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Thursday, October 1, 2009
Growth symptom

The challenges facing local medical schemes have received significant press cover recently. However, as one of the fastest growing medical schemes in South Africa, Momentum Health believes that the outlook for members remains positive, if not better than before.
“Let us start by addressing the solvency ratios, which have been in the headlines,” says Hannes Viljoen, Head of Momentum Health Product Development. “While it was correctly stated that our solvency ratio had reduced from 20.2% in 2007 to 18.6% in 2008, it was omitted that this statistical change was a direct result of the Scheme’s phenomenal growth in members over the same period. In fact, Momentum Health’s reserves had actually increased from R265m to R315m over the same period (2007 - 2008). Our principal members increased from 48 349 to just over 80 780 in the period January 2005 to December 2008, for example.
“Thus our reserves expressed in rands increased and so did our members. Because our members increased faster than our reserves, obviously the solvency ratio would reduce. How will we overcome this? Through a pro-active business plan submitted to and approved by the Council of Medical Schemes, which will see our solvency ratio returning to 25% within the next few years,” he assures.
“Even more significant is the fact that our growth went hand in hand with a reduction in the average age of members to 44.65. This in turn reduced the claims ratio, resulting in an improved financial result and a positive future outlook in terms of sustainability.”
An independent credit authority, the Global Credit Rating Company (GCR), has reaffirmed Momentum Health’s claims paying ability for the 5th consecutive year at A+ level. Momentum Health’s rating was based on:
• “the Scheme’s integral link to the greater Momentum Group brand and its extensive distribution infrastructure;
• “the large and well diversified risk pool;
• “the continued growth in membership since the start of 2005, with the age profile of the scheme showing improvement;
• “the decrease in the delivery cost ratio over the last two years;
• “the improvement in operating and net results for 2008; and,
• “the successive reduction in the Scheme’s claims ratio over the last two years.”

In an environment where many medical schemes are losing members to the Government Employee Medical Scheme (GEMS), Momentum Health is in the fortunate position of having a negligible number of government employees on its books.
Last month, it was recognised as one of the leading healthcare brands in the country, having improved from fourth position in the Sunday Times/Markinor Consumer Survey to second.
“We are confident that Momentum Health will go from strength to strength and will continue offering its members the best value through choice going into the future,” Viljoen concludes.

Copyright © Insurance Times and Investments® Vol:22.10 1st October, 2009
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