Good day, ladies and gentlemen, and welcome to Momentum Group Limited's first quarter 2026 update. All attendees will be in listen-only mode. There will be an opportunity to ask questions if prompted. If you need assistance during the call, please signal at operator by keying in star and then zero. Please note that this event is being recorded. I will now hand over to Jeanette Marais. Please go ahead, ma'am.
Thank you. Good morning, everyone. I welcome all our shareholders and our key stakeholders to our operating update for quarter one of financial year 2026. I'm joined on this call with me in the room by our Group Finance Director, Risto Ketola, as well as Rowan Burger and Abdul Gora from the Investor Relations team. To kick off, this quarter, we entered the second year of our three-year impact strategy after we ended the first year on a very high note. We managed to continue the positive earnings trajectory into the first quarter of F2026, and our strong operational performance resulted in normalized headline earnings of ZAR 1.76 million. Positive market variances contributed ZAR 201 million to our earnings versus ZAR 570 million in the previous comparable period, which highlights the strong underlying operational performance. I'm very happy with our sales, which improved by 8% to ZAR 22.4 billion.
There's also a pleasing improvement across the segments, but like peers, we have seen a fall in the profitable life annuity product line as a result of a reduction in long-term interest rates. To put that in perspective, we've seen a 28% year-on-year drop in life annuity sales, but only an 8% drop on the previous quarter. Despite the overall reduction, we have seen an impro—sorry, let me just go back one. This was a key driver in the disappointing VNB decline from ZAR 197 million to ZAR 146 million. Despite the overall reduction, we've seen an improvement in VNB in all our other businesses. As a consequence of the decrease in VNB, our new business margin reduced from 1% to 2.7%. This remains a key area of focus as we strive to achieve our impact ambitions.
We are encouraged by the excellent earnings performance we achieved over the past quarter, but we will maintain our enhanced focus on driving sales volumes, managing our expenses, and improving the VNB margin in the near term for each business unit. The outlook for South Africa indicates modest growth due to improved energy availability and transport logistics, easing interest rates and inflation, and the successful exit from the Financial Action Task Force grey list and ratings upgrade. A reduction in the inflation target is a welcome relief for our investment clients, but it does mean in the short term we expect lower economic growth. Risto will explain the broader impact on our various business lines. While the green shoots of a recovery are encouraging, our operating environment remains challenged by an increasingly competitive landscape, with subdued economic growth and the elevated cost of living affecting new business growth and margins.
Despite this, we believe that the F2027 impact targets we had set for ourselves remain achievable, namely, normalized headline earnings of ZAR 7 billion, ROE of 20%, and a VNB margin of between 1%-2%. I will now hand over to Risto, who, as you know, has a knack for not explaining the complex results simply, but also to tease out some further points of interest. Thank you.
Yeah, thanks, Jeanette. I must say that, just for context, last year we had earnings of ZAR 6.3 billion. At the time we said that those were probably about ZAR 1 billion above normalized earnings, sort of half explained by markets being so strong and half explained by underwriting being so strong last year. We said that we think ZAR 6 billion is a good number for 2026, so that is ZAR 1.5 billion a quarter. We did ZAR 1.75 billion roughly for this quarter, knock off ZAR 200 million for investment variances. You can sort of see that we are on line with what we thought was quite a, maybe not a crazy ambitious target, but like, you know, a meaningful target of ZAR 1.5 billion a quarter. A very good quarter adjusting for one-offs.
Now, we did not disclose last year's first quarter number in the trading update because we didn't do a full consolidation. However, lack of a matchbox calculation basically gives earnings of about, let's say, ZAR 1.8 billion-ZAR 1.9 billion for the first quarter. We're down a little bit on 1Q last year, but as Jeanette said, investment variances are maybe ZAR 300 million lower. Again, sort of operationally, you could see that there's quite good progress being made in the business. No matter how you slice and dice it, there's more positives than negatives in this number. You might wonder why investment variances are so much lower than last year. I mean, bond markets rallied in both periods, but last year we were still transitioning onto the IFRS 17 balance sheet, so the hedging wasn't as fully in place as now.
