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MMI HOLDINGS LIMITED - Summarised and Unaudited Group Results for the six months ended 31 December 2015

Release Date: 03/03/2016 07:05
Code(s): MMI     PDF:  
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Summarised and Unaudited Group Results for the six months ended 31 December 2015

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 group")

MMI HOLDINGS SUMMARISED AND UNAUDITED GROUP RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015


FINANCIAL HIGHLIGHTS

NEW BUSINESS PVP up 14% to R27 billion

VALUE OF NEW BUSINESS - R361 million

Annualised RETURN on EMBEDDED VALUE of 7%

Total EARNINGS up 14% to R1.5 billion

CORE HEADLINE EARNINGS down by 9% to R1.7 billion

Interim DIVIDEND up 3% to 65 cents per share


SUMMARY OF RESULTS

Group results

MMI Holdings Limited (MMI) announced its interim results for the six months to 31 December 2015, delivering a satisfactory performance in a tough environment.

- Diluted core headline earnings decreased 9% to R1.7 billion for the period, mainly as a result of unusually low underwriting profits across the group. MMI expects 
  underwriting profits to normalise over the medium term.

- Total earnings and headline earnings proved to be resilient, increasing by 14% and 5% respectively.

- Embedded value was maintained at R40 billion (2 505 cents per share), reflecting an annualised return on embedded value for shareholders of 7%.

- New business volumes increased 14% on the prior period, with strong growth from Corporate and International clients.

- The value of new business came in at R361 million, down 14% on the prior year. It should be noted, however, that it would have been 4% higher than the prior period had
  the discount rate remained unchanged.

- The life insurance profits in both Momentum Retail and Metropolitan Retail delivered good growth compared to the prior period.

- In addition, overall profit growth was once again restricted by investments into strategic initiatives that are being pursued in line with the group strategy.

- An interim dividend of 65 cents per share was declared, an increase of 3% on the prior period. This dividend is within the dividend cover range of 1.5 to 1.7.

Operating environment

Local operating conditions remained challenging and highly competitive. The performance of the South African equity markets slowed dramatically during the reporting 
period and ended slightly negative for the six-month period, while inflationary pressures and higher interest rates put further pressure on disposable income.

Capital management

- A strong capital buffer of R4 billion was reported as at 31 December 2015, after allowing for capital requirements, strategic growth initiatives and the interim dividend.

- Taking into account the growth focus, changing regulations including Solvency Assessment and Management and the difficult economic outlook, the group is satisfied that 
  its present capital level is appropriate.

Prospects

- The strategic focus areas of the MMI group are growth, client centricity and excellence.

- Each segment, together with the Product and Solutions Centres of Excellence and supporting functions, is advancing the implementation of MMI’s client-centric strategy.

- Taking into account the economic outlook, the group has increased the focus on efficiencies while continuing to focus on quality top-line growth.

- As part of the implementation of the client-centric model, a number of areas have been identified where further efficiencies can be extracted. These savings have been 
  quantified and MMI is targeting a further reduction in annual expenses of R750m by financial year 2019. 

- MMI is continuing to invest in growth initiatives with the aim of enhancing shareholder value over the longer term.

- Growth in new business volumes and profits will, however, be impacted by many factors in the South African economy, including employment levels and disposable income.

- 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.


SUMMARY OF FINANCIAL INFORMATION 
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015

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 2015. The
preparation of the group's results was supervised by the group finance director, Mary Vilakazi, CA(SA).

Corporate events

Listed debt

MMI Group Ltd (MMIGL) listed new instruments to the total value of R1 250 million on the JSE Ltd on 6 August 2015. The instruments are unsecured subordinated callable notes.

On 15 September 2015, R1 000 million of unsecured subordinated notes previously issued by MMIGL 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 financial statements are in terms of
International Financial Reporting Standards (IFRS) and are consistent with those adopted in the previous years 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 2015, 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 2015 and relevant to the group

There were no new amendments to standards and interpretations in the current period.

Segmental report

From 1 July 2015 the MMI group embarked on a new segmental reporting view that is aligned with the client-centric goals of the group. The segmental report has been disclosed
on this new internal structure and the prior periods have been restated. The new segmental reporting had no impact on the current or prior year reported earnings, diluted
earnings or headline earnings per share, or on the net asset value or net cash flow.

The new client-centric reporting view reflects the following segments:

  Momentum Retail: Momentum Retail's purpose is to enhance the lifetime financial wellness of people, their families, communities and businesses. The focus is on three main
  client segments - the upper and middle retail segments and the small business segment in South Africa, offering innovative and appropriate wealth creation, risk and savings 
  solutions.

  Metropolitan Retail: Metropolitan Retail's purpose is to enhance the lifetime financial wellness of people, their families and their communities through empowerment and
  education. They target the entry-level market retail segments in South Africa with a focus on client value, ease of interaction, empowering advice and a lifetime engagement, 
  offering savings, income generation, risk and funeral products.

  Corporate and Public Sector: In order to enhance the lifetime financial wellness of businesses, employees, customers and their communities, the client is placed at the centre
  of everything the segment does. This requires deepening industry and sector insights about the institutions that MMI serves and focusing on the strategic issues that affect 
  them and their employees.

  The Corporate and Public Sector focuses on medium to large corporates, affinity groups, labour unions and the public sector institutions, offering solutions that grow their 
  profitability, protect their asset base and enhance their sustainability.

  International: The International segment manages MMI's global expansion holistically, in order to enhance the lifetime financial wellness of people, their communities and
  their businesses and to take care of client needs in the selected segments of countries where MMI is represented.

  Shareholder Capital: This segment is responsible for the management of the capital base of the group, and the incubation of strategic initiatives until such time as they start
  to interact directly with clients, in which case they are then transferred to the relevant operating segment.

Embedded value restatements

On 1 July 2014 Guardrisk Life Ltd was transferred to covered business (adjusted net worth of R44 million and value of in-force of R324 million). The December 2014 comparatives
have been restated to reflect the transfer of Guardrisk Life Ltd to covered business.

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

Sizwe Nxasana retired from the MMI board on 30 September 2015 and Leon Crouse resigned from the MMI board with effect from 31 March 2016. We thank them for their commitment
and contribution to the group. On 20 November 2015, Peter Cooper, currently a non-executive director of RMH, RMI, RMB Structured Insurance, amongst others was appointed to the
board.

All transactions in listed shares of the company involving directors were disclosed on SENS.

Changes to the group executive committee

There were no changes in the current period.

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 2015 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.

Interim dividend declaration

Ordinary shares

- On 2 March 2016, a gross interim dividend of 65 cents per ordinary share was declared.

- The dividend is 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, 1 April 2016, and
  will be paid on Monday, 4 April 2016.

- 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.

- This will result in a net final dividend of 55.25 cents per ordinary share for those shareholders who are not exempt from paying dividend tax.

- The last day to trade cum dividend will be Wednesday, 23 March 2016.

- The shares will trade ex dividend from the start of business on Thursday, 24 March 2016.

- Share certificates may not be dematerialised or rematerialised between Thursday, 24 March 2016 and Friday, 1 April 2016, both days inclusive.

- The number of ordinary shares at the declaration date was 1 572 943 126.

- MMI's income tax number is 975 2050 147.

Preference shares

- Dividends of R20.7 million (132 cents per share p.a.) were declared on the unlisted A3 MMI Holdings Ltd preference shares as determined by the company's Memorandum of
  Incorporation.

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 by paragraph 16A(j) of IAS 34. The full condensed IAS 34 compliant results are available on MMI's website and at MMI's registered offices upon
request. 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

2 March 2016

DIRECTORS: 
MJN Njeke (chairman), JP Burger (deputy chairman), NAS Kruger (group chief executive officer), M Vilakazi (group finance director), P Cooper, L Crouse, F Jakoet,
Prof JD Krige, PJ Moleketi, SA Muller, V Nkonyeni, 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

SENS ISSUE: 3 March 2016


MMI HOLDINGS GROUP - IFRS FINANCIAL INFORMATION


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION   
                                                                              31.12.2015  31.12.2014  30.06.2015
                                                                                      Rm          Rm          Rm
ASSETS
Intangible assets                                                                 12 813      13 280      13 153
Owner-occupied properties                                                          3 084       1 805       3 030
Property and equipment                                                               463         353         353
Investment properties                                                              7 595       8 180       7 212
Investments in associates                                                            212         194         145
Employee benefit assets                                                              417         412         408
Financial instruments (1)                                                        387 538     370 089     388 258
Reinsurance contract assets                                                        3 272       3 057       3 046
Deferred income tax                                                                  296         268         287
Properties under development                                                         225         301         330
Insurance and other receivables                                                    5 157       4 253       4 080
Current income tax assets                                                            352         466         365
Cash and cash equivalents                                                         31 849      26 009      26 174
Total assets                                                                     453 273     428 667     446 841

EQUITY
Equity attributable to owners of the parent                                       24 838      24 023      24 547
Non-controlling interests                                                            395         526         501
Total equity                                                                      25 233      24 549      25 048

LIABILITIES
Insurance contract liabilities
  Long-term insurance contracts                                                  103 771     105 385     104 776
  Short-term insurance contracts                                                   6 914       6 244       6 553
Financial instruments
  Investment contracts                                                           253 107     236 079     246 490
  - with discretionary participation features                                     25 650      26 292      26 134
  - designated at fair value through income                                      227 457     209 787     220 356
  Other financial instruments (2)                                                 45 181      38 660      42 923
Reinsurance contract liabilities                                                     910         645         659
Deferred income tax                                                                4 201       4 300       4 351
Employee benefit obligations                                                       1 081       1 228       1 735
Other payables                                                                    12 668      11 216      14 062
Provisions                                                                            25          26          78
Current income tax liabilities                                                       182         335         166
Total liabilities                                                                428 040     404 118     421 793

Total equity and liabilities                                                     453 273     428 667     446 841


