Momentum Group Limited (MTM) Earnings Call Transcript & Summary

Good morning. I'm Dan Moyane. Welcome to the presentation of the annual financial results of Momentum Metropolitan Holdings for the year ended 30 June 2020. We are coming to you this morning live from the company's head office in Centurion, so on this beautiful sunny September morning and all COVID-19 protocols are being strictly observed. Welcome to everyone as well, who's joining us this morning, the analysts, the investors, shareholders, directors of the company, employees of the company who are able to join us on Business Day TV, channel 412 on DSTV or live on our live webcast, that's via corpcam.com/mm09092020. And of course, the full results can also be downloaded from the group's website, that's www.momentummetropolitan.co.za. First up, I would like to thank the Momentum Metropolitan Group Investor Relations team for having put this results session and presentation together as well as the Momentum Metropolitan Marketing Events team as well for a job well done, under very difficult conditions, of course. The world is not the same anymore as we all know. Now as I was preparing for this morning, care to me, that this is the 10th consecutive year that I have the privilege and honor to emcee and introduce the group's financial results, be they the half year interims or the full financial annual results. My first set of results was in 2011, just a year after the merger in December 2010. With 2 sets of results per year today makes it for me the 20th set of results I've had the privilege to be the emcee of. I'm grateful for the opportunity. By the way, this is not a goodbye speech, okay? I'll be here again in March 2021. And a lot has changed in that time in the company. For example, for example, it is no longer MMI, it is proudly Momentum Metropolitan Holdings under a new leadership that's been solidly steering the company towards growth, albeit in a very different world than that of 10 years ago. The Group Chief Executive Officer, that's the CEO, Hillie Meyer, and the executive team adopted the Reset and Grow strategy in 2018, and by all measures, it has worked very well and produced good results. Last year, around this time, Hillie and the Group Finance Director, Risto Ketola, told us how well on track the Reset and Grow strategy was and how excited they were about the prospects of the company. The good news this morning, as you will hear shortly from Hillie and Risto when they present the F 2020 performance is that they remain positive about the future of this business. That's because by the time COVID-19 hit our shores, Momentum Metropolitan Holdings was on a solid footing, having achieved most of its reset objectives and delivered very nicely on some of its growth plans. This achievement placed the group on a solid foundation towards a business beyond COVID-19. This position also enabled the group to perform the way it has and produced the results it has in a very difficult environment. As you'll hear shortly, the group has done a sterling job in looking after its clients, advisers, employees and the communities in which it operates. I think a lot of people would appreciate how the company is doing its best to look after employees, supporting advisers, assisting clients, for example, with appropriate relief measures and thereby helping the country and its economy. In a way, for me, it's like a humbling experience. And I guess there should be thousands of grateful people, one would hope. At this point, I would like us to pause just for a few seconds and show our gratitude to the leadership: to Hillie Meyer and his entire executive team made up of Jeanette Marais, Risto Ketola, Johan Le Roux, Peter Tshiguvho, Herman Schoeman, Dumo Mbethe, Hannes Viljoen, Jan Lubbe, Nontokozo Madonsela and Zureida Ebrahim. Let's give them a round of applause together and their respective executive and management teams across the group. Now before I ask Hillie to take the podium, it's important that I advise you that right at the start now, that unlike in past years, this morning, we will not be taking questions from the floor at the end due to considerations brought of course by COVID-19. Hillie and Risto will address questions directly with the investors, the analysts and the media in 3 arranged sessions as soon as they are done here with their presentation. And on Friday morning at 10:00, they will further unpack these results and address questions from employees of Momentum Metropolitan Holdings in a very special webinar session whose details will be sent to your staff. Thank you very much. Over to you, Hillie.

Thank you very much, Dan. You were on such a roll there. I was hoping you were going to grab the clicker and just do my bit as well. After 10 years, I think you would have been very, very well-qualified to do exactly that. Yes, thank you, everybody, that's watching and also a special word of thanks for everybody attending. Thank you for the interest in our results. This was an extraordinary year. I mean, I'm at the twilight of my working career, and I've never experienced a year like that. I mean, yesterday, the growth numbers or lack of growth numbers came out. Now I think, first of all, the fact that it's a 50% drop, I think we should take with a bit of a pinch of salt because it's an annualized number. The real drop was 16% in 1 quarter. And I think we all know that we're not going to see 4 quarters like that. But still, it is amongst the worst growth numbers in the world. So obviously, we all feel that. This was a bittersweet year for Momentum Metropolitan. I must say, I'm very happy that there were some sweet aspects. Obviously, the bitter side is all as a result of COVID-19. I mean, there's the impact on health and life. We're all human beings, and we all feel the pain in 1 way or another. So I think sort of our thoughts go out to lots of clients, shareholders. Just worldwide, this pandemic has been devastating. So yes, and that obviously had a major impact on the economy because of lockdown and continued sort of measures that we just need to take to protect lives and so forth. And then ultimately, really negatively impacted our results. I think the sweet aspect obviously, I think our -- the way in which we cope with COVID-19 both from a servicing of clients and some of the relief measures, I think that -- I think that's something that we're very proud of, the way in which we coped. And I mean, ultimately, we're in the protection business. So I think it is actually quite nice. And I mean, in this case, insurance entities, both short term, long-term and so forth, we can actually positively, I think, play a role in sort of smoothing out the impact of COVID-19 on many of the individuals that were -- and businesses that were impacted most severely. So I think that's a positive aspect. But for me, the sweetest part of the last year was that we saw during the year -- and in spite of COVID-19, we saw the concrete evidence of our Reset and Grow strategy actually working for us. And as we always said, the more difficult aspect would have been in the grow side of it. And yes, this year, we saw the improvement in sales volumes at least up to the end of March and sort of market share gains in a few areas. So it was really pleasing to see the concrete evidence of that. In this presentation, I will talk about COVID-19. Maybe just a few general observations. Risto will deal with how it impacted our results. Then I'll just spend a bit more time sharing our