You could say that we're now in the end state hedging in terms of the hedge effectiveness. We're a little bit less geared towards yields than we were, still a positive gearing, though. The bond market rallies since October, sorry, since September, probably at another 200. Second quarter also looks quite good so far. Let's see how that develops. Beyond the investment items, mortality was good across the group. Every business area had good mortality. Disability was a bit more mixed, a little bit weaker on retail than in corporate. Persistency is also good across the group, which was quite pleasing. Expenses are in line with budget. Talking of expenses, the optimization project, we added about ZAR 100 million more of annualized savings through that. A lot of that came from various business unit level and technology initiatives.
I need to sort of put a bit more impetus onto the procurement and duplication workstreams, but we're still making good headway. You know, I think our ability to invest as much as we have on technology and modernization, yet keeping costs at inflation or below in aggregate, it would not have been possible without these ongoing savings everywhere else. Okay, I think the project is still very successful, and enables us to spend money where we need to without having an end-year negative impact on group earnings. A couple of things that might not be so obvious. First of all, our SCR ratio is down quite a bit in the quarter to 1.76. Our target for the solvency coverage ratio is 1.6-2. We have gone from the top end of the range to the middle of the range.
To put that into context, I mean, during the quarter, we paid out quite big dividends to the group to both fund the external dividend and the buyback. The outflows exceeded earnings for the quarter. That is a bit of a timing thing. Also, the yield curves coming down as much as they did had a negative impact on the SCR because obviously your risks are measured on a PV basis. Also, if you look at the very detailed things, you might know that we need to use a prescribed yield curve to do the regulatory reporting. The prescribed yield curve actually has a very low long tail, compared to what we think the market yield curve is. It was sort of compounded there. Lastly, the regulatory calculation changes the stress test on equities depending on how high the markets are.
Because of the markets running, we're now pretty much at the maximum stress test, which is about 50%. We're effectively stress testing for a 50% shock in equities, whereas maybe in more market conditions we'll be more in the low 40's in terms of the stress test. I wouldn't read too much into the decline in the SCR ratio. There's a bit of technical factors there. VNB, Jeanette has already said quite a bit. I would add that annuity sales were down about a third, and the value of new business from annuities were down about 50%. The reduction in annuity sales explains the pressure on our VNB, and we make reasonable gains in all other areas. I did see some of the analyst reports. There was a question on India in one of the reports.
Earnings went backwards on IFRS 17. They improved on the Ind AS, but went backwards on IFRS 17. Last year's first quarter number included a recovery in the loss component. Basically, the onerous enforced contracts were remeasured to be less onerous. There was a bit of a one-off gain in those numbers. And then secondly, in this current period, there has been quite a bit of reinsurance commission income. Under the Ind AS, you recognize it upfront, whereas under IFRS 17, you spread it over time. That explains the timing difference between IFRS 17 and Ind AS. Maybe the most important thing for this audience is the India team is still very confident that they will have a profit on the Ind AS this year, and that profit should be sufficient to have a profit under IFRS 17.
When I look at the numbers, operating metrics a bit more myself, volume growth is very good, expense management very good, claims ratio is the wild card still. I think, in my view, the only item that could really push the break-even on IFRS 17 further is if the claims ratio gets worse from here. Lastly, Jeanette mentioned that at business unit level, the variances were a little bit different. To try and summarize it, in Metropolitan Corporate and Investments, the investment variances were positive because of bonds running and corporate and credit results being very good. In Momentum retail, we actually had a small negative variance during the quarter, and that relates to the fact that we have a lot of cash flows in Momentum Retail that are beyond the yield curve.
In other words, there's non-hedgeable cash flows beyond 25-30 years, and the PV of those cash flows increased more than the PV of the heat, well, the value of the hedging portfolio. Small negative variance in Momentum Retail and quite nice positive variances everywhere else. Okay, I think I'll leave it at that and be more than happy to take questions.
Thank you. Ladies and gentlemen, we will now be conducting the question and answer session. If you'd like to ask a question, please key in star and then one on your telephone keypad. The confirmation tone will indicate that Elani is in the question queue. You may key in star and then two to leave the question queue. Just a reminder, if you'd like to ask a question, you're welcome to key in star and then one. Our first question comes from Michael Christelis of UBS. Please go ahead.