1.  Financial instruments consist of the following:
    - Securities designated at fair value through income: R365 881 million (31.12.2014: R347 229 million; 30.06.2015: R365 727 million)
    - Investments in associates designated at fair value through income: R12 168 million (31.12.2014: R15 009 million; 30.06.2015: R12 362 million)
    - Derivative financial instruments: R2 537 million (31.12.2014: R2 029 million; 30.06.2015: R2 033 million)
    - Available-for-sale: R142 million (31.12.2014: R131 million; 30.06.2015: R208 million)
    - Held-to-maturity: R129 million (31.12.2014: R88 million; 30.06.2015: R73 million)
    - Loans and receivables: R6 681 million (31.12.2014: R5 603 million; 30.06.2015: R7 855 million)

2.  Other financial instruments consist of the following:
    - Designated at fair value through income: R40 391 million (31.12.2014: R35 421 million; 30.06.2015: R39 720 million)
    - Derivative financial instruments: R3 807 million (31.12.2014: R 2 202 million; 30.06.2015: R2 111 million)
    - Amortised cost: R983 million (31.12.2014: R1 037 million; 30.06.2015: R1 092 million)


CONDENSED CONSOLIDATED INCOME STATEMENT 
                                                                     6 mths to   6 mths to  12 mths to
                                                                    31.12.2015  31.12.2014  30.06.2015
                                                                            Rm          Rm          Rm

Net insurance premiums                                                  14 144      13 943      27 396
Fee income (1)                                                           3 790       3 768       7 355
Investment income                                                        8 350       7 980      15 559
Net realised and fair value gains                                        6 417       5 853      16 248
Net income                                                              32 701      31 544      66 558

Net insurance benefits and claims                                       13 046      11 905      24 610
Change in liabilities                                                   (2 395)         98        (869)
  Change in long-term insurance contract liabilities                    (1 977)     (1 181)     (2 069)
  Change in short-term insurance contract liabilities                     (100)        158        (139)
  Change in investment contracts with DPF liabilities                     (488)        842         728
  Change in reinsurance assets                                             (81)       (163)        154
  Change in reinsurance liabilities                                        251         442         457
Fair value adjustments on investment contract liabilities                8 486       6 158      16 039
Fair value adjustments on collective investment scheme liabilities       1 274       1 315       2 457
Depreciation, amortisation and impairment expenses                         664         633       1 326
Employee benefit expenses                                                2 549       3 086       5 922
Sales remuneration                                                       2 707       2 623       5 071
Other expenses                                                           3 183       2 980       5 806
Expenses                                                                29 514      28 798      60 362

Results of operations                                                    3 187       2 746       6 196
Share of profit of associates                                                5           5           4
Finance costs (2)                                                         (468)       (374)       (792)
Profit before tax                                                        2 724       2 377       5 408
Income tax expense                                                      (1 167)       (971)     (2 431)
Earnings for the period                                                  1 557       1 406       2 977
Attributable to:
  Owners of the parent                                                   1 537       1 353       2 857
  Non-controlling interests                                                 20          53         120
                                                                         1 557       1 406       2 977

Basic earnings per ordinary share (cents)                                 98.7        87.0       183.5
Diluted earnings per ordinary share (cents)                               97.2        85.5       180.5


1.  Fee income consists of the following:
    - Investment contracts: R1 078 million (31.12.2014: R1 229 million; 30.06.2015: R2 225 million)
    - Trust and fiduciary services: R988 million (31.12.2014: R865 million; 30.06.2015: R1 842 million)
    - Health administration: R1 107 million (31.12.2014: R1 075 million; 30.06.2015: R2 053 million)
    - Other fee income: R617 million (31.12.2014: R599 million; 30.06.2015: R1 235 million)

2.  Finance costs consist of the following:
    - Preference shares issued by MMI: R54 million (31.12.2014: R55 million; 30.06.2015: R108 million)
    - Subordinated debt: R169 million (31.12.2014: R133 million; 30.06.2015: R271 million)
    - Cost of carry positions: R175 million (31.12.2014: R109 million; 30.06.2015: R261 million)
    - Other: R70 million (31.12.2014: R77 million; 30.06.2015: R152 million)



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME           
                                                                   6 mths to   6 mths to  12 mths to 
                                                                  31.12.2015  31.12.2014  30.06.2015
                                                                          Rm          Rm          Rm

Earnings for the period                                                1 557       1 406       2 977
Other comprehensive income, net of tax                                   360          57          68
  Items that may subsequently be reclassified to income                  323           3           6
    Exchange differences on translating foreign operations               320           3           1
    Available-for-sale financial assets                                    3           -           5

  Items that will not be reclassified to income                           37          54          62
    Land and building revaluation                                         58          68         118
    Change in non-distributable reserves                                   -           2           -
    Adjustments to employee benefit funds                                (13)          1         (20)
    Income tax relating to items that will not be reclassified            (8)        (17)        (36)

Total comprehensive income for the period                              1 917       1 463       3 045

Total comprehensive income attributable to:
    Owners of the parent                                               1 898       1 410       2 926
    Non-controlling interests                                             19          53         119
                                                                       1 917       1 463       3 045


RECONCILIATION OF HEADLINE EARNINGS                                  
attributable to owners of the parent 
                                                                                     Basic earnings                    Diluted earnings

                                                                          6 mths to     6 mths to  12 mths to   6 mths to   6 mths to  12 mths to
                                                                         31.12.2015    31.12.2014  30.06.2015  31.12.2015  31.12.2014  30.06.2015
                                                                                 Rm            Rm          Rm          Rm          Rm          Rm
Earnings                                                                      1 537         1 353       2 857       1 537       1 353       2 857
Finance costs - convertible preference shares                                                                          21          23          44
Dilutory effect of subsidiaries (1)                                                                                   (14)        (16)        (31)
Diluted earnings                                                                                                    1 544       1 360       2 870
Intangible asset and other impairments                                            -             3          19           -           3          19
Tax on intangible asset and other impairments                                     -             -          (4)          -           -          (4)
Gain on sale of subsidiary                                                     (115)            -           -        (115)          -           -
Headline earnings (2)                                                         1 422         1 356       2 872       1 429       1 363       2 885
Net realised and fair value gains on excess                                    (265)           73           6        (265)         73           6
Basis and other changes and investment variances                                 68            25         148          68          25         148
Amortisation of intangible assets relating to business combinations             373           330         720         373         330         720
Non-recurring items (3)                                                          61            43          53          61          43          53
Investment income on treasury shares - contract holders                                                                13          18          24
Core headline earnings (4)                                                    1 659         1 827       3 799       1 679       1 852       3 836


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 mainly 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 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
                                                 31.12.2015  31.12.2014  30.06.2015
Basic
Core headline earnings                                106.6       117.4       244.0
Headline earnings                                      91.3        87.1       184.5
Earnings                                               98.7        87.0       183.5
Weighted average number of shares (million)           1 557       1 556       1 557
Diluted
Core headline earnings                                104.7       115.5       239.2
Weighted average number of shares (million) (1)       1 604       1 604       1 604
Headline earnings                                      90.0        85.7       181.4
Earnings                                               97.2        85.5       180.5
Weighted average number of shares (million) (2)       1 588       1 590       1 590


1.  For diluted core headline earnings per share, treasury shares held on behalf of contract holders are deemed to be issued.

2.  For diluted earnings and headline earnings per share, treasury shares held on behalf of contract holders are deemed to be cancelled.

DIVIDENDS                                                  2016    2015
Ordinary listed MMI Holdings Ltd shares (cents per share)
Interim - March                                              65      63
Final - September                                                    92
Total                                                               155


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. On 1 October 2015, 1 million preference shares were converted into ordinary shares. On each of 13 November 2014 and 31 March 2015, 
1.1 million preference shares were converted into ordinary shares. The ordinary shares were originally issued at a price of R10.18 per share. Dividends are payable on the
remaining preference shares at 132 cents per annum (payable March and September).

Significant related party transactions

R362 million of the ordinary dividends declared by MMI Holdings Ltd in September 2015 (R333 million of the ordinary dividends declared in September 2014) and R248 million of
the ordinary dividends declared in March 2015 were attributable to RMI Holdings Ltd.


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                 6 mths to   6 mths to  12 mths to
                                                                31.12.2015  31.12.2014  30.06.2015
                                                                        Rm          Rm          Rm

Changes in share capital
Balance at beginning and end                                             9           9           9

Changes in share premium
Balance at beginning                                                13 795      13 782      13 782
Conversion of preference shares                                          9          10          20
Increase in treasury shares held on behalf of contract holders         (87)         (2)         (7)
Balance at end                                                      13 717      13 790      13 795

Changes in other reserves
Balance at beginning                                                 1 866       1 802       1 802
Total comprehensive income                                             361          57          69
BEE cost                                                                 2           2           4
Change in non-distributable reserves                                    (2)          -           -
Transfer to retained earnings                                           (3)         (9)         (9)
Balance at end (1)                                                   2 224       1 852       1 866

Changes in retained earnings
Balance at beginning                                                 8 877       9 141       9 141
Total comprehensive income                                           1 537       1 353       2 857
Dividend paid                                                       (1 453)     (2 110)     (3 094)
Transactions with non-controlling interests                            (76)          -         (15)
Transfer from other reserves                                             3           9           9
Puttable non-controlling interests (2)                                   -         (21)        (21)
Balance at end                                                       8 888       8 372       8 877

Equity attributable to owners of the parent                         24 838      24 023      24 547

Changes in non-controlling interests
Balance at beginning                                                   501         480         480
Total comprehensive income                                              19          53         119
Dividend paid                                                          (33)        (16)        (23)
Transactions with owners (2)                                           (92)        (92)       (170)
Business combinations                                                    -         101          95
Balance at end                                                         395         526         501

Total equity                                                        25 233      24 549      25 048


