| Thu 28 Aug 2008, 12:27 | | ZSA - Zurich - Announcement of the reviewed Group results and cash dividend |
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ZSA
ZSA
ZSA - Zurich - Announcement of the reviewed Group results and cash dividend
declaration for the six months ended 30 June 2008
ZURICH INSURANCE COMPANY SOUTH AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1965/006764/06)
Share code: ZSA ISIN: ZAE000094496
("Zurich" or "the Group" or "the Company")
Announcement of the reviewed Group results and cash dividend declaration
for the six months ended 30 June 2008
Highlights
Insurance premium revenue up 21.7%
Headline earnings down 28.5%
Strong cash flow up 32.3%
Profit attributable to shareholders up 23.2%
Six months Six months Year ended
ended ended 31 December 2007
Rand thousands 30 June 2008 30 June 2007 % Change (Audited)
CONDENSED INCOME STATEMENT
Insurance premium revenue 2,656,792 2,183,457 21.7% 4,400,960
Insurance premium ceded to
reinsurers 623,737 460,784 827,941
-----------------------------------------------------
Net insurance premium
revenue 2,033,055 1,722,673 3,573,019
-----------------------------------------------------
Net insurance premium
earned 2,031,208 1,707,879 18.9% 3,539,125
Reinsurance commission
earned 54,381 61,627 114,959
Pension fund surplus - 6,126 19,753
Other income - fee income 4,700 6,366 19,947
Net investment income 122,717 100,463 225,595
-----------------------------------------------------
- Interest and dividends
received 130,079 104,118 236,159
- Interest paid (7,362) (3,655) (10,564)
-----------------------------------------------------
Net fair value loss on
assets held at fair value
through income (48,280) (18,066) (23,839)
Net realised gains on
financial assets -
available-for-sale 97,465 35,489 94,512
-----------------------------------------------------
Income 2,262,191 1,899,884 19.1% 3,990,052
-----------------------------------------------------
Net insurance claims 1,510,818 1,233,774 22.5% 2,595,794
Gross acquisition costs 359,969 324,053 618,605
Administrative and other
operating expenses 203,984 164,248 349,759
Investment expenses 2,470 1,778 4,734
-----------------------------------------------------
Expenses 2,077,241 1,723,853 20.5% 3,568,892
-----------------------------------------------------
Profit before tax 184,950 176,031 421,160
Income tax expense 33,764 53,222 130,128
-----------------------------------------------------
Profit after tax 151,186 122,809 291,032
Minority interest - 123 1,172
-----------------------------------------------------
Net profit attributable to
members of the Company 151,186 122,686 23.2% 289,860
-----------------------------------------------------
31 December 2007
Rand thousands 30 June 2008 30 June 2007 % Change (Audited)
CONDENSED BALANCE SHEET
Assets
Property and equipment 81,250 63,607 63,531
Investments 1,079,706 1,120,253 (3.6%) 1,111,752
Intangible insurance assets
- deferred acquisition costs 115,676 110,810 113,127
Retirement benefit fund
surplus 80,721 74,020 96,196
Assets arising from
reinsurance contracts 697,902 639,878 481,928
Current assets 1,086,265 982,328 10.6% 1,301,940
Cash and cash equivalents 1,981,961 1,497,550 32.3% 1,583,650
-----------------------------------------------------
Total assets 5,123,481 4,488,446 14.1% 4,752,124
-----------------------------------------------------
Equity and liabilities
Shareholders` equity 1,905,608 1,850,668 3.0% 1,900,130
Minority shareholders`
interest in subsidiaries 1,495 225 2,090
Employee retirement benefit
obligations 14,562 14,270 17,388
Reinsurance commission 38,163 36,390 35,263
Deferred tax liabilities 44,144 56,382 77,656
Liabilities arising from
insurance contracts 2,202,003 1,946,394 1,893,070
Other liabilities 917,506 584,117 826,527
-----------------------------------------------------
Total equity and
liabilities 5,123,481 4,488,446 4,752,124
-----------------------------------------------------
Six months Six months Year ended
ended ended 31 December 2007
Rand thousands 30 June 2008 30 June 2007 (Audited)
