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Mmi Holdings Financial Results for the six months ended 31 December 2017
MMI / MIM - MMI Holdings Limted
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 FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
SUMMARY OF KEY METRICS
During the half year MMI Holdings has made good progress on further embedding its client-centric strategy and on investing in our core operations. Even though economic
conditions remained challenging, we have seen progress come through from the measures previously communicated. We also believe the possible near-term turn in the
economic cycle and improved levels of consumer and business confidence will enable us to reap the rewards of the various investments into our business.
MMI's diluted core headline earnings of R1 556m (97 cents per share) is down 3% year-on-year. Diluted core headline earnings has been negatively affected during the
period by weaker persistency in Metropolitan Retail (R44m negative impact), weaker profitability in both new generation and legacy life products at Momentum Retail
(R111m), and an increase in MMI's share of losses (R82m), in line with business plans, on new initiatives such as the India joint venture. The negative impacts were
offset by mortality and morbidity experience which was R162m stronger in 1H2018, mainly as a result of much improved group underwriting results in Momentum Corporate.
Core earnings were also aided by improved short-term underwriting profits (R43m) and by the impact of stronger investment returns on fee income (R108m).
MMI's operating businesses contributed R1.3 billion to core headline earnings, a 4% improvement year-on-year. If we exclude the three large ongoing investments (India,
aYo and Money Management) the operating profit growth on the established businesses was 11%.
We have decided to update our dividend policy to be more consistent with our planned capital deployment and the projected profile of required capital under the SAM
regime. Our old dividend policy targeted a cover range of 1.5x to 1.7x core headline earnings. In future we will target a dividend cover centred at 2.5x core headline
earnings.
Given our current discount to embedded value (EV), we have opted to buy back shares in lieu of paying out cash dividends. We understand the importance of our decision
to our shareholders and have not taken this decision lightly. In our opinion this is currently the most efficient use of capital and will enhance value for
shareholders. We plan to distribute R2bn to shareholders through open market share buy-backs during the next 12 months.
New business volumes showed an improvement in the second quarter after a sluggish first quarter. Nonetheless, volumes are down 5% year-on-year to R20.3bn when measured
on the present value of new business premiums (PVNBP) basis. Momentum Retail and Metropolitan Retail both showed increased volumes of 3% and 9% respectively. We have
seen specific improvements recently in our guaranteed endowment, offshore investment and recurring savings product flows. New business volumes in Momentum Corporate
remains under pressure especially for single premium investment business and risk business sold to larger corporate schemes.
Value of new business declined by 1% to R288m. Margins showed improvement in 2Q18 and ended up flat year-on-year at 1.4%. Margins were particularly pleasing in
Metropolitan Retail where acquisition costs increased less than sales volumes. We believe that the main driver of ongoing margin improvement will be to increase the
productivity and scale of our various sales channels.
Group embedded value of R43.4bn was up 2% in the six months since June 2017. This equates to an embedded value per share of R27.05 on 31 December 2017. The annualised
return of embedded value (ROEV) for the period was 11.2%. This shows a significant year-on-year improvement, largely driven by investment variances which reverted from
a substantial negative amount to a material positive contribution during the current period. The ROEV on covered business was 15.5% during the period (11.4% excluding
investment variances, interest rate changes and forex movements). The ROEV on non-covered business was disappointing at -5.4%. The biggest contributors to the weak
non-covered ROEV were reduced valuations of our International operations, a more conservative valuation approach followed for Momentum Short-term Insurance, an
increased allowance for Multiply expenses, and a reduction in the carry value of our domestic asset management subsidiaries.
Operating experience variation on the embedded value basis was positive in 1H2018. Mortality and morbidity variances of R176m were strongly positive (compared to R27m
in prior year). Credit experience remained positive and our credit risk variance of R44m in 1H2018 was well above the R24m in 1H2017. These positive items were offset
by higher than expected discounts to Multiply clients and a correction on reinsurance balances due.
Diluted headline earnings were R1 292m, up 27% year-on-year. The R277m difference between diluted headline earnings and diluted core headline earnings relates to
amortisation of acquisition related intangibles and R113m to non-recurring items, offset to some extent by the more favourable fair value gains on shareholder funds
and by positive investment variances during the six months.
Key metrics 1H2018 1H2017 Change (%)
Diluted core headline earnings (Rm) 1 556 1 598 (3)
Diluted core headline earnings per share (cents) 97.0 99.6 (3)
Diluted headline earnings per share (cents) 81.4 64.0 27
Operating profit after new initiatives 1 312 1 264 4
Operating profit before new initiatives 1 457 1 311 11
New business volumes (PVNBP, Rm) 20 323 21 295 (5)
Value of new business (Rm) 288 292 (1)
New business margin (%) 1.4 1.4 -
Embedded value per share (cents) 2 705 2 648 2
Return on Embedded Value (%) 11.2 4.5 6.7
ANALYSIS OF GROUP EARNINGS
Diluted core headline earnings of R1 556m for the period represents a 3% decrease for the six months. Operating profit growth was 4% year-on-year. If we exclude the
three large ongoing investments (India, aYo and Money Management) the operating profit growth on the established businesses was 11%.
Momentum Retail
Momentum Retail's core headline earnings declined by 10% to R567m. Earnings from covered operations (life insurance) were down 16% to R600m whereas losses from non-
covered operations narrowed by around 60% to R33m.
The lower life insurance earnings were mainly due to releases of discretionary margin that were R108m lower than in 1H2017. While we expect the level of discretionary
margin releases to steadily decline over time, the decline during the period was exceptional due to some discretionary margins being capitalised at the end of F2017 as
well as the interaction between weak investment returns in F2017 and discretionary margins available for recognition in F2018.
In addition, expenses increased year-on-year mainly due to increased spend on initiatives such as growing our distribution footprint, Money Management, investment in
the Momentum Wealth platform functionality and IT investments to improve the client and advisor experience.
Earnings were also negatively impacted by a reinsurance correction of R43m for a historical underpayment as well as higher than expected premium discounts offered to
Multiply clients (R31m impact). Even though we have observed a negative impact due to the premium discounts, we have seen strong mortality and premium alteration
experience on this engaged subset of clients, which partly offsets the impact of the premium discounts.
Non-covered business in Momentum Retail experienced an improved first six months, with losses declining by R48m year-on-year to a loss of R33m. Notably, MSTI's core
earnings improved by R68m year-on-year due to very good growth in earned premiums, lower claims ratios, good expense management and recognition of a deferred tax
asset.
Metropolitan Retail
Metropolitan Retail's core headline earnings declined by 15% to R317m, mainly due to weaker persistency experience in policies aged 6 to 12 months, increased spending
on new initiatives, including Metropolitan's share of the Money Management initiative. A reduction in reserve releases year-on-year and African Bank joint venture set
up costs also negatively impacted core earnings. Strong mortality and morbidity experience, good expense management and commission payments growing by less than new
business volumes aided core earnings.
Momentum Corporate
Momentum Corporate's core headline earnings increased by 42% to R455m driven by a significant improvement in covered underwriting performance. Group disability
experience improved by around R80m year-on-year. Management initiatives around the underwriting experience such as premium re-ratings, increased focus on client
servicing and the revised risk-pricing strategy have all contributed to the improved underwriting earnings performance. An emphasis on expense management and improved
investment market performance for the six months also had a positive impact on earnings.
Guardrisk performed strongly and contributed R129m (up 42% year-on-year) to core headline earnings. Health contributed R50m and Eris R21m.
International
Core headline earnings have improved from a loss of R61m for the previous period to a loss of R27m for 1H2018. Results have improved by R29m due to better PHI claims
experience in Namibia. Support costs in SA have declined by R20m year-on-year. These positives were offset to some extent by increased losses incurred in our start up
initiatives aYo and the joint venture in India. The losses are in line with business plans, but show a marked increase compared to the previous year. We also saw a
decline in the health insurance profits in Botswana and Lesotho.
Shareholder Capital
Investment income is down 18% for the period to R260m (net of tax). This is mainly driven by a the sale of a high-yielding property that was held in the shareholder
portfolio during 1H2017, the proceeds of which are now invested in low-yielding assets such as development property. Finance costs on subordinated debt also increased
as a result of R750m of new debt being issued during the period.
Core headline earnings (Rm) Restated
1H2018 1H2017 Change (%)
Momentum Retail 567 632 (10)
Metropolitan Retail 317 373 (15)
Momentum Corporate 455 320 42
International (27) (61) 56
Operating segments 1 312 1 264 4
Shareholder Capital 244 334 (27)
Diluted core headline earnings 1 556 1 598 (3)
NEW BUSINESS COMMENTARY
New business volumes are down 5% to R20.3bn for the year when measured as PVNBP. The largest contributor to new business is Momentum Retail where volumes ended 3%
higher for the period. Overall the new business margin remained stable at 1.4%.
Momentum Retail
Momentum Retail sales were 3% up over the year. New single premium new business increased by 1% while recurring premiums increased by 5%. In single premiums we have
seen large increases on our offshore business as well as on the new Guaranteed Return Option product that was launched in October 2017. For recurring premiums, our
core risk offering, Myriad, showed an increase of 8%.
The positive volume growth did not translate into value of new business growth, mainly because of higher growth in distribution related expenses. Value of new business
decreased 16% to R89m and the new business margin of 0.8% was down from the 1.0% margin in the prior period.
Metropolitan Retail
Metropolitan grew recurring premium volumes by 4%. Risk sales increased by 4% while savings business increased by 5% year-on-year. Single premium new business was up
26%, mainly due to large inflows into preservation funds.
Value of new business increased by 38% to R130m mainly due to lower commission following a recalibration in some parts of our sales staff remuneration model, a
favourable new business mix and the adoption of the yield curve methodology. New business margin increased to 4.5%.
Momentum Corporate
Momentum Corporate new business volume was down 24% for the year. New business volumes were lower in group risk business where the market pricing remains highly
competitive. On-balance sheet investment flows were also weak during the year. Recurring premium savings business was aided by ongoing good demand for our FundsAtWork
umbrella fund solution.
VNB in Corporate reduced by 4% to R44m, whereas new business margins increased from 0.7% to 0.9%. Considerable management action is being undertaken to restore the
margins in this business.
International
International new business volumes were down 3% year-on-year. VNB was down 46% to R25m. The VNB was negatively impacted by an increase in expenses in Namibia and a
significant fall in the volumes of the corporate business in Lesotho. New business margin was 1.8% for the six months.
Present Value of New Business Premiums (Rm) Restated
1H2018 1H2017 Change (%)
Momentum Retail 11 182 10 842 3
Metropolitan Retail 2 919 2 673 9
Momentum Corporate 4 855 6 366 (24)
International 1 367 1 414 (3)
MMI total PVNBP 20 323 21 295 (5)
EMBEDDED VALUE
Our EV was R27.05 per share on 31 December 2017, representing an annualised ROEV of 11.2% over the period. ROEV excluding investment variances, forex movements, and
economic assumption changes was 8.0%.
Our covered business continued to produce steady EV growth and generated ROEV of 15.5% (11.4% excluding market items). Our non-covered operations generated ROEV
of -5.4%. The negative non-covered ROEV mainly relates to downward adjustments of some of the non-covered valuations such as our International operations, MSTI and SA
asset management operations.
Experience variation
Our overall experience variation, including development expenses, for the period was positive R13m. Risk experience variances were strong in aggregate following the
recovery in Momentum Corporate. Retail mortality and disability generated R119m of positive variances while Corporate generated a positive variance of R33m, compared
to the R108m negative variance in the previous period. Our credit risk variance of R44m is well up on that achieved in the prior period.
Persistency variance was negative R43m across the group, with higher terminations in group risk as the result of highly competitive pricing observed across that
market. Persistency also deteriorated in the lower-income market segments. Persistency in higher-income market segments remains in line with expectations. The negative
expense variance for this period reflects the significant investment in our core business.
Non-covered EV earnings
Non-covered EV earnings amounted to negative R230m for the period. This was mainly due to the reduced valuation of our International operations, increased allowance
for Multiply expenses, and reduction in the carry value of our domestic asset management subsidiaries. We also adopted a more conservative approach to our MSTI
valuation in December 2017. Non-covered operations with positive ROEV contributions included Guardrisk, Eris, and our various health operations.