1.  Other reserves consist of the following:
    - Land and building revaluation reserve: R679 million (31.12.2014: R606 million; 30.06.2015: R631 million)
    - Foreign currency translation reserve: R493 million (31.12.2014: R180 million; 30.06.2015: R181 million)
    - Revaluation of available-for-sale investments: R10 million (31.12.2014: R3 million; 30.06.2015: R8 million)
    - Non-distributable reserve: R21 million (31.12.2014: R18 million; 30.06.2015: R19 million)
    - Employee benefit revaluation reserve: R70 million (31.12.2014: R99 million; 30.06.2015: R78 million)
    - Fair value adjustment for preference shares issued by MMI Holdings Ltd: R940 million (31.12.2014: R940 million; 30.06.2015: R940 million)
    - Equity-settled share-based payment arrangements: R11 million (31.12.2014: R6 million; 30.06.2015: R9 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 of R104 million (31.12.2014: R114 million; 30.06.2015: R111 million), being the present value of the estimated purchase
    price, for exercising this option. The group has consolidated 96% of the subsidiaries' results and in June 2015 de-recognised the non-controlling interest (R90 million) 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
                                                     31.12.2015  31.12.2014  30.06.2015
                                                             Rm          Rm          Rm

Net cash inflow/(outflow) from operating activities       7 503         (53)      1 505
Net cash outflow from investing activities                 (342)       (961)     (1 271)
Net cash outflow from financing activities               (1 486)     (1 852)     (2 935)
Net cash flow                                             5 675      (2 866)     (2 701)
Cash resources and funds on deposit at beginning         26 174      28 875      28 875
Cash resources and funds on deposit at end               31 849      26 009      26 174



PRINCIPAL ASSUMPTIONS (South Africa) (1) 
                                                                          31.12.2015  31.12.2014  30.06.2015
                                                                                   %           %           %

Pre-tax investment return
  Equities                                                                      13.6        11.7        12.1
  Properties                                                                    11.1         9.2         9.6
  Government stock                                                              10.1         8.2         8.6
  Other fixed-interest stocks                                                   10.6         8.7         9.1
  Cash                                                                           9.1         7.2         7.6
Risk-free return (2)                                                            10.1         8.2         8.6
Risk discount rate (RDR)                                                        12.3        10.5        10.9
Investment return (before tax) - balanced portfolio (2)                         12.2        10.4        10.8
Expense inflation base rate (3)                                                  8.3         6.4         6.8

1.  The principal assumptions relate only to the South African life insurance business. Assumptions relating to international life insurance businesses are based on local
    requirements and can differ from the South African assumptions.

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
                                            31.12.2015  31.12.2014  30.06.2015
                                                     %           %           %

Cannon Assurance                                  33.7        33.7        33.7
Eris Property Group                               23.7        45.7        45.7
Metropolitan Botswana                                -        24.2           -
Metropolitan Health Botswana                      28.0        28.0        28.0
Metropolitan Health Ghana                          0.9         1.8         1.8
Metropolitan Health Group                         17.6        17.6        17.6
Metropolitan Health Mauritius                        -         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
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 Health 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


BUSINESS COMBINATIONS - DECEMBER 2015

There were no significant business combinations for the 6 months ended December 2015.

BUSINESS COMBINATIONS - JUNE 2015

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. This acquisition allowed for geographical as well as product diversification within the group's international
operations. The purchase price allocation has been finalised and the transaction resulted in R103 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). This acquisition allowed for revenue diversification in the Metropolitan Health segment. The transaction did not result in any goodwill being recognised.

Other

During the year 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:

June 2015                                        Total  Cannon  CareCross
                                                    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                                        39      19         20
Cash and cash equivalents                           79      16         63
Insurance contract liabilities                    (195)   (177)       (18)
Financial instrument liabilities                   (38)    (38)         -
Other liabilities                                 (268)    (98)      (170)
Net identifiable assets acquired                   611     304        307
Non-controlling interests (fair value method)      (95)    (88)        (7)
Goodwill recognised                                103     103          -
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 R437 million and earnings of R43 million
to the group results for the year.

RECONCILIATION OF GOODWILL  
                            31.12.2015  31.12.2014  30.06.2015
                                    Rm          Rm          Rm


Balance at beginning             1 333       1 088       1 088
Business combinations                -         158         234
Exchange differences                35           -          11
Balance at end                   1 368       1 246       1 333


MMI HOLDINGS GROUP - SEGMENTAL INFORMATION

6 mths to 31.12.2015              Momentum Retail   Metropolitan Retail  Corporate and Public Sector  International  Shareholder Capital  Segmental total  Reconciling items (1)  IFRS total
                                               Rm                    Rm                           Rm             Rm                   Rm               Rm                     Rm          Rm
Revenue
Net insurance premiums                     12 720                 3 645                       13 661          2 025                    -           32 051                (17 907)     14 144
  Recurring premiums                        4 575                 2 991                        7 494          1 774                    -           16 834                 (4 237)     12 597
  Single premiums                           8 145                   654                        6 167            251                    -           15 217                (13 670)      1 547

Fee income                                  1 708                    34                        2 111            171                  289            4 313                   (523)      3 790
  Fee income                                1 468                    34                        1 898            127                  235            3 762                     28       3 790
  Intergroup fee income                       240                     -                          213             44                   54              551                   (551)          -

Expenses
Net payments to contract holders
  External payments                        12 540                 3 232                       15 339          1 208                    -           32 319                (19 273)     13 046

Other expenses                              2 803                 1 065                        2 614            867                  378            7 727                  1 376       9 103
  Sales remuneration                        1 119                   514                          732            334                   11            2 710                     (3)      2 707
  Administration expenses (2)               1 276                   527                        1 037            395                  161            3 396                    498       3 894
  Amortisation due to business                
    combinations and impairments                -                     -                            6              -                   45               51                    453         504
  Cell captive business                         -                     -                          609              -                    -              609                      -         609
  Direct property expenses                      -                     -                            -              -                    -                -                    211         211
  Asset management and other                   
    fee expenses                               80                     -                          106              5                  193              384                    768       1 152
  Holding company expenses                      -                     -                            -              -                   26               26                      -          26
  Intergroup expenses                         328                    24                          124            133                  (58)             551                   (551)          -

Diluted core headline earnings                705                   311                          379             31                  253            1 679                      -       1 679
Operating profit                              981                   439                          487             37                  (32)           1 912                      -       1 912
Tax on operating profit                      (305)                 (128)                        (142)           (15)                 (31)            (621)                     -        (621)
Investment income                              35                     -                           50             12                  375              472                      -         472
Tax on investment income                       (6)                    -                          (16)            (3)                 (59)             (84)                     -         (84)

Covered                                       748                   311                          198            109                  251            1 617                      -       1 617
Non-covered                                   (43)                    -                          181            (78)                   2               62                      -          62
                                              705                   311                          379             31                  253            1 679                      -       1 679

Actuarial liabilities                     190 805                32 296                      126 804         10 941                2 946          363 792                      -     363 792


1.  The 'Reconciling items' column includes: investment contract business; intergroup fees and expenses; grossing up of fee income and expenses relating to the Shareholder Capital
    segment that are set off for management reporting purposes; non-recurring items; 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 and other minor adjustments to expenses and fee income.

2.  Momentum Retail administration expenses includes R58 million relating to Momentum SP Reid.

Restated 
6 mths to 31.12.2014              Momentum Retail  Metropolitan  Retail  Corporate and Public Sector  International  Shareholder Capital  Segmental total  Reconciling items (1)  IFRS total
                                               Rm                    Rm                           Rm             Rm                   Rm               Rm                     Rm          Rm
Revenue
Net insurance premiums                     11 895                 3 456                       15 774          1 726                    -           32 851                (18 908)     13 943
  Recurring premiums                        4 353                 2 865                        6 927          1 488                    -           15 633                 (4 067)     11 566
  Single premiums                           7 542                   591                        8 847            238                    -           17 218                (14 841)      2 377

Fee income                                  1 874                    59                        1 987            172                  381            4 473                   (705)      3 768
  Fee income                                1 623                    59                        1 807            120                  174            3 783                    (15)      3 768
  Intergroup fee income                       251                     -                          180             52                  207              690                   (690)          -
Expenses
Net payments to contract holders
  External payments                        12 221                 2 408                       12 910            973                    -           28 512                (16 607)     11 905

Other expenses                              2 779                 1 121                        2 703            783                  549            7 935                  1 387       9 322
  Sales remuneration                        1 126                   508                          709            276                    8            2 627                     (4)      2 623
  Administration expenses                   1 190                   592                        1 170            408                  361            3 721                    931       4 652
  Amortisation due to business                
     combinations and impairments               -                     -                            7              -                   20               27                    440         467
  Cell captive business                         -                     -                          498              -                    -              498                      -         498
  Direct property expenses                      -                     -                            -              -                    -                -                     65          65
  Asset management and other                   
    fee expenses                               67                     -                           97              -                  168              332                    645         977
  Holding company expenses                      -                     -                            -              -                   40               40                      -          40
  Intergroup expenses                         396                    21                          222             99                  (48)             690                   (690)          -

Diluted core headline earnings                745                   273                          377             62                  395            1 852                      -       1 852
Operating profit                            1 016                   394                          509             71                  (39)           1 951                      -       1 951
Tax on operating profit                      (290)                 (121)                        (147)           (20)                  68             (510)                     -        (510)
Investment income                              25                     -                           24             11                  460              520                      -         520
Tax on investment income                       (6)                    -                           (9)             -                  (94)            (109)                     -        (109)

Covered                                       714                   273                          211            128                  406            1 732                      -       1 732
Non-covered                                    31                     -                          166            (66)                 (11)             120                      -         120
                                              745                   273                          377             62                  395            1 852                      -       1 852

Actuarial liabilities                     180 649                32 304                      122 201          9 694                2 860          347 708                      -     347 708


1.  The 'Reconciling items' column includes: investment contract business; intergroup fees and expenses; grossing up of fee income and expenses relating to the Shareholder Capital
    segment that are set off for management reporting purposes; non-recurring items; 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 and other minor adjustments to expenses and fee income.

