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Summarised and Audited Group Results for the six months ended 31 December 2013
MMI / MIM - MMI Holdings Limited - Trading Statement
MMI Holdings Limited
Incorporated in the Republic of South Africa
Registration Number: 2000/031756/06
JSE share code: MMI
NSX share code: MIM
ISIN: ZAE0001149902
("MMI" or "the company")
MMI HOLDINGS
SUMMARISED AND UNAUDITED GROUP RESULTS
For the six months ended 31 December 2013
DELIVERING ON OUR STRATEGY
Comparable VALUE of NEW BUSINESS up 23% to R378 million
Annualised RETURN on EMBEDDED VALUE OF 20%
Profits from OPERATING DIVISIONS UP 24%
Diluted CORE HEADLINE EARNINGS UP 13% TO R1.7 billion
Interim DIVIDEND UP 12% TO 57 CENTS PER SHARE
OUR INSURANCE BRANDS
MMI Holdings is a listed entity and operates through six client-facing divisions, utilising two
established insurance brands – Metropolitan and Momentum.
OVERVIEW OF OPERATIONS
GROUP RESULTS
MMI delivered very strong financial results for the period under review.
- Embedded value, at R37 billion (2 331 cents per share), reflects an impressive annualised return on
embedded value for shareholders of 20%.
- Diluted core headline earnings increased by 13% to R1.7 billion for the period. The contribution from
operating divisions increased 24% to R1.4 billion.
OPERATING ENVIRONMENT
Operating conditions remained economically challenging and highly competitive during the period under
review. Equity markets increased strongly while interest rate volatility continued. Consumer confidence
remained uncertain, with ongoing labour challenges, unemployment, indebtedness and inflation reducing
disposable and investible income. GDP growth in the rest of Africa, however, is proving to be resilient.
Overall, the need for and provision of investment and protection products within MMI’s client base remains
an important part of financial wellness and planning.
CAPITAL MANAGEMENT
- MMI actively manages its capital resources within a defined risk appetite and balances the interests of
all stakeholders.
- The investment mandate for shareholder capital is restricted to lower-risk investments.
- The group remains actively involved and committed to the Regulator’s Solvency Assessment and Management
(SAM) project.
- MMI intends to issue R1.5 billion of unsubordinated debt during March 2014.
- A strong capital buffer of R3.5 billion was reported as at 31 December 2013, after allowing for the
Guardrisk acquisition, other strategic growth initiatives and the interim dividend.
- Taking into account the various growth initiatives, the group is satisfied that its present capital
level is appropriate in the current environment. This position is regularly evaluated.
TRANSFORMATION
- MMI currently has a level two broad-based black economic empowerment (B-BBEE) contributor status.
- The group is a member of the JSE Sustainability Index, and remains committed to a strategy that
promotes sustainable businesses.
OVERVIEW OF OPERATIONS
MOMENTUM RETAIL
- New insurance business, on a present value of premiums (PVP) basis, increased 24% to R10.5 billion for
the half year.
- The value of new business increased 46% to R136 million, boosted by excellent guaranteed endowment
sales.
- Good risk experience continued, confirming the benefits of focusing on good quality new business.
- Operating expenses were well contained during the period.
- Operating profit for the half-year increased by 27% to R652 million.
METROPOLITAN RETAIL
- Single premium new business was 30% higher while recurring premiums, excluding FNB Life, were 10% above
the levels recorded in the prior period.
- The profit-sharing arrangement with FNB Life reduced from 10% to 4% with effect from 1 July 2013.
- The value of new business for the period, again excluding FNB Life, rose by 2% to R122 million as
further investments into the sales force increased selling expenses.
- Operating profit for the half-year increased by 30% to R315 million.
MOMENTUM EMPLOYEE BENEFITS
- New business, on a PVP basis, increased substantially, rising 31% to R6.5 billion for the period.
- Good risk and investment recurring premium new business were secured while increased retirement fund
single premiums further boosted the volumes.
- Value of new business exceeded expectations, increasing 36% to R90 million, at a satisfactory PVP
margin of 1.4%.
- Operating profit for the half-year increased by 13% to R179 million.
METROPOLITAN INTERNATIONAL
- New business increased 8% to R943 million on a PVP basis, with improved contributions from most
operations.
- The value of new business followed the same trend, increasing 7% to R30 million.
- Lives under administration in the health business increased by 7% to 408 thousand while claims ratios
improved as a result of good risk management and successful re-pricing.
- Operating profit for the half-year increased by 26% to R49 million.
MOMENTUM INVESTMENTS
- Focus on investment excellence paying off with equity and balanced fund performance showing
satisfactory improvement.
- Expanded Africa investment offering combined with recently added unconstrained strategies and Eris
increases product diversity.
- Increased revenue combined with well contained expenses resulted in improved expense ratios.
- Operating profit for the half-year increased by 28% to R95 million.
METROPOLITAN HEALTH
- Slower growth was recorded in the Government Employees Medical Scheme.
- A few corporate schemes were amalgamated into schemes administered outside the MMI group thus resulting
in lost business for the Group.
- As part of its revenue diversification strategy the group acquired Providence Healthcare Risk Managers.
- The business has been and will continue positioning itself for the anticipated health reforms.
- Operating profit for the half-year increased by 7% to R75 million.
SHAREHOLDER CAPITAL
- Shareholder capital includes investment income on shareholder capital, operating profit from the
Balance Sheet Management, MMI Rewards and Momentum Short-term Insurance businesses, central shareholder
expenses and new ventures.
- The current and prior period results include the reversal of income tax provisions that are no longer
required.
- Investment income in the current period has been impacted as a result of the R1 billion special
dividend paid in October 2012.
PROSPECTS
- The strategy of the MMI group is firmly focused on growth, excellence and client-centricity.
- Each division has implemented plans and processes to identify and optimise structures, operations,
target markets, distribution channels and product offerings through innovation and collaboration, in
order to grow each business.
- Growth in new business volumes will, however, remain dependent on the economic environment, including a
recovery in employment and improved disposable income levels.
- The board of MMI Holdings believes that the group has identified and is implementing innovative
strategies to unlock value and generate the required return on capital for shareholders over time.
DIRECTORS’ STATEMENT
The directors take pleasure in presenting the unaudited condensed interim results of MMI Holdings
financial services group for the period ended 31 December 2013. The preparation of the group’s results
was supervised by the group finance director, Preston Speckmann, BCompt (Hons), CA(SA).
Corporate events
On 4 November the group announced that it will acquire 100% of Guardrisk from Alexander Forbes. In terms
of the proposed transaction MMI will acquire the investment in Guardrisk from Alexander Forbes for an
amount of R1.6 billion. The acquisition is subject to, inter alia, regulatory approvals by the Financial
Services Board and the competition authorities.
Basis of preparation of financial information
These condensed consolidated interim financial statements have been prepared in accordance with
International Accounting Standard 34 (IAS 34) – Interim financial reporting; the SAICA Financial Reporting
Guide as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council; JSE Listing Requirements and as well as the South African Companies
Act of 2008. The accounting policies applied in the preparation of these interim financial statements are
in terms of International Financial Reporting Standards (IFRS) and are consistent with those adopted in
the previous periods except as described below. Critical judgements and accounting estimates are disclosed
in detail in the group’s integrated report for the year ended 30 June 2013, 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.
New and revised standards effective for the period ended 31 December 2013 and relevant to the group
- IFRS 10 – Consolidated financial statements, IFRS 11 – Joint arrangements, IAS 28 (revised) –
Investments in associates and joint ventures (consolidation project)
IFRS 10 builds on existing principles by identifying the concept of control as the determining factor
in whether an entity should be included within the consolidated financial statements of the parent
company. Under IFRS 10, subsidiaries are all entities (including structured entities) over which the
group has control. The group controls an entity when it has power over an entity, is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect these
returns through its power over the entity. If no single party controls the investee IFRS 11 provides
guidance on whether a joint arrangement exists. IAS 28 was revised to incorporate amendments from this
consolidation project.
- Collective investment schemes: Previously the group consolidated collective investment schemes where
the group’s holding in a fund was greater than 50% and investments in a fund of between 20% and 50%
were considered to be interests in associates. As a result of the adoption of IFRS 10 the group no
longer uses the percentage holdings referred to above as the defining parameter of control. This
resulted in an increased number of collective investment schemes being reclassified to subsidiaries
(from associates) and to associates (from unit linked investments).
- Cell captives: Before the adoption of IFRS 10, cells were regarded as separate entities under SIC 12
and were not included in the consolidated group results as the risks and rewards of these cells were
not transferred to the group. These cells were therefore included in the consolidated results of cell
owners. Under IFRS 10 a cell can only be consolidated by the cell owner if it first meets the
definition of a ‘silo’. Cell captives in South Africa are not legally ring-fenced and are not seen as
protected cells and therefore do not meet the definition of a ‘silo’. Cells are therefore no longer
considered to be separate entities. This resulted in the group recognising the assets, liabilities,
income and expenses relating to its cell captive business in its consolidated results. Because the
risks and rewards relating to cell activities are for the benefit of cell owners, the inclusion of
cell income and expenses does not impact the group’s net results, as the result of cell activities are
transferred back to the cell owner.
- Other financial instruments: There were no other material financial instruments that met the new
consolidation criteria.
The changes resulting from the above have been applied retrospectively as required by the transitional
provisions of IFRS 10.
IFRS 12 was also issued as part of the consolidation project and includes the disclosure requirements
for all forms of interests in other entities, including joint arrangements, associates, special purpose
entities and other off balance sheet vehicles. The group will incorporate these disclosures in the 2014
integrated report.
Refer to the appendix for details of the above required restatements to the previously reported statement
of financial position and income statement. The statement of other comprehensive income, statement of
changes in equity, statement of cash flows and segment report has also been restated. Total assets and
liabilities increased by R17.2 billion for June 2013 (December 2012: R11.2 billion). The restatements had
no material impact on the current or prior period earnings, diluted earnings or headline earnings per
share, nor on the net asset value of the group.
- Amendments to IAS 19 - Employee benefits
The revised employee benefit standard introduces changes to the recognition, measurement, presentation
and disclosure of post-employment benefits. The standard requires the immediate recognition of all past
services costs in the income statement and replaces interest cost and expected return on plan assets
with a net interest amount that is calculated by applying the discount rate to the net defined benefit
liability (asset). Remeasurements as defined in the standard are now recorded in other comprehensive
income. The application of this amendment did not have a significant impact on group’s financial
position, group earnings and cash flows in the current or prior period.
- IFRS 13 – Fair value measurements
IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair
value and a single source of fair value measurement and disclosure requirements for use across IFRSs.
This standard is required to be applied prospectively with no restatements. The impact of this change
of fair value measurement has not been material on the current period earnings, diluted earnings or
headline earnings per share, nor on the net asset value of the group. IAS 34 – Interim reporting was
revised for the introduction of IFRS 13 and requires additional disclosure on financial instruments
carried at fair value. The group has complied with these additional disclosure requirements in these
interim results.
- Other
- IFRS 7 (amendment) – Financial instruments: disclosures: offsetting financial assets and financial
liabilities became effective for the first time in the current period and had no impact on the group’s
earnings.
- The International Accounting Standards Board (IASB) made amendments to various standards as part of
their annual improvements project. These amendments had no impact on the group’s earnings.
Reclassifications
The December 2012 and June 2013 results have been restated for the following reclassifications:
- 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.
- MMI Rewards (including Momentum Multiply) has been reallocated from Momentum Retail to Shareholder
Capital as the Rewards programme is a group-wide initiative. As a result the income, expenses,
employees and all related activities have moved from the Momentum Retail to the Shareholder Capital
segment.
- The Momentum Employee Benefit segment has taken over the management of the open health scheme
administration business to better align this with the corporate business. As a result the income,
expenses, employees and all related activities have moved from the Metropolitan Health to the Momentum
Employee Benefit segment.
These restatements had no impact on the current or prior period reported earnings, diluted earnings or
headline earnings per share, nor on the net asset value or the statement of cash flows. Refer to the
analysis of restatements tables for more details.
Embedded value – FNB Life
The contractual agreement between MMI and FirstRand Bank was changed with effect from 1 July 2013
reducing MMI’s profit-sharing arrangement from 10% to 4%. As a result of this change, the value of new
business and value of in-force of this FNB Life business has been excluded from the published MMI
embedded value with effect from 1 July 2013. The profits arising from this business will therefore now be
recognised in the embedded value earnings only as they emerge. The prior period numbers have not been
restated as the change occurred during the current reporting period.
