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SAE
SAE
SA Eagle - Reviewed results and dividend declaration for the year ended 31
December 2005
South African Eagle Insurance Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1965/006764/06)
Share code: SAE & ISIN: ZAE000006243
("the Company")
Announcement of the reviewed results and dividend declaration for the year ended
31 December 2005
Rand thousands Note 2005 2004 % Change
Restated
CONDENSED INCOME STATEMENT
Insurance premium revenue 3,509,671 3,191,143 10.0%
Insurance premium ceded to reinsurers 646,274 570,030
----------------------
Net insurance premium revenue 2,863,397 2,621,113
----------------------
Net insurance premium earned 2,812,112 2,571,909 9.3%
Investment income 4 175,412 157,351 11.5%
Fair value adjustment on trading
investments 5,138 11,682
Net realised gains on disposal of
investments 172,932 70,105
----------------------
Net income 3,165,594 2,811,047 12.6%
----------------------
Net insurance claims 1,902,370 1,675,643 13.5%
Acquisition expenses 425,683 374,476 13.7%
Administrative