Restated  
12 mths to 30.06.2015             Momentum Retail   Metropolitan Retail  Corporate and Public Sector  International  Shareholder Capital  Segmental total  Reconciling items (1)  IFRS total
                                               Rm                    Rm                           Rm             Rm                   Rm               Rm                     Rm          Rm
Revenue
Net insurance premiums                     24 676                 6 910                       29 921          3 563                    -           65 070                (37 674)     27 396
  Recurring premiums                        8 992                 5 495                       14 345          3 215                    -           32 047                 (8 282)     23 765
  Single premiums                          15 684                 1 415                       15 576            348                    -           33 023                (29 392)      3 631

Fee income                                  3 452                    95                        4 068            362                  761            8 738                 (1 383)      7 355
  Fee income                                2 962                    95                        3 644            257                  403            7 361                     (6)      7 355
  Intergroup fee income                       490                     -                          424            105                  358            1 377                 (1 377)          -
Expenses
Net payments to contract holders
  External payments                        24 088                 4 967                       27 500          1 953                    -           58 508                (33 898)     24 610

Other expenses                              5 453                 2 070                        5 267          1 586                1 229           15 605                  2 520      18 125
  Sales remuneration                        2 200                   893                        1 426            544                   15            5 078                     (7)      5 071
  Administration expenses (2)               2 286                 1 135                        1 956            837                  957            7 171                  1 535       8 706
  Amortisation due to business                 17                     -                           12              -                   81              110                    891       1 001
    combinations and impairments
  Cell captive business                         -                     -                        1 197              -                    -            1 197                      -       1 197
  Direct property expenses                      -                     -                            -              -                    -                -                    105         105
  Asset management and other                  129                     -                          201              7                  268              605                  1 373       1 978
    fee expenses
  Holding company expenses                      -                     -                            -              -                   67               67                      -          67
  Intergroup expenses                         821                    42                          475            198                 (159)           1 377                 (1 377)          -

Diluted core headline earnings              1 756                   604                          861            152                  463            3 836                      -       3 836
Operating profit                            2 423                   876                        1 170            179                 (186)           4 462                      -       4 462
Tax on operating profit                      (697)                 (272)                        (344)           (33)                  53           (1 293)                     -      (1 293)
Investment income                              42                     -                           48              6                  775              871                      -         871
Tax on investment income                      (12)                    -                          (13)             -                 (179)            (204)                     -        (204)

Covered                                     1 725                   604                          487            266                  550            3 632                      -       3 632
Non-covered                                    31                     -                          374           (114)                 (87)             204                      -         204
                                            1 756                   604                          861            152                  463            3 836                      -       3 836

Actuarial liabilities                     186 493                32 937                      125 177         10 095                3 117          357 819                      -     357 819


1.  The 'Reconciling items' column includes: investment contract business; intergroup fees and expenses; grossing up of fee income and expenses relating to the Shareholder Capital
    segment that are set off for management reporting purposes; non-recurring items; 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 and other minor adjustments to expenses and fee income.

2.  Administration expenses for the 2015 year include the following relating to new acquisitions: International - R54 million relating to Cannon; Corporate and Public Sector -
    R258 million relating to CareCross.

CHANGE IN DILUTED CORE HEADLINE EARNINGS
                                                                                    Restated               Restated
                                                             6 mths to             6 mths to             12 mths to 
                                          Change            31.12.2015            31.12.2014             30.06.2015          
                                               %                    Rm                    Rm                     Rm


Momentum Retail                               (5)                  705                   745                  1 756
Metropolitan Retail                           14                   311                   273                    604
Corporate and Public Sector                    1                   379                   377                    861
International                                (50)                   31                    62                    152
Operating segments                            (2)                1 426                 1 457                  3 373
Shareholder Capital                          (36)                  253                   395                    463
Total diluted core headline earnings          (9)                1 679                 1 852                  3 836


RECONCILIATION OF INVESTMENTS
                                                                                                       Restated               Restated
                                                                                6 mths to             6 mths to             12 mths to 
                                                                               31.12.2015            31.12.2014             30.06.2015
                                                                                       Rm                    Rm                     Rm

Revenue                                                                               659                   692                  1 429
Fee income                                                                            380                   394                    797
Intergroup fees                                                                       270                   277                    574
Investment income                                                                      13                    12                     26
Fair value (losses)/gains                                                              (4)                    9                     32

Expenses and finance costs                                                           (602)                 (577)                (1 259)
Other expenses                                                                       (595)                 (573)                (1 253)
Finance costs                                                                          (7)                   (4)                    (6)

Profit before tax                                                                      57                   115                    170
Tax                                                                                   (20)                  (30)                   (61)
Earnings attributable to ordinary shareholders                                         37                    85                    109

Core adjustments                                                                       32                    (7)                    31
Goodwill and other impairments                                                          -                     -                     12
Net realised and fair value losses/(gains) on excess                                    4                    (7)                   (22)
Amortisation of intangible assets relating to business combinations                     -                     -                     41
Non-recurring items                                                                    28                     -                      -

Diluted core headline earnings                                                         69                    78                    140

Operating profit before tax                                                            94                    98                    182
Tax on operating profit                                                               (28)                  (25)                   (56)
Investment income                                                                       6                     8                     20
Tax on investment income                                                               (3)                   (3)                    (6)
Diluted core headline earnings                                                         69                    78                    140

Allocated per segment:
Momentum Retail                                                                        52                    70                    120
Corporate and Public Sector                                                            27                     8                     28
Shareholder Capital                                                                   (10)                    -                     (8)
                                                                                       69                    78                    140

RECONCILIATION OF HEALTH
                                                                                                       Restated               Restated
                                                                                6 mths to             6 mths to             12 mths to 
                                                                               31.12.2015            31.12.2014             30.06.2015
                                                                                       Rm                    Rm                     Rm

Revenue                                                                             1 306                 1 208                  2 593
Net insurance premiums                                                                319                   234                    623
Fee income                                                                            972                   954                  1 930
Intergroup fees                                                                         1                     6                     11
Investment income                                                                      14                    14                     29

Expenses                                                                           (1 180)               (1 058)                (2 260)
Net payments to contract holders                                                     (238)                 (175)                  (485)
Other expenses                                                                       (942)                 (883)                (1 775)

Profit before tax                                                                     126                   150                    333
Tax                                                                                   (42)                  (43)                   (92)
Non-controlling interests                                                               -                    (1)                    (3)

Earnings attributable to ordinary shareholders                                         84                   106                    238

Core adjustments                                                                       14                    (5)                   (11)
Dilutory effect of subsidiaries                                                        (8)                  (11)                   (23)
Amortisation of intangible assets relating to business combinations                     6                     6                     12
Non-recurring items                                                                    16                     -                      -

Diluted core headline earnings                                                         98                   101                    227

Operating profit before tax                                                           131                   127                    283
Tax on operating profit                                                               (42)                  (36)                   (80)
Investment income                                                                      15                    17                     35
Tax on investment income                                                               (6)                   (7)                   (11)
Diluted core headline earnings                                                         98                   101                    227

Allocated per segment:
Momentum Retail                                                                         5                     3                     18
Corporate and Public Sector                                                            93                    98                    209
                                                                                       98                   101                    227


RECONCILIATION OF GUARDRISK (PROMOTER CELL (1))
                                                            6 mths to             6 mths to             12 mths to 
                                                           31.12.2015            31.12.2014             30.06.2015
                                                                   Rm                    Rm                     Rm

Revenue by type                                                   240                   244                    495
Management fees                                                   204                   182                    353
Investment fees                                                    30                    28                     51
Underwriting (loss)/profit                                        (26)                   10                     23
Other income                                                        1                     1                      3
Investment income                                                  31                    23                     65

Expenses and finance costs                                       (158)                 (142)                  (273)
Administration expenses                                          (152)                 (137)                  (263)
Finance costs                                                      (6)                   (5)                   (10)

Operating profit before tax                                        82                   102                    222
Tax attributable to promoter operating profit                     (18)                  (29)                   (62)
Diluted core headline earnings                                     64                    73                    160

Covered                                                            16                    14                     33
Non-covered                                                        48                    59                    127
Corporate and Public Sector segment                                64                    73                    160


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 SHORT-TERM INSURANCE
                                                                     6 mths to             6 mths to             12 mths to 
                                                                    31.12.2015            31.12.2014             30.06.2015
                                                                            Rm                    Rm                     Rm

Revenue                                                                    306                   241                    537
Net insurance premiums                                                     286                   227                    506
Fee income                                                                   8                     6                     15
Investment income                                                           12                     8                     16

Expenses                                                                  (401)                 (292)                  (719)
Net payments to contract holders                                          (245)                 (160)                  (441)
Other expenses                                                            (156)                 (132)                  (278)

Loss before tax                                                            (95)                  (51)                  (182)
Tax                                                                         14                    15                     51
Earnings attributable to ordinary shareholders                             (81)                  (36)                  (131)

Operating loss before tax                                                 (107)                  (59)                  (198)
Tax on operating loss                                                       17                    17                     56
Investment income                                                           12                     8                     16
Tax on investment income                                                    (3)                   (2)                    (5)
Diluted core headline earnings - Momentum Retail segment                   (81)                  (36)                  (131)


ANALYSIS OF SHAREHOLDER CAPITAL
                                                         6 mths to             6 mths to             12 mths to 
                                                        31.12.2015            31.12.2014             30.06.2015
                                                                Rm                    Rm                     Rm

Holding company costs                                          (23)                  (60)                   (90)
Balance sheet management                                         4                    69                     34
International                                                  (11)                  (11)                   (49)
Momentum short-term insurance administration                   (20)                  (23)                   (35)
Eris Property Group                                             16                    19                     41
Other                                                          (29)                   42                    (34)
Finance costs                                                 (251)                 (207)                  (433)
Investment income                                              627                   665                  1 208
Tax on investment income                                       (60)                  (99)                  (179)
Total                                                          253                   395                    463


NET PAYMENTS TO CONTRACT HOLDERS
                                                                      Restated    Restated
                                                         6 mths to   6 mths to  12 mths to
                                                        31.12.2015  31.12.2014  30.06.2015
                                                                Rm          Rm          Rm