CONDENSED STATEMENT OF CHANGES
IN EQUITY
Balance at beginning of year 1,900,130 1,758,933 1,758,933
Net changes in available-for-sale
financial assets on disposal (111,038) (19,691) (87,880)
Revaluation of available-for-sale
financial assets 19,955 61,806 44,018
Translation of foreign subsidiaries (1,034) (19,575) (10,646)
Net profit for the period 151,185 122,686 289,860
Dividends paid (53,590) (53,491) (94,155)
--------------------------------------------
Balance at end of the period 1,905,608 1,850,668 1,900,130
--------------------------------------------
CONDENSED CASH FLOW STATEMENT
Cash retained from operating
activities 494,222 96,234 266,947
--------------------------------------------
- Cash generated/(utilised) from
operations 35,437 (108,286) 195,031
- Net increase in working capital 352,920 166,754 14,085
- Net interest income and dividends 122,717 100,463 225,595
- Taxation paid (16,852) (62,697) (167,764)
--------------------------------------------
Dividends paid (53,590) (53,491) (94,155)
Cash effect of investing activities (42,321) (27,507) (71,456)
--------------------------------------------
Net increase/(decrease) in cash
and cash equivalents 398,311 15,236 101,336
Cash and cash equivalents at
beginning of year 1,583,650 1,482,314 1,482,314
--------------------------------------------
Cash and cash equivalents at
end of the period 1,981,961 1,497,550 1,583,650
--------------------------------------------
NOTES
1. Accounting policies and basis of preparation
The principal policies used in the preparation of the reviewed results for the
period ended 30 June 2008 are consistent with those applied in the annual
financial statements for the year ended 31 December 2007 and for the results for
the six months ended 30 June 2007 in terms of International Financial Reporting
Standards, including IAS 34, except for the adoption of IFRIC 11 by the Group
which results in the reallocation of equity components in the amount of R30.9
million. Comparative information in the condensed cash flow statement has been
amended to accommodate disclosure in the current year.
2. Financial highlights
Six months Six months Year ended
ended ended 31 December 2007
Rand thousands 30 June 2008 30 June 2007 % Change (Audited)
Net profit attributable
to members of the Company
(IAS 33 Earnings) 151,186 122,686 23.2% 289,860
Adjusted for:
Less loss/(gains) on
disposal of plant and
equipment (IAS 16) 1,512 - (1,405)
Less gains on disposal
of land and buildings
(IAS 16) - - (2,498)
Less gains on disposal
of available-for-sale
financial assets (IAS 16) (97,465) (35,489) (92,013)
Add tax effect 8,884 2,523 9,552
-----------------------------------------------------
Headline earnings 64,117 89,720 (28.5%) 203,496
-----------------------------------------------------
Headline earnings per share
(cents) 526.4 736.6 (28.5%) 1,670.8
Earnings per share (cents) 1,241.3 1,007.3 23.2% 2,379.9
Ordinary dividends declared
per share (cents) 260 260 700
Dividends paid per share
(cents) 440 430 2.3% 690
Number of shares in issue 12,179,500 12,179,500 12,179,500
Net asset value per share
(cents) 15,646.0 15,194.9 3.0% 15,601.0
Solvency margin (%) 49.1% 55.0% 53.2%
Combined ratio (%) 99.5% 97.2% 97.5%
Return on average equity (%) 19.0% 18.2% 15.8%
3. Segmental information
Six months Six months Year ended
ended ended 31 December 2007
Rand thousands 30 June 2008 30 June 2007 (Audited)
Gross written premium
Property 802,429 650,004 1,312,575
Transport 105,194 97,007 199,298
Motor 1,223,969 1,019,232 2,136,675
Engineering 323,836 280,678 469,020
Guarantee 35,532 829 11,782
Liability 78,529 56,425 125,447
Accident & Health 87,048 78,705 145,552
Miscellaneous 255 577 611
--------------------------------------------
Total 2,656,792 2,183,457 4,400,960
--------------------------------------------
Six months Six months Year ended
ended ended 31 December 2007
Rand thousands 30 June 2008 30 June 2007 (Audited)
Segmental income
Property 555,237 482,425 992,448
Transport 79,392 73,444 153,173
Motor 1,171,713 960,431 1,988,908
Engineering 170,168 154,068 324,334
