South African insurance major MMI Holdings Ltd suffered drop of 9.8 percent in its profit for the year ending June following the market volatility, economy slowdown and inflation rise.
Cape Town-based MMI Holdings is the third largest insurance company in South Africa. The company's net income eased from rand 3.3 billion to rand 2.98billion. Earnings per share (EPS) dropped 11 percent to rand 1.81.
The first half ending December 2014 also resulted in drop of 33 percent profit mainly impacted by the downfall in the local equity market. MMI Holdings has decided to enhance its efficiency and implement cost cutting measures. The insurer is focusing on top line growth to improve financial performance. The net income for the first half dropped from rand 1.8bn to rand 1.35bn.
To strengthen its business operations, MMI Holdings has decided to spread over different geographical markets. The insurer is implementing two-point strategy to improve top line growth. The strategy includes enhancing client base and improving the value of existing customers.
As part of its diversification plan, MMI Holdings forged a tie up with Indian business conglomerate Aditya Birla Group in October 2014 and two months later it acquired Imara SP Reid, a stock brokerage firm.
With a main objective of increasing the revenues, MMI Holdings is focusing on reducing expenditure and other costs, increasing operational efficiency. The employment growth rate and the level of disposable income in South African economy are major factors for insurance business growth.
South African insurer offers insurance on casualty and life, property, asset management, healthcare, etc. MMI Holdings has business units in Metropolitan, Momentum, Guardrisk and Eris Properties.
MMI Holdings has opened new branches and developed new products for the domestic market. The insurer is focusing on overseas operations as well, while strengthening the business in the domestic market.
The mature business is doing well for MMI Holdings, while its investments in new initiatives were not delivering the desired results owing to volatile market conditions and other factors in the domestic economy.
MMI Holdings is positive about the progress in its client-centric strategy. The client-centric strategy remains the main focus of the company. MMI Holdings business plan aims at providing lifetime financial wellness to its customers.
The number of policies was up at over 50,000 by December 2014 from 30,000 in 2013. During the first half, new business rose 11 percent to rand 420million. Present value of premiums (PVP) is considered, then the new business was up 15 percent to rand 24bn.
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