Embedded value profits (Rm) EV total ANW Net VIF
New business 288 (757) 1 045
Unwind of RDR 1 292 - 1 292
Expected profit - 1 896 (1 896)
Experience variance 13 7 6
Operating assumptions (70) - (70)
Investment return on ANW 365 365 -
Investment variance 515 28 487
Economic assumption changes 161 30 131
FX translation effect (12) (8) (4)
EV profit on non-covered (230) (230) -
EV Profit 2 322 1 331 991
CAPITAL, CAPITAL DISTRIBUTION AND OUTLOOK
Our capital position remains solid on the current statutory basis and we had a buffer of R4.1bn on 31 December 2017 on our internal basis. The CAR cover ratio was 2.8x
as of 31 December 2017 versus 2.7x as of 31 December 2016. On a forward looking Solvency Assessment and Management (SAM) basis MMI is also well capitalised after
taking into account all capital deployment initiatives and planned capital distributions.
Rbn Dec 17 Jun 17
NAV as per EV statement 16.1 16.3
Qualifying debt capital 4.4 3.6
Less: NAV in strategic subsidiaries (4.4) (3.7)
Less: Required capital (9.6) (10.1)
Capital buffer before deployment 6.4 6.2
Deployed for capital distribution (1.0) (1.5)
Deployed for strategic initiatives (1.3) (1.0)
Capital buffer 4.1 3.7
The capital buffer increased by roughly R400m compared to 30 June 2017. Note that required capital has reduced mainly due to improved investment market returns
reducing the stress arising in the investment resilience test component of the CAR calculation.
Movement in capital buffer Rbn
Capital buffer on 30 June 2017 3.7
Profit from covered business 1.6
Profit from non-covered business (0.3)
Dividends and new capital (1.0)
Increase in required capital (0.3)
New subordinated debt raised 0.8
Change in strategic commitments (0.3)
Capital buffer 4.1
Investors should note that actual capital investments during the period do not necessarily affect the capital buffer as these are usually provided for in the 'deployed
for strategic initiatives' item. For clarity we can confirm that during the past six months we have invested c. R600m:
- c. R160m was invested into M&A activity and the African Bank JV
- c. R360m was invested into our International operations (including India and aYo)
- c. R70m was invested into Momentum Short-term Insurance
Capital distribution
We have decided to review our dividend policy as the existing policy was becoming inconsistent with our capital deployment plans given sustainable earnings levels as
well as the need to maintain steady capital ratios under the SAM regime. Our previous dividend policy referenced core headline earnings and targeted a cover range of
1.5x to 1.7x. In future we will target a dividend cover range centred around 2.5x core headline earnings. We are also planning on migrating from core headline earnings
to normalised headline earnings as our primary earnings measure. We are currently reviewing the impact that this, and of the introduction of IFRS17, on future earnings
volatility. On completion of this work we will communicate more detail on the new dividend policy; especially on the dividend cover range.
Given that our shares are valued at a discount to embedded value, we have opted to buy back shares in lieu of paying out dividends. We understand the importance of our
decision to our shareholders and have not taken this decision lightly. In our opinion this is the most efficient use of capital and will enhance value for
shareholders. We plan to distribute R2bn to shareholders through open market share buy-backs during the next year. Should the share price recover and the discount to
EV close, we will reinstate cash dividends. Note that the current repurchase programme represents a more generous capital distribution than that implied by the new
dividend policy. This is because the share buy-back provides us with greater flexibility and because the current discount to EV makes the repurchase programme an
attractive investment for our discretionary capital. We also plan to be more active with regards to capital management going forward and the share repurchase programme
is an early illustration of that.
Strategy update
We remain committed to our client-centric strategy that is purposefully focused on providing for our clients' needs in order to enhance their lifetime Financial
Wellness. At the same time we continue to refine the actions and decisions to optimise delivery on our strategy aspirations. Investors should be aware that:
- The business is increasingly focused on execution, with strategy now well ingrained in the various business areas.
- We are starting to see the benefit of the execution focus coming through in a number of areas such as our product offering, technology environment, and footprint
growth in Momentum Retail.
- We have commenced the exit of a number of African countries to improve focus on remaining operations.
- We continue to invest in our Multiply programme and see it as a key component of our client engagement strategy.
- We continue to invest in our existing distribution channels and to look for new distribution channels; the African Bank joint venture is one manifestation of this
focus.
We acknowledge that we have had significant leadership changes over the last twelve months, but under the new CEO, Hillie Meyer, we expect more stability going
forward. The priority at present is to put in place a new and enduring management team for both Momentum Retail and Metropolitan Retail. We will communicate this to
the market in due course.
SUMMARY OF FINANCIAL INFORMATION
Unaudited results for the 6 months ended 31 December 2017
MMI HOLDINGS GROUP
DIRECTORS' STATEMENT
The directors take pleasure in presenting the unaudited summarised interim results of MMI Holdings financial services group for the period ended 31 December 2017. The preparation of the
group's results was supervised by the group finance director, Risto Ketola (FIA, FASSA, CFA).
Corporate events
Listed debt
MMI Group Ltd listed new instruments to the total value of R750 million on the JSE Ltd on 4 December 2017. The instruments are unsecured subordinated callable notes.
Basis of preparation of financial information
These summarised consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS); International Accounting Standard 34
(IAS 34) - Interim financial reporting (with the exception of disclosures required in terms of paragraph 16A(j)); 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 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 2017, 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 2017 and relevant to the group
- The following amendments to standards and interpretations became effective for the first time in the current period and had no impact on the group's earnings or net asset value:
Amendments to IAS 7 Cash flow statements and IAS 12 Income taxes.
- The International Accounting Standards Board (IASB) made amendments to various standards as part of their annual improvements project. These amendments had no impact on the group's earnings.
Segmental report
The client-centric reporting view reflects the following segments:
Momentum Retail: Momentum Retail offers a wide range of financial solutions to middle and affluent market segments. Our product range spans all major insurance lines (life, disability,
health, motor, property, and all-risks) and a wide range of savings and investment products. We differentiate our business through the quality of our advice channels and our commitment to
high levels of client engagement to encourage our clients to make choices that optimise their financial and physical wellness. Our most popular product solutions are retirement savings and
life insurance. Momentum Retail is closely associated with Multiply, our client engagement programme. Clients who have Multiply active on their policies enjoy premium discounts, partner
rewards and access to personal financial management tools.
Metropolitan Retail: Metropolitan Retail is a long-established life insurance provider in the lower- and middle-income segments. Metropolitan Retail's most popular products include funeral
plans, savings policies, underwritten life cover policies, and annuities. Our funeral plans are low sum insured whole life policies designed to pay for funeral costs. To extend our distribution
channels and expand our solutions basket, Metropolitan recently partnered with African Bank to offer insurance and lending products to the existing Metropolitan client base.
Momentum Corporate: Momentum Corporate provides insurance, administration and investment services to employee groups in the private and public sectors. The business is one of the largest
underwriters of death and disability insurance in the corporate market. We also have a strong market share in umbrella funds (multi-employer retirement schemes) and annuity solutions.
International: MMI International operates in the rest of Africa, India and the United Kingdom. We offer a wide range of solutions in these areas, with a focus on life, health and short-term
insurance products. In Africa, life insurance is offered in nine countries and health insurance offered in seven as well as in India. Our Multiply wellness programme is only active in India at
present, where it complements the health insurance offering. We have announced our plan to exit a number of African countries to improve focus on remaining operations.
Shareholder Capital: The Shareholder Capital segment reflects investment income on capital held to support operations, earnings from start-up ventures not yet allocated to other segments,
and some costs not allocated to operating segments (eg certain holding company expenses).
The product houses support the segments to deliver best of breed product solutions that segments can distribute to clients. There are five of these centres of excellence supporting the segments,
namely: Investments and savings, Life Insurance, Health, Short-term Insurance and Client Engagement Solutions. Each of the centres of excellence design solutions that meet unique Financial
Wellness needs of clients as identified by our segment business.
Corporate governance
The board has satisfied itself that appropriate principles of corporate governance (King IV) were applied, where possible, throughout the period under review.
Changes to the directorate, secretary and directors' shareholding
On 9 October 2017, Voyt Krzychylkiewicz resigned from the board. On 24 November, Ben van der Ross retired from the board. On 16 January 2018, Risto Ketola was appointed to the board.
On 15 February 2018, Nicolaas Kruger stepped down from the board and as CEO. On the same date, Hillie Meyer was appointed to the board as CEO. On 1 March 2018, Jeanette Marais was appointed
to the board and as deputy CEO. On 31 March 2018, Mary Vilakazi will be resigning from the board and as deputy CEO.
All transactions in listed shares of the company involving directors were disclosed on SENS.
Changes to the group executive committee
Change in roles
Mary Vilakazi Deputy CEO and CEO Momentum Retail and Metropolitan Retail (previously also Group Finance Director)
Risto Ketola Group Finance Director (previously Group Chief Financial Officer)
Thinus Alsworth-Elvey CEO Momentum Corporate (previously also CEO Momentum Investments)
Appointments/resignations Role Appointments Resignations
Innocent Dutiro CEO International 30 September 2017
Nontokoza Madonsela Group Chief Marketing Officer 9 October 2017
Khanyi Nzukuma CEO Momentum Retail and acting CEO Metropolitan Retail 31 December 2017
Andrew Le Roux Chief Business Transformation Officer 1 January 2018
Nicolaas Kruger Group CEO 15 February 2018
Hillie Meyer Group CEO 15 February 2018
Peter Tshiguvho Metropolitan Retail: Head of Channel 26 February 2018
Jeanette Marais Deputy CEO and CEO Momentum Investments 1 March 2018
Mary Vilakazi Deputy CEO and CEO Momentum Retail and 31 March 2018
Metropolitan Retail
Contingent liabilities and capital commitments
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 2017 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
- No interim dividend has been declared.
Preference shares
- Dividends of R18.5 million (2016: R19.5 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.
Share buy-back programme
- The group will distribute capital to shareholders by means of repurchasing shares, in lieu of paying a dividend. Up to R2 billion will be used to buy back shares in this repurchase programme
during the next 12 months.
