Momentum Group reported strong earnings growth in the six months to December 31 after a relatively benign insurance claims market and after all its businesses report profit.
Image: Supplied
Momentum Group’s share price surged more than 10% on Thursday after it reported sector-leading growth in normalised headline earnings, which rose by a robust 44% to R3.4 billion for the six months ending December 31.
In contrast, although not strictly comparable, Old Mutual reported a 14% increase in headline earnings for its financial year to December 31. Similarly, Sanlam reported a 37% increase in headline earnings per share for the same period, while Discovery also increased headline earnings by 37% for the six months to that date.
Momentum Group’s share price ended 10.85% higher at R32.68 on Thursday, a price that was also 57% up from the R20.75 it traded at a year ago, indicating that investors may have anticipated the strong interim performance. The interim dividend increased by 42% to 85 cents. Shareholders also benefited from the R1bn share buyback during the period.
"This excellent set of results was achieved because every business in the group performed well. It was largely driven by management interventions to improve persistency and enhance the new business mix,” CEO Jeanette Marais said in an interview on Thursday.
She said that the results of the past six months were supported by a favourable external investment and underwriting environment, but similar conditions may not necessarily remain in the second half of the financial year.
For example, she mentioned that their data showed there are usually higher insurance claims in the second half. Nevertheless, she anticipated strong growth overall for the year, as all the businesses in the group are currently performing well.
Operating profit increased by 33% to R2.8bn. Investment returns from the group’s shareholder asset portfolios more than doubled, while new business sales remained flat at R38.9bn.
The value of new business (VNB) increased 40% to R279 million, largely supported by a shift in the new business mix towards more profitable protection business in Momentum Retail, an improvement in Metropolitan’s VNB, and the positive contribution from life annuities in Momentum Investments.
Further contributions included a significantly improved underwriting result in Momentum Insure, which had been turned around and had improved its claims ratio.
There was a also strong underwriting performance in Guardrisk, profit released from annuities in Momentum Investments, continuing new business profitability in Metropolitan Life, and higher earnings from the group risk business in Momentum Corporate.
Earnings were further supported by improved persistency experience across most of the group and a favourable external investment and underwriting environment, she said.
Finance director Risto Ketola said the 48% increase in normalised headline earnings a share to 244.8 cents reflected the benefits of the share buybacks. Headline earnings per share improved by 55% from 157.4 cents to 243.6 cents, and earnings per share increased by 55% from 157.4 cents to 244.3 cents.
Ketola said their strong capital and liquidity position, along with their capital management framework, allowed the board to approve a further R1bn for share buybacks, given the prevailing discount to embedded value.
The prior R1bn buyback program communicated to investors at the last annual results was largely completed by February 5, 2025. In total, the group has completed R3.2bn in share buybacks since the first half of the 2023 financial year, which has created nearly R2bn in value for shareholders, Ketola said.
“We remain steadfast in improving the VNB and driving sales volume growth,” Marais said. Advice would continue to be a key differentiator for the group.
“Our leading market share in the Independent Financial Adviser segment places us well to deliver value. By leveraging technology to enhance client experience and empower our advisers, we will ensure our solutions remain relevant, accessible, and tailored to evolving client needs,” she said.
BUSINESS REPORT