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ZSA
ZSA
ZAE - Zurich Insurance Company South Africa Limited - Announcement of the
reviewed group results and dividend declaration for the year ended December 31,
2007
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: ZAE ISIN: ZAE000094496
("the Group")
ANNOUNCEMENT OF THE REVIEWED GROUP RESULTS AND DIVIDEND DECLARATION
FOR THE YEAR ENDED DECEMBER 31, 2007
Highlights
The Financial Sector Charter Council awarded the company an A rating and Global
Credit Rating reaffirmed the company`s AA+ claims paying ability rating.
Insurance premium revenue up 12.5%
Net asset value up 8%
Rand thousands 2007 2006 % Change
CONDENSED INCOME STATEMENT
Insurance premium revenue 4,400,960 3,910,639 12.5%
Insurance premium ceded to reinsurers 827,941 735,513
------------------------------------
Net insurance premium revenue 3,573,019 3,175,126
------------------------------------
Net insurance premium earned 3,539,125 3,115,547
Reinsurance commission earned 114,959 138,032
Pension fund surplus 19,753 230,764
Other income - fee income 19,947 10,602
Net investment income 225,595 202,224
------------------------------------
- Interest and dividends received 236,159 202,224
- Interest paid (10,564) -
------------------------------------
Net fair value losses on assets
held at fair value through income (23,839) (18,962)
Net realised gains on financial
assets - available-for-sale 94,512 71,334
------------------------------------
Income 3,990,052 3,749,541 6.4%
------------------------------------
Net insurance claims 2,595,794 2,256,842 15.0%
Gross acquisition expenses 618,605 609,307 1.5%
Administrative and other operating
expenses 349,759 447,250 (21.8%)
Investment expenses 4,734 3,594
------------------------------------
Expenses 3,568,892 3,316,993 7.6%
------------------------------------
Profit before tax 421,160 432,548 (2.6%)
Income tax expense 130,128 105,666
------------------------------------
- Current year 111,554 111,218
- Prior years under/(over) provision 18,574 (5,552)
------------------------------------
------------------------------------
Profit after tax 291,032 326,882
Minority interest 1,172 6,302
------------------------------------
Net profit attributable to members
of the Company 289,860 320,580 (9.6%)
------------------------------------
Rand thousands 2007 2006 % Change
CONDENSED BALANCE SHEET
Assets
Property and equipment 63,531 68,476
Investments 1,111,752 1,071,347 3.8%
Intangible insurance assets
- deferred acquisition expenses 113,127 98,736
Retirement benefit fund surplus 96,196 230,764
Assets arising from insurance contracts 481,928 605,614
Current assets 1,301,940 1,048,678
Cash and cash equivalents 1,583,650 1,482,314
------------------------------------
Total assets 4,752,124 4,605,929 3.2%
------------------------------------
Equity and liabilities
Shareholders` equity 1,900,130 1,758,933 8.0%
Minority shareholders` interest in
subsidiaries 2,090 13,043
Employee retirement benefit
obligations 17,388 179,924
Reinsurance commission 35,263 34,270
Deferred tax liabilities 77,656 99,451
Liabilities arising from insurance
contracts 1,893,070 1,920,676
Other liabilities 826,527 599,632
------------------------------------
Total equity and liabilities 4,752,124 4,605,929
------------------------------------
Rand thousands 2007 2006
CONDENSED STATEMENT OF CHANGES IN
EQUITY
Balance at beginning of year 1,758,933 1,511,949
Net changes in available-for-sale
financial assets on disposal (87,880) (66,495)
Revaluation of available-for-sale
financial assets 44,018 131,253
Translation of foreign subsidiaries (10,646) (38,481)
Net profit for the year 289,860 320,580
Dividends paid (94,155) (99,873)
-----------------------
Balance at end of year 1,900,130 1,758,933
-----------------------
Rand thousands 2007 2006
CONDENSED CASH FLOW STATEMENT
Cash retained from operating
activities 266,947 498,275
-----------------------
- Cash generated from operations 195,031 220,046
- Net increase in working capital 14,085 146,711
- Dividends and net interest 225,595 202,224
- Taxation paid (167,764) (70,706)
-----------------------
Dividends paid (94,155) (99,873)
Cash effect of investing activities (71,457) 66,384
-----------------------
Net increase in cash and
cash equivalents 101,336 464,786
Cash and cash equivalents at beginning
of year 1,482,314 1,017,528
-----------------------
Cash and cash equivalents at end
of year 1,583,650 1,482,314
-----------------------
NOTES
1. Accounting policies
The principal policies used in the preparation of the results for the year ended
December 31, 2007 are consistent with those applied in the annual financial
statements for the year ended December 31, 2006 in terms of International
Financial Reporting Standards, except as follows:
The Group has adopted the following new and amended IFRS and IFRIC
interpretations during the year. Adoption of these revised standards and
interpretations did not have any effect on the financial performance or position
of the Group. They did however give rise to additional disclosures, including in
some cases, revisions to accounting policies.