Momentum Retail                                             12 540      12 221      24 088
Death and disability claims                                  2 262       1 876       3 694
Maturity claims                                              3 307       3 778       7 547
Annuities                                                    2 438       2 369       4 692
Withdrawal benefits                                            154          21          80
Surrenders                                                   4 744       4 566       8 523
Short-term insurance                                           245         158         440
Health claims                                                   65          25         116
Re-insurance recoveries                                       (675)       (572)     (1 004)
Metropolitan Retail                                          3 232       2 408       4 967
Death and disability claims                                    584         555       1 093
Maturity claims                                              1 505         783       1 668
Annuities                                                      332         301         620
Withdrawal benefits                                              -          46          84
Surrenders                                                     845         753       1 560
Re-insurance recoveries                                        (34)        (30)        (58)
Corporate and Public Sector                                 15 339      12 910      27 500
Death and disability claims                                  3 305       2 430       5 084
Maturity claims                                                540         430         948
Annuities                                                      887         779       1 625
Withdrawal benefits                                          1 165       1 629       3 796
Terminations and disinvestments                              9 380       7 133      14 613
Short-term insurance                                         2 296       2 172       4 745
Health claims                                                  174         125         185
Re-insurance recoveries                                     (2 408)     (1 788)     (3 496)
International                                                1 208         973       1 953
Death and disability claims                                    222         216         420
Maturity claims                                                233         194         371
Annuities                                                       46          49          99
Withdrawal benefits                                             74          59         108
Surrenders                                                     282         220         498
Terminations                                                    34          71          90
Short-term insurance                                            96          51         104
Health claims                                                  254         183         393
Re-insurance recoveries                                        (33)        (70)       (130)

Total payments to contract holders                          32 319      28 512      58 508
Reconciling items (1)                                      (19 273)    (16 607)    (33 898)
Net insurance benefits and claims per income statement      13 046      11 905      24 610


1.  Relates mainly to payments to investment contract holders.


MMI HOLDINGS GROUP - STATUTORY EXCESS


STATUTORY EXCESS  
                                                                                                               Restated
                                                                                                 31.12.2015  31.12.2014  30.06.2015
                                                                                                         Rm          Rm          Rm

Group excess per reporting basis                                                                     24 838      24 023      24 547
Net assets - other businesses                                                                        (3 413)     (3 464)     (3 256)
Fair value adjustments on Metropolitan business acquisition and other consolidation adjustments      (3 618)     (4 070)     (3 826)

Excess - long-term insurance business, net of non-controlling interests (1)                          17 807      16 489      17 465

Disregarded assets (2)                                                                                 (996)       (991)     (1 010)
Difference between statutory and published valuation methods                                           (846)       (615)       (839)
Write-down of subsidiaries and associates for statutory purposes                                     (1 352)     (1 132)     (1 210)
Unsecured subordinated debt                                                                           3 459       3 339       3 320
Consolidation adjustments                                                                               (39)         63         141
Statutory excess - long-term insurance business                                                      18 033      17 153      17 867

Capital adequacy requirement (CAR) (Rm) (3)                                                           6 456       6 418       6 639
Ratio of long-term insurance business excess to CAR (times)                                             2.8         2.7         2.7
Discretionary margins                                                                                12 759      13 661      13 620


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; in respect of Guardrisk only MMI's promoter exposure to the South African long-term insurance business, Guardrisk Life Ltd. It
    excludes the short-term insurance businesses of Guardrisk, Momentum Short-term Insurance and Cannon (Kenya) due to it being classified as non-covered, as well as the other
    non-life insurance entities, including African health operations. Guardrisk Life Ltd was transferred to covered business 1 July 2014, with a statutory excess of R44 million
    and capital adequacy requirement of R20 million. The figures are after non-controlling interests but excludes certain items which are eliminated on consolidation.

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 R504 million (31.12.2014: R532 million; 30.06.2015: R518 million).

3.  Aggregation of separate company's capital adequacy requirements (CARs), with no assumption of diversification benefits.


MMI HOLDINGS GROUP - EMBEDDED VALUE INFORMATION

EMBEDDED VALUE RESULTS AS AT  
                                                                                                                                    Restated
                                                                                                                      31.12.2015  31.12.2014  30.06.2015
                                                                                                                              Rm          Rm          Rm
Covered business
Reporting excess - long-term insurance business (1)                                                                       17 807      16 489      17 465
Reclassification to non-covered business                                                                                  (1 479)     (1 243)     (1 204)
                                                                                                                          16 328      15 246      16 261
Disregarded assets (2)                                                                                                      (544)       (664)       (575)
Difference between statutory and published valuation methods                                                                (841)       (615)       (839)
Dilutory effect of subsidiaries (3)                                                                                          (39)        (38)        (38)
Consolidation adjustments (4)                                                                                                (32)        (62)         (5)
Value of MMI Group Ltd preference shares issued                                                                             (500)       (500)       (500)

Diluted adjusted net worth - covered business                                                                             14 372      13 367      14 304
Net value of in-force business                                                                                            21 607      20 869      21 696

Diluted embedded value - covered business                                                                                 35 979      34 236      36 000

Non-covered business
Net assets - non-covered business within life insurance companies                                                          1 479       1 243       1 204
Net assets - non-covered business outside life insurance companies                                                         3 413       3 464       3 256
Consolidation adjustments and transfers to covered business (4)                                                           (3 240)     (2 792)     (3 024)
Adjustments for dilution (5)                                                                                                 783         838         819

Diluted adjusted net worth - non-covered business                                                                          2 435       2 753       2 255
Write-up to directors' value                                                                                               1 762       2 764       2 075
  Non-covered business (1)                                                                                                 3 860       4 644       4 143
  Holding company expenses (6)                                                                                            (1 578)     (1 430)     (1 578)
  International holding company expenses (6)                                                                                (520)       (450)       (490)

Diluted embedded value - non-covered business                                                                              4 197       5 517       4 330

Diluted adjusted net worth                                                                                                16 807      16 120      16 559
Net value of in-force business                                                                                            21 607      20 869      21 696
Write-up to directors' value                                                                                               1 762       2 764       2 075
Diluted embedded value                                                                                                    40 176      39 753      40 330

Required capital - covered business (adjusted for qualifying debt) (7)                                                     6 621       7 048       7 306
Surplus capital - covered business                                                                                         7 751       6 319       6 998
Diluted embedded value per share (cents)                                                                                   2 505       2 478       2 514
Diluted adjusted net worth per share (cents)                                                                               1 048       1 005       1 032
Diluted number of shares in issue (million) (8)                                                                            1 604       1 604       1 604


1.  On 1 July 2014 Guardrisk Life Ltd was transferred to covered business (adjusted net worth of R44 million and value of in-force of R324 million). The December 2014 comparatives
    have been restated to reflect the transfer of Guardrisk Life Ltd to covered business.

2.  Disregarded assets include Sage intangible assets of R504 million (31.12.2014: R532 million; 30.06.2015: R518 million), goodwill and various other items.

3.  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 year. For embedded value purposes, disclosed on a diluted basis, the non-controlling interests and related funding have been
    reinstated.

4.  Consolidation adjustments include mainly goodwill and intangibles in subsidiaries that are eliminated.

5.  Adjustments for dilution are made up as follows:
    - Dilutory effect of subsidiaries (note 3): R116 million (31.12.2014: R115 million; 30.06.2015: R103 million)
    - Treasury shares held on behalf of contract holders: R384 million (31.12.2014: R420 million; 30.06.2015: R424 million)
    - Liability - MMI Holdings Ltd convertible preference shares issued to KTH: R283 million (31.12.2014: R303 million; 30.06.2015: R292 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 required capital for covered business amounts to R10 147 million (31.12.2014: R10 342 million; 30.06.2015: R10 604 million) and is adjusted for qualifying debt of 
    R3 526 million (31.12.2014: R3 294 million; 30.06.2015: R3 298 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 
                                                                           Restated    Restated
                                                             31.12.2015  31.12.2014  30.06.2015
                                                                     Rm          Rm          Rm

Momentum Retail                                                  11 246      11 097      11 331
  Gross value of in-force business                               12 501      12 680      12 819
  Less cost of required capital                                  (1 255)     (1 583)     (1 488)
Metropolitan Retail                                               3 364       3 551       3 582
  Gross value of in-force business                                4 079       4 301       4 288
  Less cost of required capital                                    (715)       (750)       (706)
Corporate and Public Sector (1)                                   4 751       4 271       4 657
  Gross value of in-force business                                5 512       4 966       5 354
  Less cost of required capital                                    (761)       (695)       (697)
International                                                     2 164       1 950       2 108
  Gross value of in-force business                                2 382       2 131       2 310
  Less cost of required capital                                    (218)       (181)       (202)
Shareholder Capital                                                  82           -          18
  Gross value of in-force business                                   82           -          18
  Less cost of required capital                                       -           -           -

Net value of in-force business                                   21 607      20 869      21 696


Notes

1.  December 2014 has been restated to include Guardrisk Life Ltd within the Corporate and Public Sector.


EMBEDDED VALUE DETAIL
                                                          Adjusted     Net value                Restated 
                                                         net worth   of in-force  31.12.2015  31.12.2014  30.06.2015
                                                                Rm            Rm          Rm          Rm          Rm
Covered business
South African life licences                                 12 384        19 444      31 828      30 712      32 040
  MMI Group Ltd                                             12 176        18 799      30 975      30 300      31 332
  Guardrisk Life Ltd (1)                                       149           645         794         350         649
  Metropolitan Odyssey Ltd                                      59             -          59          62          59
International                                                1 988         2 163       4 151       3 524       3 960
  MMI Holdings Namibia Ltd                                     703         1 287       1 990       1 917       1 972
  Metropolitan Life of Botswana Ltd                            427           251         678         372         571
  Metropolitan Lesotho Ltd                                     347           491         838         798         847
  Other international businesses (2)                           511           134         645         437         570

Total covered business                                      14 372        21 607      35 979      34 236      36 000

                                                                     Write-up to
                                                          Adjusted    directors'                Restated 
                                                         net worth         value  31.12.2015  31.12.2014  30.06.2015
                                                                Rm            Rm          Rm          Rm          Rm
Non-covered business
Momentum Investments (3)                                     1 143         1 181       2 324       2 028       2 165
Health businesses (4)                                          321           984       1 305       2 045       1 660
Momentum Retail (Wealth) (4)                                   402           461         863         702         817
Guardrisk business (1,4)                                       532           987       1 519       1 499       1 446
Momentum Short-term Insurance (MSTI)                           292            65         357         319         377
International (5,6)                                           (244)         (338)       (582)       (593)       (805)
MMI Holdings (after consolidation adjustments) (6)             (11)       (1 578)     (1 589)       (483)     (1 330)
Total non-covered business                                   2 435         1 762       4 197       5 517       4 330

Total embedded value                                        16 807        23 369      40 176      39 753      40 330
Diluted adjusted net worth - non-covered business           (2 435)
Adjustments to covered business - adjusted net worth         3 435
Reporting excess - long-term insurance business             17 807


1.  On 1 July 2014 Guardrisk Life Ltd was transferred to covered business (adjusted net worth of R44 million and value of in-force of R324 million). The December 2014 
    comparatives have been restated to reflect the transfer of Guardrisk Life Ltd to covered business.