highlights. And then finally, like I used to do since we've got -- implemented Reset and Grow, I'll give feedback on the Reset and Grow strategy. Now COVID-19, I mean, I think one of the things that we all become aware of lately is the excess deaths, it's not only the official COVID deaths. Now we all thought that there would be excess deaths. People -- many of that will be COVID-related. But I think the magnitude probably surprised us all. Just an interesting observation, our own claim stats reflect that. There's a significant number of deaths that -- in excess of just COVID death claims that we're paying. But it also reflects, I think, the geographical distribution that we see in the official stats. So that's just 1 interesting observation in this slide, and it's from our Momentum Health open health scheme. Just interesting to -- it again confirms what we all know by now, and that's that the older ages are most impacted. You can see there that also, that's where the impact of the COVID-19 is most severe. And you can see that older males are impacted a bit more severely than females, at least in the Momentum health scheme. And then also, just some interesting Momentum health stats. We just looked at sort of claims behavior over the last 7 or 8 months for different sort of lines, different sort of claim categories. This is pharmacy claims. The red is sort of the norm. And then the blue graph in this case indicates that in March, people obviously stocked up. I don't know, we all had our plans for what to do in the face of COVID-19. So it was 125% of pharmacy claims in March compared to the norm. And then that sort of dropped after that. Part of the reason for the drop would have been -- you can see our GP consultant claims dropped to about 50% of the norm. It slipped back, but it's still only at 75%. Similar trend, hospital admissions, which is also, I think, in a way, a bit of a concern for the non COVID-19 sicknesses and obviously, impairments that must be out there. Yes, we have got mammograms. And again, I think this is just maybe a concern that we -- I know it's important to focus on COVID-19, but we are neglecting probably some other important aspects. That's still only at 50% of the norm even as late as July. And then probably the 1 that sort of picked up the most is dental. And it's interesting, 25% still in April, which is higher than some other aspects. Okay. As far as highlights are concerned, and I picked out a number. I mean, obviously, I think we can't in this time, do justice to all the good things. But I mean, one of the true highlights was what happened in Momentum Investments. And in particular, our new business flows, new business, the PVP was 16% up on the previous year, and that's for the full year. So it includes the last quarter. So that is a very, very pleasing result. I think our platform net flows is evident there, the first time that we've seen a positive flow for a number of years, and it was quite a significant swing from a net outflow of just close to ZAR 1 billion to almost ZAR 2.5 billion in positive flows. And then finally, our in-house flows, those investments that actually ended up in our own sort of product sets, more or less doubled from last year which is very, very pleasing. I think related to that is the improvement in support from brokers. This is, again, platform business, in particular, and you can see there that we've got -- at a 25% increase in support from IFAs. So this one is for Stephen Cranston. I saw a tweet this morning where Stephen said, the only reason why you guys supported us in the past was because of our trips and so forth. Stephen, no more trips and look at the support from IFAs. Momentum Life now, you'll see when you look at the detail, the protection business and Myriad, in particular, at the upper end, sales numbers actually reduced and the present value of premiums reduced. But very pleasing in this set of results, and this is from all this comparison from NMG, shows that our support in the protection market and Myriad support improved by 10% from IFAs. And again, those are the things that really pleases me significantly. A major thing that sort of we worked very hard on behind the scenes and more of a reset element probably, but in August, we converted and transferred 1.2 million Metropolitan policy contracts onto the Momentum systems. It's been a long time coming, but it is a major, major, major milestone. It actually went very smoothly. It's probably the biggest conversion in the history, I would imagine, of this country. And yes, there's one more big migration in the pipeline. We'll probably work for another 2 years on that. So that's planned for not later than August 2022. Time flies, it will be 2 years. As far as Metropolitan Life is concerned, that's another one of, really, areas that improved a lot, especially on the distribution side. The graph on the left there shows adviser retention, probably easiest to talk to the red bar, which shows that retention numbers improved from 40% to 50%, which is still very high and not where we want to be. I mean, at the moment, we're still losing, and we need to replace in order to stand still, about 150 advisers every month. But it's a significant improvement on the 250 a month that it was a year ago. Also, you can see that retention is improving or the -- at least the churn rate is improving in experienced and inexperienced advisers alike. And then on the right-hand side of the graphs, will show that we did turn the corner. And we are increasing the size of the sales force again, and we're very happy at the number of advisers around the 3,400, where we are currently. Still on Metropolitan Life, productivity. This graph is interesting because it shows our productivity slumped in April and May and to some extent, June. But what's very, very pleasing is how it's recovered since then. July and August, it's -- and July and August are actually the best it was the last 12 months. And that's in spite of still the restrictions. So I think we've -- we're in a much better space as far as our just overall quality and quantity of Metropolitan Life product sales are concerned. And then the final graph on the right, there's premium persistency, which you'll see is still staying up there, but it improved significantly for debit orders, which is the red graph there. Another pleasing aspect this year. You need to scratch for it a little bit, but it is there in the Momentum corporate results. But I mean, 3 years ago, there was a loss of ZAR 150 million on PHI. And the last 2 years, in spite of major efforts, were still significant losses. And this year, before we allow for the reserve for COVID-19, there's a small profit on PHI claims. And I think that is a major, major achievement and something that we're really proud about. On the Momentum Health side, things are also not standing still in spite of the fact that the market is not really growing. This was the first time in 8 years that we've actually signed up for the open scheme, an employer group of more than 1,000 people, first time in 8 years. And it was a scheme of 1,500 members. I think that is significant. I remember at the analyst presentation 2 or so years ago now, probably 18 months, I said that Momentum Health is the best medical scheme out there. Well, at least there's one corporate that now agrees with us. As far as the restricted schemes are concerned, equally pleasing is that we actually participated in the tender process, and we've won a tender, and this is