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
Blignault Gouws, a non-executive director, retired from the Board of MMI Holdings on 27 November 2013.
On the same day Mary Vilakazi resigned from the Board as non-executive director in order to take up an
executive position with the group as described below. Louis Leon von Zeuner was appointed as a non-
executive director of MMI, with effect from 1 January 2014.
Wilhelm van Zyl, the deputy group CEO, informed the Board that he will be leaving the group, and
resigning as a director, with effect from 30 June 2014. MMI would like to thank him for his 24 years
of invaluable service to the group. He played a pivotal role in the creation of MMI and the successful
completion of the integration phase. We wish him well in his future endeavours.
All transactions in listed shares of the company involving directors were disclosed on SENS.
Changes to the group executive committee
In November 2013 Jan Lubbe, chief risk officer, and Vuyo Lee, group executive brand - stakeholder
management and sustainability, were appointed as members of the group executive committee.
Nigel Dunkley, group executive - balance sheet management has been transferred to the group’s asset
management business in the UK and Mary Vilakazi has been appointed as group executive - balance sheet
management from 1 May 2014.
Contingent liabilities and capital commitments
As part of running a business, the group is party to legal proceedings and appropriate provisions are
made when losses are expected to materialise. The group had no material capital commitments at 31
December 2013 that were not in the ordinary course of business.
Events after the reporting period
The Competition Tribunal and FSB approved the Guardrisk transaction on 12 February 2014 and 24 February
2014 respectively. The disclosure of the initial accounting for the business combination will be included
in the June 2014 financial results as the approvals were only obtained in February.
Metropolitan International acquired a significant majority stake in Kenyan insurer Cannon Assurance Ltd
(Cannon) for around R300 million. The acquisition is subject to regulatory and other required approvals.
The shareholders of Cannon will in turn acquire a minority stake in Metropolitan Life Kenya. This
transaction will enable a merger of the two companies with the consolidation of the life licences into
one and a standalone short-term insurance licence and business.
MMI intends to issue R1.5 billion of unsubordinated debt during March 2014 for which FSB approval has
already been received.
No other material events occurred between the reporting date and the date of approval of the interim
results.
Dividend declaration
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 2014 a gross interim dividend of 57 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 Friday, 28 March 2014 and will be paid on Monday, 31 March 2014. The dividend will be subject
to local dividend 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 0.01429 cents per
ordinary share. This will result in a net dividend, for those shareholders who are not exempt from paying
dividend tax, of 48.45214 cents per ordinary share.
The number of ordinary shares in issue at the declaration date was 1 569 803 700, whilst the last day to
trade cum dividend will be Thursday, 20 March 2014. The shares will trade ex dividend from the start of
business on Monday, 24 March 2014. Share certificates may not be dematerialised or rematerialised
between Monday, 24 March 2014 and Friday, 28 March 2014, both days inclusive. MMI’s income tax number is
975 2050 147.
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 shares
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 R5 674.
Directors’ responsibility and external audit
These results are the responsibility of the directors. The condensed interim results have not been
reviewed or audited by the external auditors. A printed version of the SENS announcement may be requested
from the group company secretary, Maliga Chetty tel: 012 684 4255.
Signed on behalf of the board
JJ Njeke Chairman
Nicolaas Kruger Group chief executive officer
Centurion
5 March 2014
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, F Jakoet, Prof JD Krige, PJ Moleketi, SA Muller, V Nkonyeni, SE Nxasana,
KC Shubane, FJC Truter, BJ van der Ross, JC van Reenen, LL von Zeuner
SECRETARY: Maliga Chetty
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 (registration number: 2000/031756/06)
REGISTERED OFFICE: 268 West Avenue, Centurion
JSE CODE: MMI NSX CODE: MIM ISIN NO. ZAE0001149902
MMI HOLDINGS GROUP – IFRS FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated Restated
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
ASSETS
Intangible assets 11 596 12 097 11 769
Owner-occupied properties 1 528 1 504 1 488
Property and equipment 330 316 348
Investment properties 7 343 5 766 6 433
Investment in associates 128 68 121
Employee benefit assets 330 308 327
Financial instrument assets (1) 332 171 297 743 312 424
Reinsurance contracts 1 247 1 333 1 345
Deferred income tax 103 110 124
Properties under development 129 90 98
Insurance and other receivables 2 924 3 039 2 828
Current income tax assets 83 68 108
Cash and cash equivalents 21 865 23 347 22 275
Non-current assets held for sale 17 716 680
Total assets 379 794 346 505 360 368
EQUITY
Equity attributable to owners of the parent 24 191 23 066 23 473
Preference shares - 500 -
24 191 23 566 23 473
Non-controlling interests 408 416 391
Total equity 24 599 23 982 23 864
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 100 500 95 496 96 642
Financial instrument liabilities
Investment contracts 205 711 173 675 184 713
– with discretionary participation features 24 414 25 445 24 937
– designated at fair value through income 181 297 148 230 159 776
Other financial instrument liabilities (2) 34 893 31 257 38 295
Deferred income tax 4 249 4 279 3 917
Employee benefit obligations 1 244 1 136 1 328
Other payables 8 224 16 269 11 162
Provisions 153 164 180
Current income tax liabilities 221 247 267
Total liabilities 355 195 322 523 336 504
Total equity and liabilities 379 794 346 505 360 368
1. Financial instrument assets consist of the following:
Securities designated at fair value through income: R316 592 million (31.12.2012: R276 503 million;
30.06.2013: R289 501 million)
Investments in associates designated at fair value through income: R7 243 million (31.12.2012: R10 760
million; 30.06.2013: R13 031 million)
Derivative financial instruments: R3 442 million (31.12.2012: R4 461 million; 30.06.2013: R3 173
million)
Held-to-maturity assets: R76 million (31.12.2012: R75 million; 30.06.2013: R69 million)
Available-for-sale assets: R437 million (31.12.2012: R1 345 million; 30.06.2013: R953 million)
Loans and receivables: R4 381 million (31.12.2012: R4 599 million; 30.06.2013: R5 697 million)
2. Other financial instrument liabilities consist of the following:
Liabilities designated at fair value through income: R30 082 million (31.12.2012: R27 086 million;
30.06.2013: R34 171 million)
Derivative financial instruments: R2 925 million (31.12.2012: R2 844 million; 30.06.2013: R2 547
million)
Liabilities at amortised cost: R1 886 million (31.12.2012: R1 327 million; 30.06.2013: R1 577 million)
CONDENSED CONSOLIDATED INCOME STATEMENT
Restated Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Net insurance premiums received 10 511 12 585 23 304
Fee income (1) 3 198 2 668 6 205
Investment income 6 982 6 899 14 375
Net realised and fair value gains 27 826 21 376 30 548
Net income 48 517 43 528 74 432
Net insurance benefits and claims 11 308 10 647 20 327
Change in liabilities 3 160 9 055 9 305
Change in insurance contract liabilities 3 848 7 503 8 501
Change in investment contracts with DPF liabilities (523) 1 748 1 239
Change in reinsurance provision 118 (12) (21)
Change in cell owner liabilities (283) (184) (414)
Fair value adjustments on investment contract liabilities 20 321 12 418 22 715
Fair value adjustments on collective investment scheme liabilities 2 629 1 523 2 782
Depreciation, amortisation and impairment expenses 564 566 1 144
Employee benefit expenses 2 603 2 447 4 494
Sales remuneration 1 815 1 612 3 061
Other expenses 2 167 2 029 4 476
Expenses 44 567 40 297 68 304
Results of operations 3 950 3 231 6 128
Share of profit of associates 6 9 12
Finance costs (2) (722) (631) (1 685)
Profit before tax 3 234 2 609 4 455
Income tax expenses (1 416) (1 113) (1 804)
Earnings 1 818 1 496 2 651
Attributable to:
Owners of the parent 1 796 1 468 2 587
Non-controlling interests 22 13 32
MMI Group Ltd preference shares - 15 32
1 818 1 496 2 651
Basic earnings per ordinary share (cents) 115.4 94.2 166.0
Diluted earnings per ordinary share (cents) 113.7 93.7 164.2
1. Fee income consists of the following:
Investment contracts: R983 million (31.12.2012: R662 million; 30.06.2013: R1 901 million)
Trust and fiduciary services: R900 million (31.12.2012: R890 million; 30.06.2013: R1 837 million)
Health administration services: R953 million (31.12.2012: R901 million; 30.06.2013: R1 866 million)
Other fee income: R362 million (31.12.2012: R215 million; 30.06.2013: R601 million)
2. Finance costs consist of the following:
Preference shares issued by MMI Holdings Ltd: R23 million (31.12.2012: R23 million; 30.06.2013:
R46 million)
Subordinated redeemable debt: R55 million (31.12.2012: R56 million; 30.06.2013: R100 million)
Cost of carry and derivative financial instruments: R580 million (31.12.2012: R477 million;
30.06.2013: R1 273 million)
Other: R64 million (31.12.2012: R75 million; 30.06.2013: R266 million)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Earnings 1 818 1 496 2 651
Other comprehensive income for the period, net of tax 109 69 88
Items that may subsequently be reclassified to income 54 17 86
Exchange differences on translating foreign operations 53 15 86
Available-for-sale financial assets 1 2 -
Items that will not be reclassified to income 55 52 2
Land and buildings revaluation 38 59 9
Adjustments to defined benefit pension fund 27 - -
Change in non-distributable reserves - - (10)
Income tax relating to items that will not be reclassified (10) (7) 3
Total comprehensive income for the period 1 927 1 565 2 739
Total comprehensive income attributable to:
Owners of the parent 1 899 1 532 2 654
Non-controlling interests 28 18 53
MMI Group Ltd preference shares - 15 32
1 927 1 565 2 739
RECONCILIATION OF HEADLINE EARNINGS
attributable to owners of the parent
Basic earnings
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Earnings 1 796 1 468 2 587
Finance costs – convertible preference shares
Dilutory effect of subsidiaries (1)
Diluted earnings
Realised gains on available-for-sale financial assets - - (2)
Intangible asset and other impairments 16 1 3
Profit on change from associate to subsidiary - (54) (67)
Loss on sale of business 2 - 3
Headline earnings (2) 1 814 1 415 2 524
Net realised and fair value gains on excess (398) (232) (340)
Basis and other changes and investment variances (64) (10) 367
Amortisation of intangible assets relating to business combinations 277 302 587
Corporate restructuring expenses (3) 27 - 58
Dilutory effect of subsidiaries (1)
Investment income on treasury shares – contract holders
Core headline earnings (4) 1 656 1 475 3 196
RECONCILIATION OF HEADLINE EARNINGS
attributable to owners of the parent (continued)
Diluted earnings
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Earnings 1 796 1 468 2 587
Finance costs – convertible preference shares 23 23 46
Dilutory effect of subsidiaries (1) (10) - (19)
Diluted earnings 1 809 1 491 2 614
Realised gains on available-for-sale financial assets - - (2)
Intangible asset and other impairments 16 1 3
Profit on change from associate to subsidiary - (54) (67)
Loss on sale of business 2 - 3
Headline earnings (2) 1 827 1 438 2 551
Net realised and fair value gains on excess (398) (232) (340)
Basis and other changes and investment variances (64) (10) 367
Amortisation of intangible assets relating to business combinations 277 302 587
Corporate restructuring expenses (3) 27 - 58
Dilutory effect of subsidiaries (1) - (12) -
Investment income on treasury shares – contract holders 21 15 18
Core headline earnings (4) 1 690 1 501 3 241
1. Metropolitan Health is consolidated at 100% and the Metropolitan Namibian group and Metropolitan Kenya
are consolidated at 96% in the results. For purposes of diluted earnings, diluted non-controlling
interests and investment returns are reinstated. The dilutory impact of these subsidiaries has been
included in diluted earnings in the current period and June 2013.
2. Headline earnings consist of operating profit, investment income, net realised and fair value gains,
investment variances and basis and other changes.
3. Corporate restructuring expenses include once-off costs relating to the restructuring of the group.
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, 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
31.12.2013 31.12.2012 30.06.2013
Basic
Core headline earnings 106.4 94.7 205.1
Headline earnings 116.6 90.8 162.0
Earnings 115.4 94.2 166.0
Weighted average number of shares (million) 1 556 1 558 1 558
Diluted
Core headline earnings 105.4 93.6 202.1
Weighted average number of shares (million) (1) 1 604 1 604 1 604
Headline earnings 114.9 90.3 160.2
Earnings 113.7 93.7 164.2
Weighted average number of shares (million) (2) 1 591 1 592 1 592
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 2014 2013
Ordinary listed MMI Holdings Ltd shares (cents per share)
Interim – March 57 51
Final – September 76
Total 127
MMI Holdings convertible redeemable preference shares (issued to Kagiso Tiso Holdings (KTH))
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 prior to that date. Dividends are payable at
132 cents per annum (payable March and September).