2.  African life and health businesses are included in covered business for embedded value purposes.

3.  Momentum Investments subsidiaries are valued using forward price-earnings multiples applied to the relevant sustainable earnings bases.

4.  The Health businesses, Momentum Retail (Wealth off-balance sheet) and Guardrisk are valued using embedded value methodology.

5.  Cannon is included within International's non-covered business at 31 December 2015.

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
                                                                                                                                              Restated
                                                                                                                                 6 mths to   6 mths to  12 mths to 
                                                                                                Covered business                31.12.2015  31.12.2014  30.06.2015
                                                                               Adjusted               Gross                                           
                                                                Notes         net worth            value of        Cost of                 
                                                                                  (ANW)      in-force (VIF)            CAR        Total EV    Total EV    Total EV
                                                                                     Rm                  Rm             Rm              Rm          Rm          Rm

Profit from new business                                                           (748)              1 220            (85)            387         448       1 054
  Embedded value from new business                              A                  (748)              1 194            (85)            361         421         954
  Expected return to end of period                              B                     -                  26              -              26          27         100
Profit from existing business                                                     2 081                (917)            53           1 217       1 549       3 263
  Expected return - unwinding of RDR                            B                     -               1 295           (166)          1 129       1 089       2 213
  Release from the cost of required capital                     C                     -                   -            228             228         215         445
  Expected (or actual) net of tax profit transfer to net worth  D                 2 087              (2 087)             -               -           -           -
  Operating experience variances                                E                    59                 (13)            (9)             37         260         701
  Development expenses                                          F                   (53)                  -              -             (53)        (45)        (79)
  Operating assumption changes                                  G                   (12)               (112)             -            (124)         30         (17)

Embedded value profit from operations                                             1 333                 303            (32)          1 604       1 997       4 317

Investment return on adjusted net worth                         H                   315                   -              -             315         431         664
Investment variances                                            I                    68                 (44)           183             207        (495)       (406)
Economic assumption changes                                     J                   (52)               (530)             7            (575)        115          58
Exchange rate movements                                         K                   104                  38            (14)            128           4          (7)
Embedded value profit - covered business                                          1 768                (233)           144           1 679       2 052       4 626
Transfer of business (to)/from non-covered business             L                   (40)                  1              -             (39)        388         523
Changes in share capital                                        M                    47                  (1)             -              46          30         202
Dividend paid                                                                    (1 707)                  -              -          (1 707)     (2 627)     (3 744)

Change in embedded value - covered business                                          68                (233)           144             (21)       (157)      1 607

Non-covered business
Change in directors' valuation and other items                                                                                        (332)        261        (557)
Holding company expenses                                                                                                               (30)        (87)       (275)
Embedded value profit - non-covered business                                                                                          (362)        174        (832)
Changes in share capital                                        M                                                                      (46)        (30)       (202)
Dividend paid                                                                                                                          257         502         649
Finance costs - preference shares                                                                                                      (21)        (23)        (44)
Transfer of business to covered business                        L                                                                       39        (388)       (523)

Change in embedded value - non-covered business                                                                                       (133)        235        (952)

Total change in group embedded value                                                                                                  (154)         78         655

Total embedded value profit                                                                                                          1 317       2 226       3 794

Return on embedded value (%) - internal rate of return                                                                                6.6%       11.5%        9.6%


A. VALUE OF NEW BUSINESS

VALUE OF NEW BUSINESS
                                                                                                   Corporate and 
                                                      Momentum Retail   Metropolitan Retail  Public Sector (1,2)  International     Total
                                                                   Rm                    Rm                   Rm             Rm        Rm
6 mths to 31.12.2015

Value of new business                                             126                    68                  137             30       361
  Gross                                                           163                    92                  154             37       446
  Less cost of required capital                                   (37)                  (24)                 (17)            (7)      (85)

New business premiums                                           9 690                 1 171                3 281            429    14 571
  Recurring premiums                                              627                   530                  862            221     2 240
  Single premiums                                               9 063                   641                2 419            208    12 331

New business premiums (APE)                                     1 533                   594                1 104            242     3 473
New business premiums (PVP)                                    12 673                 2 411               10 921          1 265    27 270
Profitability of new business as a percentage of APE              8.2                  11.4                 12.4           12.4      10.4
Profitability of new business as a percentage of PVP              1.0                   2.8                  1.3            2.4       1.3

Restated
6 mths to 31.12.2014

Value of new business                                             127                   107                  160             27       421
  Gross                                                           162                   130                  181             34       507
  Less cost of required capital                                   (35)                  (23)                 (21)            (7)      (86)

New business premiums                                           8 513                 1 171                4 190            305    14 179
  Recurring premiums                                              630                   581                  509            178     1 898
  Single premiums                                               7 883                   590                3 681            127    12 281

New business premiums (APE)                                     1 418                   640                  877            191     3 126
New business premiums (PVP)                                    11 817                 2 684                8 369            975    23 845
Profitability of new business as a percentage of APE              9.0                  16.7                 18.2           14.1      13.5
Profitability of new business as a percentage of PVP              1.1                   4.0                  1.9            2.8       1.8

Restated
12 mths to 30.06.2015

Value of new business                                             276                   185                  427             66       954
  Gross                                                           340                   232                  518             78     1 168
  Less cost of required capital                                   (64)                  (47)                 (91)           (12)     (214)

New business premiums                                          18 726                 2 450                7 773            686    29 635  
  Recurring premiums                                            1 283                 1 035                1 368            402     4 088
  Single premiums                                              17 443                 1 415                6 405            284    25 547

New business premiums (APE)                                     3 027                 1 177                2 009            430     6 643
New business premiums (PVP)                                    25 458                 5 091               17 683          2 164    50 396
Profitability of new business as a percentage of APE              9.1                  15.7                 21.3           15.3      14.4
Profitability of new business as a percentage of PVP              1.1                   3.6                  2.4            3.0       1.9


1.  December 2014 value of new business has been restated to include Guardrisk Life Ltd as part of covered business.

2.  The Corporate and Public Sector recognises cell captive business as new business at the point where all shareholder and other contractual arrangements have been finalised and
    signed, even though the first premium may only be received after the end of the current reporting period.

3.  Value of new business and new business premiums are net of non-controlling interests.

4.  The value of new business has been calculated on closing assumptions. Investment yields at the point of sale have been used for fixed annuity and guaranteed endowment
    business, for other business the investment yields at the end of the year have been used.



ANALYSIS OF NEW BUSINESS PREMIUMS
                                                                                          Corporate and 
                                             Momentum Retail   Metropolitan Retail  Public Sector (1,2)  International     Total
                                                          Rm                    Rm                   Rm             Rm        Rm
6 mths to 31.12.2015

New business premiums                                  9 690                 1 171                3 281            429    14 571
  Recurring premiums                                     627                   530                  862            221     2 240
    Risk                                                 288                   339                   99              -       726
    Savings/Investments                                  339                   191                  124              -       654
    Cell captives                                          -                     -                  639              -       639
    International                                          -                     -                    -            221       221
  Single premiums                                      9 063                   641                2 419            208    12 331
    Savings/Investments                                8 672                   145                1 736              -    10 553
    Annuities                                            391                   496                  683              -     1 570
    International                                          -                     -                    -            208       208

New business premiums (APE)                            1 533                   594                1 104            242     3 473
  Risk                                                   288                   339                   99              -       726
  Savings/Investments                                  1 206                   205                  298              -     1 709
  Annuities                                               39                    50                   68              -       157
  Cell captives                                            -                     -                  639              -       639
  International                                            -                     -                    -            242       242

Restated
6 mths to 31.12.2014
New business premiums                                  8 513                 1 171                4 190            305    14 179
  Recurring premiums                                     630                   581                  509            178     1 898
    Risk                                                 288                   373                  187              -       848
    Savings/Investments                                  342                   208                  307              -       857
    Cell captives                                          -                     -                   15              -        15
    International                                          -                     -                    -            178       178
  Single premiums                                      7 883                   590                3 681            127    12 281
    Savings/Investments                                7 527                   123                2 081              -     9 731
    Annuities                                            356                   467                1 600              -     2 423
    International                                          -                     -                    -            127       127

New business premiums (APE)                            1 418                   640                  877            191     3 126
  Risk                                                   288                   373                  187              -       848
  Savings/Investments                                  1 094                   220                  515              -     1 829
  Annuities                                               36                    47                  160              -       243
  Cell captives                                            -                     -                   15              -        15
  International                                            -                     -                    -            191       191

Restated
12 mths to 30.06.2015

New business premiums                                 18 726                 2 450                7 773            686    29 635
  Recurring premiums                                   1 283                 1 035                1 368            402     4 088
    Risk                                                 550                   658                  575              -     1 783
    Savings/Investments                                  733                   377                  556              -     1 666
    Cell captives                                          -                     -                  237              -       237
    International                                          -                     -                    -            402       402
  Single premiums                                     17 443                 1 415                6 405            284    25 547
    Savings/Investments                               16 787                   277                4 283              -    21 347
    Annuities                                            656                 1 138                2 122              -     3 916
    International                                          -                     -                    -            284       284

New business premiums (APE)                            3 027                 1 177                2 009            430     6 643
  Risk                                                   550                   658                  575              -     1 783
  Savings/Investments                                  2 412                   405                  984              -     3 801
  Annuities                                               65                   114                  213              -       392
  Cell captives                                            -                     -                  237              -       237
  International                                            -                     -                    -            430       430



1.  December 2014 value of new business has been restated to include Guardrisk Life Ltd as part of covered businesss. 

2.  The Corporate and Public Sector recognises cell captive business as new business at the point where all shareholder and other contractual arrangements have been finalised and
    signed, even though the first premium may only be received after the end of the current reporting period.