the first time that we actually gained a restricted scheme in the last 12 years. We've lost a number over the last few years, but in the year, we've gained 1. It will only -- basically, the effective date of this gain is 1 January. But it is very, very pleasing. As far as Momentum Short-term is concerned, the big event this year was the AFI transaction, a significant transaction where we bought Alexander Forbes insurance business for ZAR 2 billion. This graph shows that the red bars, the earnings numbers for MSTI on its own, which we can still measure on its own. And you will see that, that is the trajectory we had in mind, which is, I think, very pleasing. But even in the short period that we've accounted for AFI, they contributed ZAR 191 million to earnings, the combined position is ZAR 176 million positive now. I think the bottom line is we -- this is destiny changing as far as our personal line short-term business is concerned. So that was, I think, a very important strategic transaction that we did this year. And another very pleasing graph here is Guardrisk. Now since Guardrisk was acquired 6 years ago, revenue has grown by a compound rate of 15% per annum since then. Herman is sitting here. I don't know whether you knew that, Herman, I'm sure you know. But what's even more pleasing, if you break that down, the first 3 years, the compound growth was 12% and was 18% the last 3 years. I mean, as you can see there, the last year was even -- it was in its 20s. So I think the point is just Guardrisk is going from strength to strength, and that's in a very tough market and tough conditions. Another one of the highlights. It's something we're announcing now, it still needs to happen, but it's a very important milestone for us. I'd like to share that with all our shareholders and other interested parties, but we are announcing an intention to start an employee share option program, ESOP. We -- it still needs to be approved at the AGM this year at the shareholders meeting, which we'll hopefully do in November. The idea is that we'll purchase 3% of the Momentum Metropolitan normal ordinary shares in the market. It will be owned by all our South African staff members. All the staff members will be included but it will be weighted towards African and black staff members, we will be -- about 90% of the shares will belong to Asian colleagues and Indian staff members. The minimum requirement in terms of the trust is always 85%, but we're going to kick off with the 90% shareholding will be owned by some of our black colleagues. Yes, and it improves our -- I think our B credentials. And I think -- I just think that it is nice to actually secure an important [ BE ] shareholding and to actually share that with our own staff members rather than anybody else out there. Just on Reset and Grow, a few slides. I'm not going to go into the detail I normally go into. Also, just to refresh your memories, you'll remember that there were some reset components, and then grow components. Now the reset components, I mean, we reported on that in quite some detail, and that's also where we made most of the progress initially at least. So I'm not going to dwell on that today, and I'm also not going to cover all the growth targets. I'm just going to focus on those where we had some very specific measures. And I'll just sort of report back on how we're doing relative to the targets that we set. So we'll start with the Momentum agency footprint, where, as you can see there, we have plans to increase the number of agents to more than 1,000 by 2021. Last year, we reported that we ended the year, 30 June, 2019, with about 81 short of the number. This year, we're still short, but we're now only 38 short. So I think we narrowed the gap. But I think more sort of importantly, we would probably have caught up if it wasn't for the last quarter. We had sort of a net loss of 30 agents in that quarter in Momentum, in MFP, and we didn't recruit any members. Same picture for Momentum Consult, our own -- the sort of independent broker force in the group. Last year, we were 5 consultants ahead. This year, we're about 12 behind. But again, it's basically because of the last quarter that we just fell behind. So I think we -- as far as I'm concerned, we're back on track as far as footprint growth is concerned here. As far as growing productive brokers and all those brokers that meaningfully support our retail business in South Africa, this picture here doesn't look that well. But remember, the measure is as at 30 June. And as at 30 June, there were about 1,650 brokers above a certain level, but the last quarter impacted the number significantly. Just before COVID-19, we were very, very close to support from 2,000 productive brokers. So I think, again, that picture is probably not the most accurate reflection of the support we get from brokers. As far as Metropolitan Life is concerned, I've already mentioned some points, but this is what I normally refer to in the Reset and Grow feedback. Adviser productivity, again, you'll see that it dropped compared to last year. Again, it's because of COVID-19, I showed you on the graph earlier that if you just look even at July and August, there's already been a significant improvement. And also, you'll see there that payroll deductions, that stop order business, continues to increase as a percentage of the total business that we're writing which is obviously playing to improved quality of business. On the health side, there, we normally just give you an update on numbers. You can see there's not really been growth in the Momentum Health open scheme. I think what's very pleasing is our low cost product, low-cost offering, some very pleasing growth there. So it's really playing, I think, a meaningful role in providing medical insurance to a certain segment in the market, which obviously finds it very attractive. I think very pleasing, the GEMS numbers increased. The scheme that we administer. And then as I mentioned, on the corporate side, the restricted schemes, we lost 1 scheme late last year, but there's 1 scheme, significant one that we gained, that will boost the numbers, but that will only happen in January. We normally just indicate to you the increase in the underwriting component of Guardrisk revenue. That's where we basically on risk in the promoter cell. And as you would see, we increased the market share. And remember, Guardrisk had more than 20% revenue growth this year. So to grow this by 1% means that we're basically on track. We also mentioned that this won't ever be more than 30% or thereabout of the total business. So I think we will more and more, focus on quality. And not only on growth, not that we only focused on growth, Guardrisk always focuses on quality. Momentum Short-term. I think it will be fair to say that the 76,000 MSTI clients is a little bit lower than what we had in mind. But I think, keep in mind that we now acquired another 80,000, so we doubled in the number of clients, and more than -- close to double in terms of premium income. So this business is at a different level now. And I mean, it's more important that we make the most of the combined MSTI going forward. And so far, as far as integrating AFI into Momentum and working sort of 1 management team going forward and so on, we're very happy with the progress to date. And I would like to believe that all the ex AFI guys, they're now called Momentum Insurance, I'd like to believe that they all feel very welcome already. And then you will