.06.2012: R182 million) on the published basis after tax) have been released
to earnings in the six months ended 31 December 2012 in conjunction with management's regular review of the
adequacy of these margins in line with the accounting policy. This item is released from the value of in
force as part of the item "Expected (or actual) net of tax profit transfer to net worth".
E. OPERATING EXPERIENCE VARIANCES
6 mths to 31.12.2012 6 mths to 12 mths to
31.12.2011 30.06.2012
OPERATING EXPERIENCE VARIANCES Notes ANW Net VIF EV EV EV
Rm Rm Rm Rm Rm
Momentum Retail 22 (38) (16) (111) 76
Mortality and morbidity 1 115 3 118 33 154
Terminations, premium cessations
and policy alterations 2 (22) (20) (42) (67) 3
Expense variance (10) - (10) (38) (23)
Other 3 (61) (21) (82) (39) (58)
Metropolitan Retail 7 (46) (39) 18 7
Mortality and morbidity 1 44 2 46 72 92
Terminations, premium cessations
and policy alterations 4 (11) (29) (40) (52) (76)
Expense variance 13 - 13 21 27
Other 5 (39) (19) (58) (23) (36)
Momentum Employee Benefits 89 177 266 21 147
Mortality and morbidity 1 56 - 56 (11) 53
Terminations 6 35 177 212 6 44
Expense variance - - - 3 14
Other (2) - (2) 23 36
Metropolitan International 41 31 72 (12) 38
Mortality and morbidity 1 31 (1) 30 28 62
Terminations, premium cessations
and policy alterations (7) 25 18 (34) 1
Expense variance (3) 1 (2) - (18)
Other 20 6 26 (6) (7)
Shareholder capital 7 202 26 228 232 328
Opportunity cost of required
capital - (7) (7) (25) 115
Total operating experience variances 361 143 504 123 711
Notes
1. Overall, mortality and morbidity experience during the last six months was better compared to what was
allowed for in the valuation basis.
2. Unfavourable experience on mainly Wealth business, including impacts of reduction in negotiated fees.
3. Mainly non-recurring costs related to strategic initiatives undertaken in the division.
4. Mainly one-off items relating to Direct Marketing terminations and expense recoveries on withdrawals
of smoothed bonus products. Corrective actions, including provisioning and modelling changes, have been
taken during the current period.
5. Mainly tax variances resulting from short term expense relief being lower than the long-term assumptions.
6. Due to improved persistency and a migration towards less capital intensive products.
7. The income recorded in respect of shareholder capital relates mostly to earnings from holding company
activities and the management of MMI's capital and shareholder balance sheet risks. Other sources of
earnings such as variations in actual tax payments and corporate expenses not allocated to underlying
business units are also included here.
F. OPERATING ASSUMPTION CHANGES
6 mths to 12 mths to
6 mths to 31.12.2012 31.12.2011 30.06.2012
OPERATING ASSUMPTION CHANGES Notes ANW Net VIF EV EV EV
Rm Rm Rm Rm Rm
Momentum Retail (59) (4) (63) 548 (220)
Mortality and morbidity assumptions - - - - 11
Renewal expense assumptions - - - (9) 17
Termination assumptions - - - - (7)
Modelling and methodology changes 1 (59) (4) (63) (172) (241)
Reallocation of margins from Shareholder
capital - - - 729 -
Metropolitan Retail (58) (15) (73) (10) 143
Mortality and morbidity assumptions (2) (1) (3) - 15
Renewal expense assumptions (6) 1 (5) 7 (3)
Termination assumptions 3 1 4 2 3
Methodology changes 1 (23) (23) (46) - (6)
Other 2 (30) 7 (23) (19) 134
Momentum Employee Benefits 25 2 27 25 296
Assumed mortality and morbidity profit
margin - - - - 82
Termination assumptions - - - - 56
Renewal expense assumptions - 4 4 13 109
Methodology changes 1 25 (2) 23 8 55
Other - - - 4 (6)
Metropolitan International (59) (59) (118) (20) (44)
Mortality and morbidity assumptions (3) (17) (20) - 1
Renewal expense assumptions 3 (30) (10) (40) 23 (8)
Termination assumptions 12 7 19 - (7)
Modelling and methodology changes 4 (38) (39) (77) (43) (30)
Shareholder capital (6) 12 6 (708) (6)
Reallocation of margins to Momentum Retail - - - (729) -
Other (6) 12 6 21 (6)
Methodology change: cost of required capital - - - (492) (459)
Total operating assumption changes (157) (64) (221) (657) (290)
Notes
1. Various model improvements within the divisions.
2. Mainly improvements to the modelling of paid-up policies.
3. Strengthening of expense reserving basis for certain International countries.
4. Various changes to models and methodology, including improvements to a) technical provisions for financial
guarantees and b) the cost of required capital calculations affecting the net VIF.
G. INVESTMENT RETURN ON ADJUSTED NET WORTH
6 mths to 6 mths to 12 mths to
INVESTMENT RETURN ON ADJUSTED NET WORTH 31.12.2012 31.12.2011 30.06.2012
Rm Rm Rm
Investment income 322 310 611
Capital appreciation 202 94 290
Preference share dividends paid and change in fair
value of preference shares (17) (35) (31)
Investment return on adjusted net worth 507 369 870
H. INVESTMENT VARIANCES
Investment variances represent the impact of higher/lower than assumed investment returns on current and
expected future after tax profits from in-force business.