RECONCILIATION OF LUMP SUM INFLOWS   
                                                              6 mths to      6 mths to     12 mths to
                                                             31.12.2015     31.12.2014     30.06.2015 
                                                                     Rm             Rm             Rm

Total lump sum inflows                                           15 217         17 218         33 023
Inflows not included in value of new business                    (3 592)        (5 163)        (8 966)
Term extensions on maturing policies                                198            265            558
Retirement annuity proceeds invested in living annuities            518              -            822
Non-controlling interests and other adjustments                     (10)           (39)           110
Single premiums included in value of new business                12 331         12 281         25 547


B. EXPECTED RETURN

The expected return is determined by applying the risk discount rate applicable at the beginning of the reporting year to the present value of in-force covered business at the
beginning of the reporting year 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 year.


C. RELEASE FROM THE COST OF REQUIRED CAPITAL

The release from the cost of required capital represents the difference between the risk discount rate and the expected after tax investment return on the assets backing the
required capital over the year.


D. EXPECTED (OR ACTUAL) NET OF TAX PROFIT TRANSFER TO NET WORTH

The expected profit transfer for covered business from the present value of in-force to the adjusted net worth is calculated on the statutory valuation method.


E. OPERATING EXPERIENCE VARIANCES

OPERATING EXPERIENCE VARIANCES 
                                                                                                        Restated    Restated
                                                                            6 mths to 31.12.2015       6 mths to  12 mths to
                                                                                                      31.12.2014  30.06.2015
                                                         Notes         ANW        Net VIF         EV          EV          EV
                                                                        Rm             Rm         Rm          Rm          Rm

Momentum Retail                                                         56            (23)        33         127         316
Mortality and morbidity                                    1,2          61             10         71         151         365
Terminations, premium cessations and policy alterations      3         (77)             -        (77)        (17)        (75)
Expense variance                                             4         (14)             -        (14)         11         (37)
Other                                                        5          86            (33)        53         (18)         63

Metropolitan Retail                                                     36             25         61          61         140
Mortality and morbidity                                      1          24              4         28          28          85
Terminations, premium cessations and policy alterations      6          15             22         37           9         (20)
Expense variance                                                        (1)             -         (1)         10          26
Other                                                                   (2)            (1)        (3)         14          49

Corporate and Public Sector                                            (48)           (37)       (85)        (46)         (4)
Mortality and morbidity                                      7         (91)            (1)       (92)         35          24
Terminations                                                 8           5            (53)       (48)         (6)          9
Expense variance                                             4         (30)             -        (30)        (27)        (19)
FNB Life - share of profits                                             17              -         17          19          38
Other                                                        5          51             17         68         (67)        (56)

International                                                          (11)            46         35          70         119
Mortality and morbidity                                      1          27             27         54          45         109
Terminations, premium cessations and policy alterations                (12)            (1)       (13)         28         (11)
Expense variance                                                       (21)             5        (16)        (23)        (28)
Other                                                                   (5)            15         10          20          49

Shareholder Capital                                                     26             (5)        21          38         151
Opportunity cost of required capital                                     -            (28)       (28)         10         (21)
Total operating experience variances                                    59            (22)        37         260         701

Notes

1. Overall, mortality and morbidity experience for the 6 months were better compared to what was allowed for in the valuation basis.

2. The decline relative to prior periods was mainly due to an increase in mortality claims experience.

3. Better than expected termination experience on whole life insurance contracts as well as the impact of higher than expected loyalty reward discounts and clients choosing lower
   fee products negatively impacted the embedded value.

4. Overall experience was worse than expected due to proportionally higher internal cost allocations to covered segments in line with the new client centric model. This is offset
   by lower non-covered expenses.

5. Various smaller items including taxation and liability matching activities.

6. The positive variance is a result of improved persistency experience on group individual risk business.

7. The negative variance is a result of disability in payment experience.

8. Higher than expected terminations on risk business.


F. DEVELOPMENT EXPENSES

Business development expenses, comprising mainly middle market and other initiatives within Momentum Retail and Metropolitan Retail.


G. OPERATING ASSUMPTION CHANGES

OPERATING ASSUMPTION CHANGES 
                                                                                               Restated     Restated
                                                                                              6 mths to   12 mths to 
                                                                 6 mths to 31.12.2015        31.12.2014   30.06.2015 

                                              Notes           ANW       Net VIF      EV              EV           EV 
                                                               Rm            Rm      Rm              Rm           Rm

Momentum Retail                                                 -           (15)    (15)             21           63
Mortality and morbidity assumptions                             -             -       -               -          235
Termination assumptions                                         -             -       -               -          (19)
Renewal expense assumptions                                    (1)           (4)     (5)             23          (28)
Modelling, methodology and other changes                        1           (11)    (10)             (2)        (125)

Metropolitan Retail                                             6             -       6               4           60
Mortality and morbidity assumptions                             -             -       -               -           95
Termination assumptions                                         -             -       -               -          (21)
Renewal expense assumptions                                     -             -       -               -           30
Modelling, methodology and other changes                        6             -       6               4          (44)

Corporate and Public Sector                                     1           (73)    (72)             (8)        (104)
Mortality and morbidity assumptions                             -             -       -               -          (81)
Termination assumptions                                         -             -       -              (1)          63
Renewal expense assumptions                       1             -           (77)    (77)             27         (155)
Modelling, methodology and other changes                        1             4       5             (34)          69

International                                                 (19)          (24)    (43)             13           86
Mortality and morbidity assumptions                             -             1       1              32           48
Termination assumptions                                         -             -       -              (1)          (4)
Renewal expense assumptions                                     -            (8)     (8)             (1)          22
Modelling, methodology and other changes          2           (19)          (17)    (36)            (17)          20


Shareholder Capital                                             -             -       -               -         (111)
Methodology change: cost of required capital                    -             -       -               -          (11)
Total operating assumption changes                            (12)         (112)   (124)             30          (17)

Notes

1.  Impact of lower than expected sales volumes on expense recoveries.

2.  Valuation methodology refinements mainly related to the Namibian business.


H. INVESTMENT RETURN ON ADJUSTED NET WORTH

INVESTMENT RETURN ON ADJUSTED NET WORTH
                                                                                6 mths to   6 mths to  12 mths to
                                                                               31.12.2015  31.12.2014  30.06.2015
                                                                                       Rm          Rm          Rm

Investment income                                                                     281         426         618
Capital appreciation and other                                                         50          20          77
Preference share dividends paid and change in fair value of preference shares         (16)        (15)        (31)
Investment return on adjusted net worth                                               315         431         664


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. EXCHANGE RATE MOVEMENTS

The impact of foreign currency movements on International covered businesses.


L. TRANSFER OF BUSINESS (TO)/FROM NON-COVERED BUSINESS

This transfer mainly relates to the recapitalisation of non-covered subsidiaries of the life licence.


M. CHANGES IN SHARE CAPITAL

Changes in share capital include the recapitalisation of some of the International subsidiaries.



COVERED BUSINESS: SENSITIVITIES - 31.12.2015 
                                                                                                                           In-force business                  New business written
                                                                                           Adjusted                                           Cost of                            Cost of 
                                                                                          net worth             Net value      Gross value    CAR (3)    Net value  Gross value  CAR (3)
                                                                                                 Rm                    Rm               Rm         Rm           Rm           Rm       Rm

Base value                                                                                   14 372                21 607           24 556     (2 949)         361          446      (85)

 1%  increase in risk discount rate                                                                                19 904           23 185     (3 281)         290          381      (91)
     % change                                                                                                          (8)              (6)        11          (20)         (15)       7
 1%  reduction in risk discount rate                                                                               23 521           26 096     (2 575)         441          519      (78)
     % change                                                                                                           9                6        (13)          22           16       (8)
10%  decrease in future expenses                                                                                   22 743           25 692     (2 949)         411          496      (85)
     % change (1)                                                                                                       5                5          -           14           11        -
10%  decrease in lapse, paid-up and surrender rates                                                                22 287           25 282     (2 995)         423          513      (90)
     % change                                                                                                           3                3          2           17           15        6
 5%  decrease in mortality and morbidity for assurance business                                                    23 134           26 095     (2 961)         433          518      (85)
     % change                                                                                                           7                6          -           20           16        -
 5%  decrease in mortality for annuity business                                                                    21 259           24 241     (2 982)         356          441      (85)
     % change                                                                                                          (2)              (1)         1           (1)          (1)       -
 1%  reduction in gross investment return, inflation rate and risk discount rate             14 337                22 330           25 279     (2 949)         399          484      (85)
     % change (2)                                                                                 -                     3                3          -           11            9        -
 1%  reduction in inflation rate                                                                                   22 368           25 317     (2 949)         390          475      (85)
     % change                                                                                                           4                3          -            8            7        -
10%  fall in market value of equities and properties                                         14 013                20 458           23 387     (2 929)
     % change                                                                                    (2)                   (5)              (5)        (1)
10%  reduction in premium indexation take-up rate                                                                  21 320           24 257     (2 937)         345          430      (85)
     % change                                                                                                          (1)              (1)         -           (4)          (4)       -
10%  decrease in non-commission related acquisition expenses                                                                                                   411          496      (85)
     % change                                                                                                                                                   14           11        -
 1%  increase in equity/property risk premium                                                                      22 107           25 054     (2 947)         382          467      (85)
     % change                                                                                                           2                2          -            6            5        -


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 - ADDITIONAL INFORMATION

ANALYSIS OF ASSETS MANAGED AND/OR ADMINISTERED (1)
                                                                                               Restated    Restated
                                                                                 31.12.2015  31.12.2014  30.06.2015
                                                                                         Rm          Rm          Rm