see further improvement in MSTI's claims ratio. Obviously, it was helped a little bit because, I mean, there was COVID-19, there were very positive claims experienced the last quarter. Just in general, on the Reset and Grow. That was -- we indicated that we're targeting ZAR 3.6 billion to ZAR 4 billion of normalized headline earnings in 2021. This is telling you what happened this year. We were, I think, pretty much at the top end of that trajectory, so pretty much on track. And this year, our normalized headline earnings, more or less halved because of COVID-19. So given the impact on the economy and so forth, clearly impossible to now make the 2021 targets. I think this is sort of reflecting 2 things. It's reflecting in the first-hand that we would like to get back to that ZAR 3.6 billion to ZAR 4 billion target range as soon as possible. I think we're indicating here that it would be possible by 2023. Obviously, there are lots of uncertainties, but I think the second important takeout from this slide is that in the coming year, that funnel of doubt is actually bigger than it will be, maybe longer term. It's very difficult to predict what our results will be, let's say, a year from now because it depends so much on how we cope with COVID-19. Will there be a second wave and so on and so forth. But I think this is as much as we can indicate for our intentions to focus on the long term. I think just a final slide for me, over the last year with COVID-19, I think we're very happy that we could provide relief of up to ZAR 500 million to our clients in many forms, whether it was premium holidays or claims paid to date and so on and so forth. And on top of that, keep in mind that we reserved another close to ZAR 1 billion in terms of claims that we're expecting going forward. So we're going to continue to look after our clients and provide the necessary relief. Also, we're quite pleased that we -- over the last year, we didn't want to almost lose, I think, some of the things that we've worked so hard on and that will allow us to grow our market share and to be out there in the market on the front foot going forward, which is why it was important for us to retain our advisers, especially the better performing ones. So there was some support and smoothing of -- or averaging of remuneration and so forth to help our own people over the difficult 3-month period. And then as far as employees is concerned, obviously, we provided safe working environments. More than 90% of our people were basically equipped to work remotely. We didn't expect anybody with any co-morbidities or whatever to come to the office if they couldn't work from home and that sort of thing. And also, I mean, I think an important aspect is that retrenchments or large-scale retrenchments because of COVID-19 is certainly not on the cards. I think we don't want to make any knee-jerk reactions. I think we would like to see the long-term and understand the longer-term impact of COVID-19. And it might just be that if the recovery is -- I don't know, maybe better than some of the scenarios, then we're going to need all our people, I think, to deliver and to keep on building the business. We're certainly looking beyond COVID-19 as far as the long-term is concerned. And I think from a shareholder point of view, obviously, I think this COVID-19, again, demonstrated a resilient balance sheet. Yes, earnings was impacted severely. But I think in an event that, as devastating as COVID-19 where we already reserved for events will come in the coming year and we still deliver 50% of what would have been results without COVID-19, I think, is relatively acceptable in the circumstances. And again, I think it's the longer term prospects, which are most important. I saw a quote on Twitter yesterday from the CEO of Allied Electronics, and it reminded me of what we're doing. It's Mteto Nyati. And you can follow Mteto. He's got lots of I think very wise things on Twitter. The quote he says, "Happiest people don't have the best of everything. They just make the best of what they have." And I think that's what Momentum Metropolitan will do in the coming months. We're just going to do the best with what we have. Thank you very much. I'm going to hand over to Risto.

Yes, thanks, Hillie. Also, Hillie, thanks for the wipe down. Thank you very much. Hillie uses the word extraordinary period. I'll try and up it and say, it was extra extraordinary. In fact, 6 months ago, I said these are a pleasing set of results. This time, I think I'll say, I'm pleased we have results to present. It has been a dramatic 6 months to say the least. Now in terms of what -- where our key financial results, you'll see normalized headline earnings basically halved from ZAR 3.1 billion to ZAR 1.5 billion. We have to be careful not to get distracted by what could have been. But I will say that, that ZAR 1.5 billion is net of ZAR 1 billion for COVID-19 related claims, so provisions for future claims. And ZAR 1 billion impact on the market volatility and weakness we saw in the last 4 months of the year. So I would argue that adjusted, the earnings were about ZAR 3.5 billion. And I think that 10% growth reflects what we truly believe to be the underlying growth pattern in our operations, which was sort of a bit more under our own control. Also, normalized headline earnings per share, a similar decline of 50%. You'll remember that the last couple of years, our shares -- per share numbers have been better than our absolute numbers because of the buyback a couple of years ago. The impact of the buyback on our shares and issue is now out of the system. So these 2 numbers will look similar. I don't think we'll be doing buybacks anytime really soon in the current environment. In terms of sales numbers, a 10% decline in sales. Last year, we had 1 very large annuity deal we have mentioned a few times, a ZAR 5 billion transaction. I think it is very -- more than satisfactory to have flat sales in the current environment because the last 3 to 4 months were definitely impacted by the lockdown. And I'll show you some of those trends. So I would expect us to gain market share, particularly in the retail businesses with the numbers we're showing. Value of new business also halved. Now there's a big sales machine out there that needs to be fed. So there's a lot of operational gearing between the volumes and new business profitability. Again, I think I'm quite pleased with the ZAR 280 million. It would have been very easy to go to a 0 or negative VNB in light of the dramatic decline in volumes late in the year. Embedded value per share, ZAR 25.70, ZAR 10 higher than our share price, but that's a matter for shareholders to worry about than us. The return on embedded value was negative 4%. Again, I think you need to contrast that to the equity market doing about negative 10% over the same time period. As long as we can keep growing our embedded value faster than the equity market, long term, our shareholders should then be in a relatively good position. I'll talk on this slide for a while. There is an appendix that shows details per business unit. And obviously, the analyst pack has extensive commentary on every business unit. I thought I'd just highlight 1 or 2 interesting items in each of the business units to give you a flavor of some of the less than obvious items. Starting with Momentum Life, if we add back COVID and market-related items, those earnings are still only just about [ 800 ]. In other words, Momentum Life is the