Significant related party transactions
MMI Holdings Ltd declared R298 million (2013: R271 million) in ordinary dividends to RMI Holdings Ltd in
September 2013 (2013: September 2012) and R200 million in ordinary dividends to RMI Holdings Ltd in
March 2013. In September 2012, MMI Holdings Ltd also declared R255 million in special dividends to RMI
Holdings Ltd.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Changes in share capital
Balance at beginning and end 9 9 9
Changes in share premium
Balance at beginning 13 794 13 805 13 805
Treasury shares held on behalf of contract holders 16 31 (4)
Share buy-back - (7) (7)
Balance at end 13 810 13 829 13 794
Changes in other reserves
Balance at beginning 1 631 1 572 1 572
Total comprehensive income 103 64 67
Transfer from/(to) retained earnings 3 (3) (8)
Balance at end (1) 1 737 1 633 1 631
Changes in retained earnings
Balance at beginning 8 039 8 131 8 131
Total comprehensive income 1 796 1 468 2 587
Dividend paid (1 197) (2 095) (2 886)
Transactions with non-controlling interests - 88 87
Transfer (to)/from other reserves (3) 3 8
Profit on preference share buy-back - - 112
Balance at end 8 635 7 595 8 039
Equity attributable to owners of the parent 24 191 23 066 23 473
MMI Group Ltd preference shares
Balance at beginning - 500 500
Total comprehensive income - 15 32
Dividend paid - (15) (32)
Share buy-back - - (500)
Balance at end - 500 -
Changes in non-controlling interests
Balance at beginning 391 281 281
Total comprehensive income 28 18 53
Dividends paid (11) (9) (97)
Transactions with owners - 11 39
Business combinations - 115 115
Balance at end 408 416 391
Total equity 24 599 23 982 23 864
1. Other reserves consist of the following:
Land and buildings revaluation reserve: R562 million (31.12.2012: R580 million; 30.06.2013:
R534 million)
Foreign currency translation reserve: R185 million (31.12.2012: R85 million; 30.06.2013: R139 million)
Fair value adjustment for preference shares issued by MMI: R940 million (31.12.2012: R940 million;
30.06.2013: R940 million)
Fair value reserve: R12 million (31.12.2012: R12 million; 30.06.2013: R11 million)
Non-distributable reserve: R8 million (31.12.2012: R13 million; 30.06.2013: R4 million)
Equity-settled share-based payments reserve: R3 million (31.12.2012: R3 million; 30.06.2013:
R3 million)
Employee benefit revaluation reserve: R27 million (31.12.2012: Rnil; 30.06.2013: Rnil)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Restated Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Net cash inflow from operating activities 787 8 119 7 924
Net cash outflow from investing activities (307) (907) (753)
Net cash outflow from financing activities (890) (2 138) (3 169)
Net cash flow (410) 5 074 4 002
Cash resources and funds on deposit at beginning 22 275 18 273 18 273
Cash resources and funds on deposit at end 21 865 23 347 22 275
PRINCIPAL ASSUMPTIONS (South Africa) (1)
31.12.2013 31.12.2012 30.06.2013
% % %
Pre-tax investment return
Equities 11.8 10.5 11.4
Properties 9.3 8.0 8.9
Government stock 8.3 7.0 7.9
Other fixed interest stocks 8.8 7.5 8.4
Cash 7.3 6.0 6.9
Risk-free return 8.3 7.0 7.9
Risk discount rate (RDR) 10.6 9.4 10.2
Investment return (before tax) – balanced portfolio 10.5 9.2 10.1
Expense inflation base rate (2) 6.5 4.9 6.1
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.
2. An additional 1% expense inflation is allowed for in some divisions to reflect the impact of closed
books that are in run-off.
NON-CONTROLLING INTERESTS
31.12.2013 31.12.2012 30.06.2013
% % %
Eris Property Group 45.7 45.7 45.7
Metropolitan Botswana 24.2 24.2 24.2
Metropolitan Ghana 5.0 5.0 5.0
Metropolitan Health Botswana (previously Momentum Health Botswana) 28.0 28.0 28.0
Metropolitan Health Ghana (previously Momentum Health Ghana) 4.8 4.8 4.8
Metropolitan Health Group 17.6 17.6 17.6
Metropolitan Health Mauritius (previously Momentum Health Mauritius) 5.0 5.0 5.0
Metropolitan Health Namibia Administrators 49.0 49.0 49.0
Metropolitan Kenya 33.7 33.7 33.7
Metropolitan Namibia 10.3 10.3 10.3
Metropolitan Nigeria 50.0 50.0 50.0
Metropolitan Swaziland 33.0 33.0 33.0
Metropolitan Tanzania (previously Momentum Tanzania) 33.0 33.0 33.0
Metropolitan Zambia (previously Momentum Zambia) 35.0 35.0 35.0
Momentum Mozambique 33.0 25.0 33.0
Momentum Swaziland 33.0 - 33.0
ANALYSIS OF ASSETS UNDER MANAGEMENT
Restated Restated
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
On-balance sheet assets
Managed and/or administered by Momentum Investments 230 962 205 039 222 753
Investment assets 221 760 197 769 214 832
Properties 9 202 7 270 7 921
Momentum Wealth linked product assets under administration 74 644 56 421 63 045
Managed internally or by other managers within MMI 19 751 24 872 18 592
Managed by external managers 32 990 37 561 33 941
Other assets 21 447 22 612 22 037
379 794 346 505 360 368
Off-balance sheet assets
Managed and/or administered by Momentum Investments 139 846 134 707 140 874
Collective investment schemes 70 190 63 044 69 562
Segregated assets and linked products 53 240 53 006 54 005
Properties 16 416 18 657 17 307
Managed internally or by other managers within MMI 4 469 4 522 4 543
Momentum Employee Benefits – segregated assets 1 333 1 177 1 232
Metropolitan Health 10 102 10 228 9 540
Momentum Wealth linked product assets under administration 48 373 39 135 43 437
Total assets under management 583 917 536 274 559 994
Total assets managed and/or administered by Momentum Investments 370 808 339 746 363 627
Other assets under management 213 109 196 528 196 367
Total assets under management 583 917 536 274 559 994
ANALYSIS OF ASSETS BACKING SHAREHOLDER EXCESS
31.12.2013 31.12.2012 30.06.2013
Rm % Rm % Rm %
Equity securities 1 050 4.3 1 080 4.6 973 4.1
Preference shares 967 4.0 374 1.6 538 2.3
Collective investment schemes 272 1.1 535 2.3 699 3.0
Debt securities 4 994 20.6 4 393 18.6 3 797 16.2
Properties 2 506 10.3 1 991 8.5 2 324 9.9
Owner-occupied properties 1 190 4.9 1 290 5.5 1 175 5.0
Investment properties 1 316 5.4 701 3.0 1 149 4.9
Cash and cash equivalents and funds on deposit 7 289 30.1 9 126 38.7 9 405 40.1
Intangible assets 7 092 29.3 7 654 32.5 7 109 30.3
Other net assets 1 892 7.9 311 1.3 503 2.1
26 062 107.6 25 464 108.1 25 348 108.0
Redeemable preference shares (313) (1.3) (313) (1.3) (313) (1.3)
Subordinated redeemable debt (1 558) (6.3) (1 585) (6.8) (1 562) (6.7)
Shareholder excess per reporting basis 24 191 100.0 23 566 100.0 23 473 100.0
MMI HOLDINGS GROUP – SEGMENTAL INFORMATION
Momentum
6 mths to 31.12.2013 Momentum Metropolitan Employee
Retail Retail Benefits
Rm Rm Rm
Revenue
Net insurance premiums 11 357 3 450 7 796
Recurring premiums 3 860 2 752 4 014
Single premiums 7 497 698 3 782
Fee income 1 119 51 704
Fee income 1 119 51 704
Inter-segmental fee income - - -
Expenses
Net payments to contract holders
External payments 10 689 2 896 5 532
Other expenses 1 707 1 107 718
Sales remuneration 940 502 47
Administration expenses 767 605 671
Amortisation due to business combinations and impairments - - -
Direct property expenses - - -
Asset management and other fee expenses - - -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 652 315 179
Operating profit (2) 908 434 242
Tax on operating profit (2) (256) (119) (63)
Investment income - - -
Tax on investment income - - -
Actuarial liabilities 166 858 30 913 61 420
6 mths to 31.12.2013 (continued) Metropolitan Momentum Metropolitan
International Investments Health
Rm Rm Rm
Revenue
Net insurance premiums 1 421 3 781 23
Recurring premiums 1 264 - 23
Single premiums 157 3 781 -
Fee income 102 768 738
Fee income 102 768 738
Inter-segmental fee income - - -
Expenses
Net payments to contract holders
External payments 770 6 653 21
Other expenses 634 636 651
Sales remuneration 232 - -
Administration expenses 387 471 630
Amortisation due to business combinations and impairments 15 - 8
Direct property expenses - - -
Asset management and other fee expenses - 165 13
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 49 95 75
Operating profit (2) 62 117 91
Tax on operating profit (2) (13) (37) (20)
Investment income - 21 6
Tax on investment income - (6) (2)
Actuarial liabilities 8 415 34 410 10
6 mths to 31.12.2013 (continued) Shareholder Segmental Reconciling IFRS
Capital total items (1) total
Rm Rm Rm Rm
Revenue
Net insurance premiums 159 27 987 (17 476) 10 511
Recurring premiums 154 12 067 (3 333) 8 734
Single premiums 5 15 920 (14 143) 1 777
Fee income 252 3 734 (536) 3 198
Fee income 252 3 734 63 3 797
Inter-segmental fee income - - (599) (599)
Expenses
Net payments to contract holders
External payments 195 26 756 (15 448) 11 308
Other expenses 540 5 993 1 156 7 149
Sales remuneration 32 1 753 62 1 815
Administration expenses 152 3 683 261 3 944
Amortisation due to business combinations
and impairments 19 42 385 427
Direct property expenses - - 75 75
Asset management and other fee expenses 177 355 974 1 329
Holding company expenses 160 160 - 160
Inter-segmental expenses - - (601) (601)
Diluted core headline earnings 325 1 690 - 1 690
Operating profit (2) 56 1 910 209 2 119
Tax on operating profit (2) (34) (542) (209) (751)
Investment income 422 449 - 449
Tax on investment income (119) (127) - (127)
Actuarial liabilities 3 310 305 336 875 306 211
1. The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums
(R17 584 million) and claims (R15 447 million); FNB Life excluded from Metropolitan Retail
(premiums R108 million, fee income R10 million, claims R1 million, sales remuneration R33 million and
expenses R84 million); corporate restructuring expenses of R36 million; direct property and asset
management fees for all segments, except non-life segments, that are set off against investment
income for management reporting purposes but shown as an expense for accounting purposes; the
amortisation of intangibles relating to business combinations; cell captive expenses (R51 million)
and sales remuneration (R35 million) attributable to cell owners; and other minor adjustments to
expenses (R90 million), sales remuneration (R6 million) and fee income (R53 million).
2. ‘Reconciling items’ represents tax payable by cell captive owners.