Directors' responsibility
The preparation of these results are the responsibility of the directors. This announcement does not include the information required by paragraph 16A(j) of IAS 34. The summarised interim
results have not been reviewed or audited by the external auditors. The full summarised IAS 34 compliant results (including paragraph 16A(j)) 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
Hillie Meyer Group chief executive officer
Centurion
6 March 2018
DIRECTORS: MJN Njeke (chairman), LL von Zeuner (deputy chairman), HP Meyer (group chief executive officer), J Marais (deputy chief executive), M Vilakazi (deputy chief executive), RS Ketola (group
finance director), P Cooper, F Jakoet, Prof SC Jurisich, Prof JD Krige, PJ Moleketi, SA Muller, V Nkonyeni, KC Shubane, FJC Truter, JC van Reenen
GROUP COMPANY SECRETARY: Maliga Chetty
WEBSITE: http://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 - SOUTH AFRICA: Merrill Lynch South Africa (Pty) Ltd
SPONSOR - NAMIBIA: Simonis Storm Securities (Pty) Ltd
AUDITORS: PricewaterhouseCoopers Inc
REGISTERED OFFICE: 268 West Avenue, Centurion 0157
REGISTRATION NUMBER: 2000/031756/06
SENS ISSUE: 7 March 2018
MMI HOLDINGS GROUP - IFRS FINANCIAL INFORMATION
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
ASSETS
Intangible assets 11 007 11 996 11 260
Owner-occupied properties 4 250 3 324 4 105
Property and equipment 365 386 389
Investment properties 7 346 7 484 7 340
Investments in associates and joint ventures 626 654 595
Employee benefit assets 421 460 410
Financial assets designated at fair value through income 394 058 367 138 369 205
Investments in associates designated at fair value through income 11 821 13 099 15 039
Derivative financial assets 2 935 2 180 2 439
Available-for-sale financial assets 7 64 18
Held-to-maturity financial assets 396 507 397
Loans and receivables 6 453 7 240 7 293
Reinsurance contract assets 5 216 4 850 4 495
Deferred income tax 258 328 249
Properties under development 116 249 111
Insurance and other receivables 4 781 4 250 4 621
Current income tax assets 477 548 581
Cash and cash equivalents 27 275 24 980 27 353
Total assets 477 808 449 737 455 900
EQUITY
Equity attributable to owners of the parent 22 763 23 543 22 956
Non-controlling interests 299 254 292
Total equity 23 062 23 797 23 248
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 111 173 106 465 106 581
Short-term insurance contracts 8 088 6 984 7 661
Investment contracts 271 162 254 083 257 772
- with discretionary participation features (DPF) 25 086 24 462 24 338
- designated at fair value through income 246 076 229 621 233 434
Financial liabilities designated at fair value through income 41 730 36 581 37 331
Derivative financial liabilities 1 854 1 968 1 827
Financial liabilities at amortised cost 1 238 1 150 1 229
Reinsurance contract liabilities 1 475 931 1 368
Deferred income tax 3 371 3 595 3 198
Employee benefit obligations 998 1 165 1 334
Other payables 13 480 12 860 14 128
Provisions 55 30 57
Current income tax liabilities 122 128 166
Total liabilities 454 746 425 940 432 652
Total equity and liabilities 477 808 449 737 455 900
6 mths to 6 mths to 12 mths to
SUMMARISED CONSOLIDATED INCOME STATEMENT 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Net insurance premiums 14 688 14 072 28 191
Fee income (1) 3 852 3 851 7 411
Investment income 9 750 9 364 18 958
Net realised and fair value gains/(losses) 18 689 (6 630) 183
Net income 46 979 20 657 54 743
Net insurance benefits and claims 12 268 12 241 24 441
Change in actuarial liabilities and related reinsurance 4 573 (2 418) (2 267)
Change in long-term insurance contract liabilities 4 172 (1 390) (1 437)
Change in short-term insurance contract liabilities (25) (81) (86)
Change in investment contracts with DPF liabilities 749 (731) (855)
Change in reinsurance assets (386) (172) (278)
Change in reinsurance liabilities 63 (44) 389
Fair value adjustments on investment contract liabilities 14 986 (301) 6 650
Fair value adjustments on collective investment scheme liabilities 1 422 (1 572) 688
Depreciation, amortisation and impairment expenses 614 669 1 665
Employee benefit expenses 2 755 2 605 5 249
Sales remuneration 2 923 2 763 5 283
Other expenses 3 693 3 641 7 367
Expenses 43 234 17 628 49 076
Results of operations 3 745 3 029 5 667
Share of loss of associates and joint ventures (92) (39) (126)
Finance costs (2) (539) (523) (1 023)
Profit before tax 3 114 2 467 4 518
Income tax expense (1 852) (1 445) (2 937)
Earnings for the period 1 262 1 022 1 581
Attributable to:
Owners of the parent 1 247 1 015 1 536
Non-controlling interests 15 7 45
1 262 1 022 1 581
Basic earnings per ordinary share (cents) 80.0 65.0 98.4
Diluted earnings per ordinary share (cents) 79.4 64.6 98.1
1. Fee income consists of the following:
- Investment contracts: R1 266 million (31.12.2016: R1 276 million; 30.06.2017: R2 477 million)
- Trust and fiduciary services: R805 million (31.12.2016: R839 million; 30.06.2017: R1 608 million)
- Health administration: R892 million (31.12.2016: R946 million; 30.06.2017: R1 764 million)
- Other fee income: R889 million (31.12.2016: R790 million; 30.06.2017: R1 562 million)
2. Finance costs consist of the following:
- Preference shares issued by MMI: R57 million (30.12.2016: R58 million; 30.06.2017: R113 million)
- Subordinated debt: R190 million (31.12.2016: R176 million; 30.06.2017: R351 million)
- Cost of carry positions: R195 million (31.12.2016: R202 million; 30.06.2017: R408 million)
- Other: R97 million (31.12.2016: R87 million; 30.06.2017: R151 million)
6 mths to 6 mths to 12 mths to
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Earnings for the period 1 262 1 022 1 581
Other comprehensive loss, net of tax (37) (164) (103)
Items that may subsequently be reclassified to income (78) (180) (224)
Exchange differences on translating foreign operations (79) (175) (218)
Available-for-sale financial assets (1) (1) (4)
Share of other comprehensive income/(loss) of associates 2 (4) (2)
Items that will not be reclassified to income 41 16 121
Land and building revaluation 49 49 142
Remeasurements of post-employee benefit funds (11) (24) 11
Income tax relating to items that will not be reclassified 3 (9) (32)
Total comprehensive income for the period 1 225 858 1 478
Total comprehensive income attributable to:
Owners of the parent 1 209 850 1 434
Non-controlling interests 16 8 44
1 225 858 1 478
Basic earnings Diluted earnings
RECONCILIATION OF HEADLINE EARNINGS 6 mths to 6 mths to 12 mths to 6 mths to 6 mths to 12 mths to
attributable to owners of the parent 31.12.2017 31.12.2016 30.06.2017 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm Rm Rm Rm
Earnings 1 247 1 015 1 536 1 247 1 015 1 536
Finance costs - convertible preference shares 21 20 39
Dilutory effect of subsidiaries (1) (7) (6) (14)
Diluted earnings 1 261 1 029 1 561
Intangible assets and other impairments (2) 43 63 417 43 63 417
Tax on intangible assets and other impairments (12) - (61) (12) - (61)
Gain on sale of business/subsidiary - (73) (94) - (73) (94)
Tax on gain on sale of business/subsidiary - - 21 - - 21
Impairment of owner-occupied property below cost - - 28 - - 28
Headline earnings (3) 1 278 1 005 1 847 1 292 1 019 1 872
Net realised and fair value (gains)/losses on excess (110) 2 94 (110) 2 94
Basis and other changes and investment variances (41) 183 458 (41) 183 458
Adjustments for MMI shares held by policyholder funds 25 10 (42) 25 20 (42)
Amortisation of intangible assets relating to business combinations 277 293 577 277 293 577
Non-recurring items (4) 113 81 249 113 81 249
Core headline earnings (5) 1 542 1 574 3 183 1 556 1 598 3 208
1. Metropolitan Health is consolidated at 100% and the MMI Holdings Namibian group, Metropolitan Kenya and Cannon are consolidated at 96% in earnings. For purposes of diluted earnings,
diluted non-controlling interests and investment returns are reinstated. From June 2017, there is no longer a dilutory effect for Metropolitan Health as all the shares in
Metropolitan Health Corporate (Pty) Ltd which were held by Kagiso Tiso Holdings (Pty) Ltd were purchased by the group in June 2017.
2. Current period impairment relates mainly to software in Metropolitan Retail.
The June 2017 period includes impairments relating to:
- Goodwill, customer relations and internally developed software (R213 million) in the International segment that were recognised on acquisition of subsidiaries as the companies
are making losses. A risk discount rate of 18.2% has been used in the impairment calculation.
- Internally developed software in International (R88 million) and Metropolitan Retail (R76 million) whereby certain components will no longer be used and/or the costs to maintain
the system exceed the economic benefits. A risk discount rate of 11.6% has been used in the impairment calculation.
December 2016 includes the impairment of Cannon goodwill and software in International.
3. Headline earnings consist of operating profit, investment income, net realised and fair value gains, investment variances and basis and other changes.
4. Non-recurring items include costs relating mainly to the restructuring of the group. The current and prior periods also include the core earnings/loss relating to companies in countries
that the group has or will be exiting in the near future.
5. Core headline earnings 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.
EARNINGS PER SHARE (cents)
attributable to owners of the parent 6 mths to 6 mths to 12 mths to
31.12.2017 31.12.2016 30.06.2017
Basic
Core headline earnings 98.9 100.8 203.9
Headline earnings 82.0 64.3 118.3
Earnings 80.0 65.0 98.4
Weighted average number of shares (million) 1 559 1 562 1 561
Diluted
Core headline earnings 97.0 99.6 200.0
Weighted average number of shares (million) (1) 1 604 1 604 1 604
Headline earnings 81.4 64.0 117.7
Earnings 79.4 64.6 98.1
Weighted average number of shares (million) (2) 1 588 1 592 1 591
1. For diluted core headline earnings per share, treasury shares held on behalf of contract holders are deemed to be issued.
2. For diluted earnings and headline earnings per share, treasury shares held on behalf of contract holders are deemed to be cancelled.
DIVIDENDS 2018 2017
Ordinary listed MMI Holdings Ltd shares (cents per share)
Interim - March - 65
Final - September 92
Total 157
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 2018 (after extending it under the same terms by six months in December 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 2 October 2017, 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
R369 million of the ordinary dividends declared by MMI Holdings Ltd in September 2017 (R369 million of the ordinary dividends declared in September 2016) and R261 million of the ordinary
dividends declared in March 2017 were attributed to RMI Holdings Ltd.
A3 MMI Holdings Ltd preference share dividends 2018 2017
Rm Rm
KTH
Interim - March 19 20
Final - September 19
Total 39
6 mths to 6 mths to 12 mths to
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Changes in share capital
Balance at beginning and end 9 9 9
Changes in share premium
Balance at beginning 13 737 13 847 13 847
Conversion of preference shares 7 7 14
Decrease/(increase) in treasury shares held on behalf of contract holders 42 17 (124)
Balance at end 13 786 13 871 13 737
Changes in other reserves
Balance at beginning 1 788 1 955 1 955
Total comprehensive loss (38) (165) (102)
Employee share schemes - value of services provided 3 3 (22)
Change in non-distributable reserves - - (3)
Transfer to retained earnings (50) (41) (40)
Balance at end (1) 1 703 1 752 1 788
Changes in retained earnings
Balance at beginning 7 422 8 298 8 298
Total comprehensive income 1 247 1 015 1 536
Dividend paid (1 435) (1 443) (2 456)
Transactions with non-controlling interests (19) - 4
Transfer from other reserves 50 41 40
Balance at end 7 265 7 911 7 422
Equity attributable to owners of the parent 22 763 23 543 22 956
Changes in non-controlling interests
Balance at beginning 292 290 290
Total comprehensive income 16 8 44
Dividend paid (24) (28) (53)
Transactions with owners (1) (16) 11
Business combinations 16 - -
Balance at end 299 254 292
Total equity 23 062 23 797 23 248
1. Other reserves consist of the following:
- Land and building revaluation reserve: R802 million (31.12.2016: R742 million; 30.06.2017: R807 million)
- Foreign currency translation reserve: -R175 million (31.12.2016: -R57 million; 30.06.2017: -R98 million)
- Revaluation of available-for-sale investments: R6 million (31.12.2016: R9 million; 30.06.2017: R7 million)
- Non-distributable reserve: R60 million (31.12.2016: R50 million; 30.06.2017: R54 million)
- Employee benefit revaluation reserve: R77 million (31.12.2016: R53 million; 30.06.2017: R88 million)
- Fair value adjustment for preference shares issued by MMI Holdings Ltd: R940 million (31.12.2016: R940 million; 30.06.2017: R940 million)
- Equity-settled share-based payment arrangements: -R7 million (31.12.2016: R15 million; 30.06.2017: -R10 million)
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS 6 mths to 6 mths to 12 mths to
31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Net cash inflow/(outflow) from operating activities 1 551 (3 126) 586
Net cash (outflow)/inflow from investing activities (194) 408 (288)
Net cash outflow from financing activities (1 435) (1 450) (2 093)
Net cash flow (78) (4 168) (1 795)
Cash resources and funds on deposit at beginning 27 353 29 148 29 148
Cash resources and funds on deposit at end 27 275 24 980 27 353
NON-CONTROLLING INTERESTS 31.12.2017 31.12.2016 30.06.2017
% % %
Cannon Assurance 33.7 33.7 33.7
Eris Property Group 23.9 23.7 23.7
Metropolitan Health Ghana 0.9 0.9 0.9
Metropolitan Health Group - 17.6 -
Metropolitan Health Namibia Administrators 49.0 49.0 49.0
Metropolitan Kenya 33.7 33.7 33.7
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 9.9 9.9 9.9
Momentum Mozambique 33.0 33.0 33.0
Momentum Swaziland 33.0 33.0 33.0
Quanta Insurance 30.0 - -
BUSINESS COMBINATIONS - DECEMBER 2017
There were no significant business combinations for the 6 months ended December 2017. Goodwill (R26m), customer relationships relating to short-term business (R84m), broker network (R71m),
and computer software (R5m) were recognised due to small acquisitions.
BUSINESS COMBINATIONS - DECEMBER 2016
There were no significant business combinations for the 6 months ended December 2016.
BUSINESS COMBINATIONS - JUNE 2017
There were no significant business combinations for the 12 months ended June 2017. Goodwill and customer relationships to the value of R11 million each were recognised due to a small
acquisition.
RECONCILIATION OF GOODWILL 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Balance at beginning 1 128 1 237 1 237
Business combinations (1) 26 - 11
Impairment charges (2) - (52) (100)
Exchange differences (2) (20) (20)
Balance at end 1 152 1 165 1 128
1. An acquisition was made in the Guardrisk group for R90 million. This resulted in the recognition of R26 million goodwill in the current period. The entity's business is that of
underwriting managers.