Hi, Jeanette and Risto. Thanks, and team, thanks very much for the call and well done on some comprehensive disclosure. It's refreshing to see an insurer that's prepared to give us full detail at quarterly dates. Four questions if I can. Firstly, on your back-to-back product in Momentum Investments, you talk about lower onerous losses, significantly lower onerous losses, but then there's also lower VNB as well. So I'm just trying to square that. Is that a significant reprice there or what's driving that? The second one is very just technically the PVNBP multiples that are implied by your volumes don't seem to have changed at all despite the fact that yields have come down. Is that just purely a mix, a mix issue that may be changed for year- on- year?
Then your CSM releases are sort of quite seasonal. Half two is quite a lot bigger typically than half one. Does that imply your CSM commentary seems to suggest it's grown in the quarter? Does that mean that you think it can continue to grow year on year for the full year if, if new business, et cetera, stays where it is? In other words, at this run rate, will you still be able to show a growing CSM, in your view? And then the last question is just your expense savings and, you know, maybe just try and unpack what, what does that mean for VNB margins, all else being equal? If you achieve your cost-saving targets, does, do we see a material uplift in VNB margins as a result? Thank you.
Okay, I'll answer those while Jeanette can think about adding onto it maybe. You're right. We have re, we have re sort of designed, let's move to the extreme. We have repackaged the back-to-back product in investments. Now, remember what this product is. It is an annuity where you get a monthly income, but if you die, you get a lump sum to pay back your original annuity amount. Now, historically, we had a whole large component that was loss-making and a very profitable VNB component. Now, because of this cross-subsidy, which was by design at the time, it led to an onerous amount on the whole life component.
Now, we have repriced the two components in such a way that the whole life is more break-even, but then obviously, the annuity margin comes down to keep the cost similar to the end consumer. Now, the reason why the VNB is down, first of all, those volumes are down as well. There is a bit of operational gearing, and secondly, net-net, the VNB we have given up on the annuity is a little bit higher than the VNB we gained on the life component. We have removed the onerous component. It will probably have a small impact on VNB long-term because of the new split between the two components, but the decline is mainly because the volumes are down literally 40%. I am looking at it here.
Okay, the present value of new business, multiples, I mean, maybe I should start updating my own models because this hasn't come up in internal discussions. Remember, we do use opening assumptions, but the opening assumptions should be lower as well year on year. At the same time, we did become more prudent on some of the persistency assumptions in Myriad for sure, and one or two other products. I wonder if somewhat coincidentally, some of the persistency strengthening has offset the risk discount rate. I'm pretty sure that Rowan can get the actuaries to give you a lot more detailed answer. CSM releases, I mean, we have said for quite a while that our CSM underlying growth rate is probably sort of mid to low single digits at the current level of new business.
I do think at the current level of VNB, we will also still out positive CSM growth for the year. I mean, you're touching on our biggest conversation point in the group is we need VNB to really probably double from this level for us to have what we will consider acceptable earnings growth of 8%-10% on our core life business. Yeah, it should be positive for the year, but not good enough for the year at this current level of VNB. I mean, we did have, we did have positive assumption and experience variances. Again, you know, it would suggest that your actual base is still, let's call it at least conservative, you know. We are not seeing any strain from the other components of CSM growth. That's great.
Expense savings, I think I covered this at the end of, sometime last year with you in that if we get ZAR 1 billion of savings, let's call it ZAR 700 million after tax, ZAR 400 million will probably relate to the life business, maybe, maybe ZAR 350 million life business. And of that, maybe ZAR 100 million will relate directly to new business. The rest will be your renewal expenses. It will definitely help, and we need to deliver on it. I mean, that's going to probably cover a third or, yeah, probably a third of the missing VNB can be achieved by just delivering on this project. We do need to get either volumes up versus remaining expenses. We need to, maybe launch additional, and we have launched some products recently quite successfully, with good market feedback on the new estate provider benefit.
