Wrap Text
MMI Holdings unaudited results for the 6 months ended 31 December 2014
MMI Holdings Limited
Incorporated in the Republic of South Africa
Registration Number: 2000/031756/06
JSE share code: MMI
NSX share code: MIM
ISIN: ZAE000149902
("MMI" or the "company" or "Group")
MMI HOLDINGS
Unaudited results for the 6 months ended 31 December 2014
FINANCIAL HIGHLIGHTS
NEW BUSINESS PVP Up 15% to R24 billion
VALUE OF NEW BUSINESS Up 11% to R420 million
Annualised RETURN on EMBEDDED VALUE of 12%
Profits from OPERATING DIVISIONS Up 13% to R1.5 billion
CORE HEADLINE EARNINGS Up 10% to R1.9 billion
Interim DIVIDEND Up 11% to 63 cents per share
A SUMMARY OF RESULTS
GROUP RESULTS
MMI delivered solid financial results for the period under review.
- Embedded value increased to R40 billion (2 478 cents per share), reflecting an annualised return on
embedded value for shareholders of 12%.
- Diluted core headline earnings increased by 10% to R1.9 billion for the period while the
contribution from operating divisions increased 13% to R1.5 billion.
- Core headline earnings is regarded as an appropriate measure of operational performance given that
items of both a once-off and inherently volatile nature are eliminated.
- All the existing businesses increased their profits; however, overall growth was impacted by
new initiatives that are being pursued in line with the group strategy of growth,
client-centricity and excellence.
- Total earnings and headline earnings, a measure that includes fair value movements on shareholder
assets and investment variances, were negatively impacted by the declining local equity market.
- An interim dividend of 63 cents per share was declared, an increase of 11% on the prior period.
OPERATING ENVIRONMENT
Local operating conditions remained economically challenging and highly competitive. The strong
performance of the South African equity markets ended, slowing dramatically during the reporting
period and ending slightly negative for the six-month period.
MMI once again delivered satisfactory financial results for the period, despite the tough environment
and a number of investments into new growth initiatives. 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 successfully issued R750 million of subordinated debt and redeemed R500 million in December 2014
as scheduled.
- A strong capital buffer of R3.5 billion was reported as at 31 December 2014, after allowing for
capital requirements, strategic growth initiatives and the interim dividend.
- Taking into account the growth focus and the changing regulations, the group is satisfied that its
present capital level is appropriate in the current environment.
PROSPECTS
- The strategic focus areas of the MMI group are firmly focused on growth, client-centricity and
excellence.
- Each segment is implementing plans and processes to identify and optimise structures, operations,
target markets, distribution channels and product offerings through innovation and collaboration, in
order to grow the group through client-centricity.
- Taking into account the current environment, the group will increase focus on efficiencies, having
identified specific cost-savings initiatives, while continuing to pursue top-line growth.
- Growth in new business volumes and profits will, however, be impacted by many factors including
employment levels, disposable income and the electricity supply.
- The board of MMI Holdings believes that the group has identified and is implementing innovative
strategies to continue unlocking value and generating 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 2014. The preparation of the group's
results was supervised by the group chief financial officer, Mary Vilakazi, CA(SA).
Corporate events
Acquisitions
On 2 October 2014, the group acquired an accounting ownership of 71% (legal ownership of 66%) of
Cannon Assurance Ltd (Cannon), a composite insurer, for R308 million. The minority shareholders of
Cannon also acquired a minority stake in Metropolitan Life Kenya.
On 19 November 2014, the group acquired 100% of the shares in the CareCross Health Group (CareCross),
a health administrator, for R300 million in cash. It includes a majority share in Occupational Care
South Africa (OCSA).
Listed debt
MMI Group Ltd listed new instruments to the total value of R750 million on the JSE Limited on
1 December 2014. The instruments are unsecured subordinated callable notes.
On 15 December 2014, R500 million of unsecured subordinated notes previously issued by MMI Group Ltd
were redeemed.
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; the JSE Listings Requirements and the South
African Companies Act, 71 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 2014, 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 2014 and relevant to the group
- The following amendments to standards and interpretations became effective for the first time in the
current period and had no impact on the group's earnings or net asset value: Amendments to IFRS 10
Consolidated financial statements, IFRS 12 Disclosure of interests in other entities, IAS 19 Employee
benefits, IAS 27 Separate financial statements, IAS 32 Financial instruments: presentation, IAS 36
Impairment of assets and IAS 39 Financial instruments: recognition and measurement. IFRIC 21 Levies
became effective.
- 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 group's December 2013 results have been restated for the following reclassifications:
- Reinsurance contract liabilities of R178 million, previously shown with reinsurance contract assets,
have been grossed up and disclosed separately. This restatement was deemed necessary in order to
improve comparability between periods.
- Liabilities to third party cell captive owners of R287 million, previously disclosed as liabilities
at amortised cost, have been reclassified as long-term insurance contracts.
- Interest relating to interest rate swaps was previously grossed up and disclosed as interest income
(R639 million) and finance costs (R497 million). As interest rate swaps are subject to fair value
risk associated with the fixed and floating interest legs, the net amount (R142 million) has now
been disclosed as net realised and fair value gains.
- 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. Liabilities to cell
captive owners (R1 350 million), cell captive expenses (R51 million) and sales remuneration
(R35 million) attributable to cell owners were previously not allocated to any segment and were
included as a reconciling item. It is now included in the Momentum Employee Benefits segment.
- The assets under management and related fund flows tables have been refined. Refer to these tables
for details.
The group's June 2014 results have been restated for the following reclassifications:
- Reinsurance contract liabilities of R202 million, previously shown with reinsurance contract assets,
have been grossed up and disclosed separately. This restatement was deemed necessary in order to
improve comparability between periods.
- Promoter cell administration expenses of R88 million, previously included in cell captive business
expenses in the segment report, was reallocated to administration expenses in line with the way in
which the chief operating decision-maker, being the MMI executive committee, monitors and evaluates
the performance of the Momentum Employee Benefits segment.
These restatements had no impact on the current or prior period reported earnings, diluted earnings or
headline earnings per share, or on the net asset value or net cash flow.
Corporate governance
The board has satisfied itself that appropriate principles of corporate governance were applied
throughout the period under review.
Changes to the directorate, secretary and directors' shareholding
There were no changes to the directorate or secretary during the period.
All transactions in listed shares of the company involving directors were disclosed on SENS.
Changes to the group executive committee
Herman Schoeman, managing director of Guardrisk, was appointed to the group executive committee from
1 July 2014. On the same day, Khanyi Nzukuma was appointed to the group executive committee as chief
executive officer of Metropolitan Retail.
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 2014 that were not in the ordinary course of business.
Events after the reporting period
No material events occurred between the reporting date and the date of approval of these results.
Dividend declaration
Ordinary shares
- On 3 March 2015, a gross interim dividend of 63 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, 27 March 2015, and will be paid on Monday, 30 March 2015.
- 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 0.03459 cents per ordinary share. This will result in
a net dividend, for those shareholders who are not exempt from paying dividend tax, of 53.55519
cents per ordinary share.
- The shares will trade ex dividend from the start of business on Monday, 23 March 2015.
- The last day to trade cum dividend will be Friday, 20 March 2015.
- Share certificates may not be dematerialised or rematerialised between Monday, 23 March 2015 and
Friday, 27 March 2015, both days inclusive.
- The number of ordinary shares at the declaration date was 1 570 899 561.
- MMI's income tax number is 975 2050 147.
Preference shares
- Dividends of R22.1 million (132 cents per share p.a.) were declared on the unlisted A3 MMI Holdings
Ltd preference shares.
- The declaration rate was determined as set out in the company's Memorandum of Incorporation and the
total preference dividend utilised STC credits of R12 123.
Directors' responsibility
These results are the responsibility of the directors. The condensed interim results have not been
reviewed or audited by the external auditors. This announcement does not include the information
required persuant to paragraph 16A(j) of IAS 34. A printed version of the SENS announcement and
condensed interim results may be requested from the group company secretary, Maliga Chetty
tel: 012 684 4255 and are also available on our website www.mmiholdings.com.