- IFRS 7 Financial Instruments: Disclosures
- IAS 1 Amendment: Presentation of Financial Statements
- IFRIC 8 Scope of IFRS 2
- IFRIC 9 Reassessment of Embedded Derivatives
- IFRIC 10 Interim Financial Reporting and Impairment
This announcement is also IAS 34 compliant.
2. Prior years under\(over) provision for taxation
This relates to adjustments to taxes in respect of assessments finalised
relating to prior 2003.
Included under net investment income is the interest paid in respect of these
assessments.
Rand thousands 2007 2006 % Change
3. Financial highlights
Net profit attributable
to members of the
Company IAS 33 Earnings 289,860 320,580 (9.6%)
adjusted
for:
Less gains on the
disposal of plant and
equipment IAS 16 (1,405) (2,170)
Less gains on the disposal
of land and buildings IAS 16 (2,498) -
Less gains on disposal
of available-for-sale
financial assets IAS 16 (92,014) (71,334)
Add tax effect 9,552 4,675
-------------------------------------
Headline earnings 203,496 251,751 (19.2%)
-------------------------------------
Headline earnings per share
(cents) 1,670.8 2,067.0 (19.2%)
Earnings per share (cents) 2,379.9 2,632.1 (9.6%)
Ordinary dividends declared
per share (cents) 700 650 7.7%
Dividends paid per share (cents) 690 820 (15.9%)
Number of shares in issue 12,179,500 12,179,500
Net asset value per share (cents) 15,601 14,442 8.0%
Solvency margin (%) 53.2% 55.8% (4.7%)
Combined ratio (%) 97.5% 97.3% 0.2%
Return on equity (%) 15.8% 19.6% (19.4%)
3. Segmental information
Rand thousands 2007 2006
Gross written premium
Property 1,312,575 1,304,618
Transport 199,298 156,353
Motor 2,136,675 1,835,352
Engineering 469,020 349,087
Guarantee 11,782 1,593
Liability 125,447 103,802
Accident & Health 145,552 158,642
Miscellaneous 611 1,192
-----------------------
Total 4,400,960 3,910,639
-----------------------
Segmental income
Property 992,448 1,002,683
Transport 153,173 126,870
Motor 1,988,908 1,732,345
Engineering 324,334 268,123
Guarantee 3,622 740
Liability 79,736 70,509
Accident & Health 111,671 51,281
Miscellaneous 192 1,028
Non-insurance 335,968 495,962
-----------------------
Total 3,990,052 3,749,541
-----------------------
Segmental result before tax
Property 59,038 53,819
Transport 17,586 16,739
Motor (74,181) (52,339)
Engineering 44,572 59,778
Guarantee 2,680 118
Liability 12,878 8,327
Accident & Health 40,259 (12,333)
Miscellaneous (152) 88
Non-insurance 318,480 358,351
-----------------------
Total 421,160 432,548
-----------------------
Comments
The Group, after a concerted effort across all areas of the business, maintained
profit before tax at a similar level to that achieved in the previous year.
