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ZSA
ZSA
ZSA - Zurich - Announcement Of The Unaudited Group Results For The Six Months
Ended 30 June 2009
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 UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 JUNE
2009
* Gross premium increased by 8%
* Solvency margin 43%
* Headline earnings increased by 35%
* Tough economic climate impacts basic earnings
Condensed consolidated income statement
for the six months ended 30 June 2009
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2009 2008 2008
Rand thousands Unaudited Unaudited % change Audited
Insurance premium
revenue 2,872,055 2,656,792 8.1 5,316,490
Insurance premium
ceded to reinsurers (672,143) (623,737) (1,127,520)
Net insurance premium 4,188,970
revenue 2,199,912 2,033,055
Net insurance premium
earned 2,221,796 2,031,208 9.4 4,116,395
Reinsurance commission 62,381 54,381 123,486
Other income 3,711 4,700 14,146
Net investment income 161,262 169,432 327,100
Income 2,449,150 2,259,721 8.4 4,581,127
Net insurance claims 1,683,944 1,510,818 3,086,303
Acquisition expenses 407,678 359,969 765,963
Pension fund surplus - - 24,156
Administrative and
other operating
expenses 227,245 203,984 437,411
Expenses 2,318,867 2,074,771 11.7 4,313,833
Profit before tax 130,283 184,950 (29.6) 267,294
Income tax expense 23,854 33,764 56,838
Profit after tax 106,429 151,186 (29.6) 210,456
Earnings per share
(cents) 873.8 1,241.3 (29.6) 1,728.0
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2009
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2009 2008 2008
Rand thousands Unaudited Unaudited % change Audited
Profit after tax 106,429 151,186 210,456
Other comprehensive
income
Foreign currency
translation difference (1,170) (1,034) 16,946
Gross available-for-
sale revaluation
through NDR (16,082) 3,126 (135,900)
Statutory contingency
reserve (20,136) (13,368) (63,871)
Total comprehensive
income 69,041 139,910 27,631
Deferred taxation on
available-for-sale
revaluation 1,975 (469) 26,694
Total comprehensive
income for the period 71,016 139,441 54,325
Condensed consolidated statement of financial position
as at 30 June 2009
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2009 2008 2008
Rand thousands Unaudited Unaudited % change Audited
Assets
Other assets 335,580 277,647 288,892
Investments 1,779,283 1,543,806 1,732,018
Assets arising from
reinsurance contracts 876,872 697,902 540,847
Current assets 1,110,951 1,187,625 1,781,443
Cash and cash
equivalents 1,310,456 1,517,861 1,123,810
Total assets 5,413,142 5,224,841 3.6 5,467,010
Equity and liabilities
Shareholders` equity 1,880,226 1,907,103 1,856,824
Employee retirement
benefit obligations 18,574 14,562 18,060
Deferred taxation
liability 22,124 44,144 24,910
Liabilities arising
from insurance
contracts 2,449,094 2,240,166 2,217,193
Other liabilities 1,043,124 1,018,866 1,350,023
Total equity and
liabilities 5,413,142 5,224,841 3.6 5,467,010
Condensed consolidated statement of changes in equity
as at 30 June 2009
Six months Six months Year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
Rand thousands Unaudited Unaudited Audited
Share capital 3,045 3,045 3,045
Share premium 1,605 1,605 1,605
Revaluation reserve 163,165 277,622 201,040
Share-based payment reserve 145,227 145,227 145,227
Translation reserve (23,933) (39,709) (22,763)
Statutory contingency reserve 445,195 361,188 425,059
Retained profit 1,143,063 1,156,630 1,100,249
Minority interest 2,859 1,495 3,362
Balance at end of the period 1,880,226 1,907,103 1,856,824
Condensed consolidated cash flow statement
for the six months ended 30 June 2009
Six months Six months Year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
Unaudited Unaudited Audited
Cash retained from operating
activities 305,372 541,968 355,233
- Cash generated from
operations 194,960 489,693 246,102
- Dividend and interest
income 140,603 122,717 274,154
- Taxation paid (13,140) (16,852) (79,766)
- Dividends paid (17,051) (53,590) (85,257)
Cash effect of investing
activities* (118,726) (125,745) (333,061)