one business that probably did go a little bit backwards in terms of normal earnings. The 2 key reasons there are mortality and multiply discounts. So in mortality, before COVID-19 hit, we were also seeing a couple of interesting trends, in that low-income market segment mortality was very favorable, but in the upper end of the market, we did have weaker claims experience than in the previous few years. And I think it might be an industry-wide trend to keep a look out for. The second item is that we have a Multiply wellness program that's sort of -- we're very proud of. And in some ways, it's a good and a bad thing, but the level of discounts that are available to our clients for using that program together with the products, they were wider than we thought. So the discounts from premiums was about ZAR 20 million, ZAR 30 million more for the year than we budgeted for. Also, what we have now decided that we're going to assume a higher level of discounts for a few more years. So we have changed our modeling of those discounts. The present value impact of that decision was about ZAR 150 million. So there were 2 big items in there not relating to COVID. Momentum Investments. This business is asset management, but it also includes our wealth platform and it includes our annuity book. And it was the annuity to book where we had about a 300 million negative variance because of fixed income market. Let's call them dislocations. A lot of headlines always go in the equity market, the stock market, which had a big dip in March, April, then recovered quite nicely. But the fixed income market is a bit less than the headlines, but we see credit spreads widen significantly. We saw the yield curve sharpen more than we've ever seen before in terms of the shape of the curve. And we're also seeing quite unusual behavior between, let's say, the bank swap spreads, government bond spreads. So there's a lot of unusual features in the fixed income market, and that all sort of came through in our annuity book, and there was about a ZAR 300 million annualized loss on the annuities that is affecting Momentum Investments. Metropolitan Life, and Hillie spoke that this business is doing really well and has implemented very successfully in terms of Reset and Growth. It's probably the business I feel worst for because it's the most affected by the noise rather than the reality. I would have argued that before COVID-19, this business was heading towards about ZAR 700 million of earnings, which would have been a nice recovery in their performance. The items within that ZAR 400 million is -- there's also annuity book in Metropolitan Life. So we have 2 annuity books, we have one in Metropolitan Life and 1 in Momentum Life. This business also set up very large COVID-19 provisions compared to some of the other segments proportionately. And it really reflects the fact that in July, we started seeing the claims increase exponentially in Metropolitan, which wasn't maybe the case that we saw in Momentum Life. So we ended up providing quite high level of excess mortality in the Metropolitan reserving at year-end. So there's a bigger than average impact on Met from the COVID-19 provisions. And lastly, there is a smooth bonus book as well. So a majority of the savings business in Metlife's client segment goes into Smooth Bonus, and we had to increase our guarantee reserves quite a bit because of the market volatility. On the positive side, the mortality, excluding COVID, was very strong. Premium collections have remained excellent. It's actually probably one of the biggest positive surprises in the last 4 or 5 months is despite of the economic slowdown, the impact of focus on quality and salary deductions rather than bank debit orders means that our collection rates are actually better now than 12 months ago in Metropolitan. Also, the business maintained expenses very well despite quite nice upgrade to branches which is having other benefits in the current environment. Again, digressing a bit from the script, but it has been interesting to see how many people have come back into these branches and the level of activity picking up in Metropolitan, which again illustrates the importance of physical branch presence in this end of the market. I think we all want to go more digital, but in the lower end of the market, we have to offer both physical and digital servicing models. Momentum Corporate and Health, there's 2 quite different businesses in here. I'll start with the health business. Earnings were close to flat year-on-year. I think Hannes and his team does a wonderful job in an extremely complex environment. So the health environment is heavily regulated, quite emotional, somewhat political, a lot of moving parts there. And they produced another year of steady earnings despite everything that was thrown against them -- at them. Momentum Corporate on the other hand, earnings then declined more than the 57%. So Momentum Corporate earnings were severely impacted by a number of factors. One thing is that we did provide significant IBNR reserves at year-end. So we have seen sort of quite slow claims during the lockdown, but we always expected that there will be a catch-up beyond the lockdown being lifted. So there was large IBNR reserves at year-end, which in retrospect, was a good idea. We have also set up specific COVID-related reserves, also quite large. Again, larger proportionately than Momentum Life. The Smooth Bonus business and annuity business. So doom or bad luck, but you have all the lines of business that were negatively affected in your segment. If I have to say something positive here is, it always gives me encouragement to just to see how big a franchise we have there, the loyalty of the clients, the fact that we are always competitive in all the big deals. The fact that funded work is probably the benchmark in the umbrella fund segment. So this was just a difficult year because of external factors. Non-Life Insurance. This also includes 3 quite different businesses. Hillie mentioned AFI. He actually gave you a full year number in earnings. The earnings contribution for the 5 months was ZAR 18 million. And as shown, the loss in MST, I narrowed to ZAR 20 million. That hides the fact that Guardrisk profits went from ZAR 200 million to ZAR 330 million. That is despite another ZAR 100-odd million impairment on sales and deficit. So these are clients that we are expecting to recapitalize their facilities, but haven't done so, so we're taking a conservative stance. There was also a big premium collection agency that went into financial trouble. So that was another impairment. And there was the business interruption claims, which I'll talk about less. So despite all these negative one-offs, earnings growth was more than 50% in Guardrisk. 