Managed and/or administered by Investments
Financial assets                                                                    460 941     439 659     456 663
  Momentum Manager of Managers                                                      110 635     109 956     117 416
  Momentum Investment Consultants                                                    10 343      10 826      11 715
  Momentum Collective Investments                                                    62 067      61 291      63 817
  Metropolitan Collective Investments                                                37 034      24 732      24 775
  Momentum Asset Management                                                         177 376     180 331     183 198
  Momentum Global Investments                                                        57 161      46 656      48 639
  Momentum Alternative Investments                                                    6 325       5 867       7 103
Properties - Eris Property Group                                                     28 782      26 903      26 133
  On-balance sheet                                                                    8 459       7 776       8 066
  Off-balance sheet                                                                  20 323      19 127      18 067
Momentum Wealth linked product assets under administration                          152 439     130 569     138 854
  On-balance sheet                                                                   95 329      79 078      85 433
  Off-balance sheet                                                                  57 110      51 491      53 421
Managed internally or by other managers within MMI                                   74 773      63 358      70 450
  On-balance sheet                                                                   68 867      57 976      64 872
  Off-balance sheet                                                                   5 906       5 382       5 578
Managed by external managers (on-balance sheet)                                      16 754      15 832      16 789
Properties managed internally or by other managers within MMI or externally           2 445       2 510       2 506
Corporate and Public Sector - segregated assets                                         210         200         200
Corporate and Public Sector - cell captives on-balance sheet                         17 821      13 024      16 381

Total assets managed and/or administered                                            754 165     692 055     727 976

Managed and/or administered by Investments
  On-balance sheet                                                                  255 931     250 692     259 594
  Off-balance sheet                                                                 205 010     188 967     197 069
                                                                                    460 941     439 659     456 663


1. Assets managed and/or administered are included where an entity earns a fee on the assets. Non-financial assets (except properties) have been excluded.


NET FUNDS RECEIVED FROM CLIENTS (1)                         
                                                                    Gross single   Gross recurring         Gross          Gross       Net inflow/ 
                                                                         inflows           inflows        inflow        outflow         (outflow)
6 mths to 31.12.2015                                                          Rm                Rm            Rm             Rm                Rm

Momentum Retail                                                            8 145             4 575        12 720        (12 540)              180
Metropolitan Retail                                                          654             2 991         3 645         (3 232)              413
Corporate and Public Sector                                                6 167             7 494        13 661        (15 339)           (1 678)
International                                                                251             1 774         2 025         (1 208)              817
Long-term insurance business fund flows                                   15 217            16 834        32 051        (32 319)             (268)
Off-balance sheet fund flows
Managed and/or administered by Investments                                                                45 756        (45 170)              586
Properties - Eris Property Group                                                                           3 818         (1 562)            2 256
Momentum Wealth linked product assets under administration                                                 3 850         (3 858)               (8)
Managed internally or by other managers within MMI                                                           441           (268)              173
Corporate and Public Sector - segregated assets                                                                9              -                 9
Total net funds received from clients                                                                     85 925        (83 177)            2 748

                                                           
NET FUNDS RECEIVED FROM CLIENTS (1)                                            
                                                                    Gross single   Gross recurring         Gross          Gross       Net inflow/ 
Restated                                                                 inflows           inflows        inflow        outflow         (outflow)
6 mths to 31.12.2014                                                          Rm                Rm            Rm             Rm                Rm

Momentum Retail                                                            7 542             4 353        11 895        (12 221)             (326)
Metropolitan Retail                                                          591             2 865         3 456         (2 408)            1 048
Corporate and Public Sector                                                8 847             6 927        15 774        (12 910)            2 864
International                                                                238             1 488         1 726           (973)              753
Long-term insurance business fund flows                                   17 218            15 633        32 851        (28 512)            4 339
Off-balance sheet fund flows
Managed and/or administered by Investments (2)                                                            36 234        (66 205)          (29 971)
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
Corporate and Public Sector - segregated assets                                                                9              -                 9
Total net funds received from clients                                                                     79 412       (102 008)          (22 596)


1. Assets managed and/or administered are included where an entity earns a fee on the assets. Non-financial assets (except properties) have been excluded.

2. Includes outflows of R31 billion relating to Metropolitan Collective Investments.


NET FUNDS RECEIVED FROM CLIENTS (1)  
                                                                    Gross single   Gross recurring         Gross          Gross       Net inflow/ 
Restated                                                                 inflows           inflows        inflow        outflow         (outflow)
12 mths to 30.06.2015                                                         Rm                Rm            Rm             Rm                Rm

Momentum Retail                                                           15 684             8 992        24 676        (24 088)              588
Metropolitan Retail                                                        1 415             5 495         6 910         (4 967)            1 943
Corporate and Public Sector                                               15 576            14 345        29 921        (27 500)            2 421
International                                                                348             3 215         3 563         (1 953)            1 610
Long-term insurance business fund flows                                   33 023            32 047        65 070        (58 508)            6 562
Off-balance sheet fund flows
Managed and/or administered by Investments (2)                                                            72 017        (95 906)          (23 889)
Properties - Eris Property Group                                                                           2 912         (1 886)            1 026
Momentum Wealth linked product assets under administration                                                10 168        (10 582)             (414)
Managed internally or by other managers within MMI                                                         1 280         (1 117)              163
Corporate and Public Sector - segregated assets                                                                9              -                 9
Total net funds received from clients                                                                    151 456       (167 999)          (16 543)


1. Assets managed and/or administered are included where an entity earns a fee on the assets. Non-financial assets (except properties) have been excluded.

2. Includes outflows of R31 billion relating to Metropolitan Collective Investments.


ANALYSIS OF ASSETS BACKING SHAREHOLDER EXCESS
                                                        31.12.2015          31.12.2014       30.06.2015
                                                        Rm       %          Rm       %       Rm       %

Equity securities                                      504     2.0       1 699     7.1      346     1.4
Preference shares                                    1 406     5.7       1 363     5.7    1 497     6.1
Collective investment schemes                          208     0.8         523     2.2      523     2.1
Debt securities                                      3 246    13.1       4 321    18.0    4 761    19.4
Properties                                           2 891    11.6       2 262     9.4    2 241     9.1
Owner-occupied properties                            1 410     5.7       1 463     6.1    1 509     6.1
Investment properties                                1 481     6.0         799     3.3      732     3.0
Cash and cash equivalents and funds on deposit       7 702    31.0       6 408    26.7    9 368    38.2
Intangible assets                                    8 388    33.8       8 525    35.5    8 503    34.6
Other net assets                                     4 686    18.9       2 939    12.2    1 322     5.4
                                                    29 031   116.9      28 040   116.7   28 561   116.4
Redeemable preference shares                          (283)   (1.1)       (303)   (1.3)    (292)   (1.2)
Subordinated redeemable debt                        (3 526)  (14.2)     (3 294)  (13.7)  (3 298)  (13.4)
Treasury shares                                       (384)   (1.5)       (420)   (1.7)    (424)   (1.7)
Shareholder excess per reporting basis              24 838   100.0      24 023   100.0   24 547   100.0


NUMBER OF EMPLOYEES                                  31.12.2015

Indoor staff                                             10 647
  Segments
    Momentum Retail                                       1 449
    Metropolitan Retail                                   1 249
    Corporate and Public Sector                           1 007
    International                                         1 156
    Shareholder Capital                                     282

  Centres of Excellence
    Investments and savings solutions                       518
    Legacy solutions                                        205
    Life insurance solutions                                488
    Health solutions                                      3 037
    Short-term insurance solutions                          289
  Group services divisions                                  967

Field staff                                               6 247
  International                                           1 905
  Investments and savings solutions                          10
  Momentum Retail                                           258
  Metropolitan Retail                                     4 074

Total                                                    16 894


NUMBER OF EMPLOYEES (pre-restructure)        31.12.2014  30.06.2015

Indoor staff                                     10 488      10 438
  Momentum Retail                                 1 686       1 841
  Metropolitan Retail                             1 093       1 052
  Momentum Employee Benefits                      1 642       1 668
  International                                   1 185       1 010
  Momentum Investments                              671         651
  Metropolitan Health                             3 067       2 902
  Shareholder Capital
    Balance Sheet Management                         78          78
    Group services                                  802         925
    Short-term insurance                            264         311

Field staff                                       7 488       6 801
  Momentum Retail                                 1 221       1 327
  Metropolitan Retail                             4 974       3 840
  International                                   1 293       1 634

Total                                            17 976      17 239


MMI HOLDINGS GROUP - STOCK EXCHANGE PERFORMANCE

STOCK EXCHANGE PERFORMANCE   

                                                                                                         31.12.2015  30.06.2015  31.12.2014  30.06.2014
6 month period
Value of listed shares traded (rand million)                                                                 14 700      11 987       7 166       8 370
Volume of listed shares traded (million)                                                                        580         381         260         338
Shares traded (% of average listed shares in issue) (1)                                                          74          49          33          43

Trade prices
  Highest (cents per share)                                                                                   3 149       3 475       3 192       2 783
  Lowest (cents per share)                                                                                    1 900       2 829       2 502       2 228
  Last sale of period (cents per share)                                                                       2 200       3 015       3 000       2 625
Annualised percentage (%) change during period                                                                  (47)          1          31           8
Annualised percentage (%) change - life insurance sector (J857)                                                  (3)         12          10          25
Annualised percentage (%) change - top 40 index (J200)                                                           (1)         10          (9)         23

31 December/30 June
Price/diluted core headline earnings (segmental) ratio                                                         10.5        12.6        13.0        11.6
Dividend yield % (dividend on listed shares) (1)                                                                7.1         5.1         4.9         5.4
Dividend yield % - top 40 index (J200) (1)                                                                      3.1         2.9         2.9         2.6

Total shares issued (million)
  Ordinary shares listed on JSE                                                                               1 573       1 572       1 571       1 570
  Treasury shares held on behalf of contract holders                                                            (17)        (14)        (14)        (14)
  Basic number of shares in issue                                                                             1 556       1 558       1 557       1 556
  Treasury shares held on behalf of contract holders                                                             17          14          14          14
  Convertible redeemable preference shares                                                                       31          32          33          34
  Diluted number of shares in issue (2)                                                                       1 604       1 604       1 604       1 604

Market capitalisation at end (Rbn) (3)                                                                           35          48          48          42


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: 03/03/2016 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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