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MMI reviews parts of Africa business

Mar 4 '16 | By La Afrique Media | Views: 58 | Comments: 0

INSURER MMI is reviewing its business model in some African countries and is studying whether to withdraw from one or two small economies on the continent.

This forms part of the insurer’s plans to turn around the underperformance in its rest of Africa business and position it for better growth.

"There is a possibility that we will exit one or two small economies," CEO Nicolaas Kruger said after the release of MMI’s interim results in Sandton on Thursday.

He did not disclose which these small economies were.

MMI, which was created from the merger of insurance groups Momentum and Metropolitan, operates in 12 African countries outside SA.

It has a presence in Nigeria, Ghana, Zambia, Namibia, Botswana, Lesotho, Kenya, Tanzania, Malawi, Mauritius, Mozambique and Swaziland. These countries form part of MMI’s international business cluster, which includes the UK and India, where MMI will officially launch its health and wellness products in October.

Mr Kruger said MMI was looking at making its businesses in Kenya and Nigeria work better. "We have to look at how we operate in Kenya, especially in the nonlife business.

"We will also review the business model in Nigeria because of the state of the economy there," Mr Kruger said.

In Nigeria the company would look at distribution partnerships.

In Kenya, he said, the short-term insurance side of the business was not performing in line with expectations.

"We would like to scale up the business in Kenya.... We might need to do an acquisition," Mr Kruger said.

"In Nigeria we are in discussions with our partners. We would like to increase our stake. At the moment, we have a 50% stake," he said.

MMI’s interests in Nigeria are in a joint venture between United Bank for Africa and Metropolitan. The business is called UBA Metropolitan Life.

MMI’s international segment posted a 50% decline in diluted core headline earnings to R31m in the six months ended December, reflecting tough operating conditions.

Mr Kruger said the company had R2.7bn earmarked for organic and acquisitive growth and was looking to acquire a short-term insurance business in SA and do a bolt-on acquisition for its asset management business in the UK.

Momentum Retail, which includes life and short-term insurance businesses, reported a 5% decline in diluted core headline earnings to R705m, as claims below the reinsurance threshold increased.

Mr Kruger said this was not due to a pricing and poor underwriting issue. Many claims had come through, but the situation had normalised. In SA, Mr Kruger said MMI would look to roll out its short-term insurance offering at Metropolitan.

Metropolitan Retail increased diluted core headline earnings 14% to R311m, and the corporate and public sector business, which includes employee benefits, posted a 1% rise to R379m.

At a group level, MMI saw a 9% fall in diluted core headline earnings to R1.85bn. The value of new business declined 14% to R361m, while new business volumes rose 14% to R27bn.

MMI shares ended down 0.17% to R24.18.

Its interim dividend rose 3% to 65c per share.

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