Hillie Meyer. Picture: SUPPLIED
Hillie Meyer. Picture: SUPPLIED

MMI’s shareholders cheered news of CEO Nicolaas Kruger’s imminent replacement by former Momentum MD Hillie Meyer, sending the stock 7.43% higher on Tuesday to R21.70 as buyers expected a rerating on the leadership change.

The market’s reaction will come as a blow to Kruger, who dedicated the past 26 years to the insurance group, formed out of the 2010 merger between Momentum and Metropolitan — the past nine years as CEO.

The group has delivered disappointing returns to shareholders and posted humdrum results in recent years, partly due to staid new business growth at its largest units.

MMI Holdings CEO Nicolaas Kruger. Picture: FINANCIAL MAIL
MMI Holdings CEO Nicolaas Kruger. Picture: FINANCIAL MAIL

It has also experienced a number of executive leadership changes in the past six months – a challenge that other life companies have endured amidst a tough operating environment.

That MMI is bringing back Meyer, who was CEO of Momentum from 1996 to 2005, makes the changes look akin to a rescue effort. But Herman Bosman, CEO of 25.5%-shareholder Rand Merchant Investment Holdings said that as
one of the chief architects of Momentum, Meyer was the ideal candidate to drive the group into its next phase and would be preparing the next set of leaders.

Under Meyer’s leadership, Momentum had recorded growth in net profit of nearly 30% a year and increased assets under management from R25bn to R250bn, MMI said.

Jeanette Marais, an executive director at Allan Gray, will be co-deputy CEO with Mary Vilakazi, effective from March. Marais would focus on Momentum Investments, with Vilakazi focusing on integrating the retail businesses, the group said.

Bosman praised Kruger. The role he had played over 26 years, including as chief actuary, finance chief and CEO, could not be underestimated, he said.

"Based on the 32% of shareholders who voted against the remuneration policy at the annual general meeting in November, my sense was that shareholder patience had run dry," said one analyst who declined to be named.

Kruger was a great strategic thinker, but had struggled to motivate the leadership team, which led to slow and ineffective implementation, the analyst said.

While the group had recently underperformed, Kruger was to be credited for being "ahead of his time" on many strategic issues, said Andrew Vintcent, a portfolio manager at ClucasGray Asset Management.

"He pioneered the way that life insurance companies optimise regulatory capital and has been party to a number of strategic decisions that other life companies have to some extent emulated," Vintcent said.

Kruger left behind an asset-rich business that was attractively valued and in a better position than some peers in
that it could offer insurance, savings and health products across all income brackets, Vintcent said.

This is largely thanks to the merger of Metropolitan and Momentum, in which Kruger played an instrumental role.

The merger had exceeded synergy targets originally communicated to the market, said Adrian Cloete, a portfolio manager at PSG Wealth.

"Consensual and consultative", Kruger was the ideal leader for the merger, Bosman said.

Under his leadership, MMI established a health insurance joint venture with Aditya Birla Capital in India and secured a joint venture with African Bank.


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