Net increase in cash and cash
equivalents 186,646 416,223 22,172
Cash and cash equivalents at
beginning of the period 1,123,810 1,101,638 1,101,638
Cash and cash equivalents at
end of the period 1,310,456 1,517,861 1,123,810
* Reclassification of R464 million is included in six months ended
30 June 2008 comparatives.
Notes
1. Accounting policies and basis of preparation
The financial results have been prepared in accordance with International
Financial Reporting Standards (IFRS), in particular IAS 34. The principal
policies used in the preparation of the unaudited results for the period ended
30 June 2009 are consistent with those applied in the annual financial
statements for the year ended
31 December 2008, except for the adoption of IFRS 8 (Operating segments) which
has had no effect on the results to June 2009. Comparative information in the
condensed financial statements has been amended to accommodate restatements made
in the financial statements for the year ended 31 December 2008 (refer to note
5).
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2009 2008 % 2008
Rand thousands Unaudited Unaudited change Audited
2. Financial
highlights
Profit after tax 106,429 151,186 (29.6) 210,456
Adjusted for:
Less loss/(gains)
on disposal of
plant and
equipment - 1,512 (2,542)
Less gains on
disposal of
available-for-
sale financial
assets (23,053) (97,465) (77,292)
Add tax effect 3,228 8,884 10,778
Headline earnings 86,604 64,117 35.1 141,400
Headline earnings
per share (cents) 711.1 526.4 1,161.0
Earnings per
share (cents) 873.8 1,241.3 (29.6) 1,728.0
Ordinary
dividends
declared per
share (cents) - 260.0 400.0
Dividends paid
per share (cents) 140.0 440.0 700.0
Number of shares
in issue 12,179,500 12,179,500 12,179,500
Net asset value
per share (cents) 15,438 15,658 (1.4) 15,245
International
solvency margin
(%) 43.1 49.1 (6.0) 42.6
Combined ratio
(%) 101.1 99.5 1.6 100.9
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2009 2008 2008
Rand thousands Unaudited Unaudited Audited
3. Segmental information
Gross written premium
Property 945,531 802,379 1,628,430
Transport 96,800 105,190 218,129
Motor 1,341,827 1,224,085 2,560,937
Engineering 350,055 323,823 549,609
Guarantee (4,032) 35,532 32,403
Liability 50,470 78,506 158,469
Accident and health 91,226 87,022 168,047
Miscellaneous 178 255 466
Total insurance premium
revenue 2,872,055 2,656,792 5,316,490
Segmental income
Property 596,515 506,432 1,091,428
Transport 84,219 69,523 167,059
Motor 1,315,845 1,147,043 2,497,491
Engineering 174,708 166,781 330,524
Guarantee 36,750 (12,267) (8,653)
Liability 56,939 193,695 82,035
Accident and health 12,714 29,192 79,893
Miscellaneous 6,487 (14,810) 104
Other 164,973 174,132 341,246
Total net revenue 2,449,150 2,259,721 4,581,127
General insurance result
Property (6,352) (17,473) (3,848)
Transport 3,688 7,841 10
Motor (7,054) (9,552) (18,911)
Engineering (9,264) 8,659 102
Guarantee (67) 148 20
Liability 1,905 7,703 861
Accident and health (2,380) 20,120 2,552
Miscellaneous (4,992) (6,628) (18,869)
Net underwriting results (24,516) 10,818 (38,083)
Attributable investment
income 55,263 54,811 70,075
General insurance result 30,747 65,629 31,992
Six months Six months
ended ended Year ended
30 June 30 June 2008 31 December
2009 % 2008
Rand thousands Unaudited Unaudited change Audited
4. Supplementary
income statement
Insurance
premium revenue 2,872,055 2,656,792 8.1 5,316,490
Insurance
premium ceded to
reinsurers (672,143) (623,737) (1,127,520)
Net insurance
premium revenue 2,199,912 2,033,055 4,188,970
Net insurance
premium earned 2,221,796 2,031,208 9.4 4,116,395
Net insurance
claims (1,683,944) (1,510,818) (3,086,303)
Commission
incurred (345,297) (305,588) (642,477)
Administrative
and other
operating
expenses (217,071) (203,984) (425,698)
Net underwriting
results (24,516) 10,818 (38,083)
Attributable
investment
income 55,263 54,811 0.8 70,075
General
insurance result 30,747 65,629 (53.2) 31,992
Impairments on
available-for-
sale financial
assets (1,539) - (21,050)
Non-technical
expenses (5,833) - (21,723)
Investment
income 85,339 24,326 203,734
Investment
expenses (1,484) (2,470) (3,960)
