MMI Holdings Ltd. (MMI), South Africa’s third-largest insurer, said fiscal first-half profit rose 82 percent as the firm cut costs and a rally in the stock market boosted the value of investments.
Net income for the six months ended Dec. 31 climbed to 1.47 billion rand ($163 million) from 805 million rand a year earlier, the Cape Town-based insurer said in a statement today. Diluted earnings per share increased 77 percent to 94 cents, while the dividend rose 16 percent to 51 cents a share.
MMI has been cutting costs to shore up earnings after the merger of FirstRand Ltd. (FSR)’s Momentum Group Ltd. and Metropolitan Holdings Ltd. that created the company in 2010. The insurer, which operates in 12 countries outside of South Africa, invests some of the money it receives from insurance policies in the stock market and in the six months through December South Africa’s FTSE/JSE All Share Index (JALSH) rose 17 percent.
“Equity markets rose strongly during the reporting period while long bond interest rates closed slightly lower,” MMI said in the statement. “Targeted merger savings of 500 million rand are on track, with a reduction of 256 million rand recorded to date. Overall, the benefits envisaged as part of the merger rationale are being realized.”
MMI climbed as much as 3.2 percent to 23.47 rand in Johannesburg, the biggest intraday gain in almost two months. The share rose 0.9 percent to 22.96 rand at 9:33 a.m., extending an advance this year to 3.6 percent and giving the company a market value of 36.1 billion rand.
The insurer increased the value of new business an annual 18 percent to 340 million rand. The capital buffer, or cash set aside against insolvency, was 3.8 billion rand at the end of December, MMI said in the statement.
MMI also set aside 500 million rand for investment in Africa.
“The money is available either as additional investments or for the acquisition of businesses ideally in those 12 countries where we operate,” Nicolaas Kruger, chief executive officer of MMI, said in a telephone interview today. “Southern Africa is one growth area but more likely we will target a combination of East Africa including Kenya and Tanzania, and then West Africa with Ghana and Nigeria.”
To contact the reporter on this story: Renee Bonorchis in Johannesburg at email@example.com
To contact the editor responsible for this story: Dale Crofts at firstname.lastname@example.org