I. ECONOMIC ASSUMPTION CHANGES
The economic assumption changes include the effect of the change in assumed rate of investment return,
expense inflation rate and risk discount rate in respect of local and offshore business.
J. CAPITAL TRANSFERRED FROM/(TO) NON-COVERED BUSINESS
Represents the alignment of net assets and value of in-force of mainly international subsidiaries between
covered and non-covered business.
Adjusted In-force business New business written
COVERED BUSINESS: SENSITIVITIES net
31.12.2012 worth Net Gross Cost of Net Gross Cost of
value value CAR value value CAR
Rm Rm Rm Rm Rm Rm Rm
Base value 13 188 16 547 19 441 (2 894) 340 423 (83)
1% increase in risk discount rate 15 179 18 378 (3 199) 271 366 (95)
% change (8) (5) 11 (20) (13) 14
1% reduction in risk discount rate 17 967 20 513 (2 546) 423 492 (69)
% change 9 6 (12) 24 16 (17)
10% decrease in future expenses 17 471 20 365 (2 894) 397 480 (83)
% change (1) 6 5 - 17 13 -
10% decrease in lapse, paid-up and
surrender rates 17 104 20 108 (3 004) 419 505 (86)
% change 3 3 4 23 19 4
5% decrease in mortality and morbidity
for assurance business 17 840 20 734 (2 894) 426 509 (83)
% change 8 7 - 25 20 -
5% decrease in mortality for annuity
business 16 298 19 183 (2 885) 334 417 (83)
% change (2) (1) - (2) (1) -
1% reduction in gross investment
return, inflation rate and risk 13 259 16 738 19 693 (2 955) 392 473 (81)
discount rate
% change (2) 1 1 1 2 15 12 (2)
1% reduction in inflation rate 13 548 16 835 19 728 (2 893) 376 459 (83)
% change 3 2 1 - 11 9 -
10% fall in market value of equities and
properties 13 006 15 543 18 604 (3 061)
% change (1) (6) (4) 6
10% reduction in premium indexation
take-up rate 16 229 19 123 (2 894) 316 399 (83)
% change (2) (2) - (7) (6) -
10% decrease in non-commission
related acquisition expenses 392 475 (83)
% change 15 12 -
1% increase in equity/property risk
premium 16 912 19 806 (2 894) 350 433 (83)
% change 2 2 - 3 2 -
1. No corresponding changes in variable policy charges are assumed, although in practice it is likely that these
will be modified according to circumstances.
2. Bonus rates are assumed to change commensurately.
3. The change in the value of cost of required capital is disclosed as nil where the sensitivity test results in
an insignificant change in the value.
STOCK EXCHANGE PERFORMANCE 31.12.2012 30.06.2012 31.12.2011 30.06.2011
6 month period
Value of listed shares traded (rand million) 6 792 7 946 3 474 5 936
Volume of listed shares traded (million) 335 445 209 355
Shares traded (% of average listed shares in issue) (1) 43 59 28 47
Value of shares traded life insurance (J857 Rbn) 62 65 54 53
Value of shares traded top 40 index (J200 Rbn) 1 368 1 423 1 368 1 288
Trade prices
Highest (cents per share) 2 232 1 976 1 876 1 775
Lowest (cents per share) 1 792 1 645 1 505 1 583
Last sale of period (cents per share) 2 217 1 800 1 710 1 699
Annualised percentage (%) change during period 52 11 1 5
Annualised percentage (%) change life insurance sector
(J857) 57 34 23 9
Annualised percentage (%) change top 40 index (J200) 38 8 (1) (1)
31 December/30 June
Price/diluted core headline earnings (segmental) ratio 11.8 9.8 10.6 10.6
Dividend yield % (dividend on listed shares) (1) 5.4 6.3 6.3 6.2
Dividend yield % top 40 index (J200) (1) 2.8 3.0 2.8 2.4
Total shares issued (million)
Ordinary shares listed on JSE 1 570 1 571 1 504 1 504
Unlisted share purchase scheme - - 1 1
Total ordinary shares in issue 1 570 1 571 1 505 1 505
Treasury shares held on behalf of contract holders (11) (13) (15) (14)
Adjustment to staff share scheme shares (2) - - (1) (1)
Share purchase scheme - - (1) (1)
Basic number of shares in issue 1 559 1 558 1 489 1 490
Adjustment to staff share scheme shares - - 1 1
Treasury shares held on behalf of contract holders 11 13 15 14
Convertible redeemable preference shares 34 34 100 100
Diluted number of shares in issue (3) 1 604 1 605 1 605 1 605
Market capitalisation at end (Rbn) (4) 36 29 27 27
Percentage (%) of life insurance sector (1) 13 13 13 15
1. Percentages have been annualised.
2. These are shares which have been issued since 1 January 2001, the date on which the group adopted AC133
(now IAS 39).
3. The diluted number of shares in issue takes into account all issued shares, assuming conversion of the
convertible redeemable preference shares and the release of staff share scheme shares, and includes the
treasury shares held on behalf of contract holders.
4. The market capitalisation is calculated on the fully diluted number of shares in issue.
Date: 06/03/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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