Net realised
gains on
disposal of
investments 23,053 97,465 78,301
Profit before
tax 130,283 184,950 (29.6) 267,294
Income tax
expense 23,854 33,764 56,838
Profit after tax 106,429 151,186 (29.6) 210,456
5. Comparative figures
Financial assets previously included in cash and cash equivalents have been
reclassified to available-for-sale investments. Reinsurance liabilities
previously netted off against reinsurance assets have been grossed up. The
adoption of IFRIC 11 gave rise to a share-based payment reserve. The impact of
this is shown below:
Six months Six months
ended ended
30 June 30 June
2008 2008
Rand thousands Original Adjustments Adjusted
Investments 1,079,706 464,100 1,543,806
Current assets 1,086,265 101,360 1,187,625
Cash and cash equivalents 1,981,961 (464,100) 1,517,861
Other liabilities (917,506) (101,360) (1,018,866)
Share-based payment
reserve - (145,227) (145,227)
Retained profit (1,301,857) 145,227 (1,156,630)
Comments
Gross premium income grew by 8.1% (2008: 21.7%) to R2.9 billion (2008: R2.6
billion). The commercial portfolio, which represents 69% of total premiums, grew
by 10.7% and the personal portfolio by 16.2% following rating adjustments and
real growth in the portfolio. Risk Financing contracted following deliberate
action by management.
The underwriting result declined to a deficit of R24.5 million from a surplus of
R10.8 million during the same period in 2008 and the general insurance result
(inclusive of attributable investment income) declined from R65.6 million to
R30.7 million.
The first half of 2009 saw a continuation of the tough economic conditions that
have impacted the industry. Claims at R1.7 billion are up 11% on 2008 (R1.5
billion). While the fires in Gauteng and Cape Town contributed to the cost of
claims, the major concern remains the motor book where losses have remained
stubbornly high despite continued corrective action being taken.
Total investment income was most satisfactory in the current market environment
and follows further rebalancing of the investment portfolio. Dividend and
interest income increased by 77% to R140.6 million and was unaffected by the
losses suffered on the bond portfolio last year. The sale of equities realised
gains of R23 million (2008: R97 million).
The Group`s balance sheet and cash flows remain strong. At 43.1%, the solvency
ratio remains within the target range as set by the Board. Net asset value
decreased by 1.4% to R154.38 per share at the end of the period.
Having regard to the 29.6% decrease in earnings per share, the underwriting loss
and ongoing uncertainty regarding the performance of the motor portfolio as well
as volatility in investment markets, the Directors have decided to further
strengthen the solvency of the Company by not declaring an interim dividend.
The Board recognises the cyclical nature of short-term insurance results and
investment markets and cautions that the results for the six months are not
necessarily indicative of the outcome for the remainder of the year.
Changes in Directorate
The Board welcomed Pieter Bezuidenhout as an Executive Director. Claudia Dill a
Non-Executive, Non-Independent Director resigned on 19 August. Nichol Beyers
will retire as Chief Executive Officer and Executive Director on 5 October 2009
and, subject to regulatory approval, will be replaced by Gavin (Guy) Munnoch.
Compliance
The Group complies in all material respects with the Listings Requirements of
The JSE Limited and the King Report Code of Corporate Practices and Conduct.
By order of the Board
15 September 2009
Johannesburg
Board of Directors
JPG de Rauville (Independent Non-Executive Chairman)
NV Beyers (Chief Executive Officer)
P Bezuidenhout (Chief Financial Officer)
CJ Cron (Non-Executive)
JPM Deiss (Non-Executive)
C Dill (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
15 Marshall Street
Ferreirasdorp
Johannesburg
2001
(PO Box 61489, Marshalltown, 2107)
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
1 Merchant Place
Cnr Fredman Drive and Rivonia Road
Sandton
2196
Date: 16/09/2009 16:15:01 Produced by the JSE SENS Department.
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