| Mon 25 Jul 2011, 10:00 | | ZSA - Zurich Insurance Company South Africa Limited - Announcement of the |
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ZSA
ZSA
ZSA - Zurich Insurance Company South Africa Limited - Announcement of the
unaudited group results and cash dividend declaration for the six months ended
30 June 2011
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")
- Interim dividend declared
- Ongoing underwriting actions impact business volumes but benefit claims
costs
- Business well positioned for controlled growth strategy
ANNOUNCEMENT OF THE UNAUDITED GROUP RESULTS AND CASH DIVIDEND DECLARATION FOR
THE SIX MONTHS ENDED 30 JUNE 2011
Condensed statement of financial performance for the six months ended 30 June
2011
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited % Audited
Rand thousands Change
Gross written insurance
premium 2,074,951 2,426,538 (14%) 4,632,362
Insurance premium ceded to
reinsurers (506,411) (535,480) (5%) (978,900)
Net written insurance premium 1,568,540 1,891,058 (17%) 3,653,462
Net insurance premium earned 1,566,899 1,876,009 (16%) 3,713,765
Reinsurance commission earned 73,748 77,897 (5%) 168,526
Other income 6,640 12,823 (48%) 5,747
Employee benefits surplus - - - 105,552
Net investment income 98,049 96,206 2% 215,349
Net income 1,745,336 2,062,935 (15%) 4,208,939
Net insurance claims 1,084,338 1,321,192 (18%) 2,576,852
Gross commission 321,723 377,646 (15%) 747,659
Administrative and other
operating expenses 281,335 422,710 (33%) 692,029
Expenses 1,687,396 2,121,548 (20%) 4,016,540
Profit/(loss) before tax 57,940 (58,613) 199% 192,399
Income tax (expense)/credit (20,944) 15,958 (231%) (47,982)
Profit/(loss) after tax 36,996 (42,655) 187% 144,417
Earnings per share (cents) 303.8 (350.2) 187% 1,185.7
Condensed statement of comprehensive income for the six months ended 30 June
2011
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 2010
Unaudited Unaudited % Audited
Rand thousands Change
Profit/(loss) for the period 36,996 (42,655) 187% 144,417
Other comprehensive income
Foreign currency translation
difference 869 336 159% (5,246)
Unrealised gains on available-
for-sale financial assets 3,843 23,705 (84%) 94,060
Realised gains on available-
for-sale financial assets (4,177) - (100%) (6,809)
Impairment losses 210 - 100% 11,998
Taxation (24) (3,334) 99% (13,913)
Total comprehensive
income/(expense) for the
period 37,717 (21,948) 272% 224,507
Condensed statement of financial position as at 30 June 2011
Year
ended
As at As at 31 December
30 June 30 June 2010
2011 2010 % Audited
Rand thousands Unaudited Unaudited Change
Assets
Buildings, property and
equipment 98,897 114,520 (14%) 112,690
Intangibles 55,762 19,208 190% 53,519
Investments 2,107,889 1,798,315 17% 2,075,996
Loans and receivables 889,273 908,495 (2%) 965,423
Pre-payments 128,413 35,138 265% 134,544
Reinsurance assets 735,039 966,472 (24%) 970,283
Deferred taxation asset 8,485 93,581 (91%) 18,468
Deferred acquisition costs 96,918 104,912 (8%) 102,192
Income tax asset 9,449 28,019 (66%) 26,355
Cash and cash equivalents 1,151,574 1,384,705 (17%) 1,072,454
Total assets 5,281,699 5,453,365 (3%) 5,531,924
Equity and liabilities
Total equity 1,921,544 1,632,285 18% 1,883,827
Financial liabilities held
at amortisation cost 269,598 346,004 (22%) 281,597
Employee benefits 44,623 40,365 11% 41,494
obligation
Insurance liabilities 2,163,393 2,551,951 (15%) 2,447,738
Deferred reinsurance 13,448 11,770 14% 17,264
commission
Income tax liability - 4,842 (100%) -
Trade, other payables and 869,093 866,148 - 860,004
provisions
Total equity and 5,281,699 5,453,365 (3%) 5,531,924
liabilities
Condensed statement of changes in equity as at 30 June 2011
As at As at Year ended
30 June 30 June 31 December
2011 2010 % 2010 Audited
Rand thousands Unaudited Unaudited Change
Share capital 3,045 3,045 - 3,045
Share premium 1,605 1,605 - 1,605
Revaluation reserve 293,793 228,975 28% 293,941
Translation reserve (36,039) (31,326) 15% (36,908)
Statutory contingency 347,810 449,291 (23%) 375,365
reserve
Retained profit 1,311,330 980,695 34% 1,246,779
