Metropolitan: Well prepared

Johannesburg - JSE-listed life insurance and financial services firm Metropolitan has reported a 6% increase in headline earnings per share, but warns of threats to its business.

"Food, fuel and transport inflation, together with unemployment levels, remains the biggest challenge to our core target market. Any further increases are likely to curtail new business prospects and threaten the persistence of the in-force book," the company said on Wednesday.

Its financial results for the year to end-December 2008 showed an increase in new business volumes, as did industry peers Sanlam and Liberty Holdings.

The value of new business written by all the businesses in the group grew from R336m in 2007 to R371m. Headline earnings per share rose 6% to 151c per share as a result of the company's decision to reduce the number of shares in issue by about 5%.

"Although consumers were confronted by increasingly difficult conditions throughout the twelve-month period, the persistence of our business overall proved to be remarkably resilient and we ended the year in a better position than anticipated in this vitally important area," said CEO Wilhelm van Zyl in commentary accompanying the results.

Embedded value per share, the indicator by which life insurance businesses measure current and future earnings expected to be derived from policies sold, fell by 6.7% to 1 709c, which the company attributed to falling equity markets.

Metropolitan Health Group, which manages the health insurance business for the group, saw profits rise 56% to R100m from R64m, boosted by growth in membership of the Government Employees Medical Scheme.

South African financial services firms have been at pains to emphasise the strength of their capital positions and balance sheets in the midst of the financial market meltdown.

"Despite abnormal volatility on both financial and investment markets, locally and internationally, which has had a severe negative impact on our investment returns, we remain in a healthy capital position, with our capital adequacy requirement at a group level (R2.3bn) covered 3.1 times," said Van Zyl.

The total dividend for the year remained unchanged at 95c.

The company concluded: "All the businesses within the group are well prepared for the threats and opportunities posed by ongoing changes in the highly regulated environments in which they operate."

- Fin24.com