2. There were no impairments in the current period. In the prior periods, goodwill relating to the Cannon (International segment) (31.12.2016: R52 million; 30.06.2017: R62 million)
and Momentum Financial Technology (International segment) (31.12.2016: Rnil; 30.06.2017: R38 million) acquisitions were impaired due to these companies making losses.
MMI HOLDINGS GROUP - SEGMENTAL INFORMATION
6 mths to 31.12.2017 Momentum Metropolitan Momentum Shareholder Segmental Reconciling
Retail Retail Corporate International (1) Capital total Items (2) IFRS total
Rm Rm Rm Rm Rm Rm Rm Rm
Revenue
Net insurance premiums 12 228 3 788 14 586 2 296 - 32 898 (18 210) 14 688
Recurring premiums 4 940 3 120 9 003 1 872 - 18 935 (6 490) 12 445
Single premiums 7 288 668 5 583 424 - 13 963 (11 720) 2 243
Fee income 1 769 81 2 230 386 24 4 490 (638) 3 852
Fee income 1 535 78 1 987 354 - 3 954 (102) 3 852
Intergroup fee income 234 3 243 32 24 536 (536) -
Expenses
Net payments to contract holders
External payments 12 591 2 781 15 080 1 327 - 31 779 (19 511) 12 268
Other expenses 3 072 1 280 2 929 1 188 106 8 575 1 410 9 985
Sales remuneration 1 113 541 940 363 - 2 957 (34) 2 923
Administration expenses 1 424 630 1 455 649 366 4 524 70 4 594
Amortisation due to business - 43 6 - 23 72 357 429
combinations and impairments
Cell captive business - - 69 - - 69 1 010 1 079
Direct property expenses - - - - - - 225 225
Asset management and other 198 40 136 21 9 404 318 722
fee expenses
Holding company expenses - - - - 13 13 - 13
Intergroup expenses 337 26 323 155 (305) 536 (536) -
Diluted core headline earnings 567 317 455 (27) 244 1 556 - 1 556
Operating profit/(loss) 762 448 556 (10) (53) 1 703 - 1 703
Tax on operating profit/(loss) (222) (131) (165) (29) 10 (537) - (537)
Investment income 34 - 84 15 392 525 - 525
Tax on investment income (7) - (20) (3) (105) (135) - (135)
Covered 600 337 256 97 252 1 542 - 1 542
Non-covered (33) (20) 199 (124) (8) 14 - 14
567 317 455 (27) 244 1 556 - 1 556
Actuarial liabilities 204 346 34 879 137 693 13 505 - 390 423 - 390 423
1. The 'International' column includes amounts received/incurred by companies the group has decided to exit: Net insurance premiums R324 million; external payments R183 million
and administration expenses R171 million.
2. The 'Reconciling items' column includes: investment contract business premiums and claims; intergroup fee income and expenses; direct property and asset management fees for all entities,
except non-life entities, that are set off against investment income for management reporting purposes but shown as an expense for accounting purposes; asset management fees from cell
captive business; 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 Momentum Metropolitan Momentum Shareholder Segmental Reconciling
6 mths to 31.12.2016 Retail Retail Corporate International (1) Capital total Items (2) IFRS total
Rm Rm Rm Rm Rm Rm Rm Rm
Revenue
Net insurance premiums 12 018 3 521 13 257 2 054 - 30 850 (16 778) 14 072
Recurring premiums 4 716 2 996 7 960 1 759 - 17 431 (4 517) 12 914
Single premiums 7 302 525 5 297 295 - 13 419 (12 261) 1 158
Fee income 1 986 37 2 026 404 15 4 468 (617) 3 851
Fee income 1 686 37 1 813 384 11 3 931 (80) 3 851
Intergroup fee income 300 - 213 20 4 537 (537) -
Expenses
Net payments to contract holders
External payments 11 845 2 724 12 158 1 228 - 27 955 (15 714) 12 241
Other expenses 3 096 1 152 2 623 1 166 (12) 8 025 1 653 9 678
Sales remuneration 1 133 549 774 311 - 2 767 (4) 2 763
Administration expenses 1 291 593 1 394 731 134 4 143 342 4 485
Amortisation due to business - - 6 - 18 24 378 402
combinations and impairments
Cell captive business - - 88 - - 88 867 955
Direct property expenses - - - - - - 221 221
Asset management and other 315 - 107 7 5 434 386 820
fee expenses
Holding company expenses - - - - 32 32 - 32
Intergroup expenses 357 10 254 117 (201) 537 (537) -
Diluted core headline earnings 632 373 320 (61) 334 1 598 - 1 598
Operating profit/(loss) 879 520 378 (38) 33 1 772 - 1 772
Tax on operating profit/(loss) (273) (148) (105) (38) (36) (600) - (600)
Investment income 35 1 65 22 413 536 - 536
Tax on investment income (9) - (18) (7) (76) (110) - (110)
Covered 713 384 143 82 341 1 663 - 1 663
Non-covered (81) (11) 177 (143) (7) (65) - (65)
632 373 320 (61) 334 1 598 - 1 598
Actuarial liabilities 198 054 32 549 121 734 12 687 2 508 367 532 - 367 532
1. The 'International' column includes amounts received/incurred by companies the group has decided to exit: Net insurance premiums R116 million; external payments R88 million
and administration expenses R64 million.
2. The 'Reconciling items' column includes: investment contract business premiums and claims; intergroup fee income and expenses; non-recurring items included in administration expenses
(R35 million); direct property and asset management fees for all entities, except non-life entities, that are set off against investment income for management reporting purposes
but shown as an expense for accounting purposes; asset management fees from cell captive business; the amortisation of intangibles relating to business combinations; expenses relating
to consolidated collective investment schemes and other minor adjustments to expenses and fee income.
12 mths to 30.06.2017 Momentum Metropolitan Momentum Shareholder Segmental Reconciling
Retail Retail Corporate International (1) Capital total Items (2) IFRS total
Rm Rm Rm Rm Rm Rm Rm Rm
Revenue
Net insurance premiums 24 740 6 898 27 167 4 130 - 62 935 (34 744) 28 191
Recurring premiums 9 663 5 877 16 951 3 476 - 35 967 (9 291) 26 676
Single premiums 15 077 1 021 10 216 654 - 26 968 (25 453) 1 515
Fee income 3 496 146 4 270 835 73 8 820 (1 409) 7 411
Fee income 3 011 143 3 708 794 2 7 658 (247) 7 411
Intergroup fee income 485 3 562 41 71 1 162 (1 162) -
Expenses
Net payments to contract holders
External payments 25 360 5 321 25 574 2 624 - 58 879 (34 438) 24 441
Other expenses 5 994 2 448 5 681 2 419 201 16 743 2 821 19 564
Sales remuneration 2 184 1 029 1 462 615 - 5 290 (7) 5 283
Administration expenses 2 631 1 280 3 125 1 346 589 8 971 121 9 092
Amortisation due to business
combinations and impairments - 73 31 88 37 229 977 1 206
Cell captive business - - 186 - - 186 1 800 1 986
Direct property expenses - - - - - - 443 443
Asset management and other
fee expenses 379 60 309 84 10 842 649 1 491
Holding company expenses - - - - 63 63 - 63
Intergroup expenses 800 6 568 286 (498) 1 162 (1 162) -
Diluted core headline earnings 1 271 660 835 (166) 608 3 208 - 3 208
Operating profit/(loss) 1 861 926 969 (102) (48) 3 606 - 3 606
Tax on operating profit/(loss) (631) (267) (270) (87) (12) (1 267) - (1 267)
Investment income 57 2 187 27 822 1 095 - 1 095
Tax on investment income (16) (1) (51) (4) (154) (226) - (226)
Covered 1 467 685 387 203 648 3 390 - 3 390
Non-covered (196) (25) 448 (369) (40) (182) - (182)
1 271 660 835 (166) 608 3 208 - 3 208
Actuarial liabilities 195 283 32 417 131 420 12 894 - 372 014 - 372 014
1. The 'International' column includes amounts received/incurred by companies the group has decided to exit: Net insurance premiums R524 million; external payments R359 million
and administration expenses R113 million.
2. The 'Reconciling items' column includes: investment contract business premiums and claims; intergroup fee income and expenses; non-recurring items included in administration expenses
(R263 million); direct property and asset management fees for all entities, except non-life entities, that are set off against investment income for management reporting purposes
but shown as an expense for accounting purposes; asset management fees from cell captive business; 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
CHANGE IN DILUTED CORE HEADLINE EARNINGS 6 mths to 6 mths to 12 mths to
Change 31.12.2017 31.12.2016 30.06.2017
% Rm Rm Rm
Momentum Retail (10) 567 632 1 271
Metropolitan Retail (15) 317 373 660
Momentum Corporate 42 455 320 835
International 56 (27) (61) (166)
Operating segments (1) 4 1 312 1 264 2 600
Shareholder Capital (27) 244 334 608
Total diluted core headline earnings (3) 1 556 1 598 3 208
1. Includes investments in three main new initiatives being India, aYo and Money Management of R145 million (31.12.2016 R47 million; 30.06.2017 R187 million).
