MMI Holdings Limited is a large insurance-based financial services group listed on the South African Stock Exchange, the JSE, with an embedded value of ZAR35,1 billion and a market capitalisation of ZAR36 billion (as at 30 June 2013).
Created in December 2010 from the merger of Metropolitan Holdings and the Momentum Group, MMI is doing business in 12 African countries outside of South Africa as well as the United Kingdom. A liaison office was opened in India in 2011, tasked with exploring business opportunities over the medium term within the region.
MMI’s core businesses are long and short-term insurance, asset management, savings, investment, healthcare administration, health risk management, and employee benefits and rewards programmes. These solutions are provided to all market segments through their client-facing brands. Metropolitan and Momentum are the primary client-facing brands.
With July 2014 coming to a close, we are seeing MMI Holdings Limited implementing a new operating model and structure to support its strategic focus on client-centricity. We caught up with their Group Chief Executive Nicolaas Kruger a few weeks ago to explore this new approach, understand what has been learned in the three years since the merger, and what the future holds for him and the continually evolving and growing MMI group.
In spite of some commentators’ pessimism at the time of the merger, Kruger shares that they have been able to achieve a high success rate as they look back at merger objectives they wanted to achieve. “One of the objectives was to save ZAR500 million in costs, and that we have accomplished ahead of schedule. We’ve been able to merge six different product businesses, while retaining an extremely high percentage of senior management, and we are particularly pleased with this. There is also always concern over client retention during something like this, but our numbers remained solid, and if we use our MMI share price plus dividends as an indication of our growth and where we are currently, it is more than double what it was at the time of the listing. Clearly we have created a lot of value.”
What does Kruger feel his team and the group learned from the last few years? He shares: “The first thing is that going into something as stressful as this, you must have a strong business case. But it must be as strong strategically as it is on paper when looking at the numbers.” In other words, one plus one must equal three. “While it is an absolute must for the strategic rationale and numbers to add up, it is the softer issues that are most difficult to deal with.”
“You can never over-communicate,” he continues. “A huge part of our success has been very proactive stakeholder management. This is especially significant if there is uncertainty. Even if you can’t give them all the answers, just the fact that you are engaging with them and they feel you are hearing what they are saying is important.”
Kruger then goes on to stress the importance of putting the right people into the correct roles. MMI had to bring six customer facing business divisions together, and this was by far one of their most challenging and significant undertakings. “What is so important in a merger is ensuring that there remains integrity in the selection process. If people see or sense favouritism taking place, or inconsistent adherence to process, that can undermine the spirit of the merger. So we spent a lot of time evaluating, assessing, interviewing, and matching skills and capabilities to roles and functions.” As important as skills and capabilities are, the aspirations of the soon to be appointed executives need to be understood as well. Fallout is another essential risk to manage, especially for those who are not selected. Kruger says: “As important as it is to choose the right person, it is also very necessary to have a process and plan in place for those who are not chosen. They may not be quite the right fit for those roles, but they are still very valuable and you must do all you can to retain them in other appropriate roles.”
When I asked Kruger about how he had dealt with having to create a holding company team and board, he stressed that trust was at the centre of it all. He adds: “During the negotiation phase of the merger we would on occasion find ourselves across the table from each other as adversaries. Now as a new organisation you have to learn to work together. We learned that the quickest way to trust each other was to trust one another’s intent. If you trust the other party’s intent, no matter what communication issues or misunderstandings arise, you can still move forward.”
As a self proclaimed family man, he, his wife, and three children have together walked the path from actuary to Group CEO, a journey from highly technical to now high leadership, where he shares that quality time is the key to his home/work balance.
And hopefully he can maintain this balance as MMI now push forward with a strategy where its clients find themselves at the heart of some very interesting structural changes that are going to require very strong internal partnerships being formed and high levels of teamwork and trust. This is not Kruger’s first rodeo though, as the organisation he first joined 23 years ago in 1991 as an actuarial assistant, has moved from a tiny 300 employees to now having almost 17 000 individuals employed across the group.
What is clear is that no one man or woman will be able to claim credit for MMI’s successes going forward. This is certainly a very healthy way to do business. Kruger shares: “We like to give recognition to teams. We also try keeping things a little less formal here, and we try to develop an environment where people can feel at home, can be heard, where mistakes can be tolerated and where innovation happens. It’s about adding value and removing barriers.”
With the organisation now divided into four Segment Businesses whose primary function is to identify client needs, Product and Solution Businesses that will focus on delivery, and newly consolidated group-wide support functions, MMI is positioned well to respond quickly to its clients and deliver products that supply to their needs and solve their problems.
Time will tell whether or not Kruger and his team have made the correct decision to restructure this organisation, but with what seems to be high staff morale and low attrition rates, a solid and loyal customer base, and strong leadership across all key areas with a clear sense of where they are headed, it seems that MMI may be worth having in one’s investment portfolio.
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