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Cape Town - MMI Holdings [JSE:MMI] said there are still opportunities for the financial services group in various market segments, despite the slowing South African economy which is putting substantial pressure on its clients' disposable income.
In a trade update for the three months to end-September 2015 issued on Wednesday, the company said the MMI group continued to attract new single premium inflows.
It ended the quarter 3% higher than the substantial prior year comparative quarter with Momentum Retail, Metropolitan Retail and International all making strong contributions.
New business recurring premiums were however lower than the same quarter of 2014, mainly held back by lower corporate and public sector sales and the distribution restructuring taking place in Metropolitan Retail.
Satisfactory client retention was experienced across the group, but the growth in market value of investment assets under management has been curbed by the performance of markets as a whole. This resulted in pressure on top-line asset-based fee income in the current year, said MMI.
However, it added that good expense management across the group in established operations is making a positive contribution.
Turning to the operating environment, MMI said equity market volatility continued while a wealth index showed South African households experienced a drop in net wealth in real terms in the second quarter of 2015.
However, there are still opportunities for MMI in the various market segments as identified by the client-centric focused distribution teams, said the company.
MMI said it continues to invest in strategic growth initiatives to achieve long-term goals. These include the middle market, international, investments and Momentum short-term insurance businesses.
Momentum Retail delivered pleasing new business growth overall and strong single premium new business growth continued, ending 18% above the prior quarter’s total.
Single premium income once again performed very well at Metropolitan Retail, increasing by 22% over the prior quarter. Overall, the distribution model changes are having a positive impact on the business and the productivity per agent has started increasing with further new business improvements expected over the next three quarters.
After a strong performance in the corporate and public sector during the year to June 2015, both risk and investment recurring premium new business slowed down during this quarter. Securing new business in the group insurance and investment markets remains highly competitive.
MMI issued R1 000m of subordinated debt in September 2006 with a first-call date of September 2015, which was duly redeemed in line with the original intention and timeline.
In late afternoon trade on the JSE the MMI share price was 0.64% down at R24.75.