Momentum Metropolitan Momentum Shareholder
SEGMENT BY CENTRE OF EXCELLENCE Retail Retail Corporate International Capital Total
Rm Rm Rm Rm Rm Rm
6 mths to 31.12.2017
Covered
Operating profit 600 337 256 97 (8) 1 282
Investment income - - - - 260 260
Total 600 337 256 97 252 1 542
Non-covered
Investment and savings 48 - 33 52 - 133
Life insurance - - - (38) - (38)
Health (2) - 50 (77) - (29)
Short-term insurance (22) - 132 (1) - 109
Client engagement (57) (20) (8) (10) 3 (92)
Unallocated expenses - - - - (41) (41)
Other operations - - (8) (50) 30 (28)
Total (33) (20) 199 (124) (8) 14
Core earnings 567 317 455 (27) 244 1 556
Restated
6 mths to 31.12.2016
Covered
Operating profit 713 383 141 82 24 1 343
Investment income - 1 2 - 317 320
Total 713 384 143 82 341 1 663
Non-covered
Investment and savings 52 - 27 19 - 98
Life insurance - - - (42) - (42)
Health (27) - 59 6 - 38
Short-term insurance (71) (2) 91 (44) - (26)
Client engagement (35) (9) (12) (12) 9 (59)
Unallocated expenses - - - - (63) (63)
Other operations - - 12 (70) 47 (11)
Total (81) (11) 177 (143) (7) (65)
Core earnings 632 373 320 (61) 334 1 598
Momentum Metropolitan Momentum Shareholder
SEGMENT BY CENTRE OF EXCELLENCE Retail Retail Corporate International Capital Total
Rm Rm Rm Rm Rm Rm
12 mths to 30.06.2017
Covered
Operating profit 1 467 685 387 203 37 2 779
Investment income - - - - 611 611
Total 1 467 685 387 203 648 3 390
Non-covered
Investment and savings 61 - 119 82 - 262
Life insurance - - - (111) - (111)
Health (29) - 136 (82) - 25
Short-term insurance (162) (7) 200 (80) - (49)
Client engagement (66) (18) (25) (24) 12 (121)
Unallocated expenses - - - - (60) (60)
Other operations - - 18 (154) 8 (128)
Total (196) (25) 448 (369) (40) (182)
Core earnings 1 271 660 835 (166) 608 3 208
MOMENTUM INVESTMENTS CENTRE OF EXCELLENCE - NON-COVERED BUSINESS Momentum Momentum
Retail Corporate International Total
Rm Rm Rm Rm
6 mths to 31.12.2017
Revenue 496 355 230 1 081
Fee income 456 314 207 977
Performance fees 1 - - 1
Investment income 40 28 1 69
Fair value (losses)/gains (1) 13 22 34
Expenses and finance costs (423) (293) (173) (889)
Fair value adjustments on investment contracts - - (21) (21)
Other expenses (414) (271) (152) (837)
Finance costs (9) (22) - (31)
Share of loss of associates - (4) - (4)
Profit before tax 73 58 57 188
Income tax expense (25) (16) (5) (46)
Non-controlling interest - (9) - (9)
Core earnings 48 33 52 133
Operating profit before tax 51 43 56 150
Tax on operating profit (19) (15) (5) (39)
Investment income 23 4 1 28
Tax on investment income (7) 1 - (6)
Diluted core headline earnings 48 33 52 133
Assets under management at period end 302 888 116 811 67 089 486 788
Restated
6 mths to 31.12.2016
Revenue 593 318 229 1 140
Fee income 566 287 194 1 047
Performance fees - 6 - 6
Investment income 28 25 - 53
Fair value (losses)/gains (1) - 35 34
Expenses and finance costs (522) (295) (210) (1 027)
Fair value adjustments on investment contracts - - (39) (39)
Other expenses (519) (270) (171) (960)
Finance costs (3) (25) - (28)
Share of profit of associates - 20 - 20
Profit before tax 71 43 19 133
Income tax expense (19) (7) - (26)
Non-controlling interest - (9) - (9)
Core earnings 52 27 19 98
Operating profit before tax 50 32 20 102
Tax on operating profit (15) (5) (1) (21)
Investment income 23 - - 23
Tax on investment income (6) - - (6)
Diluted core headline earnings 52 27 19 98
Assets under management at period end 311 116 108 332 68 514 487 962
MOMENTUM INVESTMENTS CENTRE OF EXCELLENCE - NON-COVERED BUSINESS Momentum Momentum
Retail Corporate International Total
Rm Rm Rm Rm
Restated
12 mths to 30.06.2017
Revenue 1 105 802 490 2 397
Fee income 1 041 656 386 2 083
Performance fees 3 13 - 16
Investment income 61 121 1 183
Fair value gains - 12 103 115
Expenses and finance costs (1 001) (626) (405) (2 032)
Fair value adjustments on investment contracts - - (103) (103)
Other expenses (992) (577) (302) (1 871)
Finance costs (9) (49) - (58)
Share of profit of associates - 1 - 1
Profit before tax 104 177 85 366
Income tax expense (43) (32) (3) (78)
Non-controlling interest - (26) - (26)
Core earnings 61 119 82 262
Operating profit before tax 61 90 84 235
Tax on operating profit (30) (11) (3) (44)
Investment income 43 55 1 99
Tax on investment income (13) (15) - (28)
Diluted core headline earnings 61 119 82 262
Assets under management at period end 306 359 114 454 68 685 489 498
HEALTH CENTRE OF EXCELLENCE - NON-COVERED BUSINESS
Momentum Momentum
Retail Corporate International Total
Rm Rm Rm Rm
6 mths to 31.12.2017
Revenue 294 937 232 1 463
Net insurance premiums 108 201 135 444
Fee income 179 716 84 979
Investment income 7 12 13 32
Intergroup fees - 8 - 8
Expenses and finance costs (297) (862) (197) (1 356)
Net payments to contract holders (81) (158) (93) (332)
Other expenses (215) (704) (104) (1 023)
Finance costs (1) - - (1)
Share of loss of associates - - (84) (84)
(Loss)/Profit before tax (3) 75 (49) 23
Income tax expense 1 (25) (15) (39)
Non-controlling interest - - (13) (13)
Earnings attributable to ordinary shareholders (2) 50 (77) (29)
Operating (loss)/profit before tax (9) 64 (77) (22)
Tax on operating (loss)/profit 1 (23) (9) (31)
Investment income 6 11 10 27
Tax on investment income - (2) (1) (3)
Diluted core headline earnings (2) 50 (77) (29)
Closed schemes - 43 25 68
Open scheme 2 (5) (102) (105)
Other (4) 12 - 8
(2) 50 (77) (29)
Principal Principal
members members Lives
Closed schemes - 820 577 602 732
Open schemes 110 390 51 349 411 779
110 390 871 926 1 014 511
HEALTH CENTRE OF EXCELLENCE - NON-COVERED BUSINESS
Momentum Momentum
Retail Corporate International Total
Rm Rm Rm Rm
Restated
6 mths to 31.12.2016
Revenue 259 933 280 1 472
Net insurance premiums 102 193 179 474
Fee income 152 726 89 967
Investment income 5 13 12 30
Fair value losses (1) - - (1)
Intergroup fees 1 1 - 2
Expenses and finance costs (297) (849) (195) (1 341)
Net payments to contract holders (71) (141) (113) (325)
Other expenses (225) (708) (82) (1 015)
Finance costs (1) - - (1)
Share of loss of associate - - (51) (51)
(Loss)/Profit before tax (38) 84 34 80
Income tax expense 11 (22) (16) (27)
Non-controlling interest - - (12) (12)
Earnings attributable to ordinary shareholders (27) 62 6 41
Dilutory effect of subsidiaries - (3) - (3)
Diluted core headline earnings (27) 59 6 38
Operating (loss)/profit before tax (43) 67 6 30
Tax on operating (loss)/profit 12 (18) (9) (15)
Investment income 5 14 10 29
Tax on investment income (1) (4) (1) (6)
Diluted core headline earnings (27) 59 6 38
Closed schemes - 44 45 89
Open scheme (25) - (39) (64)
Other (2) 15 - 13
(27) 59 6 38
Principal Principal
members members Lives
Closed schemes - 845 311 458 106
Open schemes 97 752 47 880 -
97 752 893 191 458 106
HEALTH CENTRE OF EXCELLENCE - NON-COVERED BUSINESS
Momentum Momentum
Retail Corporate International Total
Rm Rm Rm Rm
Restated
12 mths to 30.06.2017
Revenue 560 1 884 468 2 912
Net insurance premiums 209 390 259 858
Fee income 340 1 419 191 1 950
Investment income 11 27 18 56
Intergroup fees - 48 - 48
Expenses and finance costs (603) (1 691) (384) (2 678)
Net payments to contract holders (151) (279) (168) (598)
Other expenses (450) (1 411) (216) (2 077)
Finance costs (2) (1) - (3)
Share of loss of associates - - (105) (105)
(Loss)/Profit before tax (43) 193 (21) 129
Income tax expense 14 (57) (36) (79)
Non-controlling interest - - (25) (25)
Earnings attributable to ordinary shareholders (29) 136 (82) 25
Operating (loss)/profit before tax (53) 167 (72) 42
Tax on operating (loss)/profit 17 (49) (24) (56)
Investment income 10 26 15 51
Tax on investment income (3) (8) (1) (12)
Diluted core headline earnings (29) 136 (82) 25
Closed schemes - 106 66 172
Open scheme (23) (6) (148) (177)
Other (6) 36 - 30
(29) 136 (82) 25
Principal Principal
members members Lives
Closed schemes - 834 061 404 756
Open schemes 108 244 50 380 207 882
108 244 884 441 612 638
SHORT-TERM INSURANCE CENTRE OF EXCELLENCE
Momentum Momentum
Retail Corporate International Total
Rm Rm Rm Rm
6 mths to 31.12.2017
Net insurance premiums 350 - 2 352
Fee income 3 321 4 328
Management fees - 233 - 233
Investment fees - 42 - 42
Underwriting fees - 46 - 46
Other fee income 3 - 4 7
Investment income 19 70 - 89
Total income 372 391 6 769
Expenses and finance costs (427) (213) (8) (648)
Net payments to contract holders (250) - - (250)
Acquisition costs (1) (50) - (3) (53)
Other expenses (127) (207) (5) (339)
Finance costs - (6) - (6)
(Loss)/Profit before tax (55) 178 (2) 121
Income tax expense 33 (46) - (13)
Non-controlling interest - - 1 1
Earnings attributable to ordinary shareholders (22) 132 (1) 109
Operating (loss)/profit before tax (58) 113 (1) 54
Tax on operating (loss)/profit 34 (28) - 6
Investment income 2 66 - 68
Tax on investment income - (19) - (19)
Diluted core headline earnings (22) 132 (1) 109
Ability - 3 - 3
Momentum Short-term Insurance 9 - - 9
MMI Short-term Insurance Administration (31) - - (31)
Guardrisk Group - 129 - 129
Quanta Insurance - - (1) (1)
(22) 132 (1) 109
(1) The acquisition costs relating to the Momentum Corporate segment is included in underwriting fees.
SHORT-TERM INSURANCE CENTRE OF EXCELLENCE Momentum Metropolitan Momentum
Retail Retail Corporate International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2016
Net insurance premiums 296 - - 118 414
Fee income 11 - 268 9 288
Management fees - - 214 - 214
Investment fees - - 36 - 36
Underwriting fees - - 18 - 18
Other fee income 11 - - 9 20
Investment income 14 - 44 10 68
Fair value losses - - - (9) (9)
Total income 321 - 312 128 761
Expenses and finance costs (405) (3) (187) (175) (770)
Net payments to contract holders (233) - - (78) (311)
Change in actuarial liabilities - - - (9) (9)
Acquisition costs (1) (66) - - (23) (89)
Other expenses (106) (3) (182) (65) (356)
Finance costs - - (5) - (5)
(Loss)/Profit before tax (84) (3) 125 (47) (9)
Income tax expense 13 1 (34) (3) (23)
Non-controlling interest - - - 6 6
Earnings attributable to ordinary shareholders (71) (2) 91 (44) (26)
Operating (loss)/profit before tax (92) (3) 81 (44) (58)
Tax on operating (loss)/profit 15 1 (22) (2) (8)
Investment income 9 - 44 2 55
Tax on investment income (3) - (12) - (15)
Diluted core headline earnings (71) (2) 91 (44) (26)
Momentum Short-term Insurance (59) - - - (59)
MMI Short-term Insurance Administration (12) (2) - (8) (22)
Guardrisk Group - - 91 - 91
Swaziland - - - (2) (2)
Tanzania - - - (3) (3)
Cannon Short-term - - - (31) (31)
(71) (2) 91 (44) (26)
(1) The acquisition costs relating to the Momentum Corporate segment is included in underwriting profit.
SHORT-TERM INSURANCE CENTRE OF EXCELLENCE Momentum Metropolitan Momentum
Retail Retail Corporate International Total
Rm Rm Rm Rm Rm
12 mths to 30.06.2017
Net insurance premiums 616 - - 148 764
Fee income 13 3 566 17 599
Management fees - - 435 - 435
Investment fees - - 73 - 73
Underwriting fees - - 58 - 58
Other fee income 13 3 - 17 33
Investment income 30 - 93 12 135
Fair value losses - - - (9) (9)
Total income 659 3 659 168 1 489
Expenses and finance costs (784) (9) (379) (241) (1 413)
Net payments to contract holders (449) - - (133) (582)
Change in actuarial liabilities - - - 7 7
Acquisition costs (1) (122) - - (34) (156)
Other expenses (213) (9) (367) (81) (670)
Finance costs - - (12) - (12)
(Loss)/Profit before tax (125) (6) 280 (73) 76
Income tax expense (37) (1) (80) (9) (127)
Non-controlling interest - - - 2 2
Earnings attributable to ordinary shareholders (162) (7) 200 (80) (49)
Operating (loss)/profit before tax (130) (6) 187 (71) (20)
Tax on operating (loss)/profit (34) (1) (54) (9) (98)
Investment income 3 - 93 - 96
Tax on investment income (1) - (26) - (27)
Diluted core headline earnings (162) (7) 200 (80) (49)
Momentum Short-term Insurance (83) - - - (83)
MMI Short-term Insurance Administration (79) (7) - (25) (111)
Guardrisk Group - - 200 - 200
Cannon Short-term - - - (55) (55)
(162) (7) 200 (80) (49)
(1) The acquisition costs relating to the Momentum Corporate segment is included in underwriting profit.
STATUTORY EXCESS
31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Group excess per reporting basis 22 763 23 543 22 956
Net assets - other businesses (3 203) (2 984) (2 849)
Fair value adjustments on Metropolitan business acquisition and other consolidation adjustments (2 805) (3 284) (2 946)
Excess - long-term insurance business, net of non-controlling interests (1) 16 755 17 275 17 161
Disregarded assets (2) (1 308) (969) (847)
Difference between statutory and published valuation methods (1 048) (597) (942)
Write-down of subsidiaries and associates for statutory purposes (1 218) (1 347) (1 328)
Unsecured subordinated debt 4 405 3 553 3 602
Consolidation adjustments (35) (37) (33)
Statutory excess - long-term insurance business 17 551 17 878 17 613
Capital adequacy requirement (CAR) (Rm) (3) 6 299 6 560 6 577
Ratio of long-term insurance business excess to CAR (times) 2.8 2.7 2.7
Discretionary margins 12 717 12 753 12 407
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. is included.
It excludes the short-term insurance businesses of Guardrisk, Momentum Short-term Insurance and Cannon (Kenya), as well as the other non-life insurance entities, including African
health operations. 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 R448 million (31.12.2016: R477 million; 30.06.2017: R464 million).
3. The CAR is an aggregation of the separate CAR's, with no assumption of diversification benefits. MMI elected to adopt the revised actuarial guidance note SAP 104 (version 9) which
was published in August 2017 but permitted adoption for reporting dates on or after 30 June 2017.