Yeah, so yeah, it will help, but it will not answer the full gap. I mean, effectively, I think I spoke to you last year. VNB is ZAR 500 million. It needs to be ZAR 1 billion. Yeah, you know, a third of that gap will probably be covered by this expense project. The other two thirds, we need product level and distribution in, increment.
Michael, I'll only add maybe one thought to VNB, and that's actually Metropolitan. The largest portion of this is actually, you know, Metropolitan need to, need to, you know, recover in terms of VNB. I think they very specifically, and we are deeply focusing on that right now, is actually the savings product. Because actually, you know, there's nothing wrong with the market on the funeral cover side. It's actually the savings product. You know, we need to make some proper decisions about that, either, you know, increase pricing, but whatever we need to do, in order to, to, to fill that gap. I'm worried about just relying on the product mix and keep on saying, you know, we need to sell more of the one and less of the other.
Maybe we actually need to be a little bit more drastic than that. That is literally on our, you know, discussion point for Group Exco, a week from now to actually look at that, you know, in depth and see what we need to do.
Very clear. Thank you.
Our next question comes from Tupelo Okunyane of Investec. Please go ahead.
Good morning. Can you hear me clearly?
Yes, we can. Please go ahead.
Thank you for the opportunity to. Okay, cool. Good morning. Like, I mean, I have three questions. The first question, and you've partly answered this, just on the seasonality of headline earnings. You've, I mean, you've achieved ZAR 1,759 million, obviously, for the first quarter. If I just simplistically just multiply that by four, you get to ZAR 7 billion, right? I mean, I appreciate that businesses like short-term insurance that are at the top of the cycle. How should we think about seasonality, I guess? I mean, is the first quarter a lot more profitable than the other quarters normally? Yeah, just a little bit of color on the seasonality of normalized headline earnings should be appreciated. Question two is on the short-term insurance business. I'm not sure if you've done this exercise, Risto.
Like, I mean, if we had a normal weather cycle, you know, what kind of normalized headline earnings would you have achieved, you know, from the ZAR 157 million you've achieved right now? Just a bit of color on that would be appreciated as well. The last question on the health membership growth. I mean, you've achieved 6% for the quarter, which is on the higher side, you know, if you look at like what you've achieved in recent history. I believe a lot of this has to do with the Woolworths business you quote in collaboration with the corporate, you know, segment of your business. How should we think about that pipeline in terms of, you know, potential, further, you know, opportunities down the line that you can get similar to Woolworths?
Yeah, I'll guarantee Nathan again, she gets the benefit of getting a minute to think. Okay, headline earnings shouldn't be that seasonal. Now, there are some businesses where there is natural seasonality. Like, for example, in health, majority of our schemes have a fee increase on one Jan. Okay, in health, for example, second half tends to be stronger than first half. Across the group, the seasonality should be quite limited. In South Africa, you still get a little bit lower death claims in the winter. Maybe 1Q will normally have a bit less death claims than other quarters. Also, it is a winter month, so there's lack of rain. At the margin, maybe 1Q, which already reflects most of the winter, could be a little bit better on average.
In my own view, the last few years, it has just been a little bit coincidental that investment markets and bond yields have come down a lot during that quarter. Like I said, we do not have full consolidation for last year, but I am looking at my own notes here. We did about, let's say, just under ZAR 1.8 million in the first quarter last year. Let's call it just under ZAR 1.6 million in the second quarter and then just under ZAR 1.5 million in the following two quarters. Last year we were close to the ZAR 1.5 million a quarter, except the first quarter was a bit better. Maybe expect 1Q to be a bit better period because of winter and the other three quarters should then be a bit more similar. Our salary increases take place in October.
Yeah, so maybe there's also a bit of a factor that salary is a little bit lower in one queue. What can hurt you towards the end of the year is when you're doing as well as we are, we had to increase our bonus provisions in the last quarter and the last few years. Okay, that's a bit of an internal, yeah, joke anyway. Obviously your bonus provisions will fluctuate during the year as well. Okay, it's a good question. I mean, seasonality should be modest. Short-term insurance and the claims ratio was, I think, what, 44 something for the period. It was very low. The premiums for the period would have been, what, ZAR 800 million. Knock off 10% to the claims ratio, knock off tax. Maybe the earnings would have been closer to ZAR 100 million if we normalized for claims.
