Metropolitan backers reap rewards

Johannesburg - Insurance stalwart Metropolitan [JSE:MET] has upped its full-year dividend paid to shareholders by 9%, saying the increase is indicative of an "improved operating outlook".

Reporting annual results for the year to end-December 2009, the group declared a final dividend of 60c. By adding the 40c dividend declared at the interim stage, the counter boasts a historical dividend yield of around 7%.

Metropolitan has traditionally been a good dividend payer and has bucked its sector's trend, where a number of banks and insurers have been cutting back on distributions to preserve their capital bases.

However, despite Metropolitan's generous dividend payments the group still holds nearly R2bn excess capital on its balance sheet. Investors will be pushing management to provide some indications as to how this is likely to be deployed.

The rebound in equity markets has also seen Metropolitan's embedded value rise by 6% to 1 811c/share. Embedded value is the measure by which insurance companies are valued. Metropolitan is now trading at a 20% discount to its embedded value.

Commenting on the outlook for the group, CEO Wilhelm van Zyl was upbeat. "The board is satisfied that the group remains strategically well positioned, thanks to its strong focus on client service, product innovation, business retention, cost containment, diversification and capital management."

However, he cautioned that food and transport inflation, together with rising unemployment, remained the biggest challenges to Metropolitan's core customer market.

- Fin24.com