Signed on behalf of the board
JJ Njeke Chairman
Nicolaas Kruger Group chief executive officer
Centurion
3 March 2015
DIRECTORS: MJN Njeke (chairman), JP Burger (deputy chairman), NAS Kruger (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
GROUP COMPANY SECRETARY: Maliga Chetty
WEBSITE: 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)
AUDITORS: PricewaterhouseCoopers Inc
REGISTERED OFFICE: 268 West Avenue, Centurion 0157
JSE CODE: MMI NSX CODE: MIM ISIN NO: ZAE000149902
MMI HOLDINGS GROUP - IFRS FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated Restated
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
ASSETS
Intangible assets 13 280 11 596 12 819
Owner-occupied properties 1 805 1 528 1 714
Property and equipment 353 330 315
Investment properties 8 180 7 343 7 675
Investments in associates 194 128 179
Employee benefit assets 412 330 405
Financial instruments (1) 370 089 332 171 355 073
Reinsurance contract assets 3 057 1 425 2 778
Deferred income tax 268 103 263
Properties under development 301 129 252
Insurance and other receivables 4 253 2 924 3 813
Current income tax assets 466 83 330
Cash and cash equivalents 26 009 21 865 28 875
Non-current assets held for sale - 17 17
Total assets 428 667 379 972 414 508
EQUITY
Equity attributable to owners of the parent 24 023 24 191 24 734
Non-controlling interests 526 408 480
Total equity 24 549 24 599 25 214
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 105 385 100 787 106 047
Short-term insurance contracts 6 244 - 5 496
Financial instruments
Investment contracts 236 079 205 711 227 056
- with discretionary participation features 26 292 24 414 25 405
- designated at fair value through income 209 787 181 297 201 651
Other financial instruments (2) 38 660 34 606 34 117
Reinsurance contract liabilities 645 178 202
Deferred income tax 4 300 4 249 4 281
Employee benefit obligations 1 228 1 244 1 246
Other payables 11 216 8 224 10 437
Provisions 26 153 157
Current income tax liabilities 335 221 255
Total liabilities 404 118 355 373 389 294
Total equity and liabilities 428 667 379 972 414 508
1. Financial instruments consist of the following:
- Securities designated at fair value through income: R347 229 million (31.12.2013: R316 592 million;
30.06.2014: R334 996 million)
- Investments in associates designated at fair value through income: R15 009 million
(31.12.2013: R7 243 million; 30.06.2014: R11 900 million)
- Derivative financial instruments: R2 029 million (31.12.2013: R 3 442 million;
30.06.2014: R2 362 million)
- Available-for-sale: R131 million (31.12.2013: R437 million; 30.06.2014: R129 million)
- Held-to-maturity: R88 million (31.12.2013: R76 million; 30.06.2014: R100 million)
- Loans and receivables: R5 603 million (31.12.2013: R4 381 million; 30.06.2014: R5 586 million)
2. Other financial instruments consist of the following:
- Designated at fair value through income: R35 421 million (31.12.2013: R30 082 million;
30.06.2014: R30 801 million)
- Derivative financial instruments: R2 202 million (31.12.2013: R2 925 million;
30.06.2014: R1 853 million)
- Amortised cost: R1 037 million (31.12.2013: R1 599 million; 30.06.2014: R1 463 million)
CONDENSED CONSOLIDATED INCOME STATEMENT
Restated
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Net insurance premiums 13 943 10 511 23 138
Fee income (1) 3 768 3 198 6 567
Investment income 7 980 6 343 14 043
Net realised and fair value gains 5 853 27 968 43 906
Net income 31 544 48 020 87 654
Net insurance benefits and claims 11 905 11 308 22 321
Change in liabilities 98 3 160 7 850
Change in long-term insurance contract liabilities (1 181) 3 565 7 786
Change in short-term insurance contract liabilities 158 - (72)
Change in investment contracts with DPF liabilities 842 (523) 468
Change in reinsurance provision 279 118 (332)
Fair value adjustments on investment contract liabilities 6 158 20 321 32 959
Fair value adjustments on collective investment scheme
liabilities 1 315 2 629 3 061
Depreciation, amortisation and impairment expenses 633 564 1 159
Employee benefit expenses 3 086 2 603 5 132
Sales remuneration 2 623 1 815 3 899
Other expenses 2 980 2 167 5 035
Expenses 28 798 44 567 81 416
Results of operations 2 746 3 453 6 238
Share of profit of associates 5 6 2
Finance costs (2) (374) (225) (482)
Profit before tax 2 377 3 234 5 758
Income tax expense (971) (1 416) (2 458)
Earnings for the period 1 406 1 818 3 300
Attributable to:
Owners of the parent 1 353 1 796 3 197
Non-controlling interests 53 22 103
1 406 1 818 3 300
Basic earnings per ordinary share (cents) 87.0 115.4 205.5
Diluted earnings per ordinary share (cents) 85.5 113.7 202.4
1. Fee income consists of the following:
- Investment contracts: R1 229 million (31.12.2013: R983 million; 30.06.2014: R1 772 million)
- Trust and fiduciary services: R865 million (31.12.2013: R900 million; 30.06.2014: R2 014 million)
- Health administration: R1 075 million (31.12.2013: R953 million; 30.06.2014: R1 978 million)
- Other fee income: R599 million (31.12.2013: R362 million; 30.06.2014: R803 million)
2. Finance costs consist of the following:
- Preference shares issued by MMI: R55 million (31.12.2013: R23 million; 30.06.2014: R46 million)
- Subordinated redeemable debt: R133 million (31.12.2013: R55 million; 30.06.2014: R149 million)
- Cost of carry positions: R109 million (31.12.2013: R83 million; 30.06.2014: R156 million)
- Other: R77 million (31.12.2013: R64 million; 30.06.2014: R131 million)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Earnings for the period 1 406 1 818 3 300
Other comprehensive income, net of tax 57 109 165
Items that may subsequently be reclassified to income 3 54 32
Exchange differences on translating foreign operations 3 53 40
Available-for-sale financial assets - 1 (8)
Items that will not be reclassified to income 54 55 133
Land and building revaluation 68 38 41
Change in non-distributable reserves 2 - 6
Adjustments to employee benefit funds
Metropolitan Staff Pension Fund - 30 107
Other 1 (3) (9)
Income tax relating to items that will not be reclassified (17) (10) (12)
Total comprehensive income for the period 1 463 1 927 3 465
Total comprehensive income attributable to:
Owners of the parent 1 410 1 899 3 363
Non-controlling interests 53 28 102
1 463 1 927 3 465
RECONCILIATION OF HEADLINE EARNINGS
attributable to owners of the parent
Basic earnings
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Earnings 1 353 1 796 3 197
Finance costs - convertible preference shares
Dilutory effect of subsidiaries (1)
Diluted earnings
Intangible asset and other impairments 3 16 25
Loss on sale of business - 2 -
Headline earnings (2) 1 356 1 814 3 222
Net realised and fair value gains on excess 73 (398) (544)
Basis and other changes and investment variances 25 (64) 160
Amortisation of intangible assets relating to business combinations 330 277 575
Non-recurring items (3) 43 27 171
Investment income on treasury shares - contract holders
Core headline earnings (4) 1 827 1 656 3 584
RECONCILIATION OF HEADLINE EARNINGS
attributable to owners of the parent (continued)
Diluted earnings
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Earnings 1 353 1 796 3 197
Finance costs - convertible preference shares 23 23 45
Dilutory effect of subsidiaries (1) (16) (10) (22)
Diluted earnings 1 360 1 809 3 220
Intangible asset and other impairments 3 16 25
Loss on sale of business - 2 -
Headline earnings (2) 1 363 1 827 3 245
Net realised and fair value gains on excess 73 (398) (544)
Basis and other changes and investment variances 25 (64) 160
Amortisation of intangible assets relating to business combinations 330 277 575
Non-recurring items (3) 43 27 171
Investment income on treasury shares - contract holders 18 21 14
Core headline earnings (4) 1 852 1 690 3 621
1. Metropolitan Health is consolidated at 100% and the MMI Holdings Namibian group, Metropolitan Kenya
and Cannon are consolidated at 96% in the results. For purposes of diluted earnings, diluted
non-controlling interests and investment returns are reinstated.
2. Headline earnings consist of operating profit, investment income, net realised and fair value gains,
investment variances and basis and other changes.
3. Non-recurring items include one-off costs relating to the restructuring of the group. For June 2014
it also includes a one-off enhancement of benefits relating to the outsourcing of the Metropolitan
Staff Pension Fund liabilities, amounting to R107 million. The previously unrecognised net surplus
asset exceeding the employer surplus account was used to fund the enhancement and released in other
comprehensive income, resulting in an accounting mismatch. The net asset value of the group has
therefore not been impacted.
4. Core headline earnings disclosed comprise operating profit and investment income on shareholder
assets. It excludes net realised and fair value gains on financial assets and liabilities,
investment variances and basis and other changes that 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
31.12.2014 31.12.2013 30.06.2014
Basic
Core headline earnings 117.4 106.4 230.3
Headline earnings 87.1 116.6 207.1
Earnings 87.0 115.4 205.5
Weighted average number of shares (million) 1 556 1 556 1 556
Diluted
Core headline earnings 115.5 105.4 225.7
Weighted average number of shares (million) (1) 1 604 1 604 1 604
Headline earnings 85.7 114.9 204.0
Earnings 85.5 113.7 202.4
Weighted average number of shares (million) (2) 1 590 1 591 1 591
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 2015 2014
Ordinary listed MMI Holdings Ltd shares (cents per share)
Interim - March 63 57
Final - September 85
Total 142
Special dividend 50
Total 192
MMI Holdings Ltd convertible redeemable preference shares (issued to Kagiso Tiso Holdings (Pty) Ltd (KTH))
The A3 MMI Holdings Ltd preference shares are redeemable in June 2017 at a redemption value of
R9.18 per share unless converted into MMI Holdings Ltd ordinary shares on a one-for-one basis prior
to that date. During the current period, one million preference shares were converted to listed
ordinary shares with effect from 13 November 2014. The ordinary shares were originally issued at a
price of R10.18 per share. Dividends are still payable on the remaining preference shares at 132 cents
per annum (payable March and September).
