Momentum Metropolitan raises provisions


Momentum Metropolitan raises provisions

Published Date: 2021-02-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Momentum Metropolitan raises provisions

The insurance group says first-half earnings will be down as much as 50 percent after it increased its Covid-19 reserves.

Momentum Metropolitan Holdings has warned that its first-half earnings could halve after the impact of Covid-19 on the economy turned out worse than expected.

In a trading statement, the insurance group said it had to increase the provisions it raised when it reported its results for the year to end-September after the impact of Covid-19 was more severe than initially modelled. Claims related to the pandemic were especially high last month, it said.

As a result, Momentum Metropolitan has updated its modelling to take account of the most recent internal claims data, the South Africa Medical Research Council Report on Weekly Deaths, as well as possible future development of the pandemic in the country. Due to this, it decided to increase its Covid-19 reserves by about R850 million for the first half of its new financial year.

The company said this would lead to a 30% to 50% decline in earnings, headline earnings and normalised headline earnings per share for the six months to end-December from the previous comparative period.

Excluding the additional provisions, the group said its earnings were similar to a year earlier, supported by solid growth in the operating profit of Momentum Investments, Non-Life Insurance and its operations in Africa outside SA.

The group's results are scheduled for release on 4 March. Its shares fell 3.1% to R16.90 yesterday.

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