Profits Down for Metropolitan Insurance

Metropolitan Holdings shows a poor profit performance in the past year They say that it was due to the bad economy and related factors that led to these results.

South Africa's fourth largest insurance group, Metropolitan Holdings, posted a financial report today, showing poor profit performance in the past year.

According to Metropolitan, the bad economy and related factors led to these results.

The rise in the prices of food and transport in South Africa in 2009, as well as unemployment challenges led to many people seeking ways to cut costs, with life insurance being the first to go in many households.

As such, profits for Metropolitan were down in 2009 as consumers defaults on their life insurance policies, or simply cancelled them.

The group saw a drop in the diluted core headline earnings per share for 2009 by 7% to 141c. This fell from 151 cents in 2008.

Metropolitan had foreseen these results and posted a 5 - 10% drop forecast beforehand.

Metropolitans products are targeted to the lower end of the socio economic market and therefore any changes in the economy are immediately felt among customers, and therefore affects the group.

Metropolitan believes that there are still many challenges ahead as food prices and other basic amenities have still not stabilized.

The insurance group's embedded value climbed to R12 billion (up from R700K less in 2008). Its new recurring premium business fell 9% to R1.159 billion.

Metropolitan nevertheless rewarded its investors with a full year dividend of 9%, saying that the increase is a sign of "an improved operating outlook".

"The board is satisfied that the group remains strategically well positioned, thanks to its strong focus on client service, product innovation, business retention, cost containment, diversification and capital management," said the CEO, Wilhelm van Zyl.