Balance at end of the 1,921,544 1,632,285 18% 1,883,827
period
Condensed cash flow statement for the six months ended 30 June 2011
Six Six Year
months months ended
ended ended 31 December
30 June 30 June % 2010
2011 2010 Change Audited
Rand thousands Unaudited Unaudited
Cash retained from 117,029 223,802 (48%) 175,623
operating activities
- Cash flows from 98,646 41,041 140% (125,972)
operations
- Dividend and interest 12,438 102,091 (88%) 227,185
income
- Taxation paid 5,945 80,670 (93%) 74,410
Dividends paid - - - -
Cash effect of financing - - - -
activities
Cash effect of investing (37,907) 128,207 (130%) (135,865)
activities
Net increase in cash and
cash equivalents 79,122 352,009 (78%) 39,758
Translation losses on
cash and cash equivalents (2) - (100%) -
Cash and cash equivalents
at beginning of the 1,072,454 1,032,696 4% 1,032,696
period
Cash and cash equivalents
at end of the period 1,151,574 1,384,705 (17%) 1,072,454
Notes
1. Accounting policies and basis of preparation
The financial results have been prepared in accordance with
International Financial Reporting Standards (IFRS), in particular
IAS34. The principal policies used in the presentation of the
unaudited results for the period ended 30 June 2011 are consistent
with those applied in the Annual Financial Statements for the year
ended 31 December 2010.
2. Financial highlights
Six months Six months Year
ended ended ended
30 June 30 June 31
2011 2010 December
Unaudited Unaudited % Change 2010
Rand thousands Audited
Profit/(loss) for the period 36,996 (42,655) 187% 144,417
Adjusted for:
Loss on disposal of plant
and equipment 31 700 (96%) 2,668
Gains on disposal of
available- for-sale (4,177) - (100%) (6,809)
financial assets
Impairment of available-for-
sale financial assets 210 3,595 (94%) 11,998
Tax effect 551 (602) (192%) (1,100)
Headline earnings 33,611 (38,962) 186% 151,174
Headline earnings per share
(cents) 276.0 (319.9) 186% 1,241.2
Earnings per share (cents) 303.8 (350.2) 187% 1,185.7
Ordinary dividends declared
per share (cents) 100 - - -
Dividends paid per share
(cents) - - - -
Number of shares in issue 12,179,500 12,179,500 - 12,179,500
Net asset value per share
(cents) 15,777 13,402 18% 15,467
International solvency
margin (%) 57.7 41.3 40% 51.6
Combined ratio (%) 100.7 99.4 1% 97.5
3. Segmental information
Six months Six months Year ended
ended ended 31
30 June 30 June 2010 December
2011 Unaudited % Change 2010
Rand thousands Unaudited Audited
Gross written insurance
premium
Property 745,503 872,492 (15%) 1,634,330
Transport 68,940 95,964 (28%) 170,825
Motor 939,301 1,110,152 (15%) 2,152,051
Engineering 179,830 198,815 (10%) 384,088
Guarantee (516) (582) (11%) 513
Liability 50,693 55,837 (9%) 113,322
Accident & Health 91,200 93,856 (3%) 177,233
Miscellaneous - 4 (100%) -
Total insurance premium
income 2,074,951 2,426,538 (14%) 4,632,362
Net income
Property 486,103 569,857 (15%) 1,131,119
Transport 62,640 76,650 (18%) 145,796
Motor 899,479 1,060,768 (15%) 2,105,553
Engineering 113,286 167,872 (33%) 335,527
Guarantee 55 48 15% (28,006)
Liability 34,756 54,467 (36%) 99,456
Accident & Health 44,328 50,841 (13%) 92,846
Miscellaneous - (26,597) (100%) -
Other 104,689 109,029 (4%) 326,648
Total net income 1,745,336 2,062,935 (15%) 4,208,939
General insurance result
Property (23,728) (17,061) 39% (64,244)
Transport 25,558 13,528 89% 14,722
Motor (10,249) 23,812 (143%) 112,364
Engineering (11,893) 23,449 (151%) 61,945
Guarantee (8,006) (21,248) (62%) (67,524)
Liability (9,614) (3,911) 146% (8,308)
Accident & Health 26,338 (744) (3,640%) 45,868
Miscellaneous - (7,070) (100%) -
Net underwriting result (11,594) 10,755 (208%) 94,823
Attributable investment
income 42,501 43,911 (3%) 95,418
General insurance result 30,907 54,666 (43%) 190,241
4. Supplementary income statement
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2011 2010 % 2010
Rand thousands Unaudited Unaudited Change Audited
Gross written insurance
premium 2,074,951 2,426,538 (14%) 4,632,362
Insurance premium ceded to
reinsurers (506,411) (535,480) (5%) (978,900)