Significant related party transactions
R333 million of the ordinary dividends declared by MMI Holdings Ltd in September 2014 (R298 million
of the ordinary dividends declared in September 2013) and R223 million of the ordinary dividends
declared in March 2014 were attributable to RMI Holdings Ltd. In September 2014, R196 million of
the special dividends declared by MMI Holdings Ltd were attributable to RMI Holdings Ltd.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Changes in share capital
Balance at beginning and end 9 9 9
Changes in share premium
Balance at beginning 13 782 13 794 13 794
Conversion of preference shares 10 - -
(Increase)/decrease in treasury shares held on behalf
of contract holders (2) 16 (12)
Balance at end 13 790 13 810 13 782
Changes in other reserves
Balance at beginning 1 802 1 631 1 631
Total comprehensive income 57 103 166
BEE cost 2 - 2
Transfer (to)/from retained earnings (9) 3 3
Balance at end (1) 1 852 1 737 1 802
Changes in retained earnings
Balance at beginning 9 141 8 039 8 039
Total comprehensive income 1 353 1 796 3 197
Dividend paid (2 110) (1 197) (2 092)
Transfer from/(to) other reserves 9 (3) (3)
Puttable non-controlling interests (2) (21) - -
Balance at end 8 372 8 635 9 141
Equity attributable to owners of the parent 24 023 24 191 24 734
Changes in non-controlling interests
Balance at beginning 480 391 391
Total comprehensive income 53 28 102
Dividend paid (16) (11) (18)
Transactions with owners (2) (92) - -
Business combinations 101 - 5
Balance at end 526 408 480
Total equity 24 549 24 599 25 214
1. Other reserves consist of the following:
- Land and building revaluation reserve: R606 million (31.12.2013: R562 million;
30.06.2014: R561 million)
- Foreign currency translation reserve: R180 million (31.12.2013: R185 million;
30.06.2014: R179 million)
- Revaluation of available-for-sale investments: R3 million (31.12.2013: R12 million;
30.06.2014: R3 million)
- Non-distributable reserve: R18 million (31.12.2013: R8 million; 30.06.2014: R16 million)
- Employee benefit revaluation reserve: R99 million (31.12.2013: R27 million;
30.06.2014: R98 million)
- Fair value adjustment for preference shares issued by MMI Holdings Ltd: R940 million
(31.12.2013: R940 million; 30.06.2014: R940 million)
- Equity-settled share-based payment arrangements: R6 million (31.12.2013: R3 million;
30.06.2014: R5 million)
2. Non-controlling interests of 25% of Metropolitan Life Kenya and Cannon have the option to sell
their shares from 3 October 2016 at a price linked to embedded value. In terms of IFRS, the group
has recognised a financial liability, being the present value of the estimated purchase price, for
exercising this option. The group has consolidated 96% of the subsidiaries' results and
de-recognised the non-controlling interest due to the financial liability recognised above, which
is in line with its selected accounting policy.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Net cash (outflow)/inflow from operating activities (53) 787 5 201
Net cash (outflow)/inflow from investing activities (961) (307) 793
Net cash (outflow)/inflow from financing activities (1 852) (890) 606
Net cash flow (2 866) (410) 6 600
Cash resources and funds on deposit at beginning 28 875 22 275 22 275
Cash resources and funds on deposit at end 26 009 21 865 28 875
PRINCIPAL ASSUMPTIONS (South Africa) (1)
31.12.2014 31.12.2013 30.06.2014
% % %
Pre-tax investment return
Equities 11.7 11.8 12.0
Properties 9.2 9.3 9.5
Government stock 8.2 8.3 8.5
Other fixed-interest stocks 8.7 8.8 9.0
Cash 7.2 7.3 7.5
Risk-free return (2) 8.2 8.3 8.5
Risk discount rate (RDR) 10.5 10.6 10.8
Investment return (before tax) - balanced portfolio (2) 10.4 10.5 10.7
Expense inflation base rate (3) 6.4 6.5 6.7
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. The risk-free return was determined with reference to the market interest rate on South African
government bonds at the valuation date. The investment return on balanced portfolio business was
calculated by applying the above returns to an expected long-term asset distribution.
3. 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
31.12.2014 31.12.2013 30.06.2014
% % %
Cannon Assurance 33.7 - -
Eris Property Group 45.7 45.7 45.7
Metropolitan Botswana 24.2 24.2 24.2
Metropolitan Ghana - 5.0 3.8
Metropolitan Health Botswana 28.0 28.0 28.0
Metropolitan Health Ghana 1.8 4.8 1.8
Metropolitan Health Group 17.6 17.6 17.6
Metropolitan 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 Life Mauritius 30.0 30.0 30.0
Metropolitan Nigeria 50.0 50.0 50.0
Metropolitan Swaziland 33.0 33.0 33.0
Metropolitan Tanzania 33.0 33.0 33.0
Metropolitan Zambia 35.0 35.0 35.0
MMI Holdings Namibia 10.3 10.3 10.3
Momentum Mozambique 33.0 33.0 33.0
Momentum Swaziland 33.0 33.0 33.0
ANALYSIS OF ASSETS UNDER MANAGEMENT (1)
Restated
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Managed and/or administered by Momentum Investments (net)
Financial assets 319 703 337 581 370 073
Momentum Manager of Managers 77 187 67 288 72 846
Momentum Collective Investments 49 735 52 252 51 215
Metropolitan Collective Investments 27 520 43 573 55 538
Momentum Asset Management 123 563 130 122 141 874
Momentum Global Investments 38 634 32 169 36 076
Momentum Alternative Investments 3 064 12 177 12 524
Properties - Eris Property Group 26 903 23 984 24 448
On-balance sheet 7 776 7 568 7 406
Off-balance sheet 19 127 16 416 17 042
346 606 361 565 394 521
Momentum Wealth linked product assets under administration 130 569 123 017 130 845
On-balance sheet 79 078 74 644 80 484
Off-balance sheet 51 491 48 373 50 361
Managed internally or by other managers within MMI 63 358 22 324 26 712
On-balance sheet 57 976 17 855 21 600
Off-balance sheet . 5 382 4 469 5 112
Managed by external managers (on-balance sheet) 15 832 32 990 32 507
Properties managed internally or by other managers
within MMI or externally 2 510 1 449 2 252
Momentum Employee Benefits - segregated assets 1 460 1 333 1 380
Momentum Employee Benefits - cell captives on-balance sheet 13 024 1 895 12 058
Total assets under management 573 359 544 573 600 275
Managed and/or administered by Momentum Investments (net)
On-balance sheet 174 364 166 226 181 915
Off-balance sheet 172 242 195 339 212 606
346 606 361 565 394 521
1. Assets under management are reported net of double counted assets except where one entity manages
assets on behalf of another in the division, and both entities earn a fee on the same assets.
Non-financial assets (except properties) have been excluded.
2. The December 2013 restatement relates to refinements in presentation, as explained in note 1 above.
NET FUNDS RECEIVED FROM CLIENTS (1)
Gross Gross Net
single recurring Gross Gross inflow/
inflows inflows inflow outflow (outflow)
6 mths to 31.12.2014 Rm Rm Rm Rm Rm
Momentum Retail 7 542 4 094 11 636 (12 084) (448)
Metropolitan Retail 591 2 865 3 456 (2 408) 1 048
Momentum Employee Benefits 3 833 6 623 10 456 (7 294) 3 162
International 238 1 488 1 726 (973) 753
Momentum Investments 4 989 - 4 989 (5 449) (460)
Metropolitan Health 25 170 195 (150) 45
Shareholder Capital - 227 227 (160) 67
Long-term insurance business fund flows 17 218 15 467 32 685 (28 518) 4 167
Off-balance sheet fund flows
Managed and/or administered by Momentum
Investments (net)
Financial assets (2) 33 129 (63 629) (30 500)
Properties - Eris Property Group 2 199 (114) 2 085
Momentum Wealth linked product assets under
administration 6 376 (5 452) 924
Managed internally or by other managers
within MMI 1 743 (1 725) 18
Momentum Employee Benefits - segregated assets 1 491 (1 168) 323
Total net funds received from clients 77 623 (100 606) (22 983)
NET FUNDS RECEIVED FROM CLIENTS (1)
Gross Gross Net
single recurring Gross Gross inflow/
Restated inflows inflows inflow outflow (outflow)
6 mths to 31.12.2013 Rm Rm Rm Rm Rm
Momentum Retail 7 497 3 860 11 357 (10 689) 668
Metropolitan Retail 698 2 752 3 450 (2 896) 554
Momentum Employee Benefits 3 782 4 014 7 796 (5 532) 2 264
International 157 1 264 1 421 (770) 651
Momentum Investments 3 781 - 3 781 (6 653) (2 872)
Metropolitan Health - 23 23 (21) 2
Shareholder Capital 5 154 159 (195) (36)
Long-term insurance business fund flows 15 920 12 067 27 987 (26 756) 1 231
Off-balance sheet fund flows
Managed and/or administered by Momentum
Investments (net)
Financial assets 39 286 (44 606) (5 320)
Properties - Eris Property Group 1 480 (2 371) (891)
Momentum Wealth linked product assets under
administration 6 317 (5 258) 1 059
Managed internally or by other managers
within MMI 345 (465) (120)
Momentum Employee Benefits - segregated assets 2 186 (1 040) 1 146
Total net funds received from clients 77 601 (80 496) (2 895)
1. Assets under management and the related fund flows are reported net of double counted assets
except where one entity manages assets on behalf of another in the division, and both entities
earn a fee on the same assets. Non-financial assets (except properties) have been excluded. As a result
December 2013 has been restated to reflect this refined presentation.
2. Includes outflows of R34 billion relating to Metropolitan Collective Investments, as disclosed in the
June 2014 results.
NET FUNDS RECEIVED FROM CLIENTS (1)
Gross Gross Net
single recurring Gross Gross inflow/
inflows inflows inflow outflow (outflow)
12 mths to 30.06.2014 Rm Rm Rm Rm Rm
Momentum Retail 14 661 7 856 22 517 (21 215) 1 302
Metropolitan Retail 1 507 5 313 6 820 (5 523) 1 297
Momentum Employee Benefits 7 060 10 283 17 343 (12 907) 4 436
International 277 2 621 2 898 (1 602) 1 296
Momentum Investments 6 262 - 6 262 (10 823) (4 561)
Metropolitan Health - 47 47 (46) 1
Shareholder Capital 23 332 355 (313) 42
Long-term insurance business fund flows 29 790 26 452 56 242 (52 429) 3 813
Off-balance sheet fund flows
Managed and/or administered by Momentum
Investments (net)
Financial assets 70 048 (72 444) (2 396)
Properties - Eris Property Group 2 114 (2 379) (265)
Momentum Wealth linked product assets
under administration 11 332 (11 163) 169
Managed internally or by other managers
within MMI 842 (775) 67
Momentum Employee Benefits - segregated assets 2 571 (2 108) 463
Total net funds received from clients 143 149 (141 298) 1 851
1. Assets under management and the related fund flows are reported net of double counted assets except
where one entity manages assets on behalf of another in the division, and both entities earn a fee
on the same assets. Non-financial assets (except properties) have been excluded.
