Africa-Press – South-Africa. More insurers are reporting less Covid-19 impact on their profits this year. Momentum Metropolitan Holdings (MMH) – the third insurer to publish a trading update for the first few months of this year – said it experienced a mortality loss of R278 million for the nine months of its financial year, which ended on 31 March 2022. A year earlier, the company recorded net mortality losses of R1.1 billion.
Although the insurer’s death claims shot up in the Delta-driven third wave, it recorded significantly less death claims in the fourth wave. It said even though claims still remain higher than before the pandemic, mortality rates in its client base have improved significantly in the first three months of 2022.
As a result, MMH released significantly less Covid-19 provision between January and March than it did in the comparable period of 2021. It released R118 million of Covid-19 provisions it had set aside for the pandemic-related deaths compared to R1.1 billion it released in the six months to December 2021. The insurer still has R693 million in Covid-19 provisions remaining should anything change and spike its claims.
This time around, the insurer didn’t need to raise additional Covid-19 provisions whereas it was forced to raise another R2.2 billion for future Covid-19 claims at its half-year mark in September.
Thanks to this reduced Covid-19 drag on its profits, growth in new business volumes and the recovery of investment markets that boosted the group’s investment returns, MMH’s normalised headline earnings grew by 46% in the nine months to 31 March.
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A mixed bag of performance
The insurance group grew its new business volumes by 16%. However, the value of its new business tanked 16% compared to the same period in 2021, and the profitability of its new business also declined, with MMH’s new business margin falling from 1.1% to 0.8%. This profit margin is is also lower than the group’s long-term target of 1.5%.
Momentum Life, the group’s life insurance business catering for the middle to high-income earners, has been struggling a bit under the pandemic. MMH said its new business volumes were again under pressure on certain products in the nine months to March, resulting in a negative value of new business for Momentum Life. The group’s life businesses have also seen a shift towards lower margin savings products.
But despite that, Momentum Life grew its normalised headline earnings by R208 million to R338 million. Its operating profit also surged 77% to R241 million. Momentum Investments grew both their new business volumes and value of new business.
Metropolitan Life grew new business volumes by double digits. But the value of its new business declined 18% because of advisers leaning more towards selling lower margin savings products. That business also recorded a surge in lapses in the first three months of 2022. And the policies were lapsing before the first premium was paid. The company said part of these lapsed policies related to fraudulent activities by some of its advisors. It has since dismissed them.
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