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ZSA
ZSA
ZSA - Zurich - Announcement Of The Reviewed Group Results And Cash Dividend
Declaration For The Year Ended 31 December 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")
Insurance premium revenue up by 20.8%
Premium revenue in excess of R5.3 billion
The Financial Sector Charter Council awarded the Company an A rating and
Global Credit Rating reaffirmed the AA+ claims paying ability rating.
ANNOUNCEMENT OF THE REVIEWED GROUP RESULTS AND CASH DIVIDEND DECLARATION FOR
THE YEAR ENDED 31 DECEMBER 2008
Condensed Income Statement
Year ended Year ended
31 December 31 December
2008 2007
Rand thousands (Reviewed) (Audited) % Change
Insurance premium revenue 5,316,490 4,400,960 20.8
Insurance premium ceded to
reinsurers (1,127,520) (827,941)
Net insurance premium revenue 4,188,970 3,573,019 17.2
Net insurance premium earned 4,116,395 3,539,125 16.3
Reinsurance commission earned 123,486 114,959
Pension fund (deficit)/surplus (24,156) 19,753
Other income - fee income 14,147 19,947
Investment income
- Interest and dividends
received 274,154 236,159
- Interest paid - (10,564)
Net fair value loss on assets
held at fair value through
income (20,041) (23,839)
Impairment on available-for-sale
financial assets (21,050) -
Net realised gains on financial
assets - available-for-sale 98,342 94,512
Income 4,561,277 3,990,052 14.3
Net insurance claims 3,086,303 2,595,794 18.9
Gross acquisition costs 765,963 618,605 23.8
Administrative and other
operating expenses 437,411 349,759 25.1
Share of loss of associates 345 -
Investment expenses 3,960 4,734
Expenses 4,293,982 3,568,892 20.3
Profit before tax 267,295 421,160 (36.5)
Income tax expense (56,838) (130,128) (56.3)
Profit after tax 210,457 291,032 (27.7)
Minority interest - (1,172)
Net profit attributable to
members of the Company 210,457 289,860 (27.4)
Condensed Balance Sheet
As at As at
31 December 31 December
2008 2007
Rand thousands (Reviewed) (Audited) % Change
Assets
Property and equipment 85,696 63,531
Investments 1,732,019 1,593,764 8.7
Intangible assets 131,156 113,127
Retirement benefit fund surplus 72,040 96,196
Assets arising from reinsurance
contracts 540,847 481,928
Other current assets 1,781,443 1,469,359 21.2
Cash and cash equivalents 1,123,809 1,101,638 2.0
Total assets 5,467,010 4,919,543 11.1
Equity and liabilities
Shareholders` equity 1,853,462 1,900,130 (2.5)
Minority shareholders` interest
in subsidiaries 3,362 2,090
Employee retirement benefit
obligations 18,060 17,388
Reinsurance commission 26,106 35,263
Deferred tax liabilities 24,910 77,656
Liabilities arising from 15.7
insurance contracts 2,191,087 1,893,070
Other liabilities 1,350,023 993,946 35.8
Total equity and liabilities 5,467,010 4,919,543 11.1
Condensed Cash Flow Statement
Year ended Year ended
31 December 31 December
2008 2007
Rand thousands (Reviewed) (Audited)
Cash retained from operating activities 440,491 266,779
- Cash generated from operations 246,102 208,948
- Dividends and interest income 274,155 225,595
- Taxation paid (79,766) (167,764)
Dividends paid (85,257) (94,155)
Cash effect of investing activities (272,842) (71,288)
Net (decrease)/increase in cash and cash
equivalents and reclassifications 22,171 (380,676)
Cash and cash equivalents at beginning of
the year 1,101,638 1,482,314
Cash and cash equivalents at end of the year 1,123,809 1,101,638
Condensed Statement of Changes in Equity
Year ended Year ended
31 December 31 December
2008 2007
Rand thousands (Reviewed) (Audited)
Balance at beginning of the year 1,900,130 1,758,933
Net changes in available-for-sale financial
assets on disposal (67,226) (87,880)
Revaluation of available-for-sale financial
assets (100,305) 44,018
Translation of foreign subsidiaries (4,337) (10,646)
Net profit for the period 210,457 289,860
Dividends paid (85,257) (94,155)
Balance at end of the period 1,853,462 1,900,130
Notes
1. Accounting Policies and Basis of Preparation
The principal policies used in the preparation of the reviewed results for
the period ended 31 December 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 2008 in terms of International
Financial Reporting Standards, including IAS34, except for the adoption of
IFRIC 11 by the Group which does not affect the results.
