Momentum had increased normalized headline earnings by 8% to R3.7 billion in the six months to December 31, while operating profit increased 10% to R3.1bn, underpinned by solid performances across business units.
Image: Momentum
Momentum Group has been awarded a tender for the administration of the Bonitas Medical Fund, positioning the financial services group as the second-largest medical scheme administrator in the country, Momentum's CEO Jeanette Marais said Thursday.
In an interview at the release of Momentum’s results for the six months to December 31, Marais said Momentum Health would take over the administration of Bonitas Medical Fund in June this year. This process will entail an estimated additional 800 staff and a significant amount of additional hardware and facilities.
Momentum's selection as the preferred healthcare administration partner for Bonitas Medical Fund earlier this year had marked the largest transfer of a medical scheme from one provider to another in the history of South Africa.
The transaction would see more than 750,000 beneficiaries under administration and shift the group’s market share from 22% to 30%, she said.
.She mentioned that the group currently administers the Government Employee Medical Scheme (GEMS), a contract that has been extended for another five years.
The deal with Bonitas means that the group will be in a strong position to participate in future government-private sector partnerships that might arise in the medical health sector, she said. Bonitas would also bring significant benefits of scale to the broader group.
Momentum reported a normalised headline earnings (NHE) increase of 8% to R3,7 billion in the six-month period, while operating profit increased by 10% to R3,1bn, underpinned by solid performances across business units. Return on equity (ROE) remained robust at 24%, comfortably above the group’s target of 20%.
Marais highlighted three trends that had boosted their financial performance: “Underwriting profitability had remained at a high level. Secondly, rising markets and solid investment performance lifted assets under management and asset-based fee income. And thirdly, persistency stayed strong across all business areas, further aiding earnings,” she said.
Sales volumes grew in double digits, with the present value of new business premiums (PVNBP) increasing by 11% to R43,3bn. This was driven by strong performances from Momentum Investments, Momentum Corporate, and Momentum Africa. However, the value of new business (VNB) fell by 15% year-on-year to R238m, primarily due to a shift from higher-margin guaranteed annuity sales to living annuities.
“It is encouraging that as the VNB contribution from guaranteed annuities continues to reduce as sales volumes decrease, other businesses are starting to compensate,” she said.
An interim dividend of 110 cents per ordinary share was declared, an increase of 29% on the prior period. “Our solvency level is within the target range, and the group continues to invest selectively in both organic and inorganic growth to position itself well for the future,” she said.
“The success of our advice ecosystem provides a powerful growth engine,” said Marais. She said there remains a financially unadvised market of tens of millions of people in South Africa that the group aims to grow into.
Momentum Distribution Services maintained market leadership in the independent financial adviser (IFA) space in the interim period, with 10% annual premium equivalent (APE) growth.
Vertical integration from the tied agency force, Momentum Financial Planning, resulted in nine times higher net flows into Momentum solutions, increasing to R1,2bn. Consult, the IFA network, increased assets under administration by 25% to R59bn. Metropolitan is also seeing sustained results and an improvement in the quality of new business from its tied agency channel.
Marais said digital innovation was also a core driver of performance. “AI is already delivering measurable value. We have 60 digital initiatives focused on risk mitigation, cost efficiency, and adviser enablement. Just seven of these have already generated R40m in savings,” she said.
Momentum’s share price slipped 3.7% to R32.92 on the JSE Thursday afternoon.