ANALYSIS OF ASSETS BACKING SHAREHOLDER EXCESS
31.12.2014 31.12.2013 30.06.2014
Rm % Rm % Rm %
Equity securities 1 279 5.3 1 050 4.3 1 228 5.0
Preference shares 1 363 5.7 967 4.0 1 354 5.5
Collective investment schemes 523 2.2 272 1.1 710 2.9
Debt securities 4 321 18.0 4 994 20.6 6 699 27.1
Properties 2 262 9.4 2 506 10.3 2 459 9.9
Owner-occupied properties 1 463 6.1 1 190 4.9 1 270 5.1
Investment properties 799 3.3 1 316 5.4 1 189 4.8
Cash and cash equivalents and funds on deposit 6 408 26.7 7 289 30.1 6 980 28.2
Intangible assets 8 525 35.5 7 092 29.3 8 129 32.9
Other net assets 2 939 12.2 1 892 7.9 563 2.3
27 620 115.0 26 062 107.6 28 122 113.7
Redeemable preference shares (303) (1.3) (313) (1.3) (313) (1.3)
Subordinated redeemable debt (3 294) (13.7) (1 558) (6.3) (3 075) (12.4)
Shareholder excess per reporting basis 24 023 100.0 24 191 100.0 24 734 100.0
BUSINESS COMBINATIONS - DECEMBER 2014
Cannon
On 2 October 2014, the group acquired an accounting ownership of 71% (legal ownership of 66%) of
Cannon, a composite insurer, for R308 million. The minority shareholders of Cannon also acquired a
minority stake in Metropolitan Life Kenya. The transaction resulted in R88 million goodwill being
recognised attributable to certain anticipated operating synergies.
CareCross
On 19 November 2014, the group acquired 100% in CareCross, a health administrator, for R300 million
in cash. It includes a majority share in Occupational Care South Africa (OCSA). The transaction did
not result in any goodwill being recognised.
Other
During the period the group also made a few smaller acquisitions.
The purchase price consideration, the net assets acquired and any relevant goodwill relating to the
above two transactions are as follows:
Total Cannon CareCross
December 2014 Rm Rm Rm
Purchase consideration in total 608 308 300
Fair value of net assets
Intangible assets 566 174 392
Tangible assets 145 138 7
Financial instrument assets 241 228 13
Reinsurance contract assets 6 6 -
Insurance and other receivables 36 36 -
Other assets 40 20 20
Cash and cash equivalents 79 16 63
Insurance contract liabilities (195) (177) (18)
Financial instrument liabilities (38) (38) -
Other liabilities (248) (78) (170)
Net identifiable assets acquired 632 325 307
Non-controlling interests (101) (94) (7)
Goodwill recognised 88 88 -
Derecognition of Metropolitan Life Kenya shares (11) (11) -
Purchase consideration in cash 608 308 300
The goodwill relating to the above transactions is not deductible for tax purposes. The above
transactions contributed net income of R109 million and earnings of R7 million to the group results
for the period.
BUSINESS COMBINATIONS - JUNE 2014
Guardrisk
On 3 March 2014, MMI Holdings Ltd acquired 100% of Guardrisk for R1.6 billion in cash. The
transaction resulted in R567 million goodwill being recognised attributable to certain anticipated
operating synergies.
Providence
On 11 November 2013, the group acquired 100% of Providence, a health administrator, for R51 million
in cash with an additional R57 million contingent consideration. The transaction resulted in
R19 million goodwill being recognised attributable to certain anticipated operating synergies.
Other
During the June 2014 year the group also had a few smaller acquisitions, relating mostly to life
books being acquired.
The purchase price consideration, the net assets acquired and any relevant goodwill relating to the
above transactions are as follows:
Total Guardrisk Providence Other
June 2014 Rm Rm Rm Rm
Purchase consideration in total 1 760 1 607 108 45
Fair value of net assets
Intangible assets 1 095 940 112 43
Tangible assets 5 1 2 2
Financial instrument assets 10 837 10 630 11 196
Reinsurance contracts 762 762 - -
Insurance and other receivables 686 686 - -
Other assets 176 176 - -
Cash and cash equivalents 2 330 2 284 4 42
Insurance contract liabilities (6 061) (5 836) - (225)
Financial instrument liabilities (7 305) (7 298) - (7)
Other liabilities (1 346) (1 305) (40) (1)
Net identifiable assets acquired 1 179 1 040 89 50
Non-controlling interests (5) - - (5)
Goodwill recognised 586 567 19 -
Contingent liability payments (57) - (57) -
Purchase consideration in cash 1 703 1 607 51 45
The goodwill relating to the above transactions is not deductible for tax purposes. The above
transactions contributed net income of R2 255 million and earnings of R83 million to the group
results for the June 2014 year.
RECONCILIATION OF GOODWILL
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Carrying amount at beginning 1 088 502 502
Business combinations 158 19 586
Carrying amount at end 1 246 521 1 088
MMI HOLDINGS GROUP - SEGMENTAL INFORMATION
Momentum
Momentum Metropolitan Employee
6 mths to 31.12.2014 Retail Retail Benefits International
Rm Rm Rm Rm
Revenue
Net insurance premiums 11 636 3 456 10 456 1 726
Recurring premiums 4 094 2 865 6 623 1 488
Single premiums 7 542 591 3 833 238
Fee income 1 345 59 995 120
Fee income 1 345 59 995 120
Inter-segmental fee income - - - -
Expenses
Net payments to contract holders
External payments 12 084 2 408 7 294 973
Other expenses 2 047 1 077 1 991 700
Sales remuneration 1 067 508 689 276
Administration expenses 980 569 806 424
Amortisation due to business
combinations and impairments - - - -
Cell captive business - - 496 -
Direct property expenses - - - -
Asset management and other fee expenses - - - -
Holding company expenses - - - -
Inter-segmental expenses - - - -
Diluted core headline earnings 673 344 272 62
Operating profit 933 475 526 82
Tax on operating profit (260) (131) (254) (20)
Investment income - - - -
Tax on investment income - - - -
Actuarial liabilities 177 943 32 716 88 111 9 820
Momentum Metropolitan Shareholder Segmental
6 mths to 31.12.2014 (continued) Investments Health Capital total
Rm Rm Rm Rm
Revenue
Net insurance premiums 4 989 195 227 32 685
Recurring premiums - 170 227 15 467
Single premiums 4 989 25 - 17 218
Fee income 649 834 285 4 287
Fee income 649 834 285 4 287
Inter-segmental fee income - - - -
Expenses
Net payments to contract holders
External payments 5 449 150 160 28 518
Other expenses 537 743 648 7 743
Sales remuneration - 3 41 2 584
Administration expenses 484 733 318 4 314
Amortisation due to business
combinations and impairments - 7 20 27
Cell captive business - - - 496
Direct property expenses - - - -
Asset management and other fee expenses 53 - 129 182
Holding company expenses - - 140 140
Inter-segmental expenses - - - -
Diluted core headline earnings 97 98 306 1 852
Operating profit 104 133 (41) 2 212
Tax on operating profit (23) (42) 28 (702)
Investment income 22 9 383 414
Tax on investment income (6) (2) (64) (72)
Actuarial liabilities 35 236 31 3 949 347 806
Reconciling
6 mths to 31.12.2014 (continued) items (1) IFRS total
Rm Rm
Revenue
Net insurance premiums (18 742) 13 943
Recurring premiums (3 901) 11 566
Single premiums (14 841) 2 377
Fee income (519) 3 768
Fee income 38 4 325
Inter-segmental fee income (557) (557)
Expenses
Net payments to contract holders
External payments (16 613) 11 905
Other expenses 1 579 9 322
Sales remuneration 39 2 623
Administration expenses 566 4 880
Amortisation due to business
combinations and impairments 440 467
Cell captive business - 496
Direct property expenses 75 75
Asset management and other fee expenses 1 016 1 198
Holding company expenses - 140
Inter-segmental expenses (557) (557)
Diluted core headline earnings - 1 852
Operating profit - 2 212
Tax on operating profit - (702)
Investment income - 414
Tax on investment income - (72)
Actuarial liabilities (98) 347 708
1. The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums
(R18 907 million) and claims (R16 604 million); FNB Life excluded from Metropolitan Retail
(premiums R165 million, fee income R3 million, claims R9 million, sales remuneration R44 million
and expenses R124 million); non-recurring items of R333 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; expenses relating to consolidated
collective investment schemes (R17 million); other minor adjustments to expenses (R92 million),
sales remuneration (R5 million) and fee income (R35 million); and adjustments to actuarial
liabilities representing inter-segmental liabilities.
2. Administration expenses for the current period include the following relating to new
acquisitions: International - R27 million relating to Cannon; Metropolitan Health - R123 million
relating to CareCross.
3. Momentum Employee Benefits includes net insurance premiums (R2 379 million), fee income
(R254 million), net payments to contract holders (R1 432 million), sales remuneration
(R624 million), administration expenses (R141 million), cell captive business expenses
(R496 million) and actuarial liabilities (R16 957 million) relating to Guardrisk (now including
Ability).
