Momentum Group reports record earnings amid challenging economic conditions

Momentum Group delivered record, normalised headline earnings (NHE) of R6.26 billion in the year to June 30, up a remarkable sector beating 41% on the prior financial year, which was already a record year.

Operating profit increased by 52% from R3.6bn to R5.48bn, very strong growth for a large insurance-based financial services group in South Africa’s currently weak economic environment. Competitor Sanlam, for instance, reported 20% growth in normalised net results in the six months to June 30, while Old Mutual grew its adjusted headline profit by 29% for the same period.

“I am satisfied our results reflect the strength of the diversified portfolio and disciplined execution of our Impact Strategy,” said CEO Jeanette Marais in an online interview.

She said that the 2026 financial year is likely to be difficult considering the weak economic environment, stating, “growth won’t just fall in our lap,” but the first quarter had been strong, although margins “everywhere" were under pressure.

“Although the pressure on our clients’ disposable income is expected to continue, affecting new business volumes which place pressure on margins, our Impact Strategy strongly anchors our execution, operations, and financial position,” said Marais. She mentioned they have R3bn available for acquisitions and potential large internal growth projects.

There had been solid operational performances across their business units in the past year, with notable contributions from: annuity profits in Momentum Investments, improved new business profitability in Metropolitan Life, higher earnings from the group risk business in Momentum Corporate, a much improved underwriting result in Momentum Insure, and strong underwriting performance and stable earnings growth in Guardrisk.

“Earnings were further supported by positive actuarial assumption changes and investment market returns,” she added. Growth in Momentum Insure was attributed to lower weather and catastrophe-related claims and better claims and cost management.

The group’s new business sales, as measured by the present value of new business premiums (PVNBP), remained broadly flat with a 3% decrease to R79.8bn. The value of new business (VNB) declined to R469m from R589m.

Marais said significant progress was made on their objectives to invest aggressively in advice to drive growth and to harness the synergies from their federated operating model.

“We are the market leader when it comes to independent financial adviser distribution, and through collaboration between businesses, we have created new solutions for our clients that are unique in the employee benefits and estate planning space,” she said.

In addition, they completed a massive systems migration involving three of their biggest businesses: Momentum Retail, Metropolitan, and Africa. This project saved more than R100m per year and helped minimise risk and improving client experience, she said.

Risto Ketola, group finance director, said the 46% increase in NHE also reflected the positive impact of the share buyback program.

A final dividend of 90 cents per share resulted in a full-year dividend of 175 cents per share, an increase of 40% on the prior full year’s 125 cents.

The R1bn share buyback programme announced at the interim results has been completed. A further R1bn buyback has been approved by the board. The discount to embedded value is still sitting at around 15% to 20%, said Marais.

Over the past year, operating profit increased by 52% to R5.48bn, due to the higher contractual services margin (CSM) release across the life businesses, supported by a larger CSM balance compared to the prior year.

Momentum Retail benefited from higher mortality experience variance in the protection and traditional business, while Metropolitan Life saw improved new business profitability and persistency experience variances.

Momentum Corporate delivered strong results aided by positive mortality and morbidity trends.  Guardrisk experienced steady growth in underwriting profit and fee income.

The decline in Africa’s operating profit followed lower market variances, higher new business strain, and an increase in support costs. The operating loss in India narrowed due to strong gross written premium growth, a reduction in the loss component, and an improved combined ratio. The business, as the fastest-growing health insurance business in that market, had reached break-even, and there remains massive potential for growth, she said.

BUSINESS REPORT