Momentum
Momentum Metropolitan Employee
Restated Retail Retail Benefits
6 mths to 31.12.2012 Rm Rm Rm
Revenue
Net insurance premiums 8 842 3 141 6 624
Recurring premiums 3 740 2 606 3 417
Single premiums (2) 5 102 535 3 207
Fee income 899 45 522
Fee income 899 45 522
Inter-segmental fee income - - -
Expenses
Net payments to contract holders
External payments 9 036 2 230 4 338
Other expenses 1 592 1 060 665
Sales remuneration 813 469 83
Administration expenses 779 591 582
Amortisation due to business combinations and impairments - - -
Direct property expenses - - -
Asset management and other fee expenses - - -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 514 242 159
Operating profit (3) 718 337 234
Tax on operating profit (3) (204) (95) (75)
Investment income - - -
Tax on investment income - - -
Actuarial liabilities 146 381 28 794 50 191
Metropolitan Momentum Metropolitan
Restated International Investments Health
6 mths to 31.12.2012 (continued) Rm Rm Rm
Revenue
Net insurance premiums 1 267 11 406 15
Recurring premiums 1 069 - 15
Single premiums (2) 198 11 406 -
Fee income 100 746 735
Fee income 100 746 735
Inter-segmental fee income - - -
Expenses
Net payments to contract holders
External payments 668 11 100 15
Other expenses 545 633 648
Sales remuneration 167 - -
Administration expenses 377 506 637
Amortisation due to business combinations and impairments 1 1 8
Direct property expenses - - -
Asset management and other fee expenses - 126 3
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 39 74 70
Operating profit (3) 54 81 87
Tax on operating profit (3) (15) (23) (21)
Investment income - 22 6
Tax on investment income - (6) (2)
Actuarial liabilities 7 127 33 015 1
Shareholder Segmental Reconciling IFRS
Restated Capital total items (1) total
6 mths to 31.12.2012 (continued) 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 (2) 1 20 449 (16 829) 3 620
Fee income 188 3 235 (567) 2 668
Fee income 188 3 235 12 3 247
Inter-segmental fee income - - (579) (579)
Expenses
Net payments to contract holders
External payments 163 27 550 (16 903) 10 647
Other expenses 476 5 619 1 035 6 654
Sales remuneration 16 1 548 64 1 612
Administration expenses 187 3 659 214 3 873
Amortisation due to business combinations
and impairments 19 29 409 438
Direct property expenses - - 103 103
Asset management and other fee expenses 107 236 818 1 054
Holding company expenses 147 147 - 147
Inter-segmental expenses - - (573) (573)
Diluted core headline earnings 403 1 501 - 1 501
Operating profit (3) (8) 1 503 141 1 644
Tax on operating profit (3) 65 (368) (141) (509)
Investment income 444 472 - 472
Tax on investment income (98) (106) - (106)
Actuarial liabilities 3 188 268 697 474 269 171
1. The '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; cell captive expenses (R18 million) and
sales remuneration (R31 million) attributable to cell owners; and other minor adjustments to expenses
(R135 million), sales remuneration (R3 million) and fee income (R12 million).
2. Momentum Investments includes two significant client single premium inflows.
3. ‘Reconciling items’ represents tax payable by cell captive owners.
Momentum
Momentum Metropolitan Employee
Restated Retail Retail Benefits
12 mths to 30.06.2013 Rm Rm Rm
Revenue
Net insurance premiums 18 575 6 246 12 228
Recurring premiums 7 611 5 013 7 145
Single premiums 10 964 1 233 5 083
Fee income 2 089 134 1 182
Fee income 2 089 134 1 182
Inter-segmental fee income - - -
Expenses
Net payments to contract holders 18 609 4 509 9 385
External payments 18 609 4 509 9 385
Inter-segmental payments - - -
Other expenses 3 173 2 029 1 287
Sales remuneration 1 645 871 82
Administration expenses 1 528 1 158 1 205
Amortisation due to business combinations and impairments - - -
Direct property expenses - - -
Asset management and other fee expenses - - -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 1 158 509 341
Operating profit (2) 1 619 707 456
Tax on operating profit (2) (461) (198) (115)
Investment income - - -
Tax on investment income - - -
Actuarial liabilities 153 463 29 070 54 614
Metropolitan Momentum Metropolitan
Restated International Investments Health
12 mths to 30.06.2013 (continued) Rm Rm Rm
Revenue
Net insurance premiums 2 535 16 819 37
Recurring premiums 2 244 - 37
Single premiums 291 16 819 -
Fee income 145 1 467 1 452
Fee income 145 1 467 1 452
Inter-segmental fee income - - -
Expenses
Net payments to contract holders 1 340 15 241 37
External payments 1 340 15 241 37
Inter-segmental payments - - -
Other expenses 1 052 1 215 1 294
Sales remuneration 335 - -
Administration expenses 715 948 1 279
Amortisation due to business combinations and impairments 2 1 15
Direct property expenses - - -
Asset management and other fee expenses - 266 -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 108 175 140
Operating profit (2) 145 198 163
Tax on operating profit (2) (37) (54) (33)
Investment income - 43 14
Tax on investment income - (12) (4)
Actuarial liabilities 7 656 32 703 11
Shareholder Segmental Reconciling IFRS
Restated Capital total items (1) total
12 mths to 30.06.2013 (continued) Rm Rm Rm Rm
Revenue
Net insurance premiums 299 56 739 (33 435) 23 304
Recurring premiums 287 22 337 (4 889) 17 448
Single premiums 12 34 402 (28 546) 5 856
Fee income 470 6 939 (734) 6 205
Fee income 470 6 939 193 7 132
Inter-segmental fee income - - (927) (927)
Expenses
Net payments to contract holders 269 49 390 (29 063) 20 327
External payments 269 49 390 (29 031) 20 359
Inter-segmental payments - - (32) (32)
Other expenses 974 11 024 2 151 13 175
Sales remuneration 34 2 967 94 3 061
Administration expenses 352 7 185 633 7 818
Amortisation due to business combinations
and impairments 39 57 795 852
Direct property expenses - - 220 220
Asset management and other fee expenses 313 579 1 359 1 938
Holding company expenses 236 236 - 236
Inter-segmental expenses - - (950) (950)
Diluted core headline earnings 810 3 241 - 3 241
Operating profit (2) 211 3 499 302 3 801
Tax on operating profit (2) (52) (950) (302) (1 252)
Investment income 860 917 - 917
Tax on investment income (209) (225) - (225)
Actuarial liabilities 3 250 280 767 588 281 355
1. The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums
(R33 609 million) and claims (R29 034 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 R174 million, fee income R11 million, claims R3 million, sales remuneration R65 million and
expenses R130 million); grossing up of fee income and expenses relating to properties under
development (R121 million); corporate restructuring expenses of R67 million; direct property and
asset management fees for all segments, except non-life segments, that are set off against investment
income for management reporting purposes but shown as an expense for accounting purposes; the
amortisation of intangibles relating to business combinations; cell captive expenses (R47 million)
and sales remuneration (R46 million) attributable to cell owners; and other minor adjustments to
expenses (R268 million), sales remuneration (R17 million) and fee income (R61 million).
2. ‘Reconciling items’ represents tax payable by cell captive owners.
Analysis of reclassifications
The comparative segmental information has been restated for the effect of IFRS 10 and, 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 total core headline earnings.
Momentum
Momentum Metropolitan Employee
Retail Retail Benefits
Rm Rm Rm
December 2012
Fee income
Published December 2012 1 028 45 384
Reclassifications (129) - 138
Restated December 2012 899 45 522
Other expenses
Published December 2012 1 611 1 060 531
Reclassifications (19) - 134
Restated December 2012 1 592 1 060 665
Actuarial liabilities
Published December 2012 146 381 28 794 50 191
Reclassifications - - -
Restated December 2012 146 381 28 794 50 191
Diluted core headline earnings
Published December 2012 522 242 163
Reclassifications (8) - (4)
Restated December 2012 514 242 159
Analysis of reclassifications (continued)
Metropolitan Momentum Metropolitan
International Investments Health
Rm Rm Rm
December 2012
Fee income
Published December 2012 100 746 873
Reclassifications - - (138)
Restated December 2012 100 746 735
Other expenses
Published December 2012 545 633 779
Reclassifications - - (131)
Restated December 2012 545 633 648
Actuarial liabilities
Published December 2012 7 127 33 015 1
Reclassifications - - -
Restated December 2012 7 127 33 015 1
Diluted core headline earnings
Published December 2012 39 74 66
Reclassifications - - 4
Restated December 2012 39 74 70
Analysis of reclassifications (continued)
Shareholder Segmental Reconciling IFRS
Capital total items total
Rm Rm Rm Rm
December 2012
Fee income
Published December 2012 59 3 235 (546) 2 689
Reclassifications 129 - (21) (21)
Restated December 2012 188 3 235 (567) 2 668
Other expenses
Published December 2012 350 5 509 1 032 6 541
Reclassifications 126 110 3 113
Restated December 2012 476 5 619 1 035 6 654
Actuarial liabilities
Published December 2012 3 188 268 697 (488) 268 209
Reclassifications - - 962 962
Restated December 2012 3 188 268 697 474 269 171
Diluted core headline earnings
Published December 2012 395 1 501 - 1 501
Reclassifications 8 - - -
Restated December 2012 403 1 501 - 1 501
Analysis of reclassifications (continued)
Momentum
Momentum Metropolitan Employee
Retail Retail Benefits
Rm Rm Rm
June 2013
Net insurance premiums
Published June 2013 18 575 6 246 12 072
Reclassifications - - 156
Restated June 2013 18 575 6 246 12 228
Fee income
Published June 2013 2 369 134 862
Reclassifications (280) - 320
Restated June 2013 2 089 134 1 182
Net payments to contract holders
Published June 2013 18 609 4 509 9 240
Reclassifications - - 145
Restated June 2013 18 609 4 509 9 385
Other expenses
Published June 2013 3 215 2 029 983
Reclassifications (42) - 304
Restated June 2013 3 173 2 029 1 287
Actuarial liabilities
Published June 2013 153 463 29 070 54 614
Reclassifications - - -
Restated June 2013 153 463 29 070 54 614
Diluted core headline earnings
Published June 2013 1 179 509 330
Reclassifications (21) - 11
Restated June 2013 1 158 509 341
Analysis of reclassifications (continued)
Metropolitan Momentum Metropolitan
International Investments Health
Rm Rm Rm
June 2013
Net insurance premiums
Published June 2013 2 535 16 819 193
Reclassifications - - (156)
Restated June 2013 2 535 16 819 37
Fee income
Published June 2013 145 1 467 1 772
Reclassifications - - (320)
Restated June 2013 145 1 467 1 452
Net payments to contract holders
Published June 2013 1 340 15 241 182
Reclassifications - - (145)
Restated June 2013 1 340 15 241 37
Other expenses
Published June 2013 1 052 1 215 1 619
Reclassifications - - (325)
Restated June 2013 1 052 1 215 1 294
Actuarial liabilities
Published June 2013 7 656 32 703 11
Reclassifications - - -
Restated June 2013 7 656 32 703 11
Diluted core headline earnings
Published June 2013 108 175 151
Reclassifications - - (11)
Restated June 2013 108 175 140
Analysis of reclassifications (continued)
Shareholder Segmental Reconciling IFRS
Capital total items total
Rm Rm Rm Rm
June 2013
Net insurance premiums
Published June 2013 299 56 739 (33 435) 23 304
Reclassifications - - - -
Restated June 2013 299 56 739 (33 435) 23 304
Fee income
Published June 2013 190 6 939 (705) 6 234
Reclassifications 280 - (29) (29)
Restated June 2013 470 6 939 (734) 6 205
Net payments to contract holders
Published June 2013 269 49 390 (29 063) 20 327
Reclassifications - - - -
Restated June 2013 269 49 390 (29 063) 20 327
Other expenses
Published June 2013 700 10 813 2 089 12 902
Reclassifications 274 211 62 273
Restated June 2013 974 11 024 2 151 13 175
Actuarial liabilities
Published June 2013 3 250 280 767 (444) 280 323
Reclassifications - - 1 032 1 032
Restated June 2013 3 250 280 767 588 281 355
Diluted core headline earnings
Published June 2013 789 3 241 - 3 241
Reclassifications 21 - - -
Restated June 2013 810 3 241 - 3 241
CHANGE IN DILUTED CORE HEADLINE EARNINGS
Restated Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Change Rm Rm Rm
Momentum Retail 27% 652 514 1 158
Metropolitan Retail 30% 315 242 509
Momentum Employee Benefits 13% 179 159 341
Metropolitan International 26% 49 39 108
Momentum Investments 28% 95 74 175
Metropolitan Health 7% 75 70 140
Operating divisions 24% 1 365 1 098 2 431
Shareholder Capital (19%) 325 403 810
Total diluted core headline earnings 13% 1 690 1 501 3 241
RECONCILIATION OF MOMENTUM INVESTMENTS
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Revenue
Fee income 768 746 1 467
Expenses and finance costs (647) (639) (1 234)
Other expenses (636) (633) (1 215)
Finance costs (11) (6) (19)
Share of profit of associates 10 - 5
Non-controlling interests (14) (27) (42)
117 80 196
Core adjustments - 1 2
Operating profit before tax 117 81 198
RECONCILIATION OF METROPOLITAN HEALTH
Restated Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Revenue 761 750 1 489
Net insurance premiums 23 15 37
Fee income 738 735 1 452
Expenses and finance costs (672) (663) (1 331)
Net payments to contract holders (21) (15) (37)
Other expenses (651) (648) (1 294)
89 87 158
Core adjustments 2 - 5
Impairments and amortisation of intangibles relating
to business combinations 8 8 15
Adjustments for dilution (6) (7) (10)
Other - (1) -
Operating profit before tax 91 87 163
RECONCILIATION OF SHAREHOLDER CAPITAL
Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Revenue
Net insurance premiums (excluding investment business) 154 144 287
Balance Sheet Management income including fee income 363 323 711
Guaranteed portfolios earnings 178 121 174
Returns in excess of benchmark 71 78 138
Returns on working capital and other 114 124 399
Other income 147 62 306
Total income 664 529 1 304
Expenses
Net payments to contract holders (excluding investment business) (87) (80) (158)
Other expenses (521) (457) (935)
Balance Sheet Management (112) (97) (173)
Strategic initiatives and other (1) (249) (213) (526)
Holding company (160) (147) (236)
Total expenses (608) (537) (1 093)
Operating profit/(loss) before tax 56 (8) 211
1. Includes Momentum Short-term Insurance, Solvency Assessment and Management (SAM) costs, redeployment
centre costs (in prior periods), MMI Rewards and India project costs.
