RMI supported by Momentum as Discovery declines

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RMI supported by Momentum as Discovery declines

Published Date: 2019-09-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

RMI supported by Momentum as Discovery declines

The group has reported a mixed performance from its portfolio of investments due to higher claims and investment spend at Discovery and OUTsurance.

Rand Merchant Investment (RMI) Holdings has posted a decline in full-year earnings due higher spending on investments and a spike in claims at associate company Discovery and short-term insurer OUTsurance. But the fall was cushioned by a recovery at life insurer Momentum Metropolitan.

RMI also owns stakes in RMI Investment Managers and fintech company AlphaCode.

Releasing full-year results yesterday, the specialist financial services investment holding company said Momentum Metropolitan, in which it holds a 27.3% interest, made steady progress last year, growing normalised headline earnings by 53%, while wholly-owned groups RMI Investment Managers and AlphaCode performed in line with expectations.

However, Discovery reported a dip in earnings as it pumped cash into its new Discovery Bank and a range of other new initiatives. It also faced a sharp rise in death claims in the first half of the year. OUTsurance's earnings came under pressure due to higher claims and cost ratios across the group, coupled with a lower earnings contribution from its investment in UK insurer Hastings.

For the year to end-June, RMI reported a 4% drop in normalised earnings to R4.08 billion and a 5% dip in normalised earnings per share to 266.9c. On a look-through basis, based on share prices on 30 June, the value attributed to unlisted investments OUTsurance, RMI Investment Managers and AlphaCode, fell 16% over the period. Over the year, Discovery's share price increased by 1%, while Momentum Metropolitan gained 7% and Hastings fell 24% in rand terms. It's kept its final dividend unchanged at 65c per share, taking its full-year payout 5.8% higher to 110c.

Its shares fell 0.3% to R30.38 yesterday.





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