Momentum
Restated Momentum Metropolitan Employee
6 mths to 31.12.2013 Retail Retail Benefits International
Rm Rm Rm Rm
Revenue
Net insurance premiums 11 357 3 450 7 796 1 421
Recurring premiums 3 860 2 752 4 014 1 264
Single premiums 7 497 698 3 782 157
Fee income 1 119 51 704 102
Fee income 1 119 51 704 102
Inter-segmental fee income - - - -
Expenses
Net payments to contract holders
External payments 10 689 2 896 5 532 770
Other expenses 1 707 1 107 804 634
Sales remuneration 940 502 82 232
Administration expenses 767 605 671 387
Amortisation due to business
combinations and impairments - - - 15
Cell captive business - - 51 -
Direct property expenses - - - -
Asset management and other - - - -
fee expenses
Holding company expenses - - - -
Inter-segmental expenses - - - -
Diluted core headline earnings 652 315 179 49
Operating profit 908 434 242 62
Tax on operating profit (256) (119) (63) (13)
Investment income - - - -
Tax on investment income - - - -
Actuarial liabilities 166 858 30 913 63 057 8 415
Restated Momentum Metropolitan Shareholder Segmental
6 mths to 31.12.2013 (continued) Investments Health Capital total
Rm Rm Rm Rm
Revenue
Net insurance premiums 3 781 23 159 27 987
Recurring premiums - 23 154 12 067
Single premiums 3 781 - 5 15 920
Fee income 768 738 252 3 734
Fee income 768 738 252 3 734
Inter-segmental fee income - - - -
Expenses
Net payments to contract holders
External payments 6 653 21 195 26 756
Other expenses 636 651 540 6 079
Sales remuneration - - 32 1 788
Administration expenses 471 630 152 3 683
Amortisation due to business
combinations and impairments - 8 19 42
Cell captive business - - - 51
Direct property expenses - - - -
Asset management and other 165 13 177 355
fee expenses
Holding company expenses - - 160 160
Inter-segmental expenses - - - -
Diluted core headline earnings 95 75 325 1 690
Operating profit 117 91 28 1 882
Tax on operating profit (37) (20) (6) (514)
Investment income 21 6 422 449
Tax on investment income (6) (2) (119) (127)
Actuarial liabilities 34 410 10 3 310 306 973
Restated Reconciling
6 mths to 31.12.2013 (continued) items (1) IFRS total
Rm Rm
Revenue
Net insurance premiums (17 476) 10 511
Recurring premiums (3 333) 8 734
Single premiums (14 143) 1 777
Fee income (536) 3 198
Fee income 63 3 797
Inter-segmental fee income (599) (599)
Expenses
Net payments to contract holders
External payments (15 448) 11 308
Other expenses 1 070 7 149
Sales remuneration 27 1 815
Administration expenses 210 3 893
Amortisation due to business
combinations and impairments 385 427
Cell captive business - 51
Direct property expenses 75 75
Asset management and other 974 1 329
fee expenses
Holding company expenses - 160
Inter-segmental expenses (601) (601)
Diluted core headline earnings - 1 690
Operating profit - 1 882
Tax on operating profit - (514)
Investment income - 449
Tax on investment income - (127)
Actuarial liabilities (475) 306 498
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); non-recurring items 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; expenses relating to
consolidated collective investment schemes (R2 million); other minor adjustments to expenses
(R88 million), sales remuneration (R6 million) and fee income (R53 million); and adjustments to
actuarial liabilities representing inter-segmental liabilities.
2. Momentum Employee Benefits includes net insurance premiums (R38 million), fee income (R9 million),
net payments to contract holders (R64 million), sales remuneration (R35 million), administration
expenses (R8 million), cell captive business expenses (R51 million) and actuarial liabilities
(R1 575 million) relating to Ability.
Momentum
Restated Momentum Metropolitan Employee
12 mths to 30.06.2014 Retail Retail Benefits International
Rm Rm Rm Rm
Revenue
Net insurance premiums 22 517 6 820 17 343 2 898
Recurring premiums 7 856 5 313 10 283 2 621
Single premiums 14 661 1 507 7 060 277
Fee income 2 034 112 1 479 184
Fee income 2 034 112 1 479 184
Inter-segmental fee income - - - -
Expenses
Net payments to contract holders
External payments 21 215 5 523 12 907 1 602
Other expenses 3 474 2 100 2 316 1 168
Sales remuneration 1 892 937 519 424
Administration expenses 1 582 1 163 1 426 729
Amortisation due to business
combinations and impairments - - - 15
Cell captive business - - 371 -
Direct property expenses - - - -
Asset management and other fee expenses - - - -
Holding company expenses - - - -
Inter-segmental expenses - - - -
Diluted core headline earnings 1 372 587 516 122
Operating profit 1 908 814 704 155
Tax on operating profit (536) (227) (188) (33)
Investment income - - - -
Tax on investment income - - - -
Actuarial liabilities 175 869 32 296 82 902 9 152
Restated Momentum Metropolitan Shareholder Segmental
12 mths to 30.06.2014 (continued) Investments Health Capital total
Rm Rm Rm Rm
Revenue
Net insurance premiums 6 262 47 355 56 242
Recurring premiums - 47 332 26 452
Single premiums 6 262 - 23 29 790
Fee income 1 442 1 513 502 7 266
Fee income 1 442 1 513 502 7 266
Inter-segmental fee income - - - -
Expenses
Net payments to contract holders
External payments 10 823 46 313 52 429
Other expenses 1 195 1 311 1 164 12 728
Sales remuneration - - 71 3 843
Administration expenses 954 1 288 531 7 673
Amortisation due to business
combinations and impairments 9 14 39 77
Cell captive business - - - 371
Direct property expenses - - - -
Asset management and other fee expenses 232 9 270 511
Holding company expenses - - 253 253
Inter-segmental expenses - - - -
Diluted core headline earnings 197 171 656 3 621
Operating profit 219 205 (38) 3 967
Tax on operating profit (59) (44) 12 (1 075)
Investment income 51 14 864 929
Tax on investment income (14) (4) (182) (200)
Actuarial liabilities 34 942 8 3 528 338 697
Restated Reconciling
12 mths to 30.06.2014 (continued) items (1) IFRS total
Rm Rm
Revenue
Net insurance premiums (33 104) 23 138
Recurring premiums (6 713) 19 739
Single premiums (26 391) 3 399
Fee income (699) 6 567
Fee income 110 7 376
Inter-segmental fee income (809) (809)
Expenses
Net payments to contract holders
External payments (30 108) 22 321
Other expenses 2 497 15 225
Sales remuneration 56 3 899
Administration expenses 518 8 191
Amortisation due to business
combinations and impairments 776 853
Cell captive business - 371
Direct property expenses 159 159
Asset management and other fee expenses 1 819 2 330
Holding company expenses - 253
Inter-segmental expenses (831) (831)
Diluted core headline earnings - 3 621
Operating profit - 3 967
Tax on operating profit - (1 075)
Investment income - 929
Tax on investment income - (200)
Actuarial liabilities (98) 338 599
1. The 'Reconciling items' column includes an adjustment to reverse investment contract premiums
(R33 305 million) and claims (R30 108 million); FNB Life excluded from Metropolitan Retail
(premiums R201 million, fee income R20 million, sales remuneration R64 million and expenses
R159 million); non-recurring items of R192 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; expenses relating to consolidated collective
investment schemes (R6 million); other minor adjustments to expenses (R161 million), sales
remuneration (R8 million) and fee income (R90 million); and adjustments to actuarial liabilities
representing inter-segmental liabilities.
2. Momentum Employee Benefits includes net insurance premiums (R1 927 million), fee income
(R192 million), net payments to contract holders (R1 642 million), sales remuneration
(R415 million), administration expenses (R88 million), cell captive business expenses
(R371 million) and actuarial liabilities (R15 869 million) relating to Guardrisk (now including
Ability).
CHANGE IN DILUTED CORE HEADLINE EARNINGS
6 mths to 6 mths to 12 mths to
Change 31.12.2014 31.12.2013 30.06.2014
% Rm Rm Rm
Momentum Retail 3 673 652 1 372
Metropolitan Retail 9 344 315 587
Momentum Employee Benefits 52 272 179 516
International 27 62 49 122
Momentum Investments 2 97 95 197
Metropolitan Health 31 98 75 171
Operating divisions 13 1 546 1 365 2 965
Shareholder Capital (6) 306 325 656
Total diluted core headline earnings 10 1 852 1 690 3 621
RECONCILIATION OF MOMENTUM INVESTMENTS
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Revenue 664 768 1 463
Fee income 649 768 1 442
Other income 15 - 21
Expenses and finance costs (563) (647) (1 239)
Other expenses (537) (636) (1 195)
Finance costs (26) (11) (44)
Share of profit of associates 11 10 9
Non-controlling interests (8) (14) (23)
104 117 210
Core adjustments - - 9
Operating profit before tax 104 117 219
Tax on operating profit (23) (37) (59)
Investment income 22 21 51
Tax on investment income (6) (6) (14)
Diluted core headline earnings 97 95 197
RECONCILIATION OF METROPOLITAN HEALTH
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Revenue 1 029 761 1 560
Net insurance premiums 195 23 47
Fee income 834 738 1 513
Expenses and finance costs (893) (672) (1 357)
Net payments to contract holders (150) (21) (46)
Other expenses (743) (651) (1 311)
136 89 203
Core adjustments (3) 2 2
Impairments and amortisation of intangibles relating to
business combinations 7 8 14
Adjustments for dilution (10) (6) (13)
Other - - 1
Operating profit before tax 133 91 205
Tax on operating profit (42) (20) (44)
Investment income 9 6 14
Tax on investment income (2) (2) (4)
Diluted core headline earnings 98 75 171
Additional off-balance sheet information
Assets under administration at reporting date 10 406 10 102 10 686
Gross recurring inflow of funds 21 670 20 220 41 137
Gross outflow of funds (17 903) (11 213) (36 791)
RECONCILIATION OF GUARDRISK (PROMOTER CELL (1))
6 mths to 4 mths to
31.12.2014 30.06.2014
Rm Rm
Revenue by type 244 165
Management fees 182 121
Investment fees 28 22
Underwriting profit 10 2
Other income 1 1
Investment income 23 19
Expenses and finance costs (142) (81)
Administration expenses (137) (80)
Finance costs (5) (1)
Operating profit before tax 102 84
Tax attributable to promoter operating profit (29) (10)
Diluted core headline earnings 73 74
1. An insurer that enters into contractual arrangements with cell shareholders whereby the risks and
rewards associated with certain insurance activities accruing to the cell shareholder, in
relation to the insurer, is specified. The promoter cell will exclude all assets and liabilities
and related income and expenses of the cell arrangements.