PAYMENTS TO CONTRACT HOLDERS
Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Momentum Retail 10 689 9 036 18 609
Death and disability claims 1 794 1 624 3 018
Maturity claims 3 214 2 649 5 726
Annuities 2 145 1 914 3 849
Withdrawal benefits 15 71 140
Surrenders 3 919 3 331 6 655
Re-insurance recoveries (398) (553) (779)
Metropolitan Retail 2 896 2 230 4 509
Death and disability claims 748 683 991
Maturity claims 1 307 836 1 688
Annuities 280 268 540
Withdrawal benefits 33 33 61
Surrenders 775 626 1 324
Re-insurance recoveries (247) (216) (95)
Momentum Employee Benefits 5 532 4 338 9 385
Death and disability claims 1 681 1 531 3 241
Maturity claims 291 203 491
Annuities 716 581 1 321
Withdrawals and surrenders 1 381 1 609 2 550
Terminations and disinvestments 1 895 711 2 454
Re-insurance recoveries (432) (297) (672)
Metropolitan International 770 668 1 340
Death and disability claims 332 270 556
Maturity claims 148 121 234
Annuities 47 43 84
Withdrawal benefits 42 40 70
Surrenders 197 173 362
Terminations and disinvestments 28 34 64
Re-insurance recoveries (24) (13) (30)
Momentum Investments
Withdrawals 6 653 11 100 15 241
Metropolitan Health
Claims 21 15 37
Shareholder Capital
Claims 195 163 269
Total payments to contract holders 26 756 27 550 49 390
Reconciling items (15 448) (16 903) (29 063)
Net insurance benefits and claims per income statement 11 308 10 647 20 327
NET FUNDS RECEIVED FROM CLIENTS
Gross Gross
single recurring Gross Gross
inflows inflows inflow outflow
Rm Rm Rm Rm
Momentum Retail 7 497 3 860 11 357 (10 689)
Metropolitan Retail 698 2 752 3 450 (2 896)
Momentum Employee Benefits 3 782 4 014 7 796 (5 532)
Metropolitan International 157 1 264 1 421 (770)
Momentum Investments 3 781 - 3 781 (6 653)
Metropolitan Health - 23 23 (21)
Shareholder Capital 5 154 159 (195)
Long-term insurance business fund flows 15 920 12 067 27 987 (26 756)
Off-balance sheet fund flows
Momentum Retail 6 153 166 6 319 (5 258)
Momentum Employee Benefits - 1 360 1 360 (1 040)
Metropolitan International 345 - 345 (465)
Momentum Investments 40 522 2 596 43 118 (43 089)
Momentum Investments – Eris Property acquisition - - - -
Metropolitan Health - 20 197 20 197 (11 192)
Total net funds received from clients 62 940 36 386 99 326 (87 800)
NET FUNDS RECEIVED FROM CLIENTS (continued)
Restated Restated
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Net inflow/ Net inflow/ Net inflow/
(outflow) (outflow) (outflow)
Rm Rm Rm
Momentum Retail 668 (194) (34)
Metropolitan Retail 554 911 1 737
Momentum Employee Benefits 2 264 2 286 2 843
Metropolitan International 651 599 1 195
Momentum Investments (2 872) 306 1 578
Metropolitan Health 2 - -
Shareholder Capital (36) (18) 30
Long-term insurance business fund flows 1 231 3 890 7 349
Off-balance sheet fund flows
Momentum Retail 1 061 987 3 422
Momentum Employee Benefits 320 348 667
Metropolitan International (120) 134 175
Momentum Investments 29 (8 087) (7 931)
Momentum Investments – Eris Property acquisition - 18 678 18 678
Metropolitan Health 9 005 7 875 4 924
Total net funds received from clients 11 526 23 825 27 284
NUMBER OF EMPLOYEES
Restated Restated
31.12.2013 31.12.2012 30.06.2013
Indoor staff 9 634 9 894 9 597
Momentum Retail 1 672 1 692 1 573
Metropolitan Retail 1 322 1 462 1 452
Momentum Employee Benefits 1 421 1 275 1 361
Metropolitan International 828 856 852
Momentum Investments 691 798 693
Metropolitan Health 2 706 2 800 2 638
Shareholder Capital
Balance Sheet Management 68 56 66
Group services 751 810 806
Short-term insurance 175 139 156
Redeployment centre - 6 -
Field staff 6 921 6 700 6 798
Momentum Retail 996 1 019 993
Metropolitan Retail 4 610 4 344 4 369
Metropolitan International 1 315 1 337 1 436
Total 16 555 16 594 16 395
MMI HOLDINGS GROUP – FINANCIAL INSTRUMENTS
FINANCIAL ASSETS SUMMARISED BY MEASUREMENT CATEGORY
31.12.2013
Rm
Financial assets designated at fair value through income 327 714
Securities designated at fair value through income 316 592
Investments in associates designated at fair value through income 7 243
Derivative financial instruments 3 442
Available-for-sale 437
Financial assets carried at amortised cost 26 322
Held-to-maturity 76
Loans and receivables 4 381
Cash and cash equivalents 21 865
Total financial assets 354 036
Fair value of financial assets carried at amortised cost:
Held-to-maturity 76
Loans and receivables 4 381
Cash and cash equivalents 21 865
26 322
FINANCIAL LIABILITIES SUMMARISED BY MEASUREMENT CATEGORY
31.12.2013
Rm
Investment contracts with DPF 24 414
Financial liabilities designated at fair value through income 214 304
Investment contracts designated at fair value through income 181 297
Liabilities designated at fair value through income 30 082
Derivative financial instruments 2 925
Financial liabilities carried at amortised cost 10 110
Financial liabilities 1 886
Other payables 8 224
Total financial liabilities 248 828
Fair value of financial liabilities carried at amortised cost:
Financial liabilities at amortised cost 2 443
Other payables 8 224
10 667
The different valuation method levels have been defined as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (that is, prices) or indirectly (that is, derived from prices)
- Level 3: Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs)
FINANCIAL ASSETS
31.12.2013 Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Securities designated at fair value through income 209 597 99 590 7 405 316 592
Equity securities
Local listed 75 533 421 - 75 954
Foreign listed 18 771 508 - 19 279
Unlisted - 66 630 696
Debt securities
Stock and loans to government and other
public bodies
Local listed 16 521 10 204 - 26 725
Foreign listed 186 1 203 24 1 413
Unlisted - 121 1 262 1 383
Other debt instruments
Local listed 22 26 562 - 26 584
Foreign listed 37 359 - 396
Unlisted 15 20 673 2 762 23 450
Funds on deposit and other money market instruments 402 21 448 - 21 850
Unit-linked investments
Collective investment schemes
Local unlisted or listed quoted 69 368 147 - 69 515
Foreign unlisted or listed quoted 26 341 154 - 26 495
Foreign unlisted unquoted - 608 606 1 214
Other unit-linked investments
Local unlisted or listed quoted 2 080 2 777 2 4 859
Local unlisted unquoted - 12 483 2 118 14 601
Foreign unlisted unquoted - 1 856 1 1 857
Foreign unlisted or listed quoted 321 - - 321
Investments in associates designated at fair value
through income 7 243 - - 7 243
Derivative financial instruments 270 3 172 - 3 442
Held for trading 270 3 143 - 3 413
Held for hedging purposes - 29 - 29
Available-for-sale 28 31 378 437
Equity securities
Local listed 17 8 - 25
Unlisted - - 4 4
Debt securities 2 16 374 392
Funds on deposit and other money market instruments - 7 - 7
Local unlisted quoted collective investment schemes 9 - - 9
217 138 102 793 7 783 327 714
FINANCIAL LIABILITIES
31.12.2013 Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Investment contracts
Designated at fair value through income 1 388 177 726 2 183 181 297
Liabilities designated at fair value through income 23 726 6 356 - 30 082
Collective investment scheme liabilities 23 668 - - 23 668
Subordinated call notes - 1 047 - 1 047
Carry positions - 5 309 - 5 309
Other borrowings 58 - - 58
Derivative financial instruments
Held for trading 372 2 553 - 2 925
25 486 186 635 2 183 214 304
RECONCILIATION OF THE FAIR VALUE OF LEVEL 3 FINANCIAL ASSETS
Financial assets
Designated at fair value through income
Unit-linked Other
Equity Debt invest- invest-
securities securities ments ments (1) Total
31.12.2013 Rm Rm Rm Rm Rm
Opening balance 820 4 846 2 571 439 8 676
Transfer from/(to) other asset
classes - - 41 (41) -
Total realised losses in net
realised and fair value gains in
the income statement - (28) (6) - (34)
Total unrealised gains in net
realised and fair value gains in
the income statement 64 156 146 - 366
Purchases 124 168 308 - 600
Sales (378) (76) (260) (20) (734)
Settlements - (972) (39) - (1 011)
Transfers into level 3 - 25 - - 25
Transfers out of level 3 - (71) (34) - (105)
Closing balance 630 4 048 2 727 378 7 783
1. Includes investments in associates’ unit-linked investments as well as available-for-sale instruments.
Sensitivity of level 3 financial instrument assets measured at fair value to changes in key assumptions:
Financial assets
Designated at fair value through income
Unit-linked Other
Equity Debt invest- invest-
securities securities ments ments Total
31.12.2013 Rm Rm Rm Rm Rm
Carrying value 630 4 048 2 727 378 7 783
Assumption change 10% increase/ 1% increase/ 10%
(decrease) (decrease) increase/ Not
in markets in interest (decrease) sensitive
rates in unit
price
Effect of increase in assumption 63 (382) 273 N/A
Effect of decrease in assumption (63) 408 (273) N/A
RECONCILIATION OF THE FAIR VALUE OF LEVEL 3 FINANCIAL LIABILITIES
Investment
contracts
designated
at fair
value
through
income
31.12.2013 Rm
Opening balance 2 200
Total realised losses in net realised and fair value gains in the income statement 1
Total unrealised losses in net realised and fair value gains in the income statement 37
Contract holder movements
Premiums received 7
Benefits paid (67)
Investment return 5
Closing balance 2 183
Sensitivity: Increasing/decreasing the investment return by 10% would decrease/increase the carrying
value of level 3 financial instrument liabilities by R46 million and R70 million respectively.
VALUATION TECHNIQUES USED IN DETERMINING THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Group’s valuation processes
The group’s in-house valuation experts perform the valuations of financial assets required for financial
reporting purposes. Discussions of valuation processes and results are held at least bi-annually, in line
with the group’s bi-annual reporting dates.