Year ended Year ended
31 December 31 December
2008 2007
Rand thousands (Reviewed) (Audited) % Change
2. Financial Highlights
Net profit attributable to
members of the Company 210,457 289,860
Adjusted for:
Less gains on disposal of plant
and equipment (2,542) (1,405)
Less gains on disposal of land
and buildings - (2,498)
Less gains on disposal of
available-for-sale financial
assets (77,292) (92,013)
Add tax effect 10,778 9,552
Headline earnings 141,401 203,496 (30.5)
Headline earnings per share
(cents) 1,161.0 1,670.8 (30.5)
Earnings per share (cents) 1,728.0 2,379.9 (27.4)
Ordinary dividends declared per
share (cents) 400 700
Dividends paid per share
(cents) 700 690
Number of shares in issue 12,179,500 12,179,500
Net asset value per share
(cents) 15,218 15,601 (2.5)
Solvency margin (%) 42.6 53.2
Combined ratio (%) 101.5 97.5
Return on average equity (%) 11.2 15.8
3. Segmental Information
Year ended Year ended
31 December 31 December
Rand thousands 2008 2007
Insurance Premium Revenue (Reviewed) (Audited)
Property 1,624,861 1,312,575
Transport 216,162 199,298
Motor 2,567,698 2,136,675
Engineering 550,460 469,020
Guarantee 32,403 11,782
Liability 158,569 125,447
Accident & Health 165,871 145,552
Miscellaneous 466 611
Total per income statement 5,316,490 4,400,960
Year ended Year ended
31 December 31 December
Rand thousands 2008 2007
Segmental income (Reviewed) (Audited)
Property 1,145,431 992,448
Transport 173,438 153,173
Motor 2,421,621 1,988,908
Engineering 349,636 324,334
Guarantee (47,194) 3,622
Liability 38,935 79,736
Accident & Health 157,554 111,671
Miscellaneous 460 192
Other 366,602 335,968
Total segmental income 4,561,277 3,990,052
Comments
While the industry continues to operate in a competitive market, the Group
showed strong premium growth with premium revenue rising by 20.8% compared to
the same period last year (2007: 12.5%).
The year was characterised by both a higher incidence of claims and increased
claims costs on the property and motor accounts. The frequency and intensity
of unseasonal storms negatively affected the underwriting result. In spite of
corrective action taken on the motor account, particularly in personal lines
which included premium increases of more than 20%, the result continued to be
impacted negatively due to an increase in the number of accidents and crime
related losses. Motor repair costs, including the cost of repairing imported
vehicles, continued to escalate well above inflation mainly due to currency
depreciation. In response to this, the Group has implemented actuarial rating
which will improve our risk selection and pricing. This, combined with an
increased focus on portfolio management in the personal lines segment, are
intended to improve the underwriting result in 2009.
In addition to the expected normal inflationary increases, the apparent
expense ratio deterioration from 2007 to 2008 was mainly due to a non-
recurring pension benefit surplus taken in 2007.
Despite the Group`s conservative equity strategy, where we limit overall
exposure to equities, we had to account for a diminution in the value of our
equity portfolio in line with the market, as well as the impairment of
certain equities. As expected we saw an increase in investment returns on our
bond and cash portfolios.
The balance sheet and cash flows of the Group remained strong and even though
the net asset value declined, mainly due to the significant drop in equity
markets in the current year, the solvency at 42.6% remained within the range
targeted by the Group.
The decrease in the effective tax rate from 30.9% to 21.3% was mainly due to
a larger component of both non-taxable dividend income and non-taxable
dividend gains.
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.
Changes in Directorate
Dennis Burton and Clifford Zungu resigned as main Board Directors 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.
Cash Dividend Declaration No. 75
1. The Directors have declared a final cash dividend of 140 cents per share
(2007: 440 cents per share) bringing the total cash dividend for 2008 to 400
cents per share (2007:700 cents per share).
2. The cash dividend is payable in accordance with the following timetable:
Last day to trade in order to participate
in the dividend: Wednesday, 8 April 2009
Shares commence trading ex the dividend
from the commencement of business on: Thursday, 9 April 2009
Record date: Friday, 17 April 2009
Payment date: Monday, 20 April 2009
Shareholders may not dematerialise or rematerialise their holdings of shares
in the Company between Thursday, 9 April 2009 and Friday, 17 April 2009, both
days inclusive.
By order of the Board
24 March 2009
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)
Auditors
PricewaterhouseCoopers Inc., Chartered Accountants (SA)
2 Eglin Road, Sunninghill, 2157
Transfer Secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
1 Merchant Place
Cnr Fredman Drive and Rivonia Road, Sandton, 2196
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
(PO Box 61489, Marshalltown, 2107)
Date: 26/03/2009 07:05:03 Produced by the JSE SENS Department.
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