Positive outlook for MMI and its subsidiaries

At the same time‚ Fitch has affirmed Momentum and Metropolitan's 'AA(zaf)' National Insurer Financial Strength ratings and 'AA-(zaf)' National Long-term ratings as well as MMI's A+(zaf)' National Long-term rating.

The subordinated debt issued by Momentum and Metropolitan has also been affirmed at A(zaf).

Fitch said the positive outlook reflects the improved profitability achieved by MMI since the merger between Momentum and Metropolitan in 2010.

In the financial year to June, the group reported realised recurring cost savings of R201m in the past year and is on track to meet its synergy target of recurring cost savings of R500m a year by 2014.

The group reported core headline earnings of R3.0bn and pre-tax return on assets‚ as calculated by Fitch‚ of 1.3%.

The group's ratings reflect its solid domestic franchise as one of South Africa's four largest life assurance groups as well as a strong capital position and low financial leverage.

The main offsetting factor is the challenging South African economy.

Fitch believes that the enlarged group, created through the merger of Momentum and Metropolitan, has created a more competitive insurance-based financial services group with businesses in life insurance‚ healthcare administration‚ asset management and employee benefits.

It benefits from both a diverse customer base (spanning all income groups) and distribution network.

Furthermore‚ it is well positioned to expand its activities into African countries.