Instrument Valuation basis Main assumptions
Equities and similar securities
- Listed, local and foreign External valuations/quoted Management applies judgement
prices (level 2) if an adjustment is required
to the quoted prices
- Unlisted External valuations/price- Management applies judgement
earnings ratios (level 3) if an adjustment is required
to the relevant price-
earnings ratio
Stock and loans to other public
bodies
- Listed, local Yield of benchmark (listed Market inputs
government) bond (level 2)
- Listed, foreign DCF, benchmarked against similar Market inputs
instrument with the same issuer
(level 2)
- Unlisted DCF, real interest rates or Market inputs and fixed spread
6-month j-bar plus fixed spread
(level 2)
DCF, risk free yield curve Market inputs and fixed spread
plus fixed spread (level 3)
Other debt securities
- Listed, local DCF (BESA and ASSA bond perfect Market inputs, uplifted with
fit zero curve and other published inflation
real or nominal yields, uplifted
with inflation)/external valuations
(linked notes)/published price
quotations on JSE equity (preference
shares) and interest rate market
(level 2)
- Listed, foreign External valuations which are based Market inputs
on published market inputs (level 2)
- Unlisted DCF (market related nominal and real Market inputs, fixed spread
discount rates, zero coupon bond
curve plus issuer spread, non-
observable nominal rates, bank and
credit default swap curves/external
valuations/NAV of a hedge fund
(debenture) (level 2 & 3)
Funds on deposit and other
money market instruments
- Listed DCF (market related yields)/issue Market inputs
price/external valuations (level 2) (which are based on quotes
received from market participants
- Unlisted Deposit rates/DCF (market related and valuation agents)
yields) (level 2)
Unit-linked investments External valuations (level 2 & 3) Net asset value (assets and
liabilities are carried at
fair value)
Derivative assets and Black-Scholes model/net present Market inputs, credit spreads,
liabilities value of estimated floating costs contract inputs
less the performance of the
underlying index over the contract
term/DCF (using fixed contract
rates and market related variable
rates adjusted for credit risk,
credit default swap premiums, offset
between strike price and market
projected forward value, yield curve
of similar market-traded instruments)
(level 2)
Subordinated call notes Price quotations on JSE interest Market inputs
(Liability) rate market (which are based on
yield of benchmark bond) (level 2)
Carry positions (Liability) DCF (in accordance with JSE interest Market inputs, contract inputs
rate market repo pricing methodology)
(level 2)
There were no significant changes in the valuation methods applied since 30 June 2013.
MMI HOLDINGS GROUP – STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF ASSETS AND LIABILITIES ON REPORTING BASIS
Restated Restated
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Total assets 379 794 346 505 360 368
Actuarial value of policy liabilities (306 211) (269 171) (281 355)
Other liabilities (48 984) (53 352) (55 149)
Non-controlling interests (408) (416) (391)
Group excess per reporting basis 24 191 23 566 23 473
Net assets – other businesses (2 557) (1 503) (1 547)
Fair value adjustments on Metropolitan business acquisition and
other consolidation adjustments (4 638) (5 675) (5 001)
Excess – long-term insurance business, net of non-controlling
interests (1) 16 996 16 388 16 925
RECONCILIATION OF CHANGE IN LONG-TERM INSURANCE EXCESS TO THE
INCOME STATEMENT
Change in excess of long-term insurance business (1) 71 (394) 143
Increase in share capital (11) (21) (29)
Change in other reserves (146) (37) (62)
Dividend paid – ordinary shares 2 080 2 289 3 140
Change in non-controlling interests 4 (7) -
Other - (29) (22)
Total surplus arising, net of non-controlling interests 1 998 1 801 3 170
Operating profit 1 318 1 237 2 636
Investment income on excess 359 377 683
Net realised and fair value gains on excess 255 179 221
Investment variances 149 189 117
Basis and other changes (83) (181) (487)
Net consolidation adjustments 16 (27) (43)
Earnings after non-controlling interests of long-term
insurance business 2 014 1 774 3 127
Earnings after non-controlling interests of other group businesses
and consolidation adjustments 5 (83) (94)
Amortisation of intangibles relating to the merger (223) (223) (446)
Earnings attributable to owners of the parent as per income statement 1 796 1 468 2 587
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
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Reporting excess – long-term insurance business (1) 16 996 16 388 16 925
Disregarded assets (2) (986) (977) (977)
Difference between statutory and published valuation methods (660) (452) (551)
Write-down of subsidiaries and associates for statutory purposes (1 305) (871) (936)
Unsecured subordinated debt 1 549 1 576 1 553
Consolidation adjustments (83) (150) (119)
Statutory excess – long-term insurance business 15 511 15 514 15 895
Capital adequacy requirement (CAR) (Rm) (3) 6 044 6 581 6 167
Ratio of long-term insurance business excess to CAR (times) 2.6 2.4 2.6
Discretionary margins 12 646 11 041 11 378
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 R548 million (31.12.2012: R576 million; 30.06.2013:
R562 million).
3. Aggregation of separate company CARs, with no assumption of diversification benefits.
MMI HOLDINGS GROUP – EMBEDDED VALUE INFORMATION
31.12.2013 31.12.2012 30.06.2013
EMBEDDED VALUE RESULTS AS AT Rm Rm Rm
Covered business
Reporting excess – long-term insurance business 16 996 16 388 16 925
Reclassification to non-covered business (1 629) (1 306) (1 482)
15 367 15 082 15 443
Disregarded assets (1) (678) (726) (693)
Difference between statutory and published valuation methods (660) (452) (551)
Dilutory effect of subsidiaries (2) (28) (31) (26)
Consolidation adjustments (3) - (202) (36)
Value of MMI Group Ltd preference shares issued (500) (483) (500)
Diluted adjusted net worth – covered business 13 501 13 188 13 637
Net value of in-force business (4) 19 370 16 547 17 870
Diluted embedded value – covered business 32 871 29 735 31 507
Non-covered business
Net assets – non-covered business within life insurance companies 1 629 1 306 1 482
Net assets – non-covered business outside life insurance companies 2 557 1 503 1 547
Consolidation adjustments (3) (1 295) (835) (1 011)
Adjustments for dilution (5) 758 637 698
Diluted adjusted net worth – non-covered business 3 649 2 611 2 716
Write-up to directors’ value 868 1 107 925
Non-covered business 2 566 2 447 2 543
Holding company expenses (6) (1 288) (998) (1 208)
International holding company expenses (6) (410) (342) (410)
Diluted embedded value – non-covered business 4 517 3 718 3 641
Diluted adjusted net worth 17 150 15 799 16 353
Net value of in-force business 19 370 16 547 17 870
Write-up to directors’ value 868 1 107 925
Diluted embedded value 37 388 33 453 35 148
Required capital – covered business (adjusted for qualifying debt
and preference shares) 8 424 8 095 8 620
Surplus capital – covered business 5 077 5 093 5 017
Diluted embedded value per share (cents) 2 331 2 086 2 191
Diluted adjusted net worth per share (cents) 1 069 985 1 020
Diluted number of shares in issue (million) (7) 1 604 1 604 1 604
1. Disregarded assets include Sage intangible assets of R548 million (31.12.2012: R576 million;
30.06.2013: R562 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 FNB Life value of in-force is excluded from the embedded value from 1 July 2013. The FNB Life net
value of in-force amounted to R141 million and R91 million at 31.12.2012 and 30.06.2013 respectively.
5. Adjustments for dilution are made up as follows:
Dilutory effect of subsidiaries (note 2): R110 million (31.12.2012: R121 million; 30.06.2013:
R119 million)
Treasury shares held on behalf of contract holders: R335 million (31.12.2012: R203 million;
30.06.2013: R266 million)
Liability – MMI Holdings Ltd convertible preference shares issued to KTH: R313 million (31.12.2012:
R313 million; 30.06.2013: R313 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 includes the treasury shares held on behalf of contract
holders.
31.12.2013 31.12.2012 30.06.2013
ANALYSIS OF NET VALUE OF IN-FORCE BUSINESS PER DIVISION Rm Rm Rm
Momentum Retail 9 441 8 588 8 967
Gross value of in-force business 10 952 10 036 10 490
Less cost of required capital (1 511) (1 448) (1 523)
Metropolitan Retail (1) 3 811 3 532 3 555
Gross value of in-force business 4 490 4 203 4 312
Less cost of required capital (679) (671) (757)
Momentum Employee Benefits 3 447 2 386 3 106
Gross value of in-force business 4 052 3 079 3 776
Less cost of required capital (605) (693) (670)
Metropolitan International 1 783 1 445 1 659
Gross value of in-force business 1 911 1 527 1 772
Less cost of required capital (128) (82) (113)
Shareholder Capital 888 596 583
Gross value of in-force business (2) 888 596 583
Less cost of required capital - - -
Net value of in-force business 19 370 16 547 17 870
Notes
1. The FNB Life value of in-force is excluded from the embedded value from 1 July 2013. The FNB Life net
value of in-force amounted to R141 million and R91 million at 31.12.2012 and 30.06.2013 respectively.
2. The value of in-force in the Shareholder Capital represents discretionary margins managed centrally
by Balance Sheet Management.
Adjusted Net value of
net worth in-force 31.12.2013 31.12.2012 30.06.2013
EMBEDDED VALUE PER DIVISION Rm Rm Rm Rm Rm
Covered business
MMI Group Ltd (1) 12 177 17 587 29 764 27 272 28 652
Metropolitan Odyssey Ltd 49 - 49 49 49
Metropolitan International 1 275 1 783 3 058 2 414 2 806
Metropolitan Life (Namibia) Ltd 458 1 176 1 634 1 371 1 523
Metropolitan Life of Botswana Ltd 165 143 308 203 266
Metropolitan Lesotho Ltd 319 422 741 590 655
Other international businesses 333 42 375 250 362
Total covered business 13 501 19 370 32 871 29 735 31 507
Write up to
Adjusted directors’
net worth value 31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm Rm Rm
Non-covered business
Momentum Investments (2) 812 867 1 679 1 686 1 746
Health businesses (3) 304 1 369 1 673 1 524 1 662
Momentum Retail (Wealth) (4) 275 156 431 431 379
Momentum Short-term Insurance (MSTI) 146 154 300 296 300
Metropolitan International Holdings (5) 88 (390) (302) (183) (285)
MMI Holdings (after consolidation
adjustments) (5) 2 024 (1 288) 736 (36) (161)
Total non-covered business 3 649 868 4 517 3 718 3 641
Total embedded value 17 150 20 238 37 388 33 453 35 148
Diluted adjusted net worth –
non-covered business (3 649)
Adjustments to covered business –
adjusted net worth 3 495
Reporting excess – long-term
insurance business 16 996
1. The FNB Life value of in-force is excluded from the embedded value from 1 July 2013. The FNB Life net
value of in-force amounted to R141 million and R91 million at 31.12.2012 and 30.06.2013 respectively.
2. Momentum Investments subsidiaries are valued using forward Price Earnings multiples applied to the
relevant sustainable earnings bases.
3. All Health businesses have been valued using Embedded Value methodology.
4. Momentum Retail (Wealth) has been valued using Embedded Value methodology.
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.