RECONCILIATION OF SHAREHOLDER CAPITAL
Restated
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Revenue
Net insurance premiums (excluding investment business) 227 154 332
Balance Sheet Management income including fee income 350 335 607
Guaranteed portfolios earnings 202 178 299
Returns in excess of benchmark 126 71 160
Returns on working capital and other 22 86 148
Other income 170 147 352
Total income 747 636 1 291
Expenses
Net payments to contract holders (excluding investment
business) (160) (87) (204)
Other expenses (628) (521) (1 125)
Balance Sheet Management (109) (112) (196)
Strategic initiatives and other (1) (379) (249) (676)
Holding company (140) (160) (253)
Total expenses (788) (608) (1 329)
Operating (loss)/profit before tax (41) 28 (38)
Tax on operating profit 28 (6) 12
Investment income 383 422 864
Tax on investment income (64) (119) (182)
Diluted core headline earnings 306 325 656
1. Includes Momentum Short-term Insurance, Solvency Assessment and Management (SAM) costs, MMI
Rewards and India project costs.
PAYMENTS TO CONTRACT HOLDERS
Restated
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Momentum Retail 12 084 10 689 21 215
Death and disability claims 1 890 1 794 3 412
Maturity claims 3 778 3 214 6 444
Annuities 2 405 2 145 4 505
Withdrawal benefits 21 15 46
Surrenders 4 564 3 919 7 569
Re-insurance recoveries (574) (398) (761)
Metropolitan Retail 2 408 2 896 5 523
Death and disability claims 555 539 1 049
Maturity claims 783 1 307 2 373
Annuities 301 280 558
Withdrawal benefits 46 33 97
Surrenders 753 775 1 542
Re-insurance recoveries (30) (38) (96)
Momentum Employee Benefits (1) 7 294 5 532 12 907
Death and disability claims 2 192 1 681 3 635
Maturity claims 430 291 667
Annuities 743 716 765
Withdrawals and surrenders 1 799 1 381 3 358
Terminations and disinvestments 1 512 1 895 3 802
Short-term insurance 2 172 - 1 880
Re-insurance recoveries (1 554) (432) (1 200)
International 973 770 1 602
Death and disability claims 397 332 701
Maturity claims 194 148 284
Annuities 49 47 97
Withdrawal benefits 59 42 90
Surrenders 222 197 395
Terminations and disinvestments 122 28 80
Re-insurance recoveries (70) (24) (45)
Momentum Investments
Withdrawals 5 449 6 653 10 823
Metropolitan Health
Claims 150 21 46
Shareholder Capital
Claims 160 195 313
Total payments to contract holders 28 518 26 756 52 429
Reconciling items (2) (16 613) (15 448) (30 108)
Net insurance benefits and claims per income statement 11 905 11 308 22 321
1. Included in Momentum Employee Benefits above is R2 785 million claims (30.06.2014: R2 556 million)
and R1 353 million re-insurance recoveries (30.06.2014: R914 million) relating to Guardrisk (now
including Ability). For December 2013 it includes R282 million claims and R218 million re-insurance
recoveries relating to Ability.
2. Relates mainly to payments to investment contract holders.
NUMBER OF EMPLOYEES
31.12.2014 31.12.2013 30.06.2014
Indoor staff 10 488 9 634 9 877
Momentum Retail 1 686 1 672 1 711
Metropolitan Retail 1 093 1 322 1 174
Momentum Employee Benefits (1) 1 642 1 421 1 650
International (2) 1 185 828 1 037
Momentum Investments 671 691 667
Metropolitan Health (3) 3 067 2 706 2 553
Shareholder Capital
Balance Sheet Management 78 68 68
Group services 802 751 781
Short-term insurance 264 175 236
Field staff 7 488 6 921 6 815
Momentum Retail 1 221 996 1 041
Metropolitan Retail 4 974 4 610 4 424
International 1 293 1 315 1 350
Total 17 976 16 555 16 692
1. Momentum Employee Benefits in the current period includes 207 (31.12.2013: nil; 30.06.2014: 218)
employees relating to Guardrisk.
2. International in the current period includes 82 employees relating to Cannon.
3. Metropolitan Health in the current period includes 525 employees relating to CareCross.
MMI HOLDINGS GROUP - STATUTORY EXCESS
STATUTORY EXCESS
Restated Restated
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Group excess per reporting basis 24 023 24 191 24 734
Net assets - other businesses (3 517) (2 557) (2 999)
Fair value adjustments on Metropolitan business acquisition
and other consolidation adjustments (4 070) (4 638) (4 343)
Excess - long-term insurance business, net of non-controlling
interests (1) 16 436 16 996 17 392
Disregarded assets (2) (991) (986) (966)
Difference between statutory and published valuation methods (615) (660) (571)
Write-down of subsidiaries and associates for statutory purposes (1 132) (1 305) (1 387)
Unsecured subordinated debt 3 339 1 549 3 075
Consolidation adjustments 63 (83) (23)
Statutory excess - long-term insurance business 17 100 15 511 17 520
Capital adequacy requirement (CAR) (Rm) (3) 6 398 6 044 6 221
Ratio of long-term insurance business excess to CAR (times) 2.7 2.6 2.8
Discretionary margins (4) 13 661 13 547 14 161
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 excludes Guardrisk and Cannon due to them being classified as non-covered, as well
as other non-life insurance business.
2. Disregarded assets are those as defined in the South African Long-term Insurance Act, 52 of 1998,
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 R532 million (31.12.2013: R548 million;
30.06.2014: R546 million).
3. Aggregation of separate company's capital adequacy requirements (CARs), with no assumption of
diversification benefits.
4. Discretionary margins are shown gross of tax. The December 2013 number has been restated.
MMI HOLDINGS GROUP - EMBEDDED VALUE INFORMATION
EMBEDDED VALUE RESULTS AS AT
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Covered business
Reporting excess - long-term insurance business 16 436 16 996 17 392
Reclassification to non-covered business (1 243) (1 629) (1 459)
15 193 15 367 15 933
Disregarded assets (1) (664) (678) (682)
Difference between statutory and published valuation methods (615) (660) (571)
Dilutory effect of subsidiaries (2) (38) (28) (34)
Consolidation adjustments (3) (62) - (77)
Value of MMI Group Ltd preference shares issued (500) (500) (500)
Diluted adjusted net worth - covered business 13 314 13 501 14 069
Net value of in-force business 20 572 19 370 20 324
Diluted embedded value - covered business 33 886 32 871 34 393
Non-covered business
Net assets - non-covered business within life insurance companies 1 243 1 629 1 459
Net assets - non-covered business outside life insurance companies 3 517 2 557 2 999
Consolidation adjustments and transfers to covered business (3) (2 792) (1 295) (2 291)
Adjustments for dilution (4) 838 758 720
Diluted adjusted net worth - non-covered business 2 806 3 649 2 887
Write-up to directors' value 3 061 868 2 395
Non-covered business (5) 4 941 2 566 4 188
Holding company expenses (6) (1 430) (1 288) (1 383)
International holding company expenses (6) (450) (410) (410)
Diluted embedded value - non-covered business 5 867 4 517 5 282
Diluted adjusted net worth 16 120 17 150 16 956
Net value of in-force business 20 572 19 370 20 324
Write-up to directors' value 3 061 868 2 395
Diluted embedded value 39 753 37 388 39 675
Required capital - covered business (adjusted for qualifying debt) (7) 7 018 8 424 7 039
Surplus capital - covered business 6 296 5 077 7 030
Diluted embedded value per share (cents) 2 478 2 331 2 474
Diluted adjusted net worth per share (cents) 1 005 1 069 1 057
Diluted number of shares in issue (million) (8) 1 604 1 604 1 604
1. Disregarded assets include Sage intangible assets of R532 million (31.12.2013: R548 million;
30.06.2014: R546 million), goodwill and various other items.
2. For accounting purposes, Metropolitan Health has been consolidated at 100%, while MMI Holdings
Namibia, Metropolitan Kenya and Cannon have been consolidated at 96% in the statement of financial
position, for the current period. 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. Adjustments for dilution are made up as follows:
- Dilutory effect of subsidiaries (note 2): R115 million (31.12.2013: R110 million;
30.06.2014: R102 million)
- Treasury shares held on behalf of contract holders: R420 million (31.12.2013: R335 million;
30.06.2014: R305 million)
- Liability - MMI Holdings Ltd convertible preference shares issued to KTH: R303 million
(31.12.2013: R313 million; 30.06.2014: R313 million)
5. Guardrisk is included as part of non-covered business at 30 June 2014 and 31 December 2014 and
Cannon as part of non-covered business at 31 December 2014.
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 required capital for covered business amounts to R10 312 million (31.12.2013: R9 982 million;
30.06.2014: R10 114 million) and is adjusted for qualifying debt of R3 294 million
(31.12.2013: R1 558 million; 30.06.2014: R3 075 million).
8. 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.