The funny thing is, obviously, the longer we stay at these very low claims ratios, the greater the debate becomes, what is that normalized claims ratio? I am sort of adding back 10% a bit willy-nilly here. I do know that insurer, and Jeanette is going to the board meeting just now. I know insurer do have comprehensive attribution back of what they think to be modest weather claims. From the numbers I have seen, I think they agree that the underlying earnings is close to 100 versus the 150 we have seen now. The last point on health, it is a good note. We are very happy with the growth in health. Some of the growth does relate to Woolworths and the Health4Me product. There are a few other clients there as well who came on board.
Health4Me is good growth, but we also see growth in our open scheme, which I think is very pleasing. You know, I don't see the open medical scheme market as being a growth market for most players. And we've seen some good market share gains there. I mean, obviously the growth rate is still modest, but if you're growing that market, you're definitely winning market share. And then gyms, our government scheme continues to grow at a steady clip, which helps. Yeah, so we're very happy with the health business. Jeanette, anything to add?
No, I think you've covered it well.
Yeah.
Okay.
Wanted to see the broader.
Someone is talking.
Yeah.
Tupelo, your background noise, but, does that conclude your questions?
Sorry. Yeah, sorry. Thank you.
Thank you.
Ladies and gentlemen, our next question comes from Harry Butler of Bank of America Securities. Please go ahead.
Hi, good morning. Thanks very much for the detailed updates. I think my questions have partly been answered, but I'd like to get a sense of if there was any impact from, or material impact from positive mortality experience on the earnings outcome in Q1. Could you possibly provide a bit more color on the improvements in Momentum Retail, VNB margin? Is that something we can extrapolate going forward? Thanks.
Yeah, okay. I don't know if you want to answer the VNB and Momentum Retail, Rowan or somebody, while I look for the mortality splits.
I think, on Momentum Retail, as a result of the restructuring on distribution, I think that we've seen the significant benefits in the acquisition costs. We're also starting to sort of see the digitization, if it's coming through quite strongly. I think the biggest change within Momentum Retail is actually a focus on our investor product. So that's the upfront commission-based investment platform. Largely that's sort of moving to sort of slightly positive VNB. I think that, you know, the efforts from the team are there. It's very much going to be a volume story going forward. It's one of those areas that continues to get a lot of focus.
Yeah, I mean, I think what I will add is that Investor, our long-term savings product in retail, has always been a, you know, source of negative VNB for us. They've done a lot to, you know, offer digital servicing and reduce costs. That's a permanent saving. You know, now, at least when we do good sales, which actually the sales numbers were great, especially from our own, you know, agency force and retail business, it actually is a positive contributor to VNB and not negative as it has been. It just shows that by focusing on the profitability in the product and not just, you know, relying on a sales mix, we're in good territory there. Now it's a matter of volumes, as Rowan has said.
Yeah, so I'm just looking here. Momentum retail, which is the Murray Exits, mortality profits are about ZAR 50 million higher than last year. Good, apparent market mortality there. Metropolitan was about ZAR 10 million better, positive in both years. Funeral mortality is still slightly above expectations. Corporate is interesting because the experience variance item has declined, but that's because we changed the assumption for long-term margins on, well, medium-term margins on corporate risk. The absolute mortality result was still very strong. Maybe a summary would be that affluent retail better, funeral similar, corporate similar. I also picked up an interesting one that on annuities, our mortality profits were a little bit lower, which might look like longevity losses.
I think it relates to the fact that we're not doing proof of life checks as often with home affiliates as we used to. We're waiting for that 10 rand story to get sorted out. Yeah, Jeanette's making a note here. We need to, we need to sort that out at some stage as well. In Africa, I'm looking here, Namibia, very similar mortality as last year. Botswana, similar to last year. The only one left is Lesotho here. Lesotho mortality was better by about ZAR 10 million. I mean, that gives you quite a detailed breakdown, but overall mortality continues to contribute very well to earnings.
