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SOUTH AFRICAN EAGLE INSURANCE COMPANY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1965/006764/06)
Share code: SAE ISIN: ZAE000006243
The Directors announce the Group results for the year ended 31 December 2002.
COMMENTS
The second half of 2002 was disappointing with the year ending with an
underwriting loss of R21,3m compared to a profit of R4,9m at the half year and a
loss of R8,7m in 2001.
The loss resulted from the continuing poor performance of the motor account,
combined with the storms in the Eastern Cape in July and August and a number of
large fires towards the end of the year.
Remedial action, which includes rate increases, continues in order to meet the
rising cost of claims and reinsurance. The exiting of unprofitable business with
a view to improving the quality of the book will continue throughout 2003.
Growth in gross written premium was 23,1% for the year. This represented mainly
pricing increases. The rapid real growth experienced by the Company in the last
two years following the rationalisation in the short term industry is beginning
to taper off as the industry stabilises.
The major reorganisation within the Company, known as Aquila Rex, will be
completed in February 2003. The implementation of new workflow technology
impacted service levels negatively during 2002. However, implementation problems
are now largely resolved. The new system provides sustainable cost savings and
will improve controls over claims costs in 2003 and beyond.
Investment income was R27m lower than in 2001. This shortfall was due to the
receipt of special dividends and income arising from the settlement of the court
case against NBS in the prior year. Underlying growth in income was satisfactory
and in line with expectations.
The equity disposal programme continued with the surplus arising on disposal of
investments totalling R54,8m (2001: R114,8m).
The solvency margin stands at 43,3% down from the 2001 year-end of 53,9% as a
result of the substantial growth in premium income for the period and the
disappointing performance of both equity markets and the underwriting account.
After taking into account the financial position following the payment of
special dividends in 2000, the significant growth in premium income in the past
few years and the disappointing result in the current year, the Directors have
declared a final dividend of 150 cents per share (2001: 450 cents per share).
This makes 400 cents per share (2001: 700 cents per share) for the year. This
action is to enable the Directors to re-establish a sustainable dividend policy
in the future.
DIVIDEND DECLARATION NO. 63
1. The Directors have declared a final dividend for 2002 of 150 cents per share
(2001: 450 cents per share) giving a total for the year of 400 cents per share
(2001: 700 cents per share).
The dividend is payable in accordance with the following timetable:
Last day to trade in order to participate
in the dividend Friday, 4 April 2003
Shares commence trading ex the dividend from the
commencement of business on Monday,7 April 2003
Record date Friday, 11 April 2003
Payment date Monday,14 April 2003
Shareholders may not dematerialise or rematerialise their holdings of shares in
the Company between Monday 7 April 2003 and Friday 11 April 2003, both days
inclusive.
By order of the Board.
PHP O`Sullivan Chairman
NV Beyers Managing Director
Johannesburg
6 February 2003
SUMMARISED INCOME STATEMENT
Note 2002 2001
R`000 R`000
GROSS WRITTEN PREMIUM 2 928 097 2 378 997
Underwriting loss 5 (21 340) (8 682)
Investment income 6 129 227 156 207
Investment expenses (3 572) (6 753)
104 315 140 772
Exceptional item 7 (14 000) -
Net realised surplus on disposal 54 823 114 761
of investments
Restructuring cost - (7 175)
Impairment of investment in - (10 000)
Zimbabwe subsidiary
OPERATING INCOME before taxation 145 138 238 358
Taxation (20 673) (82 311)
NET INCOME after taxation 124 465 156 047
Outside shareholders` interest (9 329) (13 744)
therein
Net income attributable to 115 136 142 303
members of the company
Dividends (85 257) (85 257)
RETAINED INCOME 29 879 57 046
ABRIDGED BALANCE SHEET
2002 2001
Note R`000 R`000
ASSETS
Investments 8 755 001 957 949
Fixed assets 78 983 69 747
Current assets 749 157 672 071
Technical assets 401 258 274 788
Bank and cash balances 682 975 598 574
TOTAL ASSETS 2 667 374 2 573 129
EQUITY AND LIABILITIES
Capital and reserves 974 650 1 013 513
Minority interest 56 345 55 756
Deferred taxation 4 487 15 289
Provision for post retirement 70 000 70 000
medical cost
Technical provisions 1 326 622 1 105 689
Current liabilities 235 270 312 882
TOTAL EQUITY AND LIABILITIES 2 667 374 2 573 129
CONDENSED STATEMENT OF CHANGES IN
EQUITY
2002 2001
R`000 R`000
Balance at beginning of year 1 013 513 936 181
Revaluation of investments (55 527) 9 769
Translation of foreign subsidiaries (13 215) 10 517
Net income for the year 115 136 142 303
Dividends (85 257) (85 257)
Balance at end of year 974 650 1 013 513
CONDENSED CASH FLOW STATEMENT
2002 2001
R`000 R`000
Cash available from underwriting 69 340 113 593
operations
Net increase in working capital (132 321) (75 697)
Dividends and interest received 129 227 156 207
Taxation paid (43 761) (93 461)
Dividends paid (85 257) (85 257)
Cash effect of investing activities 147 173 130 098
Increase in deposits and cash 84 401 145 483
NOTES:
1. Accounting policies
The annual financial statements
have been prepared in accordance
with the South African Statement
of Generally Accepted Accounting
Practice. The accounting
policies and methods of
computation followed are
consistent with those of the
previous years.