31.12.2017 31.12.2016 30.06.2017
EMBEDDED VALUE RESULTS Rm Rm Rm
Covered business
Reporting excess - long-term insurance business 16 755 17 275 17 161
Reclassification to non-covered business (2 544) (2 010) (2 206)
14 211 15 265 14 955
Disregarded assets (1) (488) (517) (504)
Difference between statutory and published valuation methods (1 048) (553) (942)
Dilutory effect of subsidiaries (2) (56) (50) (53)
Consolidation adjustments (3) (17) (24) (21)
Value of MMI Group Ltd preference shares issued (500) (500) (500)
Diluted adjusted net worth - covered business 12 102 13 621 12 935
Net value of in-force business 22 121 20 542 21 130
Diluted embedded value - covered business 34 223 34 163 34 065
Non-covered business
Net assets - non-covered business within life insurance companies 2 544 2 010 2 206
Net assets - non-covered business outside life insurance companies 3 203 2 984 2 849
Consolidation adjustments and transfers to covered business (3) (2 438) (2 639) (2 415)
Adjustments for dilution (4) 686 676 720
Diluted adjusted net worth - non-covered business 3 995 3 031 3 360
Write-up to directors' value 5 173 5 281 5 098
Non-covered business 6 442 6 388 6 344
Holding company expenses (5) (682) (557) (671)
International holding company expenses (5) (587) (550) (575)
Diluted embedded value - non-covered business 9 168 8 312 8 458
Diluted adjusted net worth 16 097 16 652 16 295
Net value of in-force business 22 121 20 542 21 130
Write-up to directors' value 5 173 5 281 5 098
Diluted embedded value 43 391 42 475 42 523
Required capital - covered business (adjusted for qualifying debt) (6) 5 250 6 317 6 449
Surplus capital - covered business 6 852 7 304 6 486
Diluted embedded value per share (cents) 2 705 2 648 2 651
Diluted adjusted net worth per share (cents) 1 004 1 038 1 016
Diluted number of shares in issue (million) (7) 1 604 1 604 1 604
1. Disregarded assets include Sage intangible assets of R448 million (31.12.2016: R477 million; 30.06.2017: R464 million), goodwill and various other items.
2. For accounting purposes, MMI Holdings Namibia, Metropolitan Kenya and Cannon have been consolidated at 96% in the statement of financial position. For embedded value purposes,
disclosed on a diluted basis, the non-controlling interests and related funding have been reinstated.
3. Consolidation adjustments include mainly goodwill and intangibles in subsidiaries that are eliminated.
4. Adjustments for dilution are made up as follows:
- Dilutory effect of subsidiaries (note 2): R109 million (31.12.2016: R122 million; 30.06.2017: R106 million)
- Treasury shares held on behalf of contract holders: R323 million (31.12.2016: R286 million; 30.06.2017: R353 million)
- Liability - MMI Holdings Ltd convertible preference shares issued to KTH: R254 million (31.12.2016: R268 million; 30.06.2017: R261 million)
5. The holding company expenses reflect the present value of projected recurring head office expenses. The international holding company expenses reflect the allowance for support services
to the international life assurance and health businesses.
6. The required capital for covered business amounts to R9 631 million (31.12.2016: R9 870 million; 30.06.2017: R10 051 million) and is adjusted for qualifying debt of R4 381 million
(31.12.2016: R3 553 million; 30.06.2017: R3 602 million).
7. The diluted number of shares in issue takes into account all issued shares, assuming conversion of the convertible redeemable preference shares, and includes the treasury shares held
on behalf of contract holders.
ANALYSIS OF NET VALUE OF IN-FORCE BUSINESS Restated
31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Momentum Retail 11 838 10 651 11 379
Gross value of in-force business 13 337 11 906 12 865
Less cost of required capital (1 499) (1 255) (1 486)
Metropolitan Retail 4 003 3 543 3 758
Gross value of in-force business 4 688 4 282 4 396
Less cost of required capital (685) (739) (638)
Momentum Corporate 4 045 4 201 3 846
Gross value of in-force business 4 886 4 950 4 743
Less cost of required capital (841) (749) (897)
International 2 235 2 147 2 147
Gross value of in-force business 2 496 2 352 2 403
Less cost of required capital (261) (205) (256)
Net value of in-force business 22 121 20 542 21 130
MMI HOLDINGS GROUP - EMBEDDED VALUE INFORMATION
EMBEDDED VALUE DETAIL
Adjusted net Net value of
worth in-force 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm Rm Rm
Covered business
Momentum Retail 4 018 11 838 15 856 15 371 15 716
Metropolitan Retail 2 371 4 003 6 374 6 117 6 007
Momentum Corporate 2 380 4 045 6 425 6 240 6 409
International 1 798 2 235 4 033 3 869 3 913
Shareholder Capital 1 535 - 1 535 2 566 2 020
Total covered business 12 102 22 121 34 223 34 163 34 065
Write-up to
Adjusted net directors'
worth value 31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm Rm Rm
Non-covered business
Momentum Retail 1 124 842 1 966 2 310 2 107
Investment and savings 542 615 1 157 1 528 1 402
Health 20 384 404 381 379
Short-term insurance 562 54 616 414 514
Client engagement - (211) (211) (13) (188)
Metropolitan Retail - (73) (73) (84) (78)
Client engagement - (73) (73) (84) (78)
Momentum Corporate 1 736 4 389 6 125 5 179 5 747
Investment and savings 341 1 167 1 508 1 319 1 370
Health 359 1 116 1 475 1 283 1 515
Short-term insurance 1 051 2 136 3 187 2 662 2 853
Client engagement - (30) (30) (85) 9
Other (15) - (15) - -
International 91 348 439 494 60
Investment and savings (1) 192 496 688 815 712
Life insurance 273 (36) 237 395 279
Health 356 491 847 699 800
Short-term insurance 98 19 117 180 139
Client engagement - (35) (35) - (92)
Other (shared services) (2) (828) (587) (1 415) (1 595) (1 778)
Shareholder Capital 1 044 (333) 711 413 622
Short-term insurance - - - 165 101
Client engagement 382 - 382 202 368
Other (head office expenses) (2) 662 (333) 329 46 153
Total non-covered business 3 995 5 173 9 168 8 312 8 458
Total embedded value 16 097 27 294 43 391 42 475 42 523
Diluted net asset value - non-covered business (3 995)
Adjustments to covered business - net asset value 4 653
Reporting excess - long-term insurance business 16 755
1. This includes MMI non-covered subsidiaries domiciled in the United Kingdom and related territories.
2. The International shared services impact reflects the allowance for support services to the international life assurance and health businesses. The Shareholder head office expenses
impact reflects the present value of projected recurring head office expenses.
MMI HOLDINGS GROUP - EMBEDDED VALUE INFORMATION
DIRECTORS' VALUE PER VALUATION METHOD Covered Appraisal
methodology value 31.12.2017
Rm Rm Rm
Non-covered business
Momentum Retail 954 1 012 1 966
Investment and savings 550 607 1 157
Health 404 - 404
Short-term insurance - 616 616
Client engagement - (211) (211)
Metropolitan Retail - (73) (73)
Client engagement - (73) (73)
Momentum Corporate 4 683 1 442 6 125
Investment and savings - 1 508 1 508
Health 1 496 (21) 1 475
Short-term insurance 3 187 - 3 187
Client engagement - (30) (30)
Other - (15) (15)
International 1 064 (625) 439
Investment and savings 478 210 688
Life insurance 184 53 237
Health 380 467 847
Short-term insurance 22 95 117
Client engagement - (35) (35)
Other (shared services) - (1 415) (1 415)
Shareholder Capital - 711 711
Short-term insurance - - -
Client engagement - 382 382
Other (head office expenses) - 329 329
Total non-covered business 6 701 2 467 9 168
DIRECTORS' VALUE PER VALUATION METHOD Covered Appraisal
methodology value 31.12.2016
Rm Rm Rm
Non-covered business
Momentum Retail 742 1 568 2 310
Investment and savings 361 1 167 1 528
Health 381 - 381
Short-term insurance - 414 414
Client engagement - (13) (13)
Metropolitan Retail - (84) (84)
Client engagement - (84) (84)
Momentum Corporate 3 963 1 216 5 179
Investment and savings - 1 319 1 319
Health 1 301 (18) 1 283
Short-term insurance 2 662 - 2 662
Client engagement - (85) (85)
International 1 069 (575) 494
Investment and savings 474 341 815
Life insurance 267 128 395
Health 318 381 699
Short-term insurance 10 170 180
Client engagement - - -
Other (shared services) - (1 595) (1 595)
Shareholder Capital - 413 413
Short-term insurance - 165 165
Client engagement - 202 202
Other (head office expenses) - 46 46
Total non-covered business 5 774 2 538 8 312
DIRECTORS' VALUE PER VALUATION METHOD Covered Appraisal
methodology value 30.06.2017
Rm Rm Rm
Non-covered business
Momentum Retail 955 1 152 2 107
Investment and savings 576 826 1 402
Health 379 - 379
Short-term insurance - 514 514
Client engagement - (188) (188)
Metropolitan Retail - (78) (78)
Client engagement - (78) (78)
Momentum Corporate 4 388 1 359 5 747
Investment and savings - 1 370 1 370
Health 1 535 (20) 1 515
Short-term insurance 2 853 - 2 853
Client engagement - 9 9
International 1 143 (1 083) 60
Investment and savings 458 254 712
Life insurance 242 37 279
Health 417 383 800
Short-term insurance 26 113 139
Client engagement - (92) (92)
Other (shared services) - (1 778) (1 778)
Shareholder Capital - 622 622
Short-term insurance - 101 101
Client engagement - 368 368
Other (head office expenses) - 153 153
Total non-covered business 6 486 1 972 8 458
- Covered methodology refers to APN107 (embedded value methodology) and the risk discount rate of covered business. The Health businesses, Momentum Wealth and Guardrisk are valued using
embedded value methodology.
- For Health business, explicit assumptions are made around large scheme terminations. The key assumption is the long-term profit as a percentage of revenue.
- Discounted cash flow models for Investment and savings, as well as Short-term insurance business, include assumptions around future new business. To reflect the additional uncertainty
introduced, the current period risk discount rates for these businesses are approximately 3.0% and 2.7% higher than covered business risk discount rates.
- For Eris, we approximate discounted cash flows using a Price/Earnings multiple.
- The International shared services impact reflects the allowance for support services to the international life and health businesses. The Shareholder head office expenses impact
reflects the present value of projected recurring head office expenses.
