| Wed 9 Feb 2005, 8:57 | | FirstRand -Outsurance Interim Results for the Six |
|
FIRSTRAND -Outsurance Interim Results For The Six Months Ending 31 December 2004
FirstRand Limited
Incorporated in the Republic of South Africa
Registration number: 1966/010753/06
Share Code: FSR
ISIN: ZAE000014973
(`FirstRand`)
PRESS RELEASE - OUTSURANCE INTERIM RESULTS FOR THE SIX MONTHS ENDING 31 DECEMBER
2004
OUTsurance, the direct short-term insurance operation in the RMB Holdings and
FirstRand stable, posted excellent results for the six months ending 31 December
2004. Gross premium income increased by 31.5% to R881 million (2003: R670
million) driven by strong organic growth in both the personal and business
portfolios. Headline earnings for the six months increased by 44.3% to R131.5
million from R91.2 million in the corresponding period the year before. The
increase was achieved despite a significantly higher tax rate which resulted
from the STC charge levied on OUTsurance`s maiden dividend of R150 million paid
during the period.
Commenting on the results, joint CEO Willem Roos says, `Claims experience was
better than expected due to relatively benign weather conditions and decreasing
levels of crime related claims.
Furthermore, a stronger than expected Rand had a positive impact on the average
claim cost. OUTsurance also managed to contain expenses and was therefore able
to achieve excellent results, and still managed to keep premium adjustments for
clients below inflation. We are also proud to have paid R19.7 million in
OUTbonuses during the past six months, bringing the total close to R80 million
since the company was founded.`
Expenses, as a percentage of net premium income, decreased from 18.1% to 16.6%
(compared to an industry average of 26%). Roos says that the company has gained
significant economies of scale by using technology to contain management
expenses. He further notes that OUTsurance`s model of dealing directly with
clients also contributed to keeping costs down. `OUTsurance does not pay the 15%
commission that normally goes to the insurance broker. This enables us to offer
our clients good value for money, and still maintain our profitability. Together
with the expert advice offered by our well qualified staff, OUTsurance certainly
does offer excellent value,` says Roos.
OUTsurance continues to reap rewards from collaboration with the FirstRand
Group. Roos notes that 27% of OUTsurance`s premium income is generated from
within FirstRand.
OUTsurance`s total asset base now exceeds R1.5bn. `Our healthy financial
position, together with our strong parentage in the form of RMBH and FirstRand,
underlines our excellent claims paying ability,` says Roos.
For more information, contact Anne Grobler on 012 673 3064 or 082 612 3012
Income statement 6 months to
31 Dec 31 Dec % change
2004 2003
R`000 R`000
Gross written premium 881,296 670,399 31%
Gross earned premium 873,242 659,677 32%
Reinsurance premiums (65,380) (12,423) >100%
Net earned premium 807,862 647,254 25%
Net incurred claims and (467,296) (389,086) 20%
OUTbonuses
Expenses (133,743) (117,223) 14%
Underwriting profit 206,823 140,945 47%
FirstRand profit share (60,982) (50,939) 20%
Underwriting profit after 145,841 90,006 62%
profit share
Investment income on insurance 25,930 24,804 5%
funds
Operating profit 171,771 114,810 50%
Investment income on capital 37,504 14,043 >100%
Profit before tax and profit 209,275 128,853 62%
share
FirstRand profit share 60,982 50,939 20%
Profit before tax 270,257 179,792 50%
Taxation (100,782) (54,925) 83%
Profit after tax 169,475 124,867 36%
Preference dividends (37,944) (31,696) 20%
Net profit for the year 131,531 93,171 41%
Ordinary dividends (149,948)
Calculation of headline earnings for 2004 in
accordance with AC133
Net profit for the year 131,531 93,171
Realised gains on investments (2,849)
Taxation on realised gains 855
Headline earnings 131,531 91,177 44%
Balance sheet As at
31 Dec 31 Dec % change
2004 2003
R`000 R`000
Capital employed
Shareholders` interests 596,997 482,063 24%
Long term liabilities 82,710 674 >100%
679,707 482,737 41%
Employment of capital
Investments 129,767 538,963 -76%
Cash and near cash 1,137,560
Fixed assets 103,968 29,972 >100%
Current assets 141,208 561,289 -75%
Total assets 1,512,503 1,130,224 34%
Insurance liabilities (676,228) (497,165) 36%
Current liabilities (156,568) (150,322) 4%
679,707 482,737 41%
Solvency margin 38% 39%
Sandton
9 February 2005
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
CORPORATE FINANCE
