Although not unaffected, we are pleased to report that Momentum weathered the economic storm of the past year to remain a successful company with sustainable profits. Our focus on building sustainable and mutually beneficial relationships with our stakeholder community provided crucial support during a difficult year. We will continue to rely on this attribute of our business model to take Momentum and our stakeholders from successful to significant.

Momentum’s strategic priorities reflect our commitment to all our stakeholders. For our employees our strategic priority is to entrench a values-based culture throughout the entire Momentum. We rely on our employees to live the values of “Innovation”, “Awesome service”, “Accountability” and “Integrity”. Our other values of “Teamwork” and “Growing people” illustrate the mutually beneficial nature of Momentum’s relationship with our employees. In this regard we have made good progress during the past year in respect of leadership development, talent management and employee wellness.

In times of financial stress we acknowledge the importance of proactively engaging with our clients and providing excellent service. The effectiveness of this strategic priority is measured on a regular basis and our client satisfaction surveys for 2009 reflect service delivery that exceeds industry benchmarks.

Without appropriate distribution partnerships in all market segments, we will not have a sustainable business. This imperative remains a core strategic priority and is illustrated by the ability of our distribution partners to sustain solid new business levels during the difficult past year. Partnerships with suppliers are also key to taking Momentum from successful to significant, with particular regard for the role that suppliers can play in transforming South Africa’s society from an economic perspective. During 2009 we spent more than R 1080 million on suppliers, of which more than half went to BBBEE suppliers.

Building and protecting a strong brand is another strategic priority that will receive increasing attention over the next few years. We have already started this process through our television commercial featuring the South African para-Olympian swimmer Natalie du Toit, and our sponsorship of the Momentum 94.7 Cycle Challenge. In both instances, we have extended the commercial rationale to include a social element and benefit for the community we operate in. We have entered into a sponsorship agreement with Natalie and have donated more than one hundred bicycles to community beneficiaries. In addition, the Momentum Fund has invested R 15.4 million in community grants, while our employee volunteers have invested a significant amount of their time and resources in initiatives aimed at assisting needy families.

The future well-being of Momentum and our stakeholders is linked to the environment in which we operate. We have made good progress in extending the scope of our carbon footprint measurement and have commissioned work to retrofit our head office building with energy-efficient lights. Against the background of the challenging economic environment it is particularly pleasing that Momentum received a number of awards during the year. The highlight of the year was Momentum’s award as the FIA Investment Product Supplier of the Year, for the third year in a row.

Regulatory changes continue to compound the difficult economic environment. Momentum successfully implemented product changes during 2009 to comply with the new commission regulations. The new product design provides enhanced early termination values, improved value for money and loyalty bonuses

The main challenges for the next year are largely similar to what we have experienced over the past year. Although some commentators believe that the worst of the global recession is over, a quick recovery is unlikely and unfavourable market and economic conditions are set to prevail for the next year. Investment markets remain under pressure, with a commensurate negative impact on clients’ asset values and the revenue generated by Momentum and our intermediary partners. Personal disposable income is also under pressure and consumers have less money available to invest in the products of life insurers. It will be difficult to increase new business volumes and some clients may even be forced to withdraw funds from their investments or lapse their policy contracts.

It will be difficult to increase new business volumes and some clients may even be forced to withdraw funds from their investments or lapse their policy contracts.

In the longer term we expect frequent regulatory changes to persist, as demonstrated by government’s plans in relation to retirement reform and national health insurance. A further challenge that has developed into a long-term trend is our ability to attract and retain skilled staff. We believe that this challenge can be turned into an opportunity through a dedicated focus on skills and leadership development and we have included “growing people” in Momentum’s value set to make sure we are recognised as an employer of choice.

The South African emerging market has not traditionally been part of our target market. We believe that this segment of the population has particular potential and we will increase our efforts to penetrate this growth market in the next three to five years.

Over the next five years we want to take Momentum and our stakeholders from successful to significant. Our growth strategy towards significance involves our stakeholders in different ways. We want to offer many more of Momentum’s products to our existing clients through various cross-selling initiatives. Diversification has been a common theme for South African life insurers for some time. We aim to further diversify our product range to provide a comprehensive range of financial solutions to our clients in all income segments, and to sell these in more diverse geographic locations.

Our distribution partners will benefit from this diversified product range that can be offered to clients across all income segments. We also aim to extend the nature of our relationships with distribution partners to ensure that appropriate channels are used to reach different segments of the market. Momentum will rely on its people to drive growth from within the organisation by innovating and creating efficiencies.

We are firm believers in the philosophy that challenging conditions create new opportunities. Momentum’s strategy recognises these opportunities and is focussed on growth and sustainability for all stakeholders. Our report illustrates the progress we have made in the implementation of our strategy and shows how our business practices are designed to achieve sustainability for everyone.