ANALYSIS OF CHANGES IN GROUP EMBEDDED VALUE
Covered business
Gross Value
Adjusted net of in- Cost of
worth (ANW) force (VIF) CAR
Notes Rm Rm Rm
Profit from new business (713) 1 200 (84)
Embedded value from new business A (713) 1 175 (84)
Expected return to end of period B - 25 -
Profit from existing business 1 901 (618) 220
Expected return – unwinding of RDR B - 1 047 (151)
Release from the cost of required capital C - - 217
Expected (or actual) net of tax profit transfer
to net worth D 1 762 (1 762) -
Operating experience variances E 142 156 80
Operating assumption changes F (3) (59) 74
Embedded value profit from operations 1 188 582 136
Investment return on adjusted net worth G 583 - -
Investment variances H 191 979 8
Economic assumption changes I (18) (204) (3)
Acquisition of covered business - - -
Exchange rate movements 10 3 (1)
Embedded value profit – covered business 1 954 1 360 140
Transfer of business (to)/from non-covered business J (56) - -
Changes in share capital 2 - -
Dividend paid (2 078) - -
Change in reserves 42 - -
Change in embedded value – covered business (136) 1 360 140
Non-covered business
Change in directors’ valuation and other items
Holding company expenses
Embedded value profit – non-covered business
Changes in share capital
Dividend paid
Finance costs – preference shares
Transfer of business from/(to) covered business J
Change in embedded value – non-covered business
Total change in group embedded value
Total embedded value profit
Return on embedded value (%) - internal rate of return
ANALYSIS OF CHANGES IN GROUP EMBEDDED VALUE (continued)
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Total EV Total EV Total EV
Notes Rm Rm Rm
Profit from new business 403 362 799
Embedded value from new business A 378 340 711
Expected return to end of period B 25 22 88
Profit from existing business 1 503 1 267 3 336
Expected return – unwinding of RDR B 896 706 1 487
Release from the cost of required capital C 217 278 417
Expected (or actual) net of tax profit transfer
to net worth D - - -
Operating experience variances E 378 504 912
Operating assumption changes F 12 (221) 520
Embedded value profit from operations 1 906 1 629 4 135
Investment return on adjusted net worth G 583 507 919
Investment variances H 1 178 989 1 011
Economic assumption changes I (225) 175 (221)
Acquisition of covered business - - 89
Exchange rate movements 12 10 39
Embedded value profit – covered business 3 454 3 310 5 972
Transfer of business (to)/from non-covered business J (56) 299 267
Changes in share capital 2 21 37
Dividend paid (2 078) (2 301) (3 140)
Change in reserves 42 13 (22)
Change in embedded value – covered business 1 364 1 342 3 114
Non-covered business
Change in directors’ valuation and other items 44 (38) 131
Holding company expenses (80) (177) (455)
Embedded value profit – non-covered business (36) (215) (324)
Changes in share capital (2) (21) (37)
Dividend paid 881 197 236
Finance costs – preference shares (23) (23) (46)
Transfer of business from/(to) covered business J 56 (299) (267)
Change in embedded value – non-covered business 876 (361) (438)
Total change in group embedded value 2 240 981 2 676
Total embedded value profit 3 418 3 095 5 648
Return on embedded value (%) - internal rate of return 20.4% 20.0% 17.4%
A. VALUE OF NEW BUSINESS
Momentum
Momentum Metropolitan Employee Metropolitan
Retail Retail (1) Benefits International
Value of new business Rm Rm Rm Rm
6 mths to 31.12.2013
Value of new business 136 122 90 30
Gross 170 143 113 37
Less cost of required capital (34) (21) (23) (7)
New business premiums 8 128 1 250 2 236 284
Recurring premiums 519 558 532 166
Single premiums 7 609 692 1 704 118
New business premiums (APE) 1 280 627 702 178
New business premiums (PVP) 10 499 2 831 6 506 943
Profitability of new business as a % of APE 10.6 19.5 12.8 16.9
Profitability of new business as a % of PVP 1.3 4.3 1.4 3.2
6 mths to 31.12.2012
Value of new business 93 153 66 28
Gross 118 167 108 30
Less cost of required capital (25) (14) (42) (2)
New business premiums 5 965 1 090 3 381 300
Recurring premiums 539 557 253 156
Single premiums 5 426 533 3 128 144
New business premiums (APE) 1 083 610 566 170
New business premiums (PVP) 8 459 2 866 4 977 874
Profitability of new business as a % of APE 8.6 25.1 11.7 16.5
Profitability of new business as a % of PVP 1.1 5.3 1.3 3.2
12 mths to 30.06.2013
Value of new business 203 239 213 56
Gross 268 268 275 63
Less cost of required capital (65) (29) (62) (7)
New business premiums 12 433 2 305 5 836 473
Recurring premiums 1 057 1 075 769 298
Single premiums 11 376 1 230 5 067 175
New business premiums (APE) 2 195 1 198 1 276 316
New business premiums (PVP) 17 421 5 126 11 627 1 635
Profitability of new business as a % of APE 9.2 19.9 16.7 17.7
Profitability of new business as a % of PVP 1.2 4.7 1.8 3.4
Comparative
Metropolitan Segmental
Retail (excl. total (excl.
Total FNB Life) (1) FNB Life)
Value of new business (continued) Rm Rm Rm
6 mths to 31.12.2013
Value of new business 378
Gross 463
Less cost of required capital (85)
New business premiums 11 898
Recurring premiums 1 775
Single premiums 10 123
New business premiums (APE) 2 787
New business premiums (PVP) 20 779
Profitability of new business as a % of APE 13.6
Profitability of new business as a % of PVP 1.8
6 mths to 31.12.2012
Value of new business 340 120 307
Gross 423 133 389
Less cost of required capital (83) (13) (82)
New business premiums 10 736 1 042 10 688
Recurring premiums 1 505 509 1 457
Single premiums 9 231 533 9 231
New business premiums (APE) 2 429 562 2 381
New business premiums (PVP) 17 176 2 783 17 093
Profitability of new business as a % of APE 14.0 21.3 12.9
Profitability of new business as a % of PVP 2.0 4.3 1.8
12 mths to 30.06.2013
Value of new business 711 209 681
Gross 874 238 844
Less cost of required capital (163) (29) (163)
New business premiums 21 047 2 220 20 962
Recurring premiums 3 199 990 3 114
Single premiums 17 848 1 230 17 848
New business premiums (APE) 4 985 1 113 4 900
New business premiums (PVP) 35 809 5 042 35 725
Profitability of new business as a % of APE 14.3 18.8 13.9
Profitability of new business as a % of PVP 2.0 4.2 1.9
- Value of new business and new business premiums are net of non-controlling interests.
- 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 period have been used.
1. The FNB Life business was excluded in the Metropolitan Retail VNB at 31.12.2013 and included in the
Metropolitan Retail VNB at 31.12.2012 and 30.06.2013. Comparative figures, excluding FNB Life, have
been provided.
ANALYSIS OF NEW BUSINESS PREMIUMS
Momentum
Momentum Metropolitan Employee Metropolitan
Retail Retail (1) Benefits International
Analysis of new business premiums Rm Rm Rm Rm
6 mths to 31.12.2013
New business premiums 8 128 1 250 2 236 284
Recurring premiums 519 558 532 166
Risk 260 365 160 -
Savings/Investments 259 193 372 -
International - - - 166
Single premiums 7 609 692 1 704 118
Savings/Investments 7 215 296 1 583 -
Annuities 394 396 121 -
International - - - 118
New business premiums (APE) 1 280 627 702 178
Risk 260 365 160 -
Savings/Investments 981 222 530 -
Annuities 39 40 12 -
International - - - 178
6 mths to 31.12.2012
New business premiums 5 965 1 090 3 381 300
Recurring premiums 539 557 253 156
Risk 269 390 110 -
Savings/Investments 270 167 143 -
International - - - 156
Single premiums 5 426 533 3 128 144
Savings/Investments 5 179 250 1 548 -
Annuities 247 283 1 580 -
International - - - 144
New business premiums (APE) 1 083 610 566 170
Risk 270 390 110 -
Savings/Investments 788 192 298 -
Annuities 25 28 158 -
International - - - 170
Comparative
Metropolitan Segmental
Retail (excl. total (excl.
Analysis of new business premiums (continued) Total FNB Life) (1) FNB Life)
Rm Rm Rm
6 mths to 31.12.2013
New business premiums 11 898
Recurring premiums 1 775
Risk 785
Savings/Investments 824
International 166
Single premiums 10 123
Savings/Investments 9 094
Annuities 911
International 118
New business premiums (APE) 2 787
Risk 785
Savings/Investments 1 733
Annuities 91
International 178
6 mths to 31.12.2012
New business premiums 10 736 1 042 10 688
Recurring premiums 1 505 509 1 457
Risk 769 342 721
Savings/Investments 580 167 580
International 156 - 156
Single premiums 9 231 533 9 231
Savings/Investments 6 977 250 6 977
Annuities 2 110 283 2 110
International 144 - 144
New business premiums (APE) 2 429 562 2 381
Risk 770 342 722
Savings/Investments 1 278 192 1 278
Annuities 211 28 211
International 170 - 170
Momentum
Momentum Metropolitan Employee Metropolitan
Retail Retail (1) Benefits International
Analysis of new business premiums (continued) Rm Rm Rm Rm
12 mths to 30.06.2013
New business premiums 12 433 2 305 5 836 473
Recurring premiums 1 057 1 075 769 298
Risk 508 748 369 -
Savings/Investments 549 327 400 -
International - - - 298
Single premiums 11 376 1 230 5 067 175
Savings/Investments 10 921 589 2 267 -
Annuities 455 641 2 800 -
International - - - 175
New business premiums (APE) 2 195 1 198 1 276 316
Risk 508 748 369 -
Savings/Investments 1 641 386 627 -
Annuities 46 64 280 -
International - - - 316
Comparative
Metropolitan Segmental
Retail (excl. total (excl.
Total FNB Life) (1) FNB Life)
Analysis of new business premiums (continued) Rm Rm Rm
12 mths to 30.06.2013
New business premiums 21 047 2 220 20 962
Recurring premiums 3 199 990 3 114
Risk 1 625 663 1 540
Savings/Investments 1 276 327 1 276
International 298 - 298
Single premiums 17 848 1 230 17 848
Savings/Investments 13 777 589 13 777
Annuities 3 896 641 3 896
International 175 - 175
New business premiums (APE) 4 985 1 113 4 900
Risk 1 625 663 1 540
Savings/Investments 2 654 386 2 654
Annuities 390 64 390
International 316 - 316
1. The FNB Life business was excluded in the Metropolitan Retail VNB at 31.12.2013 and included in the
Metropolitan Retail VNB at 31.12.2012 and 30.06.2013. Comparative figures, excluding FNB Life, have
been provided.
RECONCILIATION OF LUMP SUM INFLOWS
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
Rm Rm Rm
Total lump sum inflows 62 940 82 323 148 881
Inflows not included in value of new business (53 145) (73 453) (131 698)
Momentum Retail (6 264) (6 582) (14 816)
Momentum Employee Benefits (2 203) (53) (184)
Metropolitan International (370) (573) (1 024)
Momentum Investments
On-balance sheet inflows (3 781) (11 406) (16 819)
Off-balance sheet inflows
Eris Property acquisition - (18 678) (18 678)
Other (40 522) (36 161) (80 165)
Balance Sheet Management (5) - (12)
Term extensions on maturing policies 223 379 610
Non-controlling interests and other adjustments 105 (18) 55
Single premiums included in value of new business 10 123 9 231 17 848
B. EXPECTED RETURN
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 period.
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.
E. OPERATING EXPERIENCE VARIANCES
6 mths to 12 mths to
6 mths to 31.12.2013 31.12.2012 30.06.2013
ANW Net VIF EV EV EV
OPERATING EXPERIENCE VARIANCES Notes Rm Rm Rm Rm Rm
Momentum Retail (37) 109 72 (16) 128
Mortality and morbidity 1 73 4 77 118 259
Terminations, premium cessations
and policy alterations 2 (47) 67 20 (42) 17
Expense variance (5) 23 18 (10) -
Other 3 (58) 15 (43) (82) (148)
Metropolitan Retail 60 44 104 (39) 62
Mortality and morbidity 1 57 3 60 46 97
Terminations, premium cessations
and policy alterations 4 11 16 27 (40) (97)
Expense variance (6) - (6) 13 59
FNB Life – share of profits 22 - 22 - -
Other (24) 25 1 (58) 3
Momentum Employee Benefits 43 65 108 266 306
Mortality and morbidity 1 12 - 12 56 17
Terminations 5 17 42 59 212 233
Expense variance (13) 23 10 - 9
Other 6 27 - 27 (2) 47
Metropolitan International 34 18 52 72 152
Mortality and morbidity 1 41 4 45 30 81
Terminations, premium cessations
and policy alterations (1) 5 4 18 65
Expense variance (4) 6 2 (2) 16
Other (2) 3 1 26 (10)
Shareholder Capital 7 42 - 42 228 242
Opportunity cost of required capital - - - (7) 22
Total operating experience variances 142 236 378 504 912
Notes
1. Overall, mortality and morbidity experience for the six months were better compared to what was
allowed for in the valuation basis.
2. Favourable persistency due to improvement in quality of business underwritten.
3. Various items including non-recurring costs related to strategic initiatives and under-recovery of
intergroup sales costs.
