Momentum Group has delivered another record set of results for the year to 30 June 2025, with normalised headline earnings climbing to R6.26 billion – up 41% on the prior financial year. Operating profit rose 52% to R5.48bn, supported by robust contributions across Momentum’s portfolio.
Group chief executive Jeanette Marais (pictured) said the results reflect “solid operational performance across business units” and disciplined execution of the group’s impact strategy. Key contributors included annuity profits in Momentum Investments, improved new-business profitability at Metropolitan Life, stronger group risk earnings in Momentum Corporate, a significantly improved underwriting result in Momentum Insure, and steady growth from Guardrisk.
Earnings were also supported by positive actuarial assumption changes and investment market returns.
Group chief financial officer Risto Ketola estimated that even after adjusting for a number of favourable external factors, underlying earnings were about R5.3bn to R5.4bn – roughly 20% growth on the prior year.
Business unit performance
Marais highlighted that all businesses, except Africa, outperformed their 2024 earnings targets. Momentum Insure delivered sustainable profitability with earnings of R408 million, while Metropolitan contributed R868m after successfully completing its five-point turnaround plan.
Momentum Africa’s earnings remained subdued, but actions to strengthen its operating model were implemented from 1 July, alongside the sale of the group’s Ghanaian business. Marais said these steps should “set this business up for success”.
New business volumes: strong performance outside Corporate
New business volumes (PVNBP) declined 3% to R79.8bn (2024: R82.1bn). The breakdown was:
- Momentum Retail: +3% (R8.7bn vs R8.5bn)
- Momentum Investments: +2% (R49.3bn vs R48.5bn)
- Metropolitan Life: –6% (R6.5bn vs R6.9bn)
- Momentum Corporate: –24% (R11.7bn vs R15.4bn)
- Momentum Africa: +27% (R3.6bn vs R2.8bn)
Ketola noted that the 24% decline in Corporate was the main drag on group volumes. Excluding one large transaction booked in 2024, group sales would have shown a modest increase.
At Metropolitan Life, the sales force was reduced by about 15% over the past 12 months. Despite fewer agents, new business volumes fell only 6%, reflecting substantially improved productivity per agent.
In particular, the recurring-premium agency business remained almost flat year-on-year, demonstrating that the remaining sales team was operating more efficiently. Ketola highlighted that in late June, some agents were averaging more than four policies a week, nearly double the rate from a few years ago – a strong indication of better quality and focus in new-business acquisition.
VNB under pressure, but annuity earnings outlook resilient
Group value of new business (VNB) fell 20% to R469m (2024: R589m), with the new-business margin easing to 0.6% (0.7%), well below the group’s target range of 1% to 2% by 2027.
The decline was largely driven by weaker guaranteed annuity sales – one of the group’s highest-margin products – and a shift in Momentum Corporate towards lower-margin business.
Momentum Investments, which houses the group’s largest annuity book (about R40bn of retail annuities), saw annuity sales decline by roughly 25% to 30%. Yet Ketola said the earnings outlook in this line remains robust: “We’ve seen good CSM [contractual service margin] growth and subsequent CSM releases from that annuity book. Even though annuity volumes have declined, the amount of CSM we’re adding is still more than what we’re releasing. In other words, despite the recent decline, the current level of profitability in annuities is still multiples of what it was 5, 10, or 15 years ago.”
He added that annuity earnings growth remains favourable, and it would likely take either a further 10% to 20% decline in volumes or another three to five years for the annuity earnings profile to begin flattening.
The CSM vs VNB debate
Ketola acknowledged the recurring analyst question about why CSM growth appears healthy while VNB lags. Part of the answer lies in accounting differences (pre-tax versus post-tax), but he pointed to a deeper structural issue:
“We have an unusual mix of very profitable business combined with a lot of very onerous business. Almost all insurers globally carry some onerous contracts, but I do think we are unique in the size of both buckets. The benefit is that addressing onerous contracts can move our VNB and our growth rates quite quickly.”
Momentum made some progress during the year, including relaunching products to reduce onerousness, with more impact expected in 2026.
The group’s CSM grew 6% in FY2025, including the effect of positive assumption changes. Excluding these changes, growth was closer to inflation – a signal that sustained improvement in VNB is needed to lift longer-term earnings growth above an “inflationary” trajectory.
“If we can get our VNB to our internal target of R1bn, that inflationary 4% earnings growth could rise to 7% to 8%,” Ketola said. “That would present a very different picture for a large, diversified financial player in South Africa.”
ROE, EV and shareholder value
Return on equity reached 21.2%, already above the group’s 2027 target of 20%. Momentum’s embedded value per share increased 15%, and when dividends are included, the return on embedded value was 19%.
Despite share price gains, the stock still trades at a 15% to 20% discount to embedded value. Marais said the group sees “good value in the share buyback programme” as a way of continuing to return capital to shareholders.
Ketola added that Guardrisk, Momentum’s specialist cell-captive insurer, has become a significant driver of embedded-value growth, supporting stronger long-term returns from the non-life side of the business.
Dividend, buybacks and capital management
The board declared a final dividend of 90 cents per ordinary share, bringing the full-year dividend to 175c – a 40% increase on the prior year. Ketola highlighted that this payout is “towards the lower end of the new policy, but right in the middle of the range — a good outcome for shareholders”.
As previewed at the group’s capital markets day, Momentum has revised its dividend policy. The payout target has been raised from 40% to 50% of earnings, within a broader range of 40% to 60% (previously 33% to 50%).
Momentum has completed the initial R1bn share buyback programme communicated at the interim results, and the board has approved a further R1bn for buybacks, subject to Prudential Authority approval.
Ketola noted that buybacks over the past 12 months have doubled in volume, already having a noticeable impact on earnings per share, which rose 46%, outpacing the growth in absolute earnings.