2. Determination of headline
earnings: 2002 2001
R`000 R`000
Net income attributable to 115 136 142 303
members of the company
After-tax adjustment for:
Net realised surplus on disposal
of investments and fixed assets (52 702) (113 001)
- Exceptional item 14 000 -
- Impairment of investment in - 10 000
Zimbabwe subsidiary
- Reverse provision for - (12 112)
restructuring cost
- Provision for restructuring - 8 400
cost
Headline earnings 76 434 35 590
Headline earnings per share - 627,56 292,21
cents
The 2001 headline earnings was
calculated after taking into
account a once-off tax charge in
respect of the change in
legislation relating to the tax
deductibility of the contingency
reserve. Without this adjustment
the headline earnings per share
would have been 659,96 cents per
share in 2001.
3. Segmental information: Foreign
South sub-
Africa sidiaries Total
R`000 R`000 R`000
2002:
Gross written premium
General insurance business 2 394 705 199 415 2 594 120
Alternative risk transfer
business 333 977 - 333 977
2 728 682 199 415 2 928 097
Profit before taxation
General insurance business 88 278 40 535 128 813
Alternative risk transfer
business 16 325 - 16 325
104 603 40 535 145 138
Net assets
General insurance business 851 603 69 597 921 200
Alternative risk transfer
business 109 795 - 109 795
961 398 69 597 1 030 995
2001:
Gross written premium
General insurance business 1 945 478 219 097 2 164 575
Alternative risk transfer
business 214 422 - 214 422
2 159 900 219 097 2 378 997
Profit before taxation
General insurance business 183 800 37 269 221 069
Alternative risk transfer
business 17 289 - 17 289
201 089 37 269 238 358
Net assets
General insurance business 904 159 66 315 970 474
Alternative risk transfer
business 98 795 - 98 795
1 002 954 66 315 1 069 269
4. Other financial information
2002 2001
R`000 R`000
Earnings per share before 945,3 1 168,4
adjustment - cents
Earnings per share after
excluding exceptional items,
exceptional tax charges, 1 060,3 1 567,0
interest from NBS case,
restructuring cost and
impairment of investments in
subsidiary - cents
Dividend per share - cents
- Paid in year 700,0 700,0
- Declared for year 400,0 700,0
Number of shares in issue 12 179 500 12 179 500
Net asset value per share - 8 002 8 321
cents
Solvency margin % 43,3 53,9
Dividend cover 2,36 1,67
5. Underwriting loss after
charging/(crediting):
Depreciation 23 913 13 666
Surplus on disposal of fixed (794) (240)
assets
6. Investment income
Interest 108 617 113 998
Dividends 20 610 42 209
Total investment income 129 227 156 207
7. Exceptional item
The exceptional item of R14m
arises as a result of the
cancellation of software
licences and IT outsourcing
agreements for the Golden Eagle
"E-Commerce" business to
business solution, where a more
effective long term alternative
was identified.
8. Investments
Fixed properties 29 886 57 414
Mortgages and loans 44 827 54 534
Government and other approved 190 683 178 674
securities
Municipal annuities, other fixed 69 102
interest securities
265 465 290 724
Listed shares 435 581 582 964
Unlisted shares 53 955 84 261
Total investments 755 001 957 949
9. The preliminary announcement has
been reviewed by the company`s
external auditors,
PricewaterhouseCoopers Inc. A
copy of their review opinion is
available on request at the
company`s registered office.
Transfer secretaries
Computershare Investor Services Limited
8th floor
11 Diagonal Street
Johannesburg
2001
Sponsor
Rand Merchant Bank
A division of FirstRand Bank Limited
Corporate Finance
Registered office
South African Eagle Insurance Company Limited
Registration number 1965/006764/06
SA Eagle House
The Braes
193 Bryanston Drive
Bryanston
2021
Date: 06/02/2003 05:15:00 PM Produced by the JSE SENS Department
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