| Thu 2 Aug 2007, 16:00 | | ZSA - Zurich Insurance Company South Africa Limite |
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ZSA
ZSA
ZSA - Zurich Insurance Company South Africa Limited
Zurich Insurance Company South Africa Limited
(Formerly South African Eagle Insurance Company Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1965/006764/06)
Share code: ZSA & ISIN: ZAE000094496
("the Group")
Announcement of the reviewed Group results and dividend declaration
for the six months ended June 30, 2007
Highlights
Insurance premium revenue up 14.6%
Net asset value up 13.7%
Headline earnings up 24.5%
Rand thousands June 30, 2007 June 30, 2006 % Change Audited at
December 31,
2006
CONDENSED INCOME STATEMENT
Insurance premium revenue 2,183,457 1,905,852 14.6% 3,910,639
Insurance premium ceded to
reinsurers 460,784 374,217 735,513
-----------------------------------------------------
Net insurance premium 1,722,673 1,531,635 3,175,126
-----------------------------------------------------
Net insurance premium
revenue 1,707,879 1,495,576 14.2% 3,115,547
Reinsurance commission
earned 61,627 62,615 138,032
Pension fund surplus 6,126 - 230,764
Other income - fee income 6,366 3,625 10,602
Investment income 100,463 95,197 202,224
Net fair value loss on
assets held at fair value
through income - 18,066 - 28,680 - 18,962
Net realised gains on
financial assets -
available-for-sale 35,489 68,425 71,334
-----------------------------------------------------
Income 1,899,884 1,696,758 12.0% 3,749,541
-----------------------------------------------------
Net insurance claims 1,233,774 1,074,935 14.8% 2,256,842
Gross acquisition costs 324,053 292,698 10.7% 609,307
Administrative and other
operating expenses 164,248 160,872 2.1% 447,250
Investment expenses 1,778 2,250 3,594
-----------------------------------------------------
Expenses 1,723,853 1,530,755 12.6% 3,316,993
-----------------------------------------------------
Profit before tax 176,031 166,003 6.0% 432,548
Income tax expense 53,222 33,941 56.8% 105,666
-----------------------------------------------------
Profit after tax 122,809 132,062 - 7.0% 326,882
Minority interest 123 1,498 6,302
-----------------------------------------------------
Net profit attributable to
members of the Company 122,686 130,564 - 6.0% 320,580
-----------------------------------------------------
Rand thousands June 30, 2007 June 30, 2006 % Change Audited at
December 31,
2006
CONDENSED BALANCE SHEET
Assets
Property and equipment 63,607 61,827 68,476
Investments 1,120,253 982,662 14.0% 1,071,347
Intangible insurance
assets - deferred
acquisition costs 110,810 92,504 98,736
Retirement benefit fund
surplus 74,020 - 230,764
Assets arising from
reinsurance contracts 639,878 445,977 43.5% 605,614
Current assets 982,328 968,244 1,048,678
Cash and cash equivalents 1,497,550 1,431,247 4.6% 1,482,314
-----------------------------------------------------
Total assets 4,488,446 3,982,461 12.7% 4,605,929
-----------------------------------------------------
Equity and liabilities
Shareholders` equity 1,850,668 1,627,485 13.7% 1,758,933
Minority shareholders`
interest in subsidiaries 225 10,188 13,043
Employee retirement benefit
obligations 14,270 41,695 179,924
Reinsurance commission 36,390 33,397 34,270
Deferred tax liabilities 56,382 5,754 99,451
Liabilities arising from
insurance contracts 1,946,394 1,753,829 11.0% 1,920,676
Other liabilities 584,117 510,113 14.5% 599,632
-----------------------------------------------------
Total equity and liabilities 4,488,446 3,982,461 4,605,929
-----------------------------------------------------
Rand thousands June 30, 2007 June 30, 2006 Audited at
December 31,
2006
CONDENSED STATEMENT OF CHANGES IN
EQUITY
Balance at beginning of year 1,758,933 1,511,949 1,511,949
Net changes in available-for-sale
financial assets on disposal - 19,691 - 11,720 - 66,495
Revaluation of available-for-sale
financial assets 61,806 83,729 131,253
Translation of foreign subsidiaries - 19,575 - 13,960 - 38,481
Net profit for the year 122,686 130,564 320,580
Dividends paid - 53,491 - 73,077 - 99,873
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Balance at end of period 1,850,668 1,627,485 1,758,933
-------------------------------------------
Rand thousands June 30, 2007 June 30, 2006 Audited at
December 31,
2006