Guarantee 3,306 1,868 3,622
Liability 48,183 39,711 79,736
Accident & Health 57,494 56,275 111,671
Miscellaneous 97 230 192
Investments and other 176,601 131,432 335,968
--------------------------------------------
Total 2,262,191 1,899,884 3,990,052
--------------------------------------------
Six months Six months Year ended
ended ended 31 December 2007
Rand thousands 30 June 2008 30 June 2007 (Audited)
Segmental results before tax
Property (29,623) 9,971 59,038
Transport 11,909 7,908 17,586
Motor (25,087) (11,305) (74,181)
Engineering 13,477 11,623 44,572
Guarantee 116 1,214 2,680
Liability 12,214 9,412 12,877
Accident & Health 27,743 19,651 40,259
Miscellaneous 71 130 (152)
Investments and other 174,130 127,427 318,481
--------------------------------------------
Total 184,950 176,031 421,160
--------------------------------------------
Comments
Although the industry continues to operate in a competitive market, Zurich
showed strong premium growth with premium revenue rising by 21.7% compared to
the same period last year.
The first six months were characterised by a higher incidence of claims and
increased claims costs on the property and motor accounts. Also, two severe,
unseasonal floods in KwaZulu Natal in March and June negatively affected the
underwriting result.
In spite of corrective action taken on the motor account, which included premium
increases of more than 20%, the result continued to be impacted negatively due
to an increase in the incidence of accidents and crime related losses. Motor
repair costs, including the cost of repairing imported vehicles, continued to
escalate well above inflation. The Group will, however, continue to take the
necessary steps to limit the effect on the underwriting result.
Gains on the disposal of available-for-sale investments were higher than the
previous period as the Group continued to rebalance its equity portfolio in line
with its investment strategy.
Headline earnings were 28.5% lower compared to the same period last year. This
was mainly as a result of the reduced underwriting result, as well as the
unrealised losses on the Group`s bond portfolio.
The balance sheet remained strong with cash resources of approximately R2
billion (R1.5 billion: 2007) representing a R400 million improvement since
December 2007.
Solvency was satisfactory at 49.1% which was within the Group`s target solvency
range of 40% to 50%.
Given the satisfactory solvency position, the Directors have declared an interim
cash dividend of 260 cents per share (260 cents per share: 2007).
The first six months were characterised by challenges, which are expected to
persist for the balance of the year.
Messrs Burton and Zungu resigned as Executive Directors during the period. The
Board thanks these outgoing Directors for their positive contribution over the
years.
The Group complied 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. 74
1. The Directors have declared an interim cash dividend for 2008 of 260 cents
per share (260 cents per share: 2007)
2. The cash dividend is payable in accordance with the following timetable:
Last day to trade in order to participate in the dividend:
Friday, 12 September 2008
Shares commence trading ex the dividend from the commencement of business on:
Monday, 15 September 2008
Record date: Friday, 19 September 2008
Payment date: Monday, 22 September 2008
Shareholders may not dematerialise or materialise their holdings of shares in
the Company between Monday, 15 September 2008 and Friday, 19 September 2008,
both
days inclusive.
28 August 2008
By order of the Board
Bryanston
Board of Directors
JPG de Rauville Independent Non-Executive Chairman
NV Beyers Chief Executive Officer
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
Transfer Secretaries
Computershare Investor Services (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
The Braes
193 Bryanston Drive
Bryanston, 2021
Sponsor
RAND MERCHANT BANK,
(A division of FirstRand Bank Limited)
Date: 28/08/2008 12:27:02 Produced by the JSE SENS Department.
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