| Thu 2 Aug 2012, 16:30 | | ZURICH INSURANCE COMPANY S A LTD - Announcement of the unaudited Group results and cash dividend declaration for the six months ended 30 June 2012 |
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ZSA
Announcement of the unaudited Group results and cash dividend declaration for the six months ended 30 June 2012
Zurich Insurance Company South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number 1965/006764/06)
Income tax number: 9325210715
Share code: ZSA ISIN: ZAE000094496
(?Zurich? or ?the Group? or ?the Company?)
Announcement of the unaudited Group results and cash dividend declaration
for the six months ended 30 June 2012
International solvency strong at 73%
Net asset value per share up 9%
Interim dividend maintained
Chief Executive Officer, Edwyn O?Neill said: ?Operating conditions have
been challenging for the first 6 months and have been impacted by the soft
market conditions and large losses in the corporate portfolio. Management
have taken several actions to improve profitability and to position the
Group for growth over the long term in our chosen markets.?
Condensed consolidated statement of financial performance
for the six months ended 30 June 2012
Six Six
months months
ended ended
30 June 30 June Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Gross written insurance premium 1,881,783 2,074,951 (9%) 3,890,028
Insurance premium ceded to
reinsurers (438,258) (506,411) (13%) (912,495)
Net written insurance premium 1,443,525 1,568,540 (8%) 2,977,533
Net insurance premium earned 1,444,581 1,566,899 (8%) 3,001,609
Reinsurance commission earned 56,904 73,748 163,249
Investment income 118,804 107,794 10% 219,983
Other income 3,132 2,627 16,181
Gains on sale of business 1,684 - -
Gains on sale of associate 1,602 - -
Realised gains on available-for-
sale financial assets 921 4,177 14,210
Net income 1,627,628 1,755,245 (7%) 3,415,232
Net insurance claims 1,006,674 1,084,338 (7%) 1,977,622
Acquisition costs 287,188 321,723 623,568
Administrative and other
operating expenses 286,455 281,335 2% 578,608
Investment expenses 2,832 2,830 6,376
Impairment of available-for-sale
financial assets 2,700 210 7,395
Expenses 1,585,849 1,690,436 (6%) 3,193,569
Profit from operating activities 41,779 64,809 (36%) 221,663
Finance costs (5,500) (6,600) (28,200)
Share of profit/(loss) in
associates 433 (269) 333
Profit before tax 36,712 57,940 (37%) 193,796
Income tax expense (7,182) (20,944) (66%) (69,231)
Profit for the period 29,530 36,996 (20%) 124,565
Earnings per share (cents)
Basic and diluted (cents) 243 304 (20%) 1,023
Condensed consolidated statement of other comprehensive income
for the six months ended 30 June 2012
Six Six
months months
ended ended
30 June 30 June Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Profit for the period 29,530 36,996 (20%) 124,565
Other comprehensive income
Exchange differences on
translating foreign operations (157) 869 1,855
Realised gains on available-for-
sale financial assets
transferred from/recycled to the
statement of financial
performance (921) (4,177) (14,210)
Impairment losses transferred to
statement of financial
performance 2,700 210 7,395
Net unrealised gains on
available-for-sale financial
assets 75,215 3,843 25,724
Income taxation relating to
components of other
comprehensive income (10,668) (24) (2,032)
Total comprehensive income for
the period 95,699 37,717 154% 143,297
Condensed consolidated statement of financial position
as at 30 June 2012
Six Six
months months
ended ended
30 June 30 June
Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Assets
Land, buildings and equipment 83,781 98,897 94,131
Intangible assets 44,790 55,762 56,424
Investments in associates 5,188 4,291 4,902
Financial instruments 2,978,818 2,992,871 2,920,147
Deferred taxation asset - 8,485 -
Pre-payment of defined
contribution fund 141,333 128,413 142,300
Deferred acquisition costs 95,206 96,918 94,504
Reinsurance assets 681,102 735,039 585,910
Income taxation asset - 9,449 19,652
Cash and cash equivalents 789,802 1,151,574 981,803
Total assets 4,820,020 5,281,699 (9%) 4,899,773
Equity and liabilities
Total equity 2,086,285 1,921,544 9% 2,014,945
Deferred taxation liability 25,417 - 19,451
Employee benefit obligation 58,305 44,623 64,551
Financial liabilities held at
amortised cost 117,875 269,598 183,831
Insurance liabilities 1,902,054 2,163,393 1,820,397
Deferred reinsurance commission 18,192 13,448 14,610
Income taxation liability 7,792 - -
Trade and other payables 589,525 852,421 767,265
Provisions 14,575 16,672 14,723
Total equity and liabilities 4,820,020 5,281,699 (9%) 4,899,773
Condensed consolidated statement of changes in equity
as at 30 June 2012
Six Six
months months
ended ended
30 June 30 June
Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Share capital and premium 4,650 4,650 4,650
Translation reserve (35,210) (36,039) (35,053)
Revaluation reserve 377,144 293,793 310,818
Statutory contingency reserve 32,413 347,810 314,095
Retained income 1,707,288 1,311,330 1,420,435
Balance at end of the period 2,086,285 1,921,544 9% 2,014,945
Condensed consolidated cash flow statement
for the six months ended 30 June 2012
Six Six
months months
ended ended
30 June 30 June Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Cash effect from operating
activities (124,461) 117,029 (206%) (14,225)
- Cash flows from operations (252,013) 98,646 (194,234)
- Dividend and interest income 113,304 12,438 206,783
- Taxation refunded/(paid) 14,248 5,945 (26,774)
Cash effect from investing
activities (43,127) (37,907) 14% (64,928)
Cash effect from financing
activities (24,359) - (12,180)
Net movement in cash and cash
equivalents (191,947) 79,122 (343%) (91,333)
Translation losses/gains on cash
and cash equivalents (54) (2) 682
Cash and cash equivalents at
beginning of the period 981,803 1,072,454 (8%) 1,072,454
Cash and cash equivalents at end
of the period 789,802 1,151,574 (31%) 981,803
Notes
These Group results have been prepared under the supervision of the Chief
Financial Officer (CFO), Pieter Bezuidenhout, Chartered Accountant (SA),
in compliance with the requirements of the Companies Act of South Africa.