CONDENSED CASH FLOW STATEMENT
Cash retained from operating
activities 96,234 366,301 498,275
-------------------------------------------
- Cash generated from operations - 108,286 155,793 220,046
- Net increase in working capital 166,754 161,049 146,711
- Dividends and interest income 100,463 95,197 202,224
- Taxation paid - 62,697 - 45,738 - 70,706
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Dividends paid - 53,491 - 73,077 - 99,873
Cash effect of investing activities - 27,507 120,495 66,384
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Net increase in cash and cash
equivalents 15,236 413,719 464,786
Cash and cash equivalents at
beginning of year 1,482,314 1,017,528 1,017,528
-------------------------------------------
Cash and cash equivalents at
end of year 1,497,550 1,431,247 1,482,314
-------------------------------------------
NOTES
1. Accounting policies and basis of preparation
The principal policies used in the preparation of the results for the period
ended June 30, 2007 are consistent with those applied in the annual financial
statements for the year ended December 31, 2006 and for the results for the six
months ended June 30, 2006 in terms of International Financial Reporting
Standards. Comparative information in the condensed cash flow statement has been
amended to accommodate the enhanced disclosure in the current year.
Rand thousands June 30, 2007 June 30, 2006 % Change Audited at
December 31,
2006
2. Financial highlights
Reconciliation between
earnings and headline
earnings
Headline earnings 89,720 72,061 24.5% 262,041
After-tax adjustment for:
Net realised surplus on
disposal of investments,
property and equipment 32,966 58,503 58,539
-----------------------------------------------------
Net profit attributable to
members of the Company 122,686 130,564 - 6.0% 320,580
-----------------------------------------------------
Headline earnings per
share (cents) 736.6 592.0 2,151.5
Earnings per share (cents) 1,007.3 1,072.0 - 6.0% 2,632.1
Ordinary dividends declared
per share (cents) 260.0 220.0 650.0
Dividends paid per
share (cents) 430.0 600.0 820.0
Number of shares in issue 12,179,500 12,179,500 12,179,500
Net asset value per
share (cents) 15,194.9 13,362.5 13.7% 14,441.8
Solvency margin (%) 55.0% 54.0% 55.8%
Combined ratio (%) * 97.2% 97.9% 97.3%
Return on average equity (%) 18.2% 17.8% 19.6%
* If the conversion costs relating to the conversion of the Pension Fund from
defined benefit to defined contribution of R135 million were included at
December 2006, the combined ratio would have been 101.5%.
Segmental information June 30, 2007 June 30, 2006 December 31, 2006
Gross written premium
Property 650,004 518,208 1,304,617
Transport 97,007 87,037 156,353
Motor 1,019,232 891,885 1,835,352
Engineering 280,678 209,020 349,087
Guarantee 829 1,015 1,593
Liability 56,425 97,728 103,802
Accident & Health 78,705 99,767 158,642
Miscellaneous 577 1,192 1,193
--------------------------------------------------
Total per income statement 2,183,457 1,905,852 3,910,639
--------------------------------------------------
Segmental revenue
Property 478,546 502,078 974,091
Transport 72,854 59,843 125,291
Motor 952,710 789,340 1,740,531
Engineering 152,829 134,153 269,752
Guarantee 1,853 445 961
Liability 39,391 26,067 55,196
Accident & Health 55,823 45,237 86,729
Miscellaneous 228 1,028 1,028
Other 130,378 138,567 495,962
--------------------------------------------------
Total segmental revenue 1,884,612 1,696,758 3,749,541
--------------------------------------------------
Segmental result
before tax June 30, 2007 June 30, 2006 December 31, 2006
Property 9,971 19,204 53,817
Transport 7,908 13,227 16,740
Motor - 11,305 - 38,244 - 52,340
Engineering 11,623 32,226 59,778
Guarantee 1,214 170 118
Liability 9,412 3,631 8,329
Accident & Health 19,651 - 1,211 - 12,333
Miscellaneous 130 683 88
Other 128,107 136,317 358,351
--------------------------------------------------
Total segmental result
before tax 176,711 166,003 432,548
--------------------------------------------------
COMMENTARY
Notwithstanding that the industry continues to operate in a competitive market,
with an increased claims pattern, the Group achieved an improvement in the
underwriting result for the current period compared to that for the
corresponding six months last year.
