MMI: Merger benefits to come later

2011-03-09 08:03

Johannesburg - Insurance group MMI Holdings Limited [JSE:MMI], born out of the merger of Metropolitan and Momentum, on Wednesday reported pro forma diluted core headline earnings of R1.228bn for the six months ended 31 December 2010.

This translated into pro forma diluted core headline earnings per share of 77 cents.

The group declared an interim dividend per share of 63 cents.

As Momentum was the acquirer and Metropolitan the acquiree in the merger transaction, the group's interim results constitute a consolidated set of figures, comprising six months of Momentum (July to December 2010) and one month of Metropolitan (December 2010).

Although currently the MMI group's pro forma diluted core headline earnings of 77 cents per share are lower than those of Metropolitan for the second half of 2009 (79 cents), the embedded value per share has increased from 1  811 cents to 1  939 cents.

This gives the group an embedded value of R31.1bn, with a return on embedded value of 18.9%, and a diluted net asset value of R17.6bn.

"MMI's operational scale across its six businesses is immediately apparent from the pro forma figures. Our larger geographic footprint in South Africa and the 12 African countries outside South Africa plus the greater diversity of products and services that we offer are major contributory factors in ensuring benefits of scale and revenue growth opportunities," said group CEO Nicolaas Kruger.

""Our overall financial robustness is equally obvious. However, some of the benefits of the merger - our enhanced skills base for example - will only become evident over time."

The R15.3bn capital held by the group at 31 December 2010 comfortably exceeded its current economic capital requirement.

"The group remains appropriately capitalised, with a particularly strong balance sheet," said Kruger.

MMI's total assets under management and administration amounted to R424bn.