Net written insurance
premium 1,568,540 1,891,058 (17%) 3,653,462
Net insurance premium
earned 1,566,899 1,876,009 (16%) 3,713,765
Net insurance claims (1,084,338) (1,321,192) (18%) (2,576,852)
Net commission incurred (247,974) (299,749) (17%) (579,134)
Administrative and other
operating expenses (246,181) (244,313) 1% (462,956)
Net underwriting result (11,594) 10,755 (208%) 94,823
Attributable investment
income 42,501 43,911 (3%) 95,418
General insurance result 30,907 54,666 (43%) 190,241
Impairments on available-
for-sale financial assets (210) (3,595) (94%) (11,998)
Employee benefits surplus - - - 105,552
Non-technical expenses (28,783) (168,033) (83%) (223,325)
Investment income 58,692 60,639 (3%) 130,059
Investment expenses (6,843) (2,290) 199% (4,939)
Net realised gains on
disposal of investments 4,177 - 100% 6,809
Profit/(loss) before tax 57,940 (58,613) 199% 192,399
Income tax (expense)/credit (20,944) 15,958 (231%) (47,982)
Profit/(loss) after tax 36,996 (42,655) 187% 144,417
Comments
Whilst the results have been impacted by a decline in business volumes of 14% to
R2.1 billion (2010: R2.4 billion) they are reflective of ongoing actions taken
to improve underwriting profitability and challenging market conditions.
These actions, alongside the implementation of a number of claims initiatives,
have positively impacted the cost of claims which, at R1.1 billion, reflect an
18% improvement from R1.3 billion in the prior period, despite major weather-
related losses in the first quarter of the year. Expenses have been well
controlled and reflect the benefits from the business transformation programme
in 2010 and additional initiatives undertaken in the first half of the year.
The general insurance result is a surplus of R30.9 million (2010: R54.7 million)
and the underwriting result, which reflects a deficit of R11.6 million (2010:
R10.8 million surplus), is expected to be strengthened through the delivery of a
focused growth strategy flowing into 2012.
Attributable investment income of R42.5 million (2010:
R43.9 million) is slightly down on prior year despite lower premium volumes and
a declining interest rate environment.
Non-technical expenses have reduced by 83% in comparison to prior year,
predominantly as a result of the cost of the business transformation programme
being absorbed in the results for 2010.
The international solvency ratio has improved from 51.6% at year end to 57.7%.
Changes in Directorate
No changes have been made to the Directorate in 2011.
Audit
The information set out in the announcement has not been audited or reviewed by
the Company`s auditors, PricewaterhouseCoopers Inc.
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.
Cash Dividend Declaration No. 76
1. The Directors have declared an interim cash dividend for the six month
period ending 30 June 2011 of 100 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: Thursday, 4
August 2011
Shares commence trading ex the dividend from the commencement of business on:
Friday, 5 August 2011
Record date: Friday, 12 August 2011
Payment date: Monday, 15 August 2011
Shareholders may not dematerialise or materialise their holdings of shares in
the Company between Friday, 5 August 2011 and Friday, 12 August 2011, both days
inclusive.
By order of the Board
Johannesburg
25 July 2011
Board of Directors
JPG de Rauville (Independent Non-Executive Chairman), GRC Munnoch (Chief
Executive Officer), P Bezuidenhout (Chief Financial Officer), JPM Deiss (Non-
Executive), S Mered (Non-Executive), PC Rorich (Non-Executive), MN Mbekeni
(Independent Non-Executive), DD Mokgatle (Independent Non-Executive), SG Morris
(Independent Non-Executive)
Transfer Secretaries
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg,
2001
Group Company Secretary and Registered Office
G Kostopoulos, Zurich Insurance Company South Africa Limited, Registration
number 1965/006764/06, 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
www.zurich.co.za
Date: 25/07/2011 10:00:01 Produced by the JSE SENS Department.
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