Our opinion on the current state of MTM

Momentum Metropolitan (MTM) is an insurance company listed on the JSE and the Namibian stock exchanges. It was formed by the merger of Momentum and Metropolitan in December 2010. The company participates in all aspects of short and long-term insurances and various financial services. The company was the first insurance company to achieve level 1 BBBEE status. The company is closing its businesses in Mozambique, Mauritius, Zambia, Tanzania, and Swaziland. At the time of the merger between Momentum and Metropolitan, they had a combined 24% of the life insurance market in South Africa. Today that has been reduced to just 17%. The company paid out almost R4bn in death claims in the 1st quarter of 2021 - three times higher than it anticipated, mainly due to the 2nd wave of the virus. The company said that it would consider managing with about 60% of its current office space because of the move to work-from-home as a result of COVID19. On 26th May 2023 Business Day reported that Jeanette Marais would take over from Hilgard Meyer as CEO on 30th September 2023. In its results for the year to 30th June 2023 the company reported net income of R125bn up from the previous year's 70,1bn.Earnings per share (EPS) increased to 313,3c compared with 260,6c in the previous year. The company said, "During July 2022, the Group, through its wholly owned subsidiary, Metropolitan International Holdings (Pty) Ltd, disposed of its entire shareholding in Metropolitan Cannon Life Assurance Ltd and Metropolitan Cannon General Insurance Ltd. A loss on disposal of R112 million was recognised. During October 2022, the Group’s holding in Aditya Birla Health Insurance Company Ltd (ABHI) was diluted from 49% to 44.1% with the introduction of a new shareholder as a partner in the business. As a result, a gain on deemed disposal of R563 million was recognised. The Group bought back a total of 73 million shares (for a cost of R1 250 million including transaction costs) during the current year.These shares were cancelled prior to 30 June 2023". The company said that its laspe rate had deteriorated over the period. Technically, the share has begun to move up in recent months and may be entering a new upward trend. On a P:E of 6,38 and a dividend yield (DY) of 4,84% it looks reasonably priced to us.