Premium revenue increased by 14.6% compared to 2006, which reflects satisfactory
growth in a competitive market. This was achieved notwithstanding the negative
impact of reductions in premium revenues from its Zimbabwean subsidiary.
The first six months were characterised by both a higher incidence of claims and
increased claims costs on the property and motor accounts and, the effects of
severe flooding in Kwa-Zulu Natal in late March, affected the account.
In spite of corrective action taken on the motor account, which included premium
increases of more than 20%, the result continues to be impacted negatively due
to an increase in the incidence of accidents and crime related losses. Motor
repair costs, including the costs of repairing imported vehicles, continue to
escalate well above the official inflation rate. The Group will, however,
continue to take the steps necessary to limit the effect on the underwriting
result.
Gains on disposal of available-for-sale investments were lower at R35.4 million
(2006 R68.4 million).
Headline earnings of R89.7 million were 24.5% higher compared to the same period
last year. Earning per share of 1,007 cents, however, were 6.0% lower, mainly as
a result of an increased tax charge and reduced gains on the disposal of
available-for-sale financial assets.
Liquidity is satisfactory, the cash flow from operations is positive although
reduced as a result of a significant increase in claims payments.
The proposed conversion of the pension fund from a defined benefit fund to a
defined contribution fund was successfully completed with all members opting for
the conversion. This has led to a significant decrease in both the retirement
obligations and the surplus attributable to the Group as this surplus was
utilised to settle the obligations. Therefore, other than a small number of post
retirement medical aid obligations totalling R14.2 million, there are no further
post retirement obligations.
The solvency margin increased marginally to 55% but remains above the stated
policy of maintaining solvency within the 40% to 50% range.
Given the strong solvency position, the Directors have declared an interim
dividend of 260 cents per share, an increase of 18%.
Gerard de Rauville was elected as Chairman of the Board on May 9 and, with
effect from August 1, the Board welcomes both Chris Cron and Ms Mandiza Mbekeni
as Directors. Al Paas resigned as a Director during the period under review.
While the Directors are confident regarding the Group`s prospects for the
remainder of the year it should be noted that underwriting as well as investment
performance fluctuates and, therefore, results for the first six months are not
necessarily indicative of the year-end result.
DIVIDEND DECLARATION NO. 72
1. The Directors have declared an interim dividend for 2007 of 260 cents per
share (2006: 220 cents per share)
2. The dividend is payable in accordance with the following timetable:
Last day to trade in order to participate in the dividend: Friday,
August 17, 2007
Shares commence trading ex the dividend from the commencement of business
on: Monday, August 20, 2007
Record date: Friday, August 24, 2007
Payment date: Monday, August 27, 2007
Shareholders may not dematerialise or rematerialise their holdings of shares
in the Company between August 20, 2007 and August 24, 2007, both days
inclusive.
August 1, 2007
By order of the Board.
Bryanston
Board of Directors
JPG de Rauville Independent Non-Executive Chairman
NV Beyers Chief Executive Officer
DM Burton Executive
CJ Cron Non-Executive
MN Mbekeni Independent Non-Executive
SG Morris Independent Non-Executive
DS Phiri Non-Executive
CN Zungu Executive
Auditors
The Company`s external auditors, PricewaterhouseCoopers Inc, have reviewed the
financial announcement. A copy of their review opinion is available on request
at the Company`s registered office.
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg, 2001
Group company secretary and registered office
Tracy Pitman
Zurich Insurance Company South Africa Limited
(Formerly South African Eagle Insurance Company Limited)
Registration number 1965/006764/06
The Braes
193 Bryanston Drive
Bryanston, 2021
Sponsor
RAND MERCHANT BANK,
(A division of FirstRand Bank Limited)
Date: 02/08/2007 16:00:01 Produced by the JSE SENS Department.