1. Accounting policies and basis of preparation
The financial results have been prepared in accordance with International
Financial Reporting Standards (IFRS), in particular IAS34 ? Interim
Financial Reporting. The principal policies used in the presentation of
the unaudited results for the period ended 30 June 2012 are consistent
with those applied in the Annual Financial Statements for the year ended
31 December 2011.
2. Financial highlights
Six months Six months
ended ended
30 June 30 June
Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Profit for the period 29,530 36,996 (20%) 124,565
Adjusted for:
Losses on disposal of
property, plant and equipment 240 31 683
Gains on disposal of
available-for-sale financial
assets (921) (4,177) (14,210)
Gains on sale of business and
associate (3,286) - -
Impairment of available-for-
sale financial assets 2,700 210 7,395
Tax effect 177 551 1,207
Headline earnings 28,440 33,611 (15%) 119,640
Headline earnings per share
(cents) 234 276 (15%) 983
Earnings per share (cents) 243 304 (20%) 1,023
Ordinary dividends declared
per share (cents) 100 100 200
Dividends paid per share
(cents) 200 - 100
Number of shares in issue 12,179,500 12,179,500 12,179,500
Net asset value per share
(cents) 17,129 15,777 9% 16,544
International solvency margin
(%) 73 58 27% 68
Combined ratio (%) 103.3 100.7 3% 97.9
3. Segmental information
Six months Six months
ended ended
30 June 30 June Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Gross written insurance
premium
Property 695,411 745,503 1,391,949
Transport 58,928 68,940 134,608
Motor 839,897 939,301 1,733,932
Engineering 148,320 179,830 355,940
Guarantee 19 (516) (2,250)
Liability 54,632 50,693 106,411
Accident & Health 84,576 91,200 169,438
Total insurance premium income 1,881,783 2,074,951 (9%) 3,890,028
Six months Six months
ended ended
30 June 30 June Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Audited
Net income
Property 459,050 486,103 948,487
Transport 41,940 62,640 122,468
Motor 794,280 899,479 1,682,462
Engineering 126,312 113,286 257,706
Guarantee 588 55 (1,467)
Liability 36,657 34,756 73,917
Accident & Health 42,658 44,328 81,285
Investment income and other 126,143 114,598 250,374
Net income 1,627,628 1,755,245 (7%) 3,415,232
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June % 2011
Rand thousands 2012 2011 Change Audited
Unaudited Unaudited
General insurance result
Property (47,122) (23,728) (54,868)
Transport 11,480 25,558 54,401
Motor (38,606) (10,249) (7,202)
Engineering 5,859 (11,893) 22,115
Guarantee (1,734) (8,006) 20,695
Liability 10,038 (9,614) (3,444)
Accident & Health 11,949 26,338 30,597
Net underwriting result (48,136) (11,594) 315% 62,294
Attributable investment income 47,588 42,501 12% 80,549
General insurance result (548) 30,907 (102%) 142,843
4. Supplementary income statement
Six months Six months
ended ended
30 June 30 June
Year ended
2012 2011 % 31 Dec 2011
Rand thousands Unaudited Unaudited Change Unaudited
Gross written insurance
premium 1,881,783 2,074,951 (9%) 3,890,028
Insurance premium ceded to
reinsurers (438,258) (506,411) (13%) (912,495)
Net written insurance
premium 1,443,525 1,568,540 (8%) 2,977,533
Net insurance premium earned 1,444,581 1,566,899 (8%) 3,001,609
Net insurance claims (1,006,674) (1,084,338) (7%) (1,977,622)
Net commission incurred (230,284) (247,974) (7%) (460,319)
Administrative and other
operating expenses (255,759) (246,181) 4% (501,374)
Net underwriting result (48,136) (11,594) 315% 62,294
Attributable investment
income 47,588 42,501 12% 80,549
General insurance result (548) 30,907 (102%) 142,843
Impairments of available-
for-sale financial assets (2,700) (210) (7,395)
Non-technical expenses (27,131) (32,796) (77,234)
Other investment income 65,716 58,692 127,748
Investment expenses (2,832) (2,830) (6,376)
Net realised gains on
disposal of investments 4,207 4,177 14,210
Profit before tax 36,712 57,940 (37%) 193,796
Income tax expense (7,182) (20,944) (66%) (69,231)
Profit for the period 29,530 36,996 (20%) 124,565
Comments
The underwriting result reflects a deficit of R48.1 million compared to a
deficit of R11.6 million in the prior year. The general insurance result
(inclusive of attributable investment income) is a deficit of R0.5 million
compared to a surplus of R30.9 million. The result has been impacted by
soft market conditions putting downward pressure on rates, a weakening
Rand influencing the cost of claims on the motor book and large losses in
the property portfolio impacting the commercial and corporate segments.