6 mths to 6 mths to 12 mths to
ANALYSIS OF CHANGES IN GROUP EMBEDDED VALUE Covered business 31.12.2017 31.12.2016 30.06.2017
Notes Adjusted Gross
net worth value of in- Cost of Total Total Total
(ANW) force (VIF) CAR EV EV EV
Rm Rm Rm Rm Rm Rm
Profit from new business (757) 1 162 (99) 306 317 643
Embedded value from new business A (757) 1 144 (99) 288 292 547
Expected return to end of period B - 18 - 18 25 96
Profit from existing business 1 903 (732) 46 1 217 1 353 3 123
Expected return - unwinding of RDR B - 1 246 (169) 1 077 1 156 2 327
Release from the cost of required capital C - - 197 197 181 442
Expected (or actual) net of tax profit transfer to net worth D 1 896 (1 896) - - - -
Operating experience variances E 20 (12) 18 26 114 18
Development expenses F (13) - - (13) (17) (67)
Operating assumption changes G - (70) - (70) (81) 403
Embedded value profit from operations 1 146 430 (53) 1 523 1 670 3 766
Investment return on adjusted net worth H 365 - - 365 310 652
Investment variances I 28 467 20 515 (731) (1 354)
Economic assumption changes J 30 109 22 161 (29) (164)
Exchange rate movements K (8) (6) 2 (12) (33) (36)
Embedded value profit - covered business 1 561 1 000 (9) 2 552 1 187 2 864
Transfer of business to non-covered business L (420) - - (420) (298) (675)
Changes in share capital M 5 - - 5 (28) (25)
Dividend paid (1 979) - - (1 979) (1 665) (3 066)
Change in embedded value - covered business (833) 1 000 (9) 158 (804) (902)
Non-covered business
Change in directors' valuation and other items (207) (238) (696)
Holding company expenses (23) - (139)
Embedded value profit - non-covered business (230) (238) (835)
Changes in share capital M (5) 28 25
Dividend paid 544 222 610
Finance costs - preference shares (19) (20) (39)
Transfer of business from covered business L 420 298 675
Change in embedded value - non-covered business 710 290 436
Total change in group embedded value 868 (514) (466)
Total embedded value profit 2 322 949 2 029
Return on embedded value (%) - internal rate of return 11.2% 4.5% 4.7%
6 months to
ANALYSIS OF CHANGES IN ADJUSTED NET WORTH Covered business 31.12.2017
Momentum Metropolitan Momentum Shareholder
Retail Retail Corporate International Capital Total
Rm Rm Rm Rm Rm Rm
Embedded value from new business (432) (92) (94) (139) - (757)
Expected (or actual) net of tax profit
transfer to net worth 1 000 406 241 249 - 1 896
Operating experience variances (61) (4) 98 (8) (5) 20
Development expenses (4) (3) (6) - - (13)
Operating assumption changes - - - - - -
Embedded value profit from operations 503 307 239 102 (5) 1 146
Investment return on adjusted net worth 113 58 64 79 51 365
Investment variances (21) 12 19 18 - 28
Economic assumption changes 11 22 - (3) - 30
Exchange rate movements - - - (8) - (8)
Embedded value profit - covered business 606 399 322 188 46 1 561
ANALYSIS OF CHANGES IN GROSS Covered business 6 months to
VALUE OF IN-FORCE 31.12.2017
Momentum Metropolitan Momentum
Retail Retail Corporate International Total
Rm Rm Rm Rm Rm
Embedded value from new business 565 252 151 176 1 144
Expected return - unwinding of RDR 622 206 280 156 1 264
Expected (or actual) net of tax profit
transfer to net worth (1 000) (406) (241) (249) (1 896)
Operating experience variances (34) 7 14 1 (12)
Operating assumption changes - - (70) - (70)
Embedded value profit from operations 153 59 134 84 430
Investment variances 291 165 13 (2) 467
Economic assumption changes 28 68 (5) 18 109
Exchange rate movements - - - (6) (6)
Embedded value profit - covered business 472 292 142 94 1 000
ANALYSIS OF CHANGES IN COST OF Covered business 6 months to
CAR 31.12.2017
Momentum Metropolitan Momentum
Retail Retail Corporate International Total
Rm Rm Rm Rm Rm
Embedded value from new business (44) (30) (13) (12) (99)
Expected return - unwinding of RDR (69) (32) (53) (15) (169)
Release from the cost of required capital 81 53 63 - 197
Operating experience variances - - 18 - 18
Operating assumption changes - - - - -
Embedded value profit from operations (32) (9) 15 (27) (53)
Investment variances 19 (38) 39 - 20
Economic assumption changes - (1) 2 21 22
Exchange rate movements - - - 2 2
Embedded value profit - covered business (13) (48) 56 (4) (9)
Covered business
ANALYSIS OF CHANGES IN GROUP
EMBEDDED VALUE Momentum Metropolitan Momentum Shareholder
Retail Retail Corporate International Capital Total
Rm Rm Rm Rm Rm Rm
6 mths to 31.12.2017
Embedded value from new business 89 130 44 25 - 288
Expected return - unwinding of RDR 553 174 227 141 - 1 095
Release from the cost of required capital 81 53 63 - - 197
Operating experience variances (95) 3 130 (7) (5) 26
Development expenses (4) (3) (6) - - (13)
Operating assumption changes - - (70) - - (70)
Embedded value profit from operations 624 357 388 159 (5) 1 523
Investment return on adjusted net worth 113 58 64 79 51 365
Investment variances 289 139 71 16 - 515
Economic assumption changes 39 89 (3) 36 - 161
Exchange rate movements - - - (12) - (12)
Embedded value profit - covered business 1 065 643 520 278 46 2 552
6 mths to 31.12.2016
Embedded value from new business 106 94 46 46 - 292
Expected return - unwinding of RDR 617 208 232 124 - 1 181
Release from the cost of required capital 66 62 53 - - 181
Operating experience variances 10 86 (62) 52 28 114
Development expenses (17) - - - - (17)
Operating assumption changes (48) (7) (29) 3 - (81)
Embedded value profit from operations 734 443 240 225 28 1 670
Investment return on adjusted net worth 135 77 70 26 2 310
Investment variances (420) (219) (91) (8) 7 (731)
Economic assumption changes (21) 11 (28) 9 - (29)
Exchange rate movements - - - (33) - (33)
Embedded value profit - covered business 428 312 191 219 37 1 187
ANALYSIS OF CHANGES IN GROUP Covered business
EMBEDDED VALUE
Momentum Metropolitan Momentum Shareholder
Retail Retail Corporate International Capital Total
Rm Rm Rm Rm Rm Rm
12 mths to 30.06.2017
Embedded value from new business 228 178 68 73 - 547
Expected return - unwinding of RDR 1 255 451 490 227 - 2 423
Release from the cost of required capital 210 127 105 - - 442
Operating experience variances 36 20 (147) 65 44 18
Development expenses (36) - (31) - - (67)
Operating assumption changes 537 184 (295) (23) - 403
Embedded value profit from operations 2 230 960 190 342 44 3 766
Investment return on adjusted net worth 269 157 145 63 18 652
Investment variances (932) (193) (203) (21) (5) (1 354)
Economic assumption changes (54) (14) (103) 7 - (164)
Exchange rate movements - - - (36) - (36)
Embedded value profit - covered business 1 513 910 29 355 57 2 864
A. VALUE OF NEW BUSINESS
VALUE OF NEW BUSINESS (1,2) Momentum Metropolitan Momentum
Retail (3) Retail Corporate International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2017
Value of new business 89 130 44 25 288
Gross 133 160 57 37 387
Less cost of required capital (44) (30) (13) (12) (99)
New business premiums 8 603 1 391 1 750 473 12 217
Recurring premiums 563 675 327 232 1 797
Single premiums 8 040 716 1 423 241 10 420
New business premiums (APE) 1 367 747 469 256 2 839
New business premiums (PVP) 11 182 2 919 4 855 1 367 20 323
Profitability of new business as a percentage of APE 6.5 17.4 9.4 9.8 10.1
Profitability of new business as a percentage of PVP 0.8 4.5 0.9 1.8 1.4
Restated
6 mths to 31.12.2016
Value of new business 106 94 46 46 292
Gross 139 125 69 52 385
Less cost of required capital (33) (31) (23) (6) (93)
New business premiums 8 490 1 218 2 500 421 12 629
Recurring premiums 535 649 423 239 1 846
Single premiums 7 955 569 2 077 182 10 783
New business premiums (APE) 1 331 706 630 257 2 924
New business premiums (PVP) 10 842 2 673 6 366 1 414 21 295
Profitability of new business as a percentage of APE 8.0 13.3 7.3 17.9 10.0
Profitability of new business as a percentage of PVP 1.0 3.5 0.7 3.3 1.4
12 mths to 30.06.2017
Value of new business 228 178 68 73 547
Gross 314 230 113 95 752
Less cost of required capital (86) (52) (45) (22) (205)
New business premiums 17 624 2 325 4 637 824 25 410
Recurring premiums 1 135 1 220 751 439 3 545
Single premiums 16 489 1 105 3 886 385 21 865
New business premiums (APE) 2 784 1 331 1 140 478 5 733
New business premiums (PVP) 22 774 5 164 11 121 2 536 41 595
Profitability of new business as a percentage of APE 8.2 13.4 6.0 15.3 9.5
Profitability of new business as a percentage of PVP 1.0 3.4 0.6 2.9 1.3
1. Value of new business and new business premiums are net of non-controlling interests.
2. 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 reporting date have been used.
3. For Momentum Retail, the definition of new business has been amended to exclude negative alterations after the commission clawback period. This change aligns with the definition
used internally by Momentum Sales.
ANALYSIS OF NEW BUSINESS PREMIUMS Momentum Metropolitan Momentum
Retail (1) Retail Corporate International Total
Rm Rm Rm Rm Rm
6 mths to 31.12.2017
New business premiums 8 603 1 391 1 750 473 12 217
Recurring premiums 563 675 327 232 1 797
Risk 276 450 67 - 793
Savings/Investments 287 225 260 - 772
International - - - 232 232
Single premiums 8 040 716 1 423 241 10 420
Savings/Investments 7 580 361 1 068 - 9 009
Annuities 460 355 355 - 1 170
International - - - 241 241
New business premiums (APE) 1 367 747 469 256 2 839
Risk 276 450 67 - 793
Savings/Investments 1 045 261 367 - 1 673
Annuities 46 36 35 - 117
International - - - 256 256
Restated
6 mths to 31.12.2016
New business premiums 8 490 1 218 2 500 421 12 629
Recurring premiums 535 649 423 239 1 846
Risk 270 434 154 - 858
Savings/Investments 265 215 269 - 749
International - - - 239 239
Single premiums 7 955 569 2 077 182 10 783
Savings/Investments 7 496 227 1 533 - 9 256
Annuities 459 342 544 - 1 345
International - - - 182 182
New business premiums (APE) 1 331 706 630 257 2 924
Risk 270 434 154 - 858
Savings/Investments 1 015 238 422 - 1 675
Annuities 46 34 54 - 134
International - - - 257 257
ANALYSIS OF NEW BUSINESS PREMIUMS Momentum Metropolitan Momentum
Retail (1) Retail Corporate International Total
Rm Rm Rm Rm Rm
12 mths to 30.06.2017
New business premiums 17 624 2 325 4 637 824 25 410
Recurring premiums 1 135 1 220 751 439 3 545
Risk 532 811 306 - 1 649
Savings/Investments 603 409 442 - 1 454
Annuities - - 3 - 3
International - - - 439 439
Single premiums 16 489 1 105 3 886 385 21 865
Savings/Investments 15 455 439 2 917 - 18 811
Annuities 1 034 666 969 - 2 669
International - - - 385 385
New business premiums (APE) 2 784 1 331 1 140 478 5 733
Risk 532 811 306 - 1 649
Savings/Investments 2 149 453 734 - 3 336
Annuities 103 67 100 - 270
International - - - 478 478
1. For Momentum Retail, the definition of new business has been amended to exclude negative alterations after the commission clawback period. This change aligns with the definition
used internally by Momentum Sales.
RECONCILIATION OF LUMP SUM INFLOWS 6 mths to 6 mths to 12 mths to
31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Total lump sum inflows 13 963 13 419 26 968
Inflows not included in value of new business (4 342) (3 344) (6 518)
Term extensions on maturing policies 262 227 345
Retirement annuity proceeds invested in living annuities 549 497 1 107
Non-controlling interests and other adjustments (12) (16) (37)
Single premiums included in value of new business 10 420 10 783 21 865
PRINCIPAL ASSUMPTIONS (South Africa) (1,4) 31.12.2017 31.12.2016 30.06.2017
% % %
Pre-tax investment return
Equities 12.9 12.8 12.9
Properties 10.4 10.3 10.4
Government stock 9.4 9.3 9.4
Other fixed-interest stocks 9.9 9.8 9.9
Cash 8.4 8.3 8.4
Risk-free return (2) 9.4 9.3 9.4
Risk discount rate (RDR) 11.6 11.5 11.7
Investment return (before tax) - balanced portfolio (2) 11.5 11.5 11.6
Renewal expense inflation rate (3) 6.7 7.5 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. Risk-free returns are taken from an appropriate market related, risk-free yield curve as at the valuation date. Appropriate risk premia are added to the risk-free yields in order
to derive yields on other asset classes. Expected cash flows at each duration are discounted using yields appropriate to that duration. The investment return on balanced portfolio
business was calculated by applying the above returns to an expected long-term asset distribution.
3. An inflation rate of 6.0% p.a. is used over the planning horizon (three years) where after the inflation rate is derived from market inputs as the difference between nominal
and real yields across the term structure of these curves. An additional 1% expense inflation is allowed for in some divisions to reflect the impact of closed books that are in run-off.
4. The assumptions quoted in the table are representative rates derived at the 10-year point of the yield curves.
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. The expected return on new business 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
Restated
6 mths to 31.12.2017 6 mths to 12 mths to
31.12.2016 30.06.2017
OPERATING EXPERIENCE VARIANCES Notes ANW Net VIF EV EV EV
Rm Rm Rm Rm Rm
Momentum Retail (61) (34) (95) 10 36
Mortality and morbidity 1 55 14 69 61 165
Terminations, premium cessations and policy alterations (5) 17 12 26 58
Expense variance 2 (54) - (54) 37 40
Credit risk variance 14 - 14 3 39
Other 3 (71) (65) (136) (117) (266)
Metropolitan Retail (4) 7 3 86 20
Mortality and morbidity 1 41 9 50 40 83
Terminations, premium cessations and policy alterations 4 (52) (11) (63) (11) (69)
Expense variance (5) - (5) 42 (23)
Credit risk variance 8 - 8 5 21
Other 4 9 13 10 8
Momentum Corporate 98 14 112 (96) (135)
Mortality and morbidity 1 33 - 33 (108) (152)
Terminations (2) 14 12 (18) (191)
Expense variance 5 47 - 47 4 36
Credit risk variance 22 - 22 16 57
Other (2) - (2) 10 115
International (8) 1 (7) 52 65
Mortality and morbidity 1 35 (11) 24 34 44
Terminations, premium cessations and policy alterations (3) (1) (4) - 4
Expense variance (7) - (7) 6 (3)
Other (33) 13 (20) 12 20
Shareholder Capital (5) - (5) 28 44
Opportunity cost of required capital - 18 18 34 (12)
Total operating experience variances 20 6 26 114 18
Notes
1. Overall, mortality and morbidity experience for the 6 months were better compared to what was allowed for in the valuation basis.