Great, thank you.
Our next question come from Kasim Chetty Gomes of Laurium Capital. Please go ahead.
Good morning, guys. I hope you can hear me. Just one quick question.
I'm not sure if it's been indirectly answered, answered Harry's question, but can you provide a bit of color on what happened to risk volumes within the Momentum retail?
You are breaking up.
Oh, sorry.
Can you hear me now?
Can you maybe try to repeat it?
Can you hear me now?
Much better.
Okay, sorry about that. I've got one quick question. I don't know if it's been directly answered to Harry's question, but can you provide a bit of color as to what happened to risk product volumes within the Momentum retail?
Yeah, I think the volumes were marginally down for the year on year in, in re you're talking about retail risk products.
Yes, that's correct.
Yeah, so the total volumes in retail were up 11, and I think risk volumes were marginally down, which means your RAs and CMOs would have been up sort of mid-teens. I mean, we have launched the estate provider benefit recently, but it's too early. That will start coming through in the second and third quarter numbers. I did see an analyst comment this morning suggesting that our third quarter, sorry, our first quarter sales volumes might suggest we lost market share during the quarter. We haven't received that input from our own team. Yeah, so again, I didn't get the gist of your question, but I can confirm that Myriad volumes are down maybe 2% for the, you know, quarter year on year.
Okay, thank you.
Our next question comes from Marius Steyn of ALG. Please go ahead.
Good morning. Yeah, I've got to echo what Michael said, some really excellent disclosure. Very impressed with that. I have a few questions, and I'm going to split them in parts if that's all right. Let's start with two underwriting margin questions. The first one is, can you speak to the underwriting margin of Guardrisk and to what extent that benefited from good weather claims experience? Number two, can you tell me what the Indian loss ratio was and whether that was elevated during the quarter, and how that compares to your long-term targets?
Yeah, okay. Marius, I can tell you that the Guardrisk underwriting profit was up quite a bit quarter on quarter, which means that, I mean, I'm looking at the number here, the underwriting margin is comfortably in the double digits. Now, motor was good, so that might relate to your comment about good underwriting conditions. Corporate and commercial property were good, so they benefited from the same thing. Also, gap cover did a bit better. Gap cover's been under a bit of pressure after, after the COV, you know, you had sort of delay claims through COVID, but gap cover did better. I mean, the only area where I think things went a bit backwards was like guarantees. There might have been some construction guarantees called upon here.
The underwriting margin is up year on year, that's for sure.
The benefit was more than just weather because it's kind of across, across the products, which is great.
Yeah, yeah, for sure. I mean, there's also like buckets here, Marius, like we're sharing with the sales. That's up quite a bit year on year, but I don't have the see-through into exactly what type of sales those are in front of me. But I, yeah, I can basically say commercial property, corporate property, motor, gap cover, all good. Guarantees, not so good for the period. India, the loss ratio was in the high 70's. I'm just going to get it to you now. The claims ratio, it was 79% for the quarter, up from 73% last year same time. I did mention on my call that that's the one factor that's not going as well as expected. I'd rather talk to you about the expense ratio that went from 40 to 32 because of the volumes.
Yeah, Marius, I mean, that gives you some idea. I mean, the loss ratio needs to come down to sort of low to mid-70s for us to make our break even for the year.
Okay. My next question relates to investments. There are two questions here. One is quite positive and the other one is somewhat negative. The first question is, I mean, traditionally your platform profits are paper thin. It looks like you are starting to produce platform profits. Is that correct? Is that margin starting to be delivered?
Jeanette?
Risto's just paging to make sure we don't tell you a lie, but the, I mean, my sense is that the answer's yes.
Yeah, there's a technicality to it. Marius, you're right. I mean, we made a, we made about a, I think a ZAR 50 million profit on the platform for the quarter, but it does include, how would I put this nicely, includes a one-off adjustment for a technology project in our favor. I don't think I can say much more than that. I mean, it's profitable even without that, but the margins are quite thin. This quarter just benefited from a, let's call it a fee reversal in our favor. Is that good enough for you, Marius?