Gross premium income rose by an expected 12.5%. This increase was achieved
despite
a reduction in the contribution received from our Zimbabwean subsidiary due
to currency devaluation. The growth in premium, although slightly lower than
in the period to June 2007, is still satisfactory in a challenging market.
In 2007, the Group benefited from a net pension fund surplus of R43 million
including related investment income (2006: R97 million, after accounting for a
R133 million expense of conversion from a defined benefit to a defined
contribution
pension fund).
The increase in both the number and the quantum of claims continued
into the second half of the year. This resulted in an increase in claims of some
15%. The main area of concern remains the motor book.
Expenses increased by 11% after allowing the effects of the offering in respect
of the Pension Fund conversion to employees, discussed above. The expense ratio
improved to 9.6% (2006: 10%).
After taking the above into account the Group achieved a satisfactory
improvement
in the underwriting result.
Investment income showed an increase of R42 million which reflected the enhanced
interest rates received by the Group on funds deposited at institutions. The
through income fair value adjustment continued to show a loss. This was offset
by the increase in realised gains on the disposal of equities held as
available-for-sale. Investment related income therefore increased over 2006
levels by
16.4%.
Taxation increased by R20 million due to an under-provision for the prior years.
Excluding this, the tax rate is comparable to 2006.
The Group`s balance sheet remains strong with an increase in net asset value of
8%. Solvency is satisfactory at 53.2% and continues to remain within the Group`s
policy range.
CHANGES IN DIRECTORATE
Gerard de Rauville was elected as Chairman of the Board on 9 May and, during the
year, the Board welcomed Christopher Cron, Joseph Deiss, Mandiza Mbekeni and
Dolly Mokgatle as directors. Al Paas resigned as a director during the year.
COMPLIANCE
The Group complies in all material respects with the JSE Listings Requirements
and the King Report Code of Corporate Practices and Conduct.
REVIEW
The company`s auditors, PricewaterhouseCoopers Inc., have reviewed the
information set out in the announcement and their unqualified review opinion is
available for inspection at the company`s registered office.
CASH DIVIDEND DECLARATION NO. 73
The Directors have declared a final cash dividend for 2007 of 440 cents per
share
(2006: 430 cents per share)
The dividend is payable in accordance with the following timetable:
Last day to trade in order to participate in the dividend:
Thursday, March 13, 2008
Shares commence trading ex the dividend from the commencement of business on:
Friday, March 14, 2008
Record date: Thursday, March 20, 2008
Payment date: Tuesday, March 25, 2008
Shareholders may not dematerialise or rematerialise their holdings of shares in
the Company between Friday, March 14, 2008 and Thursday, March 20 2008, both
days inclusive.
On behalf of the Board
JPG de Rauville
Chairman
NV Beyers
Chief Executive Officer
February 25, 2008
Bryanston
Board of Directors
JPG de Rauville (Independent Non-Executive Chairman)
NV Beyers (Chief Executive Officer)
DM Burton (Executive)
CJ Cron (Non-Executive)
JPM Deiss (Non-Executive)
MN Mbekeni (Independent Non-Executive)
DD Mokgatle (Independent Non-Executive)
SG Morris (Independent Non-Executive)
DS Phiri (Non-Executive)
CN Zungu (Executive)
Auditors
PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
2 Eglin Road, Sunninghill, 2157
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg, 2001
Group Company Secretary and Registered Office
TA Pitman
Zurich Insurance Company South Africa Limited
Registration number 1965/006764/06
Zurich House
The Braes
193 Bryanston Drive
Bryanston, 2021
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 25/02/2008 15:00:01 Produced by the JSE SENS Department.
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