| Fri 15 Nov 2002, 17:08 | | New Africa Capital - QUARTERLY UPDATE |
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New Africa Capital - QUARTERLY UPDATE
JSE code - NAC
NSX code - NWC
ISIN number - ZAE 000033361
QUARTERLY UPDATE
New in-force business
The group new business figures for the nine months ended 30 September 2002 are
shown below. The basis used is consistent with that used in the embedded value
calculation. Policies are included from the date that they become in force as
opposed to the date on which they are concluded (the latter is normally referred
to as production figures). There can be a delay of up to three months between
these two dates.
NEW BUSINESS PREMIUMS # # # Quarter
Q1 Q2 Q3 ave
for 2001
Mar-02 Jun-02 Sep-02 Dec-01
Recurring premiums 170 187 216 160
Individual life 154 135 144 121
Gross premiums 180 154 165 146
Lapses at (26) (19) (21) (25)
inception
Employee benefits 16 52 72 39
Lapses as a % of gross 14% 12% 13% 17%
premiums
Single premiums 414 493 855 748
Individual life 202 228 262 258
Employee benefits 212 265 593 490
Total 584 680 1 071 908
APE 211 236 302 235
# Provisional new business premiums, subject to adjustment at the year-end
valuation.
Individual life business
Recurring new business premium income net of lapses at inception has improved 7%
over the previous quarter. This was primarily the result of a 7% increase in
gross business, and a significant reduction in lapses at inception.
The continuation of an improvement in the lapse experience at inception is
encouraging and management is confident now that Predict, the lapse predictor
tool for excluding potentially high lapse rate business, has been rolled out to
all branches, a further improvement in the lapse experience can be expected.
Early indications are that as a result of the introduction of Predict
approximately 2% of new business applications are rejected outright, with a
further 10% of business being accepted with commission on an "as and when" basis
over the first 12 months of the contract.
The improvement in single premium business is very pleasing and is further proof
of the continued progress made by the group over the quarter.
The number of ordinary recurring premium business policies sold during the
reporting period was on a par with that of 2001. There has, however, been a 10%
increase in the premium size.
Employee benefits business
Employee benefits new premium inflows improved significantly in the third
quarter, with new recurring premiums showing a healthy 38% increase. In
addition, on-balance sheet single premiums showed an increase of 124% over the
second quarter. A significant portion of the unit`s bulk pension annuity
business this year has been written through special purpose vehicles. Such
arrangements have added R765m to single premium inflows this year which, if
taken together with the on-balance sheet amounts, total R1 835m for the 9-month
period, representing a 25% increase over the 2001 equivalent.
Conditions in the employee benefits market have been adversely affected by the
uncertainty that has persisted for almost a year now around the implementation
of last December`s surplus legislation. The delays in the finalisation of the
Regulations to the Act and FSB implementation guidelines have considerably
slowed activity in the industry.
The continued generation of improved employee benefits new business volumes is
therefore particularly gratifying, and is in no small measure the result of an
outstanding track record of developing practical and creative solutions to
client requirements. This, together with unparalleled empowerment credentials,
continues to bode well for future performance.
Reduction in expenses
When we released our 2001 annual financial results, we made a commitment to our
shareholders that we would reduce the 2001 actual expenses for life
administration costs across the group by R50 million in the 2002 financial year.
By 30 September we had made significant inroads in trimming expenses despite the
many challenges with which we were confronted during the first nine months of
the year. With the exception of Metropolitan Life and Metropolitan Advisory &
Retail Services (MARS), all the businesses achieved their cost cutting targets
over the nine months.
Metropolitan Life incurred a R 7 million abnormal software write-off.
MARS has undertaken an aggressive restructuring exercise to reduce its cost base
by a significant amount. This distribution channel now forms part of the new
Metropolitan retail structure, with its executive team having been streamlined
through the redeployment or retrenchment of several of the most senior members
with effect from 1 November. In total, R 5 million in unforeseen once-off
expenses were incurred during this process.
The restructuring of MARS holds many future benefits for the group as it allows
for better alignment within the Metropolitan retail business cluster.
In the light of the two abnormal items referred to above (R12 million), the
expected expense reduction is now projected to be in the range of R40 - R50
million. To achieve this will necessitate a concerted effort, especially
bearing in mind that Metropolitan Employee Benefits, Namibia, Botswana and
International, as growing businesses, are incurring additional expenses on an
ongoing basis and the additional R17 million invested in project GoldRush.
END
ISSUED BY NICO OOSTHUIZEN
INVESTOR & FINANCIAL MEDIA
NEW AFRICA CAPITAL
TEL 2721 9406111 OR 083 285 7092
DATE 15 NOVEMBER 2002
QUERIES PRESTON SPECKMANN
GROUP FINANCE DIRECTOR
NEW AFRICA CAPITAL
TEL 2721 9406634 or 083 285 6454
TYRREL MURRAY
GENERAL MANAGER: GROUP FINANCE
NEW AFRICA CAPITAL
TEL 2721 9405083 OR 082 889 2167
Date: 15/11/2002 04:53:01 PM Produced by the JSE SENS Department