Yeah, so, yeah, we should look for higher margins from that business in the next number of years. My second question.
No, no.
My second question is why, why is your asset management lagging so much? Why aren't you not increasing own solution assets?
I don't know where you got that from because our.
7% versus 21%.
Our technical integration is improving.
AUM was 7% up and AUA was 21%, 20% up. I mean, you know, that, that's where I got it from.
Okay. So you're just saying that the, under admin is growing faster than under management?
Yeah, under management is growing slower than markets.
Yeah.
Has boarded quite a big corporate client.
Yeah.
There has been some rebalancing in the last portfolios away from our own solutions that has also had an impact.
Yeah.
It's a bit of an own goal, I think.
Okay. I, you probably heard that. I mean, I don't know if I, I, yeah, own goal's a strong word, but I, I do know that we have also moved a bit more, assets, for example, when, when we grow on the guaranteed index products, for example, the money moved from asset management to BSM, which is the life company manager. Because some of the, some of the metrics we follow, like the percentage of assets managed on our own solutions by our distribution channels, those have actually all shown an improving trend.
Yeah.
The AUM decline might have been a function of, like Jeanette said, one or two large corporate clients exiting. I think we also had a U.K. client who pulled money.
Yeah. Marius, we also have had a couple of large institutional platform wins, which are obviously big on assets, very low on margin, which contributed to that. I think our key imperative is really the curate business, which is still really in its infancy. As all on the call are aware, most institutional investors and IFAs are looking for a three-year track record. Our anticipation of that vertical integration will really kick through for that business in a couple of years' time. The focus at the moment remains very much on asset gathering and making sure we get our ducks in a row to effect that vertical integration, you know, as the opportunities exist.
Okay. Finally, can you give us a sense of the covered versus non-covered earnings split change for the investments business quarter on year on year?
Yeah, I got it in front of me here. Covered's actually marginally down for the year. Asset management is then up quite a bit. The reason covered is down, I mean, we got investment variances are significantly lower. The need to book did well. There was a positive investment variance of ZAR 50 million, but last year it was substantially higher.
Okay. That's actually very good news. Thank you very much.
Mm-hmm.
Our next question comes from Bradley Moorcroft of Peregrine Capital. Please go ahead.
Hi, Jeanette. Risto. Thanks a lot for the great disclosure as well. Just one on Momentum. I'm sure you flagged in the update that new business is tracking below expectations. How's unit count progressing there? And yeah, how confident are you that you can get those new business levels up to where you'd like to see them?
Look, I mean, just because I got some details on this from the board pack last night, I think what is very encouraging for me is that we've actually increased volumes in both consult by Momentum, which, as you know, is our own independent advisor network, which is actually a channel where we've been completely, you know, punching below our weight, which actually says that the changes we've made are starting to come through. We've also seen positive growth in the IFA market. The problem we have is actually in our own [BDC] channel, the channel that came across as part of the [Forbes acquisition]. There's still some, you know, kind of internal work that we're doing on fixing that channel.
That is the one that is hurting us most because it is still by far the largest percentage of our sales come from that channel. You know, we've got new management in, a new person managing that channel. Of course, you know, we're focusing on, you know, kind of cleaning it up a little bit. That has definitely hurt us. I think the positive is that in the IFA market, which we know is almost, you know, far more competitive and demanding, we've actually seen some positive growth. I'll know more after this now because I know that Grant and the team is actually doing a proper presentation on this to the whole board because it's been a concern of the board.
I'll then know a little bit more, but I think, you know, those for me are the green shoots that I'm positive about. I don't know, Risto, whether you want to add something.
Yeah, I mean, the policy count ended the quarter at 133,000, started the quarter at 136,000. We lost about 3,000 policies during the quarter. The gross shipping premiums are basically flat quarter on quarter.
Yeah.
Yeah.
It is certainly below our own targets for [Insure]. I mean, I think, I mean, internally that's what we measure the guys against. It's not really just the year on year number. You know, we have ambitious targets for them in terms of gross written premium and new business. They are short of those own targets at the moment. I mean, they're very focused on fixing that.
Awesome. Thanks for that, Deb.