2. Due to additional investment in order to improve Momentum Retail's capabilities available to clients and intermediaries.
3. Includes one off impact arising from reinsurance premium as well as larger than expected premium discounts.
4. Higher than expected terminations.
5. The impact of efficiencies achieved in the segment.
F. DEVELOPMENT EXPENSES
Business development expenses within segments.
G. OPERATING ASSUMPTION CHANGES
Restated
6 mths to 12 mths to
6 mths to 31.12.2017 31.12.2016 30.06.2017
OPERATING ASSUMPTION CHANGES Notes ANW Net VIF EV EV EV
Rm Rm Rm Rm Rm
Momentum Retail - - - (48) 587
Mortality and morbidity assumptions - - - - 410
Termination assumptions - - - - (60)
Renewal expense assumptions - - - - (56)
Modelling, methodology and other changes - - - (48) 293
Metropolitan Retail - - - (7) 184
Mortality and morbidity assumptions - - - - (15)
Termination assumptions - - - - (15)
Renewal expense assumptions - - - - (55)
Modelling, methodology and other changes - - - (7) 269
Momentum Corporate - (70) (70) (29) (295)
Mortality and morbidity assumptions - - - - (358)
Termination assumptions - - - - 105
Renewal expense assumptions 1 - (70) (70) (29) (46)
Modelling, methodology and other changes - - - - 4
International - - - 3 3
Mortality and morbidity assumptions - - - - 102
Termination assumptions - - - - (56)
Renewal expense assumptions - - - 2 19
Modelling, methodology and other changes - - - 1 (62)
Shareholder Capital - - - - -
Methodology change: cost of required capital - - - - (76)
Total operating assumption changes - (70) (70) (81) 403
Notes:
1. Lower than expected sales volumes on expense recoveries.
H. INVESTMENT RETURN ON ADJUSTED NET WORTH
INVESTMENT RETURN ON ADJUSTED NET WORTH 6 mths to 6 mths to 12 mths to
31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Investment income 272 313 620
Capital appreciation and other 111 15 68
Preference share dividends paid and change in fair value of preference shares (18) (18) (36)
Investment return on adjusted net worth 365 310 652
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 NON-COVERED BUSINESS
This transfer represents the alignment of the net assets and value of in-force of subsidiaries between covered and non-covered business.
M. CHANGES IN SHARE CAPITAL
Changes in share capital include the recapitalisation of some of the International subsidiaries.
In-force business New business written
Adjusted net Net Gross Cost of Net Gross Cost of
COVERED BUSINESS: SENSITIVITIES - worth value value CAR (3) value value CAR (3)
31.12.2017 Rm Rm Rm Rm Rm Rm Rm
Base value 12 102 22 121 25 407 (3 286) 288 387 (99)
1% increase in risk discount rate 20 105 23 794 (3 689) 214 321 (107)
% change (9) (6) 12 (26) (17) 8
1% reduction in risk discount rate 24 090 26 943 (2 853) 373 463 (90)
% change 9 6 (13) 30 20 (9)
10% decrease in future expenses 23 313 26 599 (3 286) 348 447 (99)
% change (1) 5 5 - 21 16 -
10% decrease in lapse, paid-up and surrender rates 22 654 25 940 (3 286) 373 480 (107)
% change 2 2 - 30 24 8
5% decrease in mortality and morbidity for assurance business 23 930 27 245 (3 315) 358 457 (99)
% change 8 7 1 24 18 -
5% decrease in mortality for annuity business 21 641 24 900 (3 259) 284 383 (99)
% change (2) (2) (1) (1) (1) -
1% reduction in gross investment return, inflation rate
and risk discount rate 12 102 22 624 25 839 (3 215) 336 435 (99)
% change (2) - 2 2 (2) 17 12 -
1% reduction in inflation rate 22 820 26 106 (3 286) 326 425 (99)
% change 3 3 - 13 10 -
10% fall in market value of equities and properties 11 871 20 969 24 192 (3 223)
% change (2) (5) (5) (2)
10% reduction in premium indexation take-up rate 21 571 24 857 (3 286) 269 368 (99)
% change (2) (2) - (7) (5) -
10% decrease in non-commission related acquisition expenses 348 447 (99)
% change 21 16 -
1% increase in equity/property risk premium 22 840 26 126 (3 286) 309 408 (99)
% change 3 3 - 7 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.
ANALYSIS OF ASSETS MANAGED AND/OR ADMINISTERED (1) Restated Restated
31.12.2017 31.12.2016 30.06.2017
Rm Rm Rm
Managed and/or administered by Investments
Financial assets 410 228 414 771 414 070
Momentum Manager of Managers (2) 89 396 82 479 86 757
Momentum Investment Consultants (2) 5 153 4 921 4 956
Momentum Collective Investments 80 296 60 419 72 667
Metropolitan Collective Investments 875 31 573 19 860
Momentum Asset Management 154 113 154 695 151 241
Momentum Global Investments 54 328 56 323 55 724
Momentum Alternative Investments 6 154 6 617 6 390
Momentum Securities (2) 19 913 17 744 16 475
Properties - Eris Property Group 21 260 19 236 21 307
On-balance sheet 8 147 8 605 8 778
Off-balance sheet 13 113 10 631 12 529
Momentum Wealth linked product assets under administration 157 694 148 793 151 203
On-balance sheet 102 395 94 839 97 082
Off-balance sheet 55 299 53 954 54 121
Managed internally or by other managers within MMI (on-balance sheet) 72 129 63 369 67 399
Managed by external managers (on-balance sheet) 16 307 15 152 15 144
Properties managed internally or by other managers within MMI or externally 3 565 2 452 2 778
Momentum Corporate - cell captives on-balance sheet (2) 15 745 16 681 15 508
Total assets managed and/or administered 696 928 680 454 687 409
Managed and/or administered by Investments
On-balance sheet 230 207 224 227 223 792
Off-balance sheet 180 021 190 544 190 278
410 228 414 771 414 070
1. Assets managed and/or administered, other than CIS assets, are included where an entity earns a fee on the assets. The total CIS assets are included in Momentum Collective Investments
only as this is where the funds are housed. Non-financial assets (except properties) have been excluded.
2. Restatements relate primarily to the inclusion of Momentum Securities, as well as the removal of double-counted CIS assets.
NET FUNDS RECEIVED FROM CLIENTS (1) Gross Gross
single recurring Gross Gross Net inflow/
inflows inflows inflow outflow (outflow)
Rm Rm Rm Rm Rm
6 mths to 31.12.2017
Momentum Retail 7 288 4 940 12 228 (12 591) (363)
Metropolitan Retail 668 3 120 3 788 (2 781) 1 007
Momentum Corporate 5 583 9 003 14 586 (15 080) (494)
International 424 1 872 2 296 (1 327) 969
Long-term insurance business fund flows 13 963 18 935 32 898 (31 779) 1 119
Off-balance sheet fund flows
Managed and/or administered by Investments 40 901 (61 572) (20 671)
Properties - Eris Property Group 705 (121) 584
Momentum Wealth linked product assets under administration 3 659 (4 877) (1 218)
Total net funds received from clients 78 163 (98 349) (20 186)
Restated
6 mths to 31.12.2016
Momentum Retail 7 302 4 716 12 018 (11 845) 173
Metropolitan Retail 525 2 996 3 521 (2 724) 797
Momentum Corporate 5 297 7 960 13 257 (12 158) 1 099
International 295 1 759 2 054 (1 228) 826
Long-term insurance business fund flows 13 419 17 431 30 850 (27 955) 2 895
Off-balance sheet fund flows
Managed and/or administered by Investments (2) 29 140 (63 909) (34 769)
Properties - Eris Property Group 834 (9 015) (8 181)
Momentum Wealth linked product assets under administration 3 848 (4 888) (1 040)
Momentum Corporate - segregated assets - (216) (216)
Total net funds received from clients 64 672 (105 983) (41 311)
Restated
12 mths to 30.06.2017
Momentum Retail 15 077 9 663 24 740 (25 360) (620)
Metropolitan Retail 1 021 5 877 6 898 (5 321) 1 577
Momentum Corporate 10 216 16 951 27 167 (25 574) 1 593
International 654 3 476 4 130 (2 624) 1 506
Long-term insurance business fund flows 26 968 35 967 62 935 (58 879) 4 056
Off-balance sheet fund flows
Managed and/or administered by Investments (2) 66 343 (102 076) (35 733)
Properties - Eris Property Group 2 067 (8 350) (6 283)
Momentum Wealth linked product assets under administration 7 368 (10 081) (2 713)
Momentum Corporate - segregated assets - (216) (216)
Total net funds received from clients 138 713 (179 602) (40 889)
1. Assets managed and/or administered, other than CIS assets, are included where an entity earns a fee on the assets. The total CIS assets are included in Momentum Collective Investments
only as this is where the funds are housed. Non-financial assets (except properties) have been excluded.
2. The Aluwani assets were transferred to Aluwani in the prior periods.
ANALYSIS OF ASSETS BACKING SHAREHOLDER EXCESS
31.12.2017 31.12.2016 30.06.2017
Rm % Rm % Rm %
Equity securities 344 1.5 321 1.4 441 1.9
Preference shares 1 216 5.3 1 585 6.7 1 325 5.8
Collective investment schemes 465 2.0 271 1.2 330 1.4
Debt securities 7 061 31.0 6 032 25.6 6 762 29.5
Properties 3 625 15.9 3 180 13.5 3 630 15.8
Owner-occupied properties 2 775 12.2 1 657 7.0 2 374 10.3
Investment properties 850 3.7 1 523 6.5 1 256 5.5
Cash and cash equivalents and funds on deposit 6 084 26.7 7 839 33.3 6 003 26.2
Intangible assets 7 005 30.8 7 646 32.5 7 144 31.1
Other net assets 1 921 8.4 776 3.3 1 537 6.7
27 721 121.8 27 650 117.4 27 172 118.4
Redeemable preference shares (254) (1.1) (268) (1.1) (261) (1.1)
Subordinated redeemable debt (4 381) (19.2) (3 553) (15.1) (3 602) (15.7)
Treasury shares (323) (1.4) (286) (1.2) (353) (1.5)
Shareholder excess per reporting basis 22 763 100.0 23 543 100.0 22 956 100.0
STOCK EXCHANGE PERFORMANCE 31.12.2017 30.06.2017 31.12.2016 30.06.2016
6 month period
Value of listed shares traded (rand million) 8 160 10 392 9 681 10 914
Volume of listed shares traded (million) 420 449 413 478
Shares traded (% of average listed shares in issue) (1) 54 58 53 61
Trade prices
Highest (cents per share) 2 242 2 669 2 482 2 597
Lowest (cents per share) 1 709 1 920 2 099 1 955
Last sale of period (cents per share) 2 100 2 024 2 359 2 264
Annualised percentage (%) change during period 8 (26) 9 6
Annualised percentage (%) change - life insurance sector (J857) 55 (2) (9) (9)
Annualised percentage (%) change - top 40 index (J200) 34 7 (9) 1
31 December/30 June
Price/diluted core headline earnings (segmental) ratio 10.8 10.1 11.9 11.3
Dividend yield % (dividend on listed shares) (1) - 7.8 2.8 6.9
Dividend yield % - top 40 index (J200) (1) 2.7 2.8 2.8 2.9
Total shares issued (million)
Ordinary shares listed on JSE 1 576 1 575 1 575 1 574
Treasury shares held on behalf of contract holders (16) (18) (12) (13)
Basic number of shares in issue 1 560 1 557 1 563 1 561
Treasury shares held on behalf of contract holders 16 18 12 13
Convertible redeemable preference shares 28 29 29 30
Diluted number of shares in issue (2) 1 604 1 604 1 604 1 604
Market capitalisation at end (Rbn) (3) 34 32 38 36
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: 07/03/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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