6 years later, the ZAR 1.6 billion looks cheaper. Anyone? Okay. And then Africa, another good story here. There was a one-off tax gain early in the year in Lesotho, which explains a big part of that growth. Now there's been some uncertainty on how the tax life insurance profits in Lesotho for a number of years. And we were providing tax at a conservative understanding of that. That has now been settled with the revenue authorities because the effective tax rate is lower than we had sort of provided it. We had about a ZAR 70 million release of deferred tax liabilities coming through in the year. Even beyond that, Africa was less affected. The lockdowns were less severe in a lot of these countries. I think in Kenya, they had a nightly curfew. In Namibia, it was more regional, the Windhoek area. And in Ghana, for example, the lockdown period was very short. So the operational and economic impact in rest of Africa wasn't quite as harsh as here. New initiatives. The main item there is India. India, this is the bottom of the J curve. In Indian rupee, we're seeing quite good improvement or narrowing of the losses in the last couple of quarters. Unfortunately, the South African rand depreciated about 20% against the rupee. So when we translate to earnings, our loss was a bit higher this year than last year. It doesn't change the statement that we believe we are through the bottom of the J curve. In rupees, it's very visible, and I think in rands, it will be visible in the coming year. And in terms of top line growth, we continue to be very excited about this business. Our partner is doing a fantastic job there. We're up to 8 million clients from a 0 start in 2016. I think this is a phenomenal business that we are partnering in. Shareholders. That's the head office. I mean, Hillie, generated 25% decline in earnings. No, so what that really is, is our investment return on our own investments, our own risk capital investments less head office costs, which were well-contained. But in terms of the investment returns, we have about a ZAR 12 billion, ZAR 13 billion investment portfolio of highly liquid, high-quality assets. They are mainly variable rates, so the reduction in the short end of the yield curve resulted in lower interest earned. And we also did buy Forbes, so we had about ZAR 2 billion less cash lying around in the second half of the year. So call it average balances, average interest rates both went against it. And then a more volatile item in here is the venture capital investments. Last year -- it's only about ZAR 500 million portfolio, but obviously, very volatile. Last year, we had about ZAR 100 million gain. This year, unfortunately, we had about ZAR 100 million unrealized loss. So there's a big swing factor on venture capital, as you would expect. Okay, so that was a 10-minute slide. I promise you, I'm not going to spend 10 minutes on each of the remaining 20 slides. We might be here for a while. Okay, this is just a more scientific expression of what I said earlier, of how we got to the 3.5 billion of underlying earnings, just illustrating the big impact of both COVID-19 provisions and market impact. And these are after tax, so the pretax provision was about ZAR 1.3 billion. In EV, it was even higher, closer to ZAR 2 billion pretax. This next slide is interesting. It just illustrates that we are a little bit different to a lot of our peers. Now on ZAR 950 million provision, it's mainly mortality. The impact of lapses, business interruption gets a lot smaller than what we've seen for a lot of our peers. I think it is important to remember that our health business is big but only contributes, let's say, 10% of group profits. Item management, big. It's big, but also quite a small contributor to profits compared to some of our peers. Our short-term business is growing, but it's still quite small. We are a life insurance business. And you can see that our mortality provisions for COVID-19 are large, in both absolute sense and in relative sense. On the other hand, our termination exposure is small. Now this reflects 2 related items. One thing is that our product designs tend to be -- we would consider a bit more conservative. We don't have massive premium escalations in a lot of our retail products. Clients pay what they pay and they're covered. It also means there's a lot less future profit that we can or do book upfront at the point of sale. So getting technical here, our negative rand reserves are actually very small. It's about ZAR 2 billion on Myriad and about ZAR 1 billion on Metropolitan funeral. Those numbers are about a factor of 1/10 of some of our retail peers. So it's a combination of product design and accounting policy. We are just not that exposed to lapse risk, with which, I think in the current environment is positive. Non-life insurance claims, that is just a -- we could have just put that in business interruption because that's what it is. We are assuming a net of reinsurance pretax loss of ZAR 50 million relating to business interruption in insurance. So it's ZAR 38 million after tax. It's important that the actual gross exposure, the amount of money we're planning on putting back to our clients is ZAR 600 million. Now because of Guardrisk's history and careful capital management, there's extensive reinsurance. So again, at a gross level, these numbers are quite comparable to our peers, but net of reinsurance, our exposure is very small. Yes, I don't know if it's lucky or smart, but I think in this case, it's smart, it is Guardrisk. Okay, and the last item, which is not here, is retrenchments. So as a group, we have had a -- we try to avoid retrenchment risk. We had some exposure a couple of years ago. Exposure is now very limited. Even in Guardrisk, who partners with the bigger banks, big retailers, mobile phone companies, Guardrisk is a big player in credit life insurance, but they're really an intellectual property provider partner. The actual risk is carried by the retail partners, for example. So our financial exposure is quite limited. Okay. Just moving on to some consolidated results. Just looking at sales first. As I mentioned, earlier last year, we had 2 spikes here, both relative to EB. The big one was the first quarter when we had a ZAR 5 billion annuity deal come through. Despite that, we're only down 10%. And I think the Momentum Investments, volume growth of 16%, is a particularly impressive achievement in the current marketplace. Also, Metropolitan Life down 4%. It will be interesting to see as the numbers come out in the industry, is -- and I'll show in my last slide of the presentation. We're internally quite surprised positively of the ability of Metropolitan to sort of reinvent its way of operations to be able to continue selling through the last quarter as well. So Metropolitan Life and Momentum Investments were definitely positive surprises for the year, both pre- and post-COVID. Africa also recovered. I think performance there, particularly Lesotho and Botswana, both in terms of volumes and VNB was exemplary. Momentum Corporate -- sorry, Dumo, that you're sitting in right in front of me. No big deals this year, so that reflects a more normal level of volumes. And Momentum Life was actually doing okay, but Momentum Life was probably more affected than other businesses by the lockdown. And again, that was a bit of a negative surprise, and I'll explain that a little bit later. How that converts into margins, a bit of a mixed bag here. 6 months ago, they were all pointing up. Unfortunately, now, they were sort of all over the place. But Metropolitan Life is a good story again, to be able to grow VNB margins through the lockdown is impressive. And again, I keep banging on about the same fact, quality of sales, experience of the agents, selling businesses in lapse on the first day, collecting more through debit order -- sorry, stock order, definitely not debit -- yes, stock order. So that is all playing through here. Also Metropolitan Africa, Namibia is still VNB negative. However, in Lesotho and Botswana, we've seen significant improvement. And again, a bit like Met, it's a collection of things, looking at the remuneration of agents, looking at the pricing of the products. There's