Hillie Meyer. Picture: FREDDY MAVUNDA
Hillie Meyer. Picture: FREDDY MAVUNDA

When MMI was formed in 2011 though the merger of Metropolitan and Momentum, it held 24% of SA’s life insurance market share.

Fast-forward to 2017, and that figure has shrunk to 17%. Earlier this year, CEO Hillie Meyer estimated that it had fallen to 11%.

At the end of its 2018 financial year, the Momentum and Metropolitan retail units reported double-digit declines in earnings, dragging down the rest of the group.

Meyer says the "financial wellness" repositioning under the MMI umbrella drowned the brands’ individual identities and is not resonating with some of its traditional customers.

Now, eight years after the merger, the two brands are re-establishing their identities. The MMI marketing team has launched a brand campaign for Metropolitan, just a few weeks after Momentum aired its own. Revitalisation of the Momentum and Metropolitan client-facing brands has been identified as one of the means to meet MMI’s "reset and grow" strategy, which aims to increase earnings and set the business up to achieve sustainable, profitable growth within three years.

Nontokozo Madonsela
Nontokozo Madonsela

"Everybody is screaming. Everybody is trying to get the consumers’ attention," MMI group chief marketing officer Nontokozo Madonsela tells the FM. "Sanlam is in the space, Outsurance is constantly present. We had to think about how we’d stand out creatively … we are hoping it will be received well by the market and that the value of marketing will contribute meaningfully to the business goals."

The brand campaign is filled with the usual "What matters to you matters to us" and "We are here for you" axioms that characterise financial service firms’ marketing material.

But what MMI is doing differently, especially with the Metropolitan Retail campaign, is trying to appeal to families with nontraditional family structures. Insurers are notorious for their rigidity in defining "family".

Sanlam was once taken to task by the ombud for long-term insurance for disregarding an African cultural norm around extended family, on a funeral cover claim that involved a second cousin.

Madonsela says they want to tap into these realities with their Metropolitan campaign, while the Momentum brand is banking on its improved Multiply offering to appeal to the more affluent market. Momentum Retail has about 90,000 members on the loyalty programme and it is hoping to increase its subscriber base by 20,000 a year.

While investment in brand awareness will help MMI some way, Jean Pierre Verster, portfolio manager at Fairtree Capital, says the brands suffered under the MMI umbrella.

"Brand strength is quite a subjective concept, and a recent IFA study conducted by SBG Securities actually showed that the brands still made a positive impression on financial advisers.

"But it is clear that the merger has been detrimental to the combined businesses."

While the two brands operate in different income segments, some observers have pointed out overlaps, especially when the brands got stuck under the financial wellness umbrella. Nevertheless, one can’t underplay the scale benefit that comes with being part of a larger group as opposed to having each brand trying to compete individually as a sub-scale player.

"Though we realise the individual brands have to be much stronger, one must recognise that MMI is a strong brand and the diversity of its portfolio is what makes it unique," says Madonsela. "We can legitimately serve both the affluent and emerging markets."

While MMI might want to pin its underperformance on subsidiaries’ brand strength, or lack thereof, the insurer’s loss of market share seems to be mostly the product of operational issues, bad judgment and a poor distribution strategy.

"You could perhaps argue that the merger resulted in a lack of focus and contributed to the fumbling strategy," says one analyst, who can’t be named due to company policy.

Some of the more questionable past decisions that the current executives (under Meyer’s leadership) are trying to correct include incompatible partnerships like the African Bank joint venture and exiting several markets in Africa, where the company has not performed well.

It is also trying to improve the quality of its distribution agents, especially in the Metropolitan business, where early-duration lapses — which caused the 14% decline in the unit’s earnings — were largely attributed to the under-par quality of the distribution force.

Independent analyst Maurice Conradie says some of MMI’s woes have to do with the fact that the market is ruthless in applying conglomerate discount on big mergers.

"Often they are right in doing so. A brand can be broken down into the expected future cash flows … a good example was the David Jones acquisition by Woolworths," he says.

This year Woolworths had to write down the value of Australian department store David Jones by R6.9bn. It has struggled to bed down the acquisition, which took place in 2014.

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