Metropolitan’s Doyle steps down in celebratory mood, writes Richard Stovin-Bradford
When Metropolitan Holdings chief executive Peter Doyle presents his financial services group’s December full- year results on Wednesday, it will be his final appearance on the podium — his swan song.
Doyle says he is not singing yet, but when he steps down as CEO at the end of the month after more than 10 years in the role and a 30- year career with the group, he can celebrate Metropolitan’s progression from a purely retail- oriented South African life assurer into a diversified financial services business with operations locally and elsewhere on the continent.
An insurance analyst said: “Doyle’s move into employee benefits in a big way has been a success and his move up market through the Odyssey platform has worked well. “If you break the group down into its various distribution channels, you can see how diversification has cushioned Metropolitan in tough markets.”
Doyle hands over to Wilhelm van Zyl, previously head of Metropolitan’s successful corporate benefits area and managing director of the group’s main operating unit, Metropolitan Life. Analysts are keen to see what, if anything, will change under Van Zyl’s leadership.
He takes the reins of a business with 10 million customers that covers about 12.5-million lives. It provides life assurance to retail and corporate clients, administers healthcare schemes, offers asset management, and operates life offices in six other countries in Africa.
Liberty Life made much of its expansion into Africa in its annual results presentation. But analysts question whether the demographics of its new markets match its positioning as a high-end life assurer and wealth manager.
For Metropolitan, clients in its African markets have a very similar profile to those in its core domestic market.
But the insurance analyst said: “The jury is still out on Metropolitan’s international businesses.”
Closer to home, Metropolitan runs an asset management arm to handle inflows from clients of its life operation. Although it has never had a strong track record as a manager of third-party funds, shareholders will watch Van Zyl for any plans to leverage what has hereto been a predominantly in-house business.
Much as Sanlam has moved swiftly to create a lifestyle-related platform of financial businesses ranging from traditional life, through asset management to healthcare insurance and personal finance options, Metropolitan has similar ambitions to attract customers onto its books — third-party asset management would be a valuable addition.
Doyle said: “Cross-selling is not something we’ve emphasised because we first need to build critical mass in each of the businesses before we start to leverage the potential.” Client numbers in the non-life operations are heading in the right direction.
Its traditional target market is the man in the street with a stable monthly income in need of advice and investments. It has a bias towards the lower end of the market, which it has made its speciality.
That Old Mutual is its biggest competitor in that market is a sign of how the SA life market has consolidated over the past decade. It is also an indication of how larger groups are expanding beyond their traditional markets.
The difference for Metropolitan is that its 10 million customers are in its primary target market — they are not a marginal, add-on market.
The absence of a trading update suggests Metropolitan is not expecting dramatic changes from the trajectory it was on in its third- quarter update, despite torrid market conditions in the last two months of the year.
Doyle said: “We are a long-term business in a long-term game. “Market volatility happens, but we manage clients’ cash through the cycle.”
The consensus forecast for fully-diluted core headline earnings a share for the year to December is 140c, with a full-year dividend of 94c, covered an aggressive 1.5 times as cash-generative Metropolitan continues to hand back capital to shareholders.
One asset manager said that a key aspect of Metropolitan’s investment case was the excess capital within the group and what it did with it. Although there is probably scope for a special dividend, no analysts consulted expected one.
One performance indicator that Doyle will not want to see compromised in his valedictory results is Metropolitan’s record of reporting net cash inflows into its business — a record that has remained unbroken since the group was founded in 1897.
Old Mutual reported net cash outflows from its South African business but Metropolitan, which reported R8.7-billion of inflows in the first nine months, will be keen to stick with tradition.
Doyle leaves a changed market. A decade ago, Metropolitan’s peers would have been Protea Life and Commercial Union (which Metropolitan acquired and renamed Odyssey) then, perhaps, Norwich Life, Fedsure and Southern Life. All those names have disappeared.
Of course, in an ever-more consolidated industry, Doyle can also afford himself a final chuckle: although Metropolitan did some consolidating of its own, it never got consolidated itself.
What next for Doyle — another industry role? Not quite. He plans to take a break, but beyond that his plans are vague.
He will not be lost to the industry because he is president elect of the Actuarial Society. But, he said: “I’m unlikely to turn up in another corporate position any time soon.”
