One hell of a steep Hillie to climb for Meyer at MMI
The product of 2010’s merger between Metropolitan and Momentum has been going backwards
Insurance companies are supposed to make somewhat boring but happily predictable investments. But in MMI’s case, it’s been anything but a slow and steady climb with regular dividends. On the contrary, the product of 2010’s merger between Metropolitan and Momentum has been going backwards, culminating in this year’s appointment of Hillie Meyer, a former Momentum CEO, to resuscitate MMI’s fortunes. We asked him, does MMI actually know what it wants to be?
We’ve got a very clear idea of what we want to become. We’re going to re-position ourselves as a South African financial services group. There might then be one or two anomalies – for example, what does India do (a health insurance joint venture) and I think that would be fair. Strictly speaking the India JV wouldn’t fit but it’s going very well there and if we’re successful in that it might be the model for things we might want to do in other emerging countries.
We’ve got to contrast it with what MMI wanted to be five or six years ago, and then they had much more global aspirations. They wanted to go into retail in the UK, India; they wanted to be a pan-African organisation.
It makes sense for us as far as Africa is concerned to focus on three SADC countries (Botswana, Lesotho, Namibia), that are going to be the core of our African portfolio. But in Ghana we actually have a good business. So I’d say that in three years time if we’ve done well with Ghana it will be the recipe maybe for more things in Africa. So some of the things that look like anomalies now provide a bit of optionality. In this re-set exercise we didn’t just want to kill opportunities with some very good prospects.
But should you be a broad financial services group?
For the next three years we’re not going to add anything else. We’re not going to change our mind and apply for a bank licence, that kind of thing. Now we’ve cut back, basically because of so many failures. Our guys failed in a lot of the businesses in Africa, we failed in the UK, we wrote off a lot of money there. In hindsight there were some totally underperforming assets that just didn’t turn out the way they were intended them to be.
If you’re not successful in your expansion strategy then at some point someone’s got to tell you to cut back and that’s what the shareholders did and that’s what my brief now is. Fix what we have and sort out the South African businesses. That’s the first and foremost priority.
But if MMI hasn’t come right in all this time, what should give the market confidence that it will?
My impression was that a lot of time and effort was spent on things that theoretically had a lot of appeal, but while lots of teams were busy with very extravagant ideas and initiatives, the core businesses that basically had to keep on paying the rent were neglected. And when I say neglected I mean neglected. In the SA business on the retail side we used to be at 14-15% market share and we’re now down to 10-11%. Now try and win that back. It is huge –that’s the size of an insurance company.
It’s sad that it had to happen and it’s (about) not prioritising things sufficiently, not appreciating what it means to stay in a certain segment. And I think it was partly because the guys were saying: our growth is going to come from other countries and channels.
So you ask me, what’s going to be different: I think it’s that. Everybody in MMI now realises we’ve got one more chance to deliver and a lot of the people, they want to be led and look up to leaders they believe in and see make the changes. So some of the decisions we’ve made so far, staff have welcomed it even though it makes it a tougher environment.
You say that you want MMI to become more entrepreneurial. We’ve heard that from the likes of Absa, and it seems incongruous that an entrenched insurer could be entrepreneurial at all, so what, practically, does it mean?
My biggest job is almost to keep the bureaucracy at bay and keep on pretending that we’re a small business. In reality what it means – and it doesn’t matter what area – is (to have) smaller teams. If we put all our call centre people let’s say in Momentum Retail, together, it would be 400 people. But if you structure it in teams of 15 or 20 and you align each call centre to either a certain client base or product, or a distribution channel, then it almost brings back the sense of: we know what we’re here for, we’re a little team, we work for those clients or products, and you start measuring it like this. That brings back a feeling of belonging.
You know, salespeople that sit in a branch, they are all very entrepreneurial because they operate like a little business: they know exactly what they write, what they earn, they see their costs …a nd that’s what we’re doing.
Momentum Retail used to be one big organisation and a lot of other support staff worked for that unit so there were a lot of allocated expenses and nobody took ownership. Now we’ve got 12 profit centres so already instead of one Momentum Retail we’ve got 12 little units and each one has a profit center head with their own income statement … then it’s real.