Shares in South Africa's fourth-biggest life insurer by market value jumped as much as 4,5 per cent on the solid operations and a recovery in the group's retail business.

Metropolitan said it was moving towards doing more business by telephone to improve efficiencies when writing new business.

It will also continue to buy back shares where appropriate, it said.

"The results are well ahead of expectations and a key thing is that each division's operating results are ahead of expectations," said one Johannesburg-based analyst.

"The retail business is coming out of a four-quarter slump and it might turn out to be another good year."

By 0807 GMT, the share stood 4 per cent higher at 14,03 rand, outperforming the JSE Securities Exchange's mid-cap index, which was up 0.7 per cent.

Core headline EPS for the year ended Dec.

31 rose to 109,39 cents, while fully diluted the number climbed to 95,93 cents from 71,12 cents a year earlier.

Headline earnings per share is the key profit measure for South African firms and excludes non-trading, capital and certain extraordinary items.

The core headline figure also strips out capital appreciation on investment assets.

"The excellent results bear testimony to the group's entrenched position in the so-called emerging market," the company said.

The group's retail business, the largest contributor to profits, increased operating profit by 48 per cent.

Total recurring premium income rose 11 per cent to 5,8 billion rand while retail single premium income increased 8 per cent.

Metropolitan is currently targeting the lower classes and the growing South African middle class.

"The outlook in the group's target markets is extremely positive, boosted by the increase in disposable income as a result of reduced interest rates, lower inflation, rising employment rates, an improved GDP outlook and growing business confidence," the company said.

The South African economy, Africa's largest, is enjoying its longest expansion on record, with low interest rates helping to drive a consumer-led boom partly fuelled by a growing black middle class.

But the benefits are yet to filter to the poor majority, many of whom remain unemployed.

Metropolitan said its return on embedded value was 27 per cent, with embedded value per share at 14,99 rand, up 22 per cent.

Embedded value is an insurer's underlying asset value plus its prospects for profitability per share.

Assets under management climbed 33 per cent to 71,4 billion rand.

The group said its operations in Namibia, Botswana and Lesotho increased profits strongly in 2005, and that it was investigating opportunities in Nigeria.

Metropolitan stock, up 18,4 percent so far this year, is cheap compared with rivals such as Old Mutual on the basis of its current price/earnings ratio, according to Reuters Knowledge.

Metropolitan traded at around 5,8 times current earnings, compared with Old Mutual's 7,76 times.

But it was more expensive than Sanlam at 3,6 times.

- Nampa-Reuters

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