ANALYSIS OF NET VALUE OF IN-FORCE BUSINESS PER DIVISION
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Momentum Retail 9 963 9 441 9 674
Gross value of in-force business 11 483 10 952 11 212
Less cost of required capital (1 520) (1 511) (1 538)
Metropolitan Retail 3 627 3 811 3 738
Gross value of in-force business 4 384 4 490 4 445
Less cost of required capital (757) (679) (707)
Momentum Employee Benefits 4 406 3 447 4 242
Gross value of in-force business 5 131 4 052 4 892
Less cost of required capital (725) (605) (650)
International 1 950 1 783 1 832
Gross value of in-force business 2 131 1 911 2 006
Less cost of required capital (181) (128) (174)
Shareholder Capital 626 888 838
Gross value of in-force business (1) 626 888 838
Less cost of required capital - - -
Net value of in-force business 20 572 19 370 20 324
Notes
1. The value of in-force in the Shareholder Capital represents discretionary margins managed centrally
by Balance Sheet Management.
EMBEDDED VALUE PER DIVISION
Adjusted net Net value of
worth in-force 31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm Rm Rm
Covered business
MMI Group Ltd 11 677 18 623 30 300 29 764 30 994
Metropolitan Odyssey Ltd 62 - 62 49 59
International 1 575 1 949 3 524 3 058 3 340
MMI Holdings Namibia Ltd 627 1 290 1 917 1 634 1 793
Metropolitan Life of Botswana Ltd 219 153 372 308 341
Metropolitan Lesotho Ltd 341 457 798 741 783
Other international businesses 388 49 437 375 423
Total covered business 13 314 20 572 33 886 32 871 34 393
Write-up to
Adjusted net directors'
worth value 31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm Rm Rm
Non-covered business
Momentum Investments (1) 913 1 115 2 028 1 679 1 928
Health businesses (2) 327 1 718 2 045 1 673 1 761
Momentum Retail (Wealth) (3) 320 382 702 431 655
Guardrisk business (4) 495 1 354 1 849 - 1 607
Momentum Short-term Insurance (MSTI) 138 181 319 300 319
International (5,6) (334) (259) (593) (302) (386)
MMI Holdings (after consolidation
adjustments) (6) 947 (1 430) (483) 736 (602)
Total non-covered business 2 806 3 061 5 867 4 517 5 282
Total embedded value 16 120 23 633 39 753 37 388 39 675
Diluted adjusted net worth -
non-covered business (2 806)
Adjustments to covered business -
adjusted net worth 3 122
Reporting excess - long-term
insurance business 16 436
1. Momentum Investments subsidiaries are valued using forward price-earnings multiples applied to the
relevant sustainable earnings bases.
2. All Health businesses are valued using embedded value methodology.
3. Momentum Retail (Wealth) is valued using embedded value methodology.
4. Guardrisk is valued using embedded value methodology.
5. Cannon is included within International at 31 December 2014.
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.
ANALYSIS OF CHANGES IN GROUP EMBEDDED VALUE
Covered business
Notes Gross
Adjusted Value of
net worth in-force Cost of
(ANW) (VIF) CAR
Rm Rm Rm
Profit from new business (657) 1 189 (85)
Embedded value from new business A (657) 1 162 (85)
Expected return to end of period B - 27 -
Profit from existing business 2 070 (563) 58
Expected return - unwinding of RDR B - 1 240 (166)
Release from the cost of required capital C - - 214
Expected (or actual) net of tax profit transfer to
net worth D 1 996 (1 996) -
Operating experience variances E 114 157 10
Development expenses F (45) - -
Operating assumption changes G 5 36 -
Embedded value profit from operations 1 413 626 (27)
Investment return on adjusted net worth H 430 - -
Investment variances I (10) (411) (74)
Economic assumption changes J (13) 137 (10)
Exchange rate movements 6 (1) (1)
Embedded value profit - covered business 1 826 351 (112)
Transfer of business from/(to) non-covered business K 20 1 (2)
Changes in share capital 20 10 -
Dividend paid (2 621) - -
Change in reserves - - -
Change in embedded value - covered business (755) 362 (114)
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 (to)/from covered business K
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
31.12.2014 31.12.2013 30.06.2014
Notes
Total EV Total EV Total EV
Rm Rm Rm
Profit from new business 447 403 875
Embedded value from new business A 420 378 779
Expected return to end of period B 27 25 96
Profit from existing business 1 565 1 503 3 228
Expected return - unwinding of RDR B 1 074 896 1 786
Release from the cost of required capital C 214 217 407
Expected (or actual) net of tax profit transfer to
net worth D - - -
Operating experience variances E 281 378 544
Development expenses F (45) - -
Operating assumption changes G 41 12 491
Embedded value profit from operations 2 012 1 906 4 103
Investment return on adjusted net worth H 430 583 1 063
Investment variances I (495) 1 178 1 278
Economic assumption changes J 114 (225) (321)
Exchange rate movements 4 12 (2)
Embedded value profit - covered business 2 065 3 454 6 121
Transfer of business from/(to) non-covered business K 19 (56) (6)
Changes in share capital 30 2 42
Dividend paid (2 621) (2 078) (3 271)
Change in reserves - 42 -
Change in embedded value - covered business (507) 1 364 2 886
Non-covered business
Change in directors' valuation and other items 248 44 718
Holding company expenses (87) (80) (175)
Embedded value profit - non-covered business 161 (36) 543
Changes in share capital (30) (2) (42)
Dividend paid 496 881 1 179
Finance costs - preference shares (23) (23) (45)
Transfer of business (to)/from covered business K (19) 56 6
Change in embedded value - non-covered business 585 876 1 641
Total change in group embedded value 78 2 240 4 527
Total embedded value profit 2 226 3 418 6 664
Return on embedded value (%) - internal rate of return 11.5% 20.4% 19.0%
A. VALUE OF NEW BUSINESS
VALUE OF NEW BUSINESS
Momentum
Momentum Metropolitan Employee
Retail Retail (1) Benefits International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2014
Value of new business 118 108 167 27 420
Gross 149 131 192 34 506
Less cost of required capital (31) (23) (25) (7) (86)
New business premiums 8 288 1 177 4 395 305 14 165
Recurring premiums 524 587 595 178 1 884
Single premiums 7 764 590 3 800 127 12 281
New business premiums (APE) 1 300 646 975 191 3 112
New business premiums (PVP) 10 656 2 699 9 369 975 23 699
Profitability of new business as a
percentage of APE 9.1 16.7 17.1 14.1 13.5
Profitability of new business as a
percentage of PVP 1.1 4.0 1.8 2.8 1.8
Restated
6 mths to 31.12.2013
Value of new business 136 122 90 30 378
Gross 170 143 113 37 463
Less cost of required capital (34) (21) (23) (7) (85)
New business premiums 8 128 1 054 2 236 284 11 702
Recurring premiums 519 558 532 166 1 775
Single premiums 7 609 496 1 704 118 9 927
New business premiums (APE) 1 280 607 702 178 2 767
New business premiums (PVP) 10 499 2 635 6 506 943 20 583
Profitability of new business as a
percentage of APE 10.6 20.1 12.8 16.9 13.7
Profitability of new business as a
percentage of PVP 1.3 4.6 1.4 3.2 1.8
Restated
12 mths to 30.06.2014
Value of new business 240 236 254 49 779
Gross 312 276 299 61 948
Less cost of required capital (72) (40) (45) (12) (169)
New business premiums 15 948 2 160 6 384 541 25 033
Recurring premiums 1 022 1 083 1 033 327 3 465
Single premiums 14 926 1 077 5 351 214 21 568
New business premiums (APE) 2 515 1 191 1 568 348 5 622
New business premiums (PVP) 20 434 4 948 14 491 1 866 41 739
Profitability of new business as a
percentage of APE 9.5 19.8 16.2 14.1 13.9
Profitability of new business as a
percentage of PVP 1.2 4.8 1.8 2.6 1.9
1. The Metropolitan Retail APE and PVP have been changed to only reflect the initial inflows on certain
early retirement annuity business (comparatives have been restated). This reduced APE by R24 million
(31.12.2013: R20 million; 30.06.2014: R42 million) and PVP by R240 million (31.12.2013: R196 million;
30.06.2014: R424 million). This had no impact on value of new business.
2. Value of new business and new business premiums are net of non-controlling interests.
3. 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.
ANALYSIS OF NEW BUSINESS PREMIUMS
Momentum
Momentum Metropolitan Employee
Retail Retail (1) Benefits International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2014
New business premiums 8 288 1 177 4 395 305 14 165
Recurring premiums 524 587 595 178 1 884
Risk 264 379 206 - 849
Savings/Investments 260 208 389 - 857
International - - - 178 178
Single premiums 7 764 590 3 800 127 12 281
Savings/Investments 7 415 123 2 193 - 9 731
Annuities 349 467 1 607 - 2 423
International - - - 127 127
New business premiums (APE) 1 300 646 975 191 3 112
Risk 264 379 206 - 849
Savings/Investments 1 001 220 608 - 1 829
Annuities 35 47 161 - 243
International - - - 191 191
Restated
6 mths to 31.12.2013
New business premiums 8 128 1 054 2 236 284 11 702
Recurring premiums 519 558 532 166 1 775
Risk 260 365 160 - 785
Savings/Investments 259 193 372 - 824
International - - - 166 166
Single premiums 7 609 496 1 704 118 9 927
Savings/Investments 7 215 100 1 583 - 8 898
Annuities 394 396 121 - 911
International - - - 118 118
New business premiums (APE) 1 280 607 702 178 2 767
Risk 260 365 160 - 785
Savings/Investments 981 202 530 - 1 713
Annuities 39 40 12 - 91
International - - - 178 178
ANALYSIS OF NEW BUSINESS PREMIUMS
Momentum
Momentum Metropolitan Employee
Retail Retail (1) Benefits International Total
Rm Rm Rm Rm Rm
Restated
12 mths to 30.06.2014
New business premiums 15 948 2 160 6 384 541 25 033
Recurring premiums 1 022 1 083 1 033 327 3 465
Risk 501 713 408 - 1 622
Savings/Investments 521 370 625 - 1 516
International - - - 327 327
Single premiums 14 926 1 077 5 351 214 21 568
Savings/Investments 14 130 201 4 198 - 18 529
Annuities 796 876 1 153 - 2 825
International - - - 214 214
New business premiums (APE) 2 515 1 191 1 568 348 5 622
Risk 501 713 408 - 1 622
Savings/Investments 1 934 390 1 045 - 3 369
Annuities 80 88 115 - 283
International - - - 348 348
1. The Metropolitan Retail APE and PVP have been changed to only reflect the initial inflows on certain
early retirement annuity business (comparatives have been restated). This reduced APE by R24 million
(31.12.2013: R20 million; 30.06.2014: R42 million) and PVP by R240 million (31.12.2013: R196 million;
30.06.2014: R424 million). This had no impact on value of new business.