no magic wand, it's just a collection of activities. Momentum Investments, quite a stable margin, a little bit of improvement reflects the 16% growth in volumes. Then the negative stories here is Momentum Life. Momentum Life has this big, big sales engine. Let's call it platform -- no, bad word, engine. It costs ZAR 700 million a year before we sell a single policy. That is sales managers, branches, agents. In the last quarter, our sales literally dropped by 30% or 40%, very quickly go from a thin margin to not covering those fixed overheads. So Momentum Life actually had a negative VNB in the last quarter, and that explains the dramatic decline in the margins, 9 months versus 12 months. And again, it highlights what Metropolitan did. Metropolitan also has this big engine of ZAR 200 million a quarter that needs to be fed. Then Momentum Corporate. Here, the fixed costs are nowhere near the same level as the retail shops, but there is still a level, maybe ZAR 50 million a quarter of, let's call, them overheads of distribution. Also what happened during the year is the big deals we got this year tend to be savings products, whereas last year was annuity products and risk products. So volume was down ZAR 50 million but the mix within the ZAR 50 million was also towards lower margin. Okay, embedded value. I'll make up some time on this slide. EV profit before COVID and so on, ZAR 3.4 billion versus ZAR 3 billion last year, ZAR 3.1 billion last year. So again, that 10% number keeps popping up as a reasonable judgment of our operational performance. And you'll see the COVID and market impacts are bigger here than IFRS earnings because of the future-looking calculations of the EV. Capital, also short and sweet slide. Capital ratio dropped from 2.1 to about 1.85 in June. What is important that even though during the height of the crisis in March, we never felt that the lower end will be breached. We got close to it. But the whole point of having a capital range is to operate within that. And I think we've been through a real-life stress test and the fact that our capital ratio has held up extremely well is something that gives us comfort and liquidity management. So a lot of things that have been done on spreadsheets, hedging off of the right of market risks. We've all done it in real life now, and it went well. We learned a few things, but we feel more comfortable than less comfortable in terms of our risk management after these events. Also, what we haven't really made that clear is we did redeem a ZAR 750 million Tier 2 bond in June. So the capital ratio is also affected by a reduction in our gearing which is other benefits in terms of risk management. Dividend. I never thought paying a 0 dividend would be such an easy discussion. So our dividend policy is to pay out 1/3 to half of our earnings. There was no earnings. We actually made a small loss in the second half of the year. So we decided our dividend policy, we'll stick to it. One could have argued, yes, your capital ratios are good, pay out some small dividend. But we believe in the current environment, the right thing to do was to make sure that our balance sheet and our liquidity position is as strong as it can be. Also, the last bullet point there is important. We do projected balance sheet modeling frequently, partly internal, partly for regulatory reporting. All of that work supports the current dividend policy of sort of 2x to 3x cover. That basically tells you that we expect to redeem -- reinstate dividends once our earnings recover. We don't really see any reason to warn people about long-term dividend paying ability. Okay, some topical matters. I always close up. It's normally 3, but this year, there's 4. The first one is resilience, diversification. One of my more wise guy actuaries asked me, do I want this slide in here this year because earnings halved. And the answer is, of course, but diversity of earnings is always important. And the fact that earnings declined, that's not the whole part of diversification. It could have been a lot worse or it could've been a lot better if we were a less-balanced business. Now the 2 parts I show here in blue is our admin profits. So this is medical scheme administration, pension fund administration. Big part of Guardrisk business is really providing admin services. And that actually went up by 15%, 20%. So as you would expect in the crisis, the admin is stable, maybe less exciting, but it sort of makes some money every quarter, pays the bills, good business. On the other hand, in red, the equity market is not what really caught us, it was the fixed income market. I mentioned right in the beginning, the shift in the shape of the yield curve, credit spreads, specific names, impairments, swap versus government basis spread, it was a crazy couple of months on the fixed income side. And it is our annuity book, which normally is a very stable source of ZAR 500 million of profit, let's say, that almost shrunk to 0 profitability in the last 12 months. This is a more actuarially, visually-pleasing numbers table, the same. It just shows you, again, in the third quarter, every product range got hurt by the markets because equity markets fell the same time as the bond market started giving us some gray hairs. In the fourth quarter, the equity market recovered. So you see product lines like long-term savings in traditional, which were a lot of Smooth Bonus and reversionary bonus. All those earnings recovered with the equity markets recovering. Unfortunately, the annuity book continued to make widening mark-to-market losses. And you could argue that, let's say, the annuity mark-to-market losses were reversed, then all of a sudden, the fourth quarter rebound would have been almost like what everybody expected, looking at the stock market index. Yes, so fixed income. I mean the market has improved a little bit. But obviously, in the current economic environment, I don't want to make too many statements about credit risk. We have to sort of wait and see how that plays out. Hillie took the Momentum Health scheme slides. Very cool data there about utilization of different services. I thought, let me take the Metropolitan details and also provide some interesting numbers. This shows deaths in Momentum -- sorry, Metropolitan that we actually marked COVID-19 on the death certificate, okay? And those peaked at 300 during July. Now the first thing, some people would say 300 is a lot because there was probably 10,000 in the whole country. How can you be 3% of claims? It's because Metropolitan insures 5 million people. The average policy, Metropolitan, has the premium payer, the spouse, the parents, maybe children. So very quickly, those 1.2 million funeral policies become 5 million lives. We ensure literally 8% of South African population. So no wonder that our claims are so high as a proportion of overall claims in the country. The other point this illustrates very well is that if you look on the bottom left, those are the total claims. There's always some seasonality. So South Africa does have cold winters. So we do have more deaths in the winter. It jumped in June from 6,000 roughly to about 9,000 in July. Now that is a much bigger jump. It's probably about 1,000 more than we would normally expect in the winter. So that ties into the excess deaths being probably 2x to 3x higher than deaths actually marked as COVID-19 on the official cause of death. The other one that shows is that in August, our excess deaths didn't fall at the same