4. Favourable persistency arising from corrective action taken in the previous period.
5. Favourable persistency impacting positively on fee income.
6. Various small other operating experience variances.
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 31.12.2013 31.12.2012 30.06.2013
ANW Net VIF EV EV EV
OPERATING ASSUMPTION CHANGES Notes Rm Rm Rm Rm Rm
Momentum Retail - 17 17 (63) 78
Mortality and morbidity assumptions - - - - 66
Renewal expense assumptions - - - - 104
Termination assumptions - - - - 104
Modelling, methodology and other
changes 1 - 17 17 (63) (196)
Metropolitan Retail (19) (47) (66) (73) 149
Mortality and morbidity assumptions - - - (3) 205
Renewal expense assumptions - - - (5) 90
Termination assumptions - 1 1 4 (178)
FNB Life 2 - (91) (91) - -
Modelling, methodology and other
changes 1 (19) 43 24 (69) 32
Momentum Employee Benefits - 7 7 27 387
Assumed mortality and morbidity
profit margin - - - - (29)
Termination assumptions - 2 2 - 201
Renewal expense assumptions - - - 4 81
Modelling, methodology and other
changes 1 - 5 5 23 134
Metropolitan International (15) (7) (22) (118) (18)
Mortality and morbidity assumptions 2 1 3 (20) 4
Renewal expense assumptions 3 (3) (17) (20) (40) 24
Termination assumptions 9 2 11 19 (21)
Modelling, methodology and other
changes 1 (23) 7 (16) (77) (25)
Shareholder Capital 31 25 56 6 20
Methodology change: cost of required
capital 1 - 20 20 - (96)
Total operating assumption changes (3) 15 12 (221) 520
Notes
1. Various changes to models and methodology.
2. Future profits no longer recognised in the value of in-force for FNB Life business.
3. Strengthening of expense reserving basis.
G. INVESTMENT RETURN ON ADJUSTED NET WORTH
6 mths to 6 mths to 12 mths to
31.12.2013 31.12.2012 30.06.2013
INVESTMENT RETURN ON ADJUSTED NET WORTH Rm Rm Rm
Investment income 349 322 681
Capital appreciation 246 202 267
Preference share dividends paid and change in fair value
of preference shares (12) (17) (29)
Investment return on adjusted net worth 583 507 919
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. TRANSFER OF BUSINESS (TO)/FROM NON-COVERED BUSINESS
Represents the alignment of net assets and value of in-force of mainly international subsidiaries
between covered and non-covered business.
In-force business New business written
Adjusted
net Net Gross Cost of Net Gross Cost of
COVERED BUSINESS: SENSITIVITIES worth value value CAR (3) value value CAR (3)
– 31.12.2013 Rm Rm Rm Rm Rm Rm Rm
Base value 13 501 19 370 22 293 (2 923) 378 463 (85)
1% increase in risk discount rate 17 802 21 101 (3 299) 309 403 (94)
% change (8) (5) 13 (18) (13) 11
1% reduction in risk discount rate 21 161 23 652 (2 491) 456 531 (75)
% change 9 6 (15) 21 15 (12)
10% decrease in future expenses 20 544 23 456 (2 912) 433 518 (85)
% change (1) 6 5 - 15 12 -
10% decrease in lapse, paid-up and
surrender rates 20 039 22 995 (2 956) 457 546 (89)
% change 3 3 1 21 18 5
5% decrease in mortality and morbidity
for assurance business 20 953 23 908 (2 955) 461 545 (84)
% change 8 7 1 22 18 (1)
5% decrease in mortality for annuity
business 19 076 22 005 (2 929) 374 460 (86)
% change (2) (1) - (1) (1) 1
1% reduction in gross investment return,
inflation rate and risk discount rate 13 509 19 883 22 818 (2 935) 426 509 (83)
% change (2) - 3 2 - 13 10 (2)
1% reduction in inflation rate 20 132 23 037 (2 905) 415 500 (85)
% change 4 3 (1) 10 8 -
10% fall in market value of equities and
properties 13 182 18 199 21 158 (2 959)
% change (2) (6) (5) 1
10% reduction in premium indexation
take-up rate 19 093 21 989 (2 896) 359 444 (85)
% change (1) (1) (1) (5) (4) -
10% decrease in non-commission related
acquisition expenses 434 519 (85)
% change 15 12 -
1% increase in equity/property risk
premium 19 839 22 728 (2 889) 390 475 (85)
% change 2 2 (1) 3 3 -
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.
MMI HOLDINGS GROUP – STOCK EXCHANGE PERFORMANCE
STOCK EXCHANGE PERFORMANCE 31.12.2013 30.06.2013 31.12.2012 30.06.2012
6 month period
Value of listed shares traded (rand million) 6 992 9 268 6 792 7 946
Volume of listed shares traded (million) 299 398 335 445
Shares traded (% of average listed shares in
issue) (1) 38 51 43 59
Value of shares traded – life insurance
(J857 – Rbn) 77 93 62 65
Value of shares traded – top 40 index
(J200 – Rbn) 1 502 1 691 1 368 1 423
Trade prices
Highest (cents per share) 2 622 2 700 2 232 1 976
Lowest (cents per share) 2 039 1 951 1 792 1 645
Last sale of period (cents per share) 2 530 2 217 2 217 1 800
Annualised percentage (%) change during period 30 - 52 11
Annualised percentage (%) change – life
insurance sector (J857) 33 20 57 34
Annualised percentage (%) change – top 40
index (J200) 40 2 38 8
31 December/30 June
Price/diluted core headline earnings (segmental)
ratio 12.0 11.0 11.8 9.8
Dividend yield % (dividend on listed shares) (1) 5.3 5.7 5.4 6.3
Dividend yield % – top 40 index (J200) (1) 2.7 2.9 2.8 3.0
Total shares issued (million)
Ordinary shares listed on JSE 1 570 1 570 1 570 1 571
Treasury shares held on behalf of contract holders (13) (14) (11) (13)
Basic number of shares in issue 1 557 1 556 1 559 1 558
Treasury shares held on behalf of contract holders 13 14 11 13
Convertible redeemable preference shares 34 34 34 34
Diluted number of shares in issue (2) 1 604 1 604 1 604 1 605
Market capitalisation at end (Rbn) (3) 41 36 36 29
Percentage (%) of life insurance sector (1) 13 13 13 13
1. Percentages have been annualised.
2. The diluted number of shares in issue takes into account all issued shares, assuming conversion of
the convertible redeemable preference shares, and includes the treasury shares held on behalf of
contract holders.
3. The market capitalisation is calculated on the fully diluted number of shares in issue.
Appendix – Restatement of prior period financial statements
Reclassifi
As Reclassifi -cation
previously -cation of cell Restated
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL reported of CIS captives 31.12.2012
POSITION Rm Rm Rm Rm
ASSETS
Intangible assets 12 097 - - 12 097
Owner-occupied properties 1 504 - - 1 504
Property and equipment 316 - - 316
Investment properties 5 766 - - 5 766
Investment in associates 68 - - 68
Employee benefit assets 308 - - 308
Financial instrument assets 288 235 8 408 1 100 297 743
Reinsurance contracts 1 565 - (232) 1 333
Deferred income tax 110 - - 110
Properties under development 90 - - 90
Insurance and other receivables 3 091 - (52) 3 039
Current income tax assets 68 - - 68
Cash and cash equivalents 21 333 1 610 404 23 347
Non-current assets held for sale 716 - - 716
Total assets 335 267 10 018 1 220 346 505
EQUITY
Equity attributable to owners of the parent 23 066 - - 23 066
Preference shares 500 - - 500
23 566 - - 23 566
Non-controlling interests 416 - - 416
Total equity 23 982 - - 23 982
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 95 787 - (291) 95 496
Financial instrument liabilities
Investment contracts 172 422 - 1 253 173 675
– with discretionary participation features 25 445 - - 25 445
– designated at fair value through income 146 977 - 1 253 148 230
Other financial instrument liabilities 20 926 9 965 366 31 257
Deferred income tax 4 279 - - 4 279
Employee benefit obligations 1 136 - - 1 136
Other payables 16 324 53 (108) 16 269
Provisions 164 - - 164
Current income tax liabilities 247 - - 247
Total liabilities 311 285 10 018 1 220 322 523
Total equity and liabilities 335 267 10 018 1 220 346 505
Reclassifi
As Reclassifi -cation Restated
previously -cation of cell 6 mths to
reported of CIS captives 31.12.2012
CONDENSED CONSOLIDATED INCOME STATEMENT Rm Rm Rm Rm
Net insurance premiums received 12 585 - - 12 585
Fee income 2 689 (21) - 2 668
Investment income 6 543 327 29 6 899
Net realised and fair value gains 21 013 314 49 21 376
Net income 42 830 620 78 43 528
Net insurance benefits and claims 10 647 - - 10 647
Change in liabilities 9 257 - (202) 9 055
Change in insurance contract liabilities 7 637 - (134) 7 503
Change in investment contracts with DPF liabilities 1 748 - - 1 748
Change in reinsurance provision (128) - 116 (12)
Change in cell owner liabilities - - (184) (184)
Fair value adjustments on investment contract
liabilities 12 328 - 90 12 418
Fair value adjustments on collective investment
scheme liabilities 967 556 - 1 523
Depreciation, amortisation and impairment expenses 566 - - 566
Employee benefit expenses 2 447 - - 2 447
Sales remuneration 1 581 - 31 1 612
Other expenses 1 947 64 18 2 029
Expenses 39 740 620 (63) 40 297
Results of operations 3 090 - 141 3 231
Share of profit of associates 9 - - 9
Finance costs (631) - - (631)
Profit before tax 2 468 - 141 2 609
Income tax expenses (972) - (141) (1 113)
Earnings 1 496 - - 1 496
Attributable to:
Owners of the parent 1 468 - - 1 468
Non-controlling interests 13 - - 13
MMI Group Ltd preference shares 15 - - 15
1 496 - - 1 496
Basic earnings per ordinary share (cents) 94.2 - - 94.2
Diluted earnings per ordinary share (cents) 93.7 - - 93.7
Audited Reclassifi
as Reclassifi -cation
previously -cation of cell Restated
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL reported of CIS captives 30.06.2013
POSITION Rm Rm Rm Rm
ASSETS
Intangible assets 11 769 - - 11 769
Owner-occupied properties 1 488 - - 1 488
Property and equipment 348 - - 348
Investment properties 6 433 - - 6 433
Investment in associates 121 - - 121
Employee benefit assets 327 - - 327
Financial instrument assets 297 847 13 534 1 043 312 424
Reinsurance contracts 1 519 - (174) 1 345
Deferred income tax 124 - - 124
Properties under development 98 - - 98
Insurance and other receivables 2 857 - (29) 2 828
Current income tax assets 108 - - 108
Cash and cash equivalents 19 424 2 430 421 22 275
Non-current assets held for sale 680 - - 680
Total assets 343 143 15 964 1 261 360 368
EQUITY
Equity attributable to owners of the parent 23 473 - - 23 473
Preference shares - - - -
23 473 - - 23 473
Non-controlling interests 391 - - 391
Total equity 23 864 - - 23 864
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 96 817 - (175) 96 642
Financial instrument liabilities
Investment contracts 183 506 - 1 207 184 713
– with discretionary participation features 24 937 - - 24 937
– designated at fair value through income 158 569 - 1 207 159 776
Other financial instrument liabilities 22 152 15 812 331 38 295
Deferred income tax 3 917 - - 3 917
Employee benefit obligations 1 328 - - 1 328
Other payables 11 112 152 (102) 11 162
Provisions 180 - - 180
Current income tax liabilities 267 - - 267
Total liabilities 319 279 15 964 1 261 336 504
Total equity and liabilities 343 143 15 964 1 261 360 368
CONDENSED CONSOLIDATED INCOME STATEMENT
Audited Reclassifi
as Reclassifi -cation Restated
previously -cation of cell 12 mths to
reported of CIS captives 30.06.2013
CONDENSED CONSOLIDATED INCOME STATEMENT Rm Rm Rm Rm
Net insurance premiums received 23 304 - - 23 304
Fee income 6 234 (29) - 6 205
Investment income 13 537 788 50 14 375
Net realised and fair value gains 29 152 1 322 74 30 548
Net income 72 227 2 081 124 74 432
Net insurance benefits and claims 20 327 - - 20 327
Change in liabilities 9 677 - (372) 9 305
Change in insurance contract liabilities 8 525 - (24) 8 501
Change in investment contracts with DPF liabilities 1 237 - 2 1 239
Change in reinsurance provision (85) - 64 (21)
Change in cell owner liabilities - - (414) (414)
Fair value adjustments on investment contract
liabilities 22 614 - 101 22 715
Fair value adjustments on collective investment
scheme liabilities 882 1 900 - 2 782
Depreciation, amortisation and impairment expenses 1 144 - - 1 144
Employee benefit expenses 4 494 - - 4 494
Sales remuneration 3 015 - 46 3 061
Other expenses 4 249 180 47 4 476
Expenses 66 402 2 080 (178) 68 304
Results of operations 5 825 1 302 6 128
Share of profit of associates 12 - - 12
Finance costs (1 684) (1) - (1 685)
Profit before tax 4 153 - 302 4 455
Income tax expenses (1 502) - (302) (1 804)
Earnings 2 651 - - 2 651
Attributable to:
Owners of the parent 2 587 - - 2 587
Non-controlling interests 32 - - 32
MMI Group Ltd preference shares 32 - - 32
2 651 - - 2 651
Basic earnings per ordinary share (cents) 166.0 - - 166.0
Diluted earnings per ordinary share (cents) 164.2 - - 164.2
Date: 05/03/2014 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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