Premium volumes have dropped by 9% to R1.9 billion compared to the prior
year (2011: R2.1 billion) following the decision to run off the cell
captive operation, Zurich Risk Financing SA Limited as well as the impact
of the soft market.
Despite the large losses experienced in 2012, claims improved by 7% to R1
billion (2011: R1.1 billion). Administrative expenses increased by 4% to
R256 million (2011: R246 million) but continue to be well controlled.
Further expense management initiatives are in place and are expected to
yield positive results through 2012 and 2013.
Attributable investment income has been affected by the current low
interest rate conditions. However, at R47.6 million, this is higher than
prior year (2011: R42.5 million) due to strong working capital management.
Escape Premium Collection (Proprietary) Limited, a subsidiary of the
Company, was disposed of during the first half of 2012 resulting in a gain
of R1.7 million, but impacting cash and payables balances in the Group.
Transactions carried out with subsidiaries, holding company, associates
and the ultimate holding company were conducted at arms-length.
In prior years, a statutory reserve of 10% of rolling net written premiums
was provided for and, as a result of the amendments to the Short Term
Insurance Act, this reserve has fallen away. Zurich Insurance Company
Botswana, a subsidiary of the Company, still provides for this reserve.
The Group?s financial position remains strong as evidenced by the 9%
increase in net asset value per share from R158 to R171 and the
international solvency which improved to 73% (2011: 58%).
As at 30 June 2012 matters in litigation amount to R80 million. Having
regard to the nature and prospects of these matters, the Group does not
believe that such litigation will have a material effect on its profit or
loss and the financial condition for the period.
Changes in Directorate
Edwyn O?Neill was appointed to the position of Chief Executive Officer on
21 May 2012 succeeding Guy Munnoch who retired from the Company. Pieter
Rorich resigned as a Non-Executive Director with effect from 25 May 2012.
Audit
The information set out in this announcement has not been audited or
reviewed by the Company?s auditors, PricewaterhouseCoopers Inc.
Compliance
The Group complies in all material respects with the King Report and Code
on Governance and the Listings Requirements of the JSE Limited.
Cash Dividend Declaration No. 78
Notice is hereby given that the Directors have declared a gross interim
cash dividend of 100 cents per ordinary share, out of income reserves for
the period ended 30 June 2012.
The Company has utilised secondary tax credits amounting to 100 cents per
share. The gross dividend is therefore not subject to local dividend tax.
The resultant net dividend amount is 100 cents per share for those
shareholders who are not exempt from the dividend tax.
The issued share capital at the declaration date is 12,179,500 ordinary
shares.
The salient dates for the dividend will be as follows:
Declaration date: Wednesday, 1 August 2012
Last day to trade in order to participate in the
dividend: Friday, 24 August 2012
Shares commence trading ex the dividend from the
commencement of business on: Monday, 27 August 2012
Record date: Friday, 31 August 2012
Payment date: Monday, 3 September 2012
Shareholders may not dematerialise or materialise their holdings of shares
in the Company between Monday, 27 August 2012 and Friday, 31 August 2012,
both days inclusive.
By order of the Board
1 August 2012
Johannesburg
Board of Directors
JPG de Rauville (Independent Non-Executive Chairman)
GRC Munnoch (Chief Executive Officer) ? resigned 20 May 2012
JE O?Neill (Chief Executive Officer) ? appointed 21 May 2012
P Bezuidenhout (Chief Financial Officer)
JPM Deiss (Non-Executive)
S Mered (Non-Executive)
PC Rorich (Non-Executive) ? resigned 25 May 2012
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
Date: 02/08/2012 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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