speed as the COVID death. We've talked to Hillie's other point about lack of clinical treatment protocols, preventive care, so we might end up with a situation where the COVID-19 deaths dropped rapidly. And hopefully, there's no second spike, but the excess deaths might take longer to normalize because of the impact of access to health care and preventive care. And the last point to note is the age distribution of our deaths is a little bit different to the national population. But I suppose it also shows that not every policy covers parents as well. So maybe there's a bias towards exposure at working ages. Okay, I mean, the good thing about working for a life company during COVID-19 is we actually have excellent data internally, which I think made a bit easier to take rational decisions in a lot of the planning. Okay, my last slide on results themselves. This shows monthly sales numbers. I saw one of the banks showed monthly credit card activity. So I thought this is even more interesting to insurance people. Maybe the big story here is, compare the top left Momentum Life, sales dropped 37% quarter-on-quarter versus Metropolitan Life that dropped only 14% quarter-on-quarter. 6 months ago, we expected the total opposite. So what happened here is in Metropolitan, the sales force adopted the digital and straight-through process type of way of processing new business a lot quicker than we thought. So we have had these tools available for a couple of years, but the adoption has been very poor. The crisis forced people to speed up their migration from paper to paperless. And it happened in Metropolitan dramatically quickly. The other point to note there is that there's no medical underwriting on these policies on funeral policies. What quarters out in Momentum Life is a lockdown resulted in inability to have nurse's visits, inability to do blood test, inability to get lab time from blood tests, hard to get doctor's visits. So the strict underwriting of Momentum Life had a dramatic effect on ability to write any business in the heart of the lock down, whereas in Metropolitan, that factor wasn't there. So Metropolitan was a positive surprise. Momentum Investment is also a positive surprise. Obviously, the markets dropped a lot more dramatically than 14%. But that wealthy segment, there was, in mind, the need to do something with it. And the fact that we have a lot of low-risk balance sheet products meant that we actually got quite a good -- a lot of flow as people were de-risking their portfolios. Some Momentum Investments are, again, good. In Corporate, and Africa has also a bit of a corporate story. Corporate business is so volatile that 1 or 2 big schemes actually hides all trends, even during the COVID. So what happening, Momentum Corporate in April, we signed up one of the big universities, so resulted in a nice spike there. And in Africa, we signed up, I think, 3 different corporate clients in Botswana in May and June, and there might have been one big one in Lesotho as well. So the Corporate business is just so volatile that it's hard to read any trends in short term. The Corporate guys are saying the pipeline is not looking too great, but they always say that. But maybe in the current economy, we'll take it a bit more seriously. And at group level, the 5% reduction in monthly run rate of sales. I would have taken that on 26th of March, for sure, if offered. So that was a good outcome. Okay, I'll close now. So that was the financial results. I think the short summary is, high level, they don't look great. But when you dig through it, I think we're very happy with the operational performance and our ability to operate through the crisis. Then just in more general closing, I think it's important that at every chance we get, we thank people who have really put themselves at risk. So these are frontline, health care staff, obviously, emergency workers. Some people do not have the luxury -- didn't feel like a luxury, but the luxury of staying at home and staying sheltered. And those people's efforts made sure that we were safe, mainly safe and that the impact of the pandemic was minimized. The second thing is I want to also thank our clients. Now we've seen the economic data, as Hillie said. The fact that our premium collections remain as good as they are, I have to thank our clients for their loyalty and for trusting us with an ever tightening belt in terms of looking after their financial needs. Insurance accounting can be quite funny, but I can tell you now, with no clients, there's no money. So we need to thank our clients. Thirdly, just thank our staff. It required a lot of perseverance and grit. The first few weeks of lockdown were quite interesting. Then it started becoming a bit dull. Then load shedding started becoming a little bit more than just dull. Also, the finance team deserves a particular thank you. I mean, producing these results, working from home, load shedding, everything was a massive effort. So thank you to all our staff. Our service levels, again, held up much better than we thought, so a real-life business continuity test, and we passed. And then last point is -- similar to Hillie is we did try to portray a sense of realism, but also a sense of optimism. So for example, we're not planning on mass retrenchments, we're not planning on shutting things down. We're going to continue investing, working on things, improving things to make sure that when the tide turns, we're the biggest beneficiaries of tide turning. And that talks about our belief that South Africa has massive, massive latent potential. And we want to be here, and we want to make sure we reap it when that time comes. Also, there is a classic saying of never waste a good crisis, so hopefully, some of the economic data we've seen lately in unemployment data, we hope that we see tangible changes in economic policy towards a more growth-driven agenda, which will then ensure that everyone benefits in the potential and prosperity that could be in South Africa. Thank you very much.

A note about optimism, being positive as a company, a group about the future. Hillie used the word bittersweet. And I was thinking, okay, it's been a bittersweet year and we're almost close to lunch, and I start to think of the sweet and sour sauce. Just to think, this is -- it's not that bad. After all, you can enjoy bittersweet moments. Well done, Hillie, again, well done to the team. As I said right at the start, they will not be taking questions from the floor, unlike in the past years. We are restricted in that way, of course, by COVID-19. However, Hillie and Risto and some of the designated executives are now going to go away and do -- and will be doing sessions and answering questions from investors, from analysts and media in prearranged sessions. And especially on Friday, don't forget, and details will be shared with the staff of Momentum Metropolitan Holdings, they'll be hosting a special webinar session at 10:00 in the morning. And those details will come to you as employees. And thank you very much for everybody, for having attended today here, the head office in Centurion for the presentation of the financial 2020 results of the group. And thank you, everybody, who's joined us on Business Day television and on the webcast as well. And wherever you are, please continue to stay safe, observe all those safety measures that are needed, washing your hands, sanitizing and observing social distancing. And of course, wear your mask. Thank you very much.