| Wed 13 Feb 2002, 0:00 | | Mutual & Federal Insurance Company Limited -audite |
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The Year Ended 31 December 2001
INCOME STATEMENT
31/12/01 31/12/00 Change
R'm R'm %
Technical account
Gross premiums 4 820 3 468 39
Net premiums 4 306 3 152 37
Net underwriting surplus 89 2
Investment return on insurance
activities 161 144 12
General insurance result 250 146 71
Long term investment return on
shareholders' funds 393 381
Operating income based on long term
investment return 643 527 22
Non-technical account
Short-term investment fluctuations 299 2
Dividends, interest and property
income 341 361
Realised surplus on investments 553 411
Unrealised deficit on
investments (41) (245)
Allocated investment return
transferred to technical account (554) (525)
Goodwill and retrenchment costs (18) (11)
Income before taxation 924 518
Taxation (205) (62)
719 456
Minority shareholders / share of
associates 26 10
Net income 745 466
Headline earnings 520 475 9
Headline earnings per share
(cents) (note 2) 215 197 9
Operating ratio (%) (note 3) 97,9 99,9
Basic earnings per share (cents)
(note 2) 308 194
Ordinary dividend per share (cents) 58 58
Special dividend per share (cents) 350 300
Net asset value per share (cents) 1 318 1 451
Number of shares in issue (million)
- at period end 242,2 241,0
- weighted average 241,6 240,8
Determination of headline earnings
Net income 745 466
Goodwill and retrenchment costs 18 11
Short-term investment fluctuations (299) (2)
Taxation effect of short-term
investment fluctuations 56 -
Headline earnings 520 475
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
Audited financial results for the year ended 31 December 2001
BALANCE SHEET
Assets As at As at
31/12/01
R'm R'm
Non-current assets 4 165 4
619
Fixed assets 82 63
Investments at market value 3 803 4
288
Ordinary shares 3 127 3
365
Government stock 221 362
Other 455 561
Investment in associated companies 101
125
Goodwill 179 143
Reinsurers' share of technical provisions 500 473
Deferred acquisition costs 127 107
Current assets 1 667 1
341
Debtors / other 755 610
Bank balances 912 731
6 459 6
540
Liabilities
Capital and reserves 3 192 3
498
Interest of outside shareholders in
subsidiaries 3 128
Non-current liabilities 415 163
Gross technical provisions 2 557 2
480
Gross provision for unearned premiums 878 850
Gross outstanding claims 1 647 1
602
Deferred reinsurance commission revenue 32 28
Current liabilities and provisions 292 271
6 459 6
540
STATEMENT OF CHANGES IN EQUITY
R'm Share Contingency Retained
capital reserve income Total
Balance at 1 January 2001 103 279 3 116 3 498
Net income for the period 745 745
Transfer to contingency reserve 52 (52) -
Dividends paid (988) (988)
Secondary tax on companies (75) (75)
Issue of share capital 12 12
Balance at 31 December 2001 115 331 2 746 3 192
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2001
31/12/01 31/12/00
R'm R'm
Cash generated by operations 208 219
Investment income 341 361
Cash generated by operating activities 549 580
Taxation paid (108) ( 30)
Cash available from operating activities 441 550
Dividends paid (988) (863)
Secondary tax on companies paid ( 179) -
Cash utilised by operating activities ( 726) (313)
Cash generated by / (utilised in)
investing activities 884 (768)
Decrease / (increase) in funding requirements 158 (1081)
Cash effects of financing activities
Proceeds from issue of shares 12 3
Increase / (decrease) in cash and cash
equivalents 170 (1 078)
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
Audited financial results for the year ended 31 December 2001(continued)
NOTES
1. Integration
costs
Included in the underwriting results are non-recurring costs of R27
million in respect of expenses paid for the
integration of CGU Holdings
("CGU") (2000: R nil).
2. Earnings per
share
Headline earnings per share are calculated on net income adjusted for
goodwill, retrenchment costs and short-term
investment fluctuations net of taxation. Basic earnings per share are
based on net income after goodwill and
retrenchment costs.
3. Operating
ratio
This reflects the ratio of total insurance
expenditure to net earned premiums.
4. Change in accounting policy
During the year the company changed its accounting policy with regard
to provision for dividends, which are
now accounted for in the period in which they are declared. Prior
year figures have been restated accordingly.
5. Prior year
adjustment
Following the withdrawal of Practice Note 10, in terms of which transfers
to the contingency reserve were deductible
for income tax purposes, the financial statements have been
amended by raising deferred tax on the balance
of the contingency reserve at 1 January 2000. Prior year figures have been
adjusted to recognise the effect of this change.
COMMENTS
Gross premiums have increased by 39% following the inclusion of the CGU results
for a full year. All CGU activities have now been successfully integrated into
those of Mutual & Federal and significant synergistic benefits are being
realised.
The current group results also now include those of newly acquired Fedsure
General Insurance Namibia Limited with effect from 1 October 2001.
There has been a 71% improvement in the General Insurance Result from R146
million to R250 million. This is mainly due to an increase in the underwriting
result from a break-even in 2000 to a surplus of R89 million.
The underwriting results were, however, negatively impacted by a high level of
claims on the motor portfolio whilst the engineering and fire portfolios were
adversely effected by the incidence of large losses.
The headline earnings per share have increased by 9%, despite the payment of
special dividends or R3,00 and R3,50 in 2000 and 2001 respectively and a
significant increase in the taxation charge. A provision of R97 million was
raised in respect of Capital Gains Tax (CGT) during the year following the
implementation of CGT on 1 October 2001.
The strong capital position of the company enabled the Board to declare a
special dividend of 350 cents per share in November 2001 and this will naturall
lead to a decline in the level of future investment income. Despite this
dividend, the solvency margin (being the ratio of net assets to net premiums)
remains strong and was in excess of 70% at 31 December 2001.
The Board has declared a final dividend of 36 cents per share, bringing the
total ordinary dividends for the year to 58 cents.
FUTURE PROSPECTS
The dramatic events of 11 September 2001 have placed significant pressures on
international insurance markets and there has been a sharp hardening in
reinsurance costs, which will result in an escalation in insurance terms.
Further rating increases are accordingly required to meet the rising re-
insurance premiums and the additional cost of claims following the depreciation
in the value of the rand. The application of premium increases should lead to
satisfactory underwriting results in 2002.
DECLARATION OF DIVIDEND (NUMBER
64)
A final dividend of 36 cents per share has been declared payable to shareholder
in respect of the twelve months to 31 December 2001.
In accordance with the trading requirements under the STRATE environment, the
last day to trade to participate in the final dividend will be Thursday
14 March 2002. The shares will commence trading ex-dividend on Friday 15 March
2002, and the record date will be Friday 22 March 2002. Payment will be made o
Monday 25 March 2002.
Certificated shareholders may not dematerialise their shares between Friday 8
March and Friday 22 March 2002 both days inclusive.
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
12 February
2002
