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MAF
MAF
MAF - Mutual & Federal Insurance Company - Quarterly operational update for the
nine months ended 30 September 2008
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1970/006619/06
Share code: MAF ISIN No: ZAE000010823
("Mutual & Federal" or "the company")
Quarterly operational update for the nine months ended 30 September 2008
The text of this quarterly operational update for the nine months ended 30
September 2008, released on 6 November 2008, can be accessed on Mutual &
Federal`s website http://www.mf.co.za
The company has successfully undertaken an internal staff and infrastructure
reorganisation, reducing headcount by 21% which amounted to more than 600
people. Whilst the overall expense savings in 2008 will be offset by the costs
of the reorganisation, expense ratios will benefit in future years from the
action taken.
Mutual & Federal has achieved positive trading results despite a softer
insurance market compared to the comparative period. A substantial number of
group schemes were however cancelled due to unsatisfactory performance whilst
premiums on risk finance business declined following changes to insurance
practices in the retail environment. Gross premiums for the period nevertheless
remained steady compared to the comparative period.
Although underwriting results were negatively influenced by the group schemes
portfolio and increases in the frequency and severity of commercial fire claims
in the first half of the year, a significant improvement was achieved in the
third quarter. Premium rates on fire risks were reviewed and this, together with
remedial action on group schemes, has returned the business to underwriting
profitability for the year to date.
Interest and dividend returns for the period were offset by losses on the
revaluation of listed shares following the decline in global equity markets. In
addition, certain non-operational expenses related to the restructure, as well
as costs to exploit alternate distribution channels, were written of at 30
September 2008. The solvency margin (being the ratio net assets to net premiums)
at that date accordingly declined to 39% from 42% as at 31 December 2007. This
nevertheless remains within our target range of 30% to 40%.
The sale process whereby Old Mutual intends to dispose of its shareholding in
Mutual & Federal is progressing well and management expects that an announcement
with regard to the sale will be made in December 2008.
Johannesburg
6 November 2008
Sponsor
Nedbank Capital
Date: 06/11/2008 11:34:01 Produced by the JSE SENS Department.
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