RECONCILIATION OF LUMP SUM INFLOWS
Restated Restated
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Total lump sum inflows 17 218 15 920 29 790
Inflows not included in value of new business (5 163) (6 321) (8 670)
Term extensions on maturing policies 265 223 465
Non-controlling interests and other adjustments (39) 105 (17)
Single premiums included in value of new business 12 281 9 927 21 568
1. December 2013 has been restated to reconcile from on-balance sheet single lump sum inflows instead of
total lump sum inflows.
2. The Metropolitan Retail APE and PVP have been changed to only reflect the initial inflows on certain
early retirement annuity business (comparatives have been restated). This reduced APE by R24 million
(31.12.2013: R20 million; 30.06.2014: R42 million) and PVP by R240 million (31.12.2013: R196 million;
30.06.2014: R424 million). This had no impact on value of new business.
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
OPERATING EXPERIENCE VARIANCES
12 mths to 31.12.2014 6 mths to 12 mths to
31.12.2013 30.06.2014
ANW Net VIF EV EV EV
Notes Rm Rm Rm Rm Rm
Momentum Retail 26 52 78 72 170
Mortality and morbidity 1 144 7 151 77 235
Terminations, premium
cessations and policy
alterations 2 (79) 51 (28) 20 5
Expense variance 4 - 4 18 43
Other 3 (43) (6) (49) (43) (113)
Metropolitan Retail 68 5 73 104 39
Mortality and morbidity 1 48 (17) 31 60 108
Terminations, premium
cessations and policy
alterations (2) 16 14 27 (60)
Expense variance 14 - 14 (6) 45
FNB Life - share of profits 19 - 19 22 30
Other (11) 6 (5) 1 (84)
Momentum Employee Benefits (6) 27 21 108 218
Mortality and morbidity 1 33 - 33 12 60
Terminations - 27 27 59 138
Expense variance (5) - (5) 10 21
Other 4 (34) - (34) 27 (1)
International 8 62 70 52 102
Mortality and morbidity 1 42 3 45 45 86
Terminations, premium
cessations and policy
alterations (4) 32 28 4 17
Expense variance (17) (6) (23) 2 6
Other (13) 33 20 1 (7)
Shareholder Capital 5 18 11 29 42 86
Opportunity cost of required
capital - 10 10 - (71)
Total operating experience
variances 114 167 281 378 544
Notes
1. Overall, mortality and morbidity experience for the six months was better compared to what was allowed
for in the valuation basis.
2. Better than expected termination experience on whole life insurance contracts as well as negative
persistency on investment contracts contributed to the negative termination experience.
3. Various items including negative experience on policyholders taking up premium discounts on risk business
and the impact of share price appreciation on the deferred compensation share scheme for sales agents.
4. Various items including business development and system migration costs.
5. 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. DEVELOPMENT EXPENSES
Business development expenses, comprising mainly middle market and other initiatives within Momentum
Retail.
G. OPERATING ASSUMPTION CHANGES
6 mths to 12 mths to
Notes 6 mths to 31.12.2014 31.12.2013 30.0.2014
ANW Net VIF EV EV EV
Rm Rm Rm Rm Rm
OPERATING ASSUMPTION CHANGES
Momentum Retail - (2) (2) 17 12
Mortality and morbidity
assumptions - - - - 80
Renewal expense assumptions - - - - (30)
Termination assumptions - - - - (51)
Modelling, methodology and
other changes - (2) (2) 17 13
Metropolitan Retail - 4 4 (66) (129)
Mortality and morbidity
assumptions - - - - 101
Renewal expense assumptions - - - - 87
Termination assumptions - - - 1 (85)
FNB Life - - - (91) (91)
Modelling, methodology and
other changes - 4 4 24 (141)
Momentum Employee Benefits - 26 26 7 461
Assumed mortality and
morbidity profit margin - - - - (23)
Termination assumptions - (1) (1) 2 144
Renewal expense assumptions 1 - 46 46 - 366
Modelling, methodology and
other changes - (19) (19) 5 (26)
International 5 8 13 (22) 15
Mortality and morbidity assumptions 2 - 32 32 3 (7)
Renewal expense assumptions (4) 3 (1) (20) 17
Termination assumptions (1) - (1) 11 10
Modelling, methodology and
other changes 10 (27) (17) (16) (5)
Shareholder Capital - - - 56 (7)
Methodology change: cost of
required capital - - - 20 139
Total operating assumption changes 5 36 41 12 491
Notes
1. Impact of good sales volumes on expense recoveries.
2. Mainly allowance for improved risk profits on employee benefits business.
H. INVESTMENT RETURN ON ADJUSTED NET WORTH
INVESTMENT RETURN ON ADJUSTED NET WORTH
6 mths to 6 mths to 12 mths to
31.12.2014 31.12.2013 30.06.2014
Rm Rm Rm
Investment income 425 349 722
Capital appreciation and other 20 246 368
Preference share dividends paid and change in fair value of
preference shares (15) (12) (27)
Investment return on adjusted net worth 430 583 1 063
I. 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.
J. 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.
K. TRANSFER OF BUSINESS FROM/(TO) NON-COVERED BUSINESS
This transfer represents the alignment of net assets and value of in-force of mainly international
subsidiaries between covered and non-covered business.
Ajusted In-force business New business written
COVERED BUSINESS: SENSITIVITIES net Net Gross Cost of Net Gross Cost of
- 31.12.2014 worth value value CAR (3) value value CAR (3)
Rm Rm Rm Rm Rm Rm Rm
Base value 13 314 20 572 23 755 (3 183) 420 506 (86)
1% increase in risk discount rate 18 972 22 513 (3 541) 354 448 (94)
% change (8) (5) 11 (16) (11) 9
1% reduction in risk discount rate 22 459 25 227 (2 768) 495 572 (77)
% change 9 6 (13) 18 13 (10)
10% decrease in future expenses 21 731 24 920 (3 189) 474 559 (85)
% change (1) 6 5 - 13 10 (1)
10% decrease in lapse, paid-up and
surrender rates 21 303 24 531 (3 228) 504 594 (90)
% change 4 3 1 20 17 5
5% decrease in mortality and
morbidity for assurance
business 21 944 25 159 (3 215) 490 576 (86)
% change 7 6 1 17 14 -
5% decrease in mortality for
annuity business 20 176 23 393 (3 217) 416 502 (86)
% change (2) (2) 1 (1) (1) -
1% reduction in gross investment
return, inflation rate and risk
discount rate 13 274 20 940 24 143 (3 203) 438 524 (86)
% change (2) - 2 2 1 4 4 -
1% reduction in inflation rate 21 315 24 498 (3 183) 457 542 (85)
% change 4 3 - 9 7 (1)
10% fall in market value of equities
and properties 13 068 19 453 22 562 (3 109)
% change (2) (5) (5) (2)
10% reduction in premium indexation
take-up rate 20 296 23 459 (3 163) 404 490 (86)
% change (1) (1) (1) (4) (3) -
10% decrease in non-commission
related acquisition expenses 465 551 (86)
% change 11 9 -
1% increase in equity/property
risk premium 21 048 24 217 (3 169) 433 519 (86)
% change 2 2 - 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
31.12.2014 30.06.2014 31.12.2013 30.06.2013
6 month period
Value of listed shares traded (rand million) 7 166 8 370 6 992 9 268
Volume of listed shares traded (million) 260 338 299 398
Shares traded (% of average listed shares in issue) (1) 33 43 38 51
Value of shares traded - life insurance (J857 - Rbn) 104 88 77 93
Value of shares traded - top 40 index (J200 - Rbn) 1 628 1 566 1 502 1 691
Trade prices
Highest (cents per share) 3 192 2 783 2 622 2 700
Lowest (cents per share) 2 502 2 228 2 039 1 951
Last sale of period (cents per share) 3 000 2 625 2 530 2 217
Annualised percentage (%) change during period 31 8 30 -
Annualised percentage (%) change - life insurance
sector (J857) 10 25 33 20
Annualised percentage (%) change - top 40 index (J200) (9) 23 40 2
31 December/30 June
Price/diluted core headline earnings (segmental) ratio 13.0 11.6 12.0 11.0
Dividend yield % (dividend on listed shares) (1) 4.9 5.4 5.3 5.7
Dividend yield % - top 40 index (J200) (1) 2.9 2.6 2.7 2.9
Total shares issued (million)
Ordinary shares listed on JSE 1 571 1 570 1 570 1 570
Treasury shares held on behalf of contract holders (14) (14) (13) (14)
Basic number of shares in issue 1 557 1 556 1 557 1 556
Treasury shares held on behalf of contract holders 14 14 13 14
Convertible redeemable preference shares 33 34 34 34
Diluted number of shares in issue (2) 1 604 1 604 1 604 1 604
Market capitalisation at end (Rbn) (3) 48 42 41 36
Percentage (%) of life insurance sector (1) 13 12 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.
Date: 04/03/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