Thanks, Bradley. The next question, Kasim Jared Houston of All Weather Capital. Please go ahead.
Morning, morning everyone. Just checking you can hear me.
We can.
Perfect. Thank you. Two questions from my side. Can you just give some detail on the loss in the shareholder segment? I see you have given kind of commentary on some of the areas, but if you can just give us a sense of where the kind of respective split of that ZAR 74 million loss came from, how much kind of is VC write downs, how much is the other factors. My second question is just on the share buybacks. Risto, in your comments, you kind of described the decrease in SCR driven by the dividend and the buybacks. Is it fair to assume the bulk of the buybacks were completed in this quarter given how much that ratio has decreased, or is there still quite a bit to go there?
Yeah. So remember the ratio we give you is for Momentum Metropolitan Life, which is the main life company. We paid the dividend to Momentum Group, where me and Jeanette work. We are busy with the buyback, but the dividend flowed out of the life company into group. You can think of it as the cash, cash has already been sort of put aside for the buyback, but the buyback itself is nowhere near complete. You know, slowly but surely, I think things come together. Yeah, in terms of the loss on shareholder funds, I am looking here. We had a ZAR 35 million loss on the venture capital fund. We had central expenses of about ZAR 50 million. And then we had a small positive, well, a small positive investment return on the remainder of the portfolio.
There was also some property costs here, ZAR 49 million negative. Yeah. To answer your actual question, VC funds minus ZAR 35 million, central cost of minus ZAR 50 million, and then property cost offset the interest income on the cash portfolio for the period.
Some of those central costs, Jared, were as a result of the share hedge. The share price reduced over the quarter, which contributed to that number.
Perfect. That, that's very helpful. Maybe if I can slip in one more, just the commentary kind of guides that we'll see some of the benefit of the cost savings program in the latter part of 2026. Is that just the timing of the way we actually see it translate into earnings? Just want to get clarity on how we see that flow through to earnings.
Yeah. I think that comment might relate to the fact that we had ZAR 100 million, which is quite a big quarter in terms of cost savings in this quarter. A lot of that is technology related. You might have, so it might be like ZAR 25 million in the quarter, but maybe you saw ZAR 5 million in the current quarter, and you're gonna now see the full amount going later on. Also, there's one or two big projects that are nearing completion, such as the duplication project in one of the areas. Yeah. You'll see a bigger impact. What I would say, that VNB, the question earlier about somebody, it was a micro somebody. Obviously, that will only come into play once we make an assumption change at year end in the next year's VNB number.
It is actually one of the reasons why Jeanette keeps slave driving me on the project is that we need to get as much savings this year as possible.
As an opening.
As an opening assumption in the next year's VNB, we need to target as much of the expense savings in this year as possible.
Okay. Thanks. Thanks very much, Kasim. Well done. Another good quarter.
Just quickly, to Michael's question to Risto around the PV and VP multiple. We do use opening yield curves, as Risto explained. The June 2024 curves and the June 2025 curves were not significantly different. A large part of that multiple really comes off the single premiums, and obviously the yield curve does not sort of change there. The big volumes that come through in investments and come through in corporate, you know, sort of do affect that number. Michael will unpack it by business unit for you.
Thank you. Ladies and gentlemen, with no further questions in the question queue, we have reached the end of the Q&A session. I will now hand back for closing remarks.
Thanks, everyone. I do not have any massive closing, closing remarks except to say thank you. I mean, this was a great call. I think, you know, the one thing that is clear is the more we disclose, the more, you know, interactive the call is and so on. I mean, we quite enjoyed it. Thanks for the compliments on that. We will keep it up. I think it is important to us to always, you know, disclose as much as we can.
Now that we are kind of well into, you know, the IFRS rhythm, you know, I think you can bargain on it that this will continue the way in which we do the disclosure. I mean, thank you. I think we got some great questions and great interaction, and we really enjoyed it. If you have further questions, please feel free to email Rowan and Abdul, and we will do our best to get back to you on that. Thank you very much. Thank you, ma'am. Ladies and gentlemen, that concludes today's event. Thank you for joining us. You may now disconnect your line.