MAF-Mutual & Federal-Operational update for the th
MAF
MAF
MAF-Mutual & Federal-Operational update for the three months ended 31 March 2007
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1970/06619/06
Share code: MAF ISIN: ZAE000010823
("Mutual & Federal" or "the company")
OPERATIONAL UPDATE FOR THE THREE MONTHS ENDED 31 MARCH 2007
Trading conditions within the short-term insurance industry remain highly
competitive with premiums being increased in a number of portfolios to maintain
profitability. The underwriting results during the first quarter have been
adversely impacted by weather-related losses in Gauteng in January and KwaZulu-
Natal in March.
The ongoing refinement of estimation methods used for technical reserves has
favourably impacted the underwriting surplus in the current period by R24m
(2006: R9m). Furthermore, in 2007 the rate used in the calculation of the long-
term investment return has been increased from 11,1% to 15,6% in accordance with
the approach adopted by the holding company Old Mutual, and this has resulted in
an increase of R54m in adjusted pre-tax operating profit in 2007.
It should be noted that short-term insurance results and investment levels
fluctuate and those for the first three months are not necessarily indicative of
the outturn for the remainder of the half-year.
Results for the half-year will be published in the first week of August 2007.
RESULTS SUMMARY AT 31 MARCH 2007
Rm 2007 2006
(3 months) (3 months)
Gross premium income 2,415 2,151
Net earned premiums 1,956 1,782
Claims ratio 65.7% 64.6%
Combined ratio 98.3% 96.3%
Underwriting ratio 1.7% 3.7%
Return on capital (3 year average capital)* 30.0% 20.7%
Solvency ratio* 47% 75%
Underwriting surplus 33 66
Long-term investment return 196 166
Non-operating costs -5 -
Adjusted pre-tax operating profit 224 232
* Special dividend of R2 140m paid in September 2006
The above financial information has not been audited by the company`s auditors.
Johannesburg
24 May 2007
Sponsor
Nedbank Capital
Date: 24/05/2007 14:24:01 Produced by the JSE SENS Department.
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