| Tue 20 Feb 2001, 0:00 | | Mutual & Federal Financial Results For The Year En |
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MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
Financial results for the year ended 31 December 2000
INCOME STATEMENT (Note 1) 31/12/00 31/12/99 Change
R'm R'm %
Technical account
Gross premiums 3,468 2,786 24%
Net premiums 3,152 2,482 27%
Net underwriting surplus/(loss) 2 (56)
Investment return on insurance activities 144 140 3%
General insurance result 146 84 74%
Long term investment return on
shareholders' funds 381 492
Operating income based on long term
investment return 527 576 -9%
Non-technical account 2 1,714
Dividends, interest and property
Income 361 301
Realised surplus on investments 406 1,381
Unrealised (deficit)/surplus on
Investments (240) 664
Allocated investment return
transferred to technical account (525) (632)
Goodwill and retrenchment costs (10)
Income before taxation 519 2,290
Taxation (49) (45)
470 2,245
Minority shareholders / share
of associates 10 3
Net income 480 2,248
Headline earnings 488 534 -9%
Headline earnings per share
(cents) (note 2) 203 222 -9%
Basic earnings per share
(cents) (note 2) 199 934
Ordinary dividend per share (cents) 58 58
Special dividend per share (cents) 300 600
Net asset value per share (cents) 1,450 1,653 -12%
Number of shares in issue (million)
- at period end 241.0 240.7
- weighted average 240.8 240.6
Determination of headline earnings
Operating income based on long term
investment return 527 576
Taxation (49) (45)
Minority shareholders / share
of associates 10 3
Headline earnings 488 534
BALANCE SHEET As at As at
31/12/00 31/12/99
R'm R'm
Non-current assets 4,656 3,745
Fixed assets 63 38
Investments at market value 4,288 3,591
Ordinary shares 3,365 3,124
Government stock 362 144
Other 561 323
Investment in associated companies 125 97
Goodwill 103
Deferred taxation 77 19
Reinsurers' share of technical
provisions 266 275
Current assets 1,342 1,726
Debtors / other 611 409
Bank balances 731 1,317
Total assets 6,264 5,746
Capital and reserves 3,494 3,978
Interest of outside shareholders
in subsidiaries 128 4
Non current provisions 117 54
Gross technical provisions 2,136 1,467
Current liabilities and provisions 389 243
Total liabilities 6,264 5,746
STATEMENT OF CHANGES IN EQUITY
Share Contingency Retained Total
R'm capital Reserve income
Balance at 1 January 2000 100 243 3,635 3,978
Net income for the period 480 480
Transfer to contingency reserve 36 (36) 0
Dividends (863) (863)
Secondary tax on companies (104) (104)
Issue of share capital 3 3
Balance at 31 December 2000 103 279 3,112 3,494
NOTES
1. Presentation
To provide investors with a clear understanding of the results achieved
from the insurance activities, and to comply with United Kingdom accounting
practice the income statement is divided into a technical and non-technical
account.
The technical account includes a long - term investment return of 14 % on
both:
a. funds generated by insurance activities and
b. shareholders' funds
The non-technical account includes all non insurance - related activities
including investments, investment returns transferred to the technical account
and goodwill written off.
2. Earnings per share
Headline earnings per share are calculated on operating income based on the
long - term investment return, after taxation and share of associated
companies' retained income, whilst basic earnings per share are based on net
income.
COMMENTS
The current year earnings include the operations of CGU Holdings ("CGU") for
the three-month period from October 2000 when final approval for the
acquisition was received. The acquisition was a success and CGU activities are
currently being integrated into the Group. Benefits from the rationalisation
will start to accrue in 2001 and the goodwill of R106 million arising from the
acquisition is being written off over a period of ten years.
The directors are pleased to report a General Insurance Result of R146 million,
which includes an underwriting surplus of R2 million. This is a significant
improvement on the R31 million underwriting deficit reported at the half-year
following widespread flooding which caused extensive property damage and
business interruption. Rating increases implemented during the period improved
the results but crime and motor vehicle accidents remain at high levels,and
further rating increases are planned to achieve a satisfactory underwriting
outturn.
Headline earnings per share decreased by 9% as a result of reduced levels of
investments following the declaration of a special dividend in 1999.
The strong capital position of the group enabled the Board to declare a special
dividend of 300 cents per share in November 2000. This will also lead to
reduced levels of earnings in future. Despite the special dividend, the
solvency margin (being the ratio of net assets to net premiums) remains strong
and was in excess of 85% at 31 December 2000.
The Board has declared a final dividend of 36 cents per share bringing the
total ordinary dividends for the year to 58 cents.
In the light of continuing improvement in the underwriting results and the
synergistic benefits which will be derived from the CGU acquisition, the Board
is cautiously optimistic for 2001.
DECLARATION OF DIVIDEND (NUMBER 62)
A final dividend of 36 cents per share has been declared payable to
shareholders registered in the books of the company at the close of business on
9 March 2001. The transfer books and register of members of the company will
be closed from 10 March 2001 to 17 March 2001 both days inclusive, and dividend
cheques will be posted to shareholders on or about 30 March 2001.
On behalf of the Board
K T M Saggers (Chairman) B Campbell (Managing Director)
Registered Office: 19th Floor, Mutual & Federal Centre, 75 President
Street, Johannesburg 2001
Transfer Secretaries: Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg 2001
20 February 2001
