MMI HOLDINGS LIMITED - MMI Holdings Announces its Year-End Results

MMI Holdings Announces its Year-End Results

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 GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1904/002186/06)
Company code: MMIG

5 September 2018

MMI HOLDINGS ANNOUNCES ITS YEAR-END RESULTS
-   Back to basics for new MMI leadership


Johannesburg, South Africa: Today MMI Holdings Limited (JSE: MMI) released its results for the twelve
months ending 30 June 2018. This set of results follows a financial year in which the MMI Holdings
Board initiated turnaround changes, including appointing new executive leaders and tasking them with
positioning the business for improved performance and future growth.


The new MMI leadership team has started the process of implementing a new strategy to reset and
grow the business by focusing on the basics and addressing structural shortcomings. Hillie Meyer,
Group CEO of MMI Holdings says, “We know that we are reporting disappointing financial results. In
spite of the strategic reset and the senior management changes, we now have a more stable
environment and I have no doubt that we can turn MMI around”.


To achieve this, the leadership team is focusing on a strategy comprising two components, which they
termed RESET and GROW. “To reset the business we are focusing on fixing what is wrong and getting
the basics right, such as aligning the business’s cost base with its revenue,” says Meyer. Other basic
improvements include that MMI changed its operating model to empower end-to-end business units
to run their businesses efficiently and effectively, an increased focus on successfully growing the core
businesses in South Africa and exiting markets on the African continent that do not deliver shareholder
value.

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The GROW part of the company’s strategy includes increasing the size of its distribution channels and
improving productivity, regaining its reputation for developing innovative products, connecting with
business partners and clients through excellent service and revitalising the Momentum and
Metropolitan client-facing brands.


“Through our turnaround strategy, we are targeting to increase earnings from the current R2.8bn, to
R4.0bn. It takes time to turn around an insurance company, but I have absolute confidence in the
commitment and ability of our management team and employees to not only turn the business
around, but to also set MMI up to achieve sustainable, profitable growth within three years,” says
Meyer.


Salient features of the Group’s performance include:
•   Diluted core headline earnings declined by 12% to R2.8 billion after being affected by various
    factors such as increased investment in strategic initiatives, higher expenditure on distribution, and
    weaker persistency in Metropolitan Retail;

•   MMI’s investment in new growth initiatives increased by R127 million. If the impact of new
    investments is excluded, operating profit shows a decline of 5%;

•   New business volumes increased by 1% year-on-year to R42.2 billion on a present value of new
    business premiums (PVNBP) basis. This included year-on-year growth of 3% for Momentum Retail
    and 1% growth for Momentum Corporate;

•   Strong mortality and disability underwriting profits across the group supported weak core earnings
    in other areas of the business. The risk experience across the group improved by R201 million;

•   MMI international’s core headline earnings remain negative but showed an improvement of R118
    million due to the efforts to streamline the Africa portfolio, improved Permanent Health Insurance
    (PHI) experience in Namibia and strong profit growth from the UK asset management business;

•   The Guardrisk business continues to deliver exceptional results, increasing core headline earnings
    by 29% to R258 million;

•   Momentum Short-term Insurance (MSTI) performed well, mainly due to the continuous
    improvement in the claims ratio as well as good expense management. The claims ratio reduced
    from 72.9% to 66.5% year-on-year;

•   Value of new business reduced by 45% to R301 million, with a commensurate reduction in the
    overall new business margin from 1.3% to 0.7%. Momentum Corporate compensated for the weak
    performance elsewhere and increased its VNB by 82% to R124 million, almost doubling the margin
    to 1.1%;

•   The South African Health business continued to show progress in terms of earnings and
    membership growth;

•   The Return on Embedded Value was -1.1%, driven by negative operating assumption changes and
    certain businesses not achieving projected earnings numbers; and

•   As communicated in the interim results in March 2018, MMI announced a share buyback of up to
    R2 billion, in lieu of a cash dividend (both interim and final). The total cash dividend for the previous
    year was 157 cents per share. At 30 June 2018, 47 million shares (R971 million) had been bought
    back. The repurchases have added, to date, 12 cents to the embedded value per share. The group
    will continue the buyback programme, provided the shares trade at a discount to embedded value.
    When dividends resume, MMI will target a dividend cover range centred on 2.5x normalised
    headline earnings.


ENDS

Issued on behalf of MMI Holdings                             For more information, please contact:
Contact: Mandy Laemmle                                       FleishmanHillard South Africa
T: 012 671 8738 M: 082 822 2494                              Chama Mwenso T: 011 548 2058
amanda.laemmle@momentum.co.za                                chama.mwenso@fleishman.co.za


About MMI Holdings
MMI Holdings Limited (MMI) is a South African based financial services group listed on the South African stock
exchange, the JSE. MMI was formed from the merger of Metropolitan and Momentum, sizable insurance-based
financial services players in South Africa.


The company enhances financial wellness by enabling businesses and people from all walks of life to achieve
their financial goals and life aspirations. MMI conducts its business through operating brands Metropolitan,
Momentum with Multiply, Guardrisk, and Eris Properties. The core businesses of MMI are long and short-term
insurance, asset management, savings, investment, healthcare administration, health risk management,
employee benefits, and rewards programmes.


SPONSOR - SA: Merrill Lynch South Africa (Pty) Ltd
SPONSOR - Namibia: Simonis Storm Securities (Pty) Ltd
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