Johannesburg - Diversified financial services
group Metropolitan Holdings reported on Wednesday that recurring
premium income for the nine-month period ended September increased by 5% in
extremely difficult operating conditions.
It said a 2% increase in the group's recurring premium new insurance
business over the period reflected both the product line changes made within
the businesses and the state of the underlying economy.
"The insurance businesses are taking the opportunity of the downturn to
focus on the quality of new business as opposed to the quantity," it pointed
out in a trading update.
"The new business persistency levels within the retail business
continued at satisfactory levels while expenses remained under control,
which was particularly satisfying," it added.
The corporate business secured a number of profitable risk and
administration contracts through innovative solutions and its new
umbrella fund product.
Metropolitan International also continued to make good progress in its
African operations.
Metropolitan Health Group (MHG) further increased its number of members
under administration while maintaining service levels above the
contracted levels. The managed care business, Qualsa, was successful in
tendering for another Government Employees Medical Scheme (Gems) contract.
The group added that its capital management activities are ongoing, with
an overall strengthening on all capital measurements.
"Net cash received from clients to date was R3.3bn and we expect
to end the year in a positive position," the group added.
Market reduction
The group noted that during the course of the past twelve months South
Africa has experienced periods of extreme investment market reduction and
volatility.
"Metropolitan has managed to navigate its way through the turmoil
successfully, with its healthy capital position intact," it stated.
"During this time of economic downturn, the persistency of the group's
policyholder base has remained surprisingly resilient and overall the
number of lives under administration on the active insurance books has
continued to grow.
"Expense management has remained top-of-mind, with a balance being
sought between investing in the future (staff and systems) and continuing to
manage the overall expense base."
"The various sub-sets of the South African and African economies have
experienced the economic downturn differently. Clients in the emerging
sectors have remained resilient while those exposed to the stock markets,
interest-rate leverage and higher levels of variable income have been under
severe pressure. Metropolitan remains focused on servicing and assisting its
traditional emerging markets, which are expected to continue growing over
time. The current extent of job losses remains a concern," Metropolitan
added.
Securing new business
But it said management was confident that the group's stated market
positioning, together with its diversified income streams and sound business
processes, will enable it to continue generating good operating results
for the foreseeable future.
New recurring premium income in the retail business for the period, at
R660m, was pleasing, only 1% down on 2008. New single premium income
written amounted to R1.594bn.
Turning to the corporate business, Metropolitan noted that securing new
business in the current employee benefits (EB) market remains challenging
and will continue to be so for a while.
Recurring new business premium income (on balance sheet) for the first
nine months of 2009 was 16% higher than 2008, boosted by risk contracts.
New administration business on the Neon platform grew significantly,
with total new recurring annual premiums at R67m for the period,
compared to R8m for the same period in 2008.
New single premium income ended slightly lower as a result of tighter
investment market conditions during 2009 and an aversion by fund trustees to
move underfunded smoothed bonus investments.
"Overall, on balance sheet PVP ended 7% higher. This, together with the
off balance sheet business, confirms Metropolitan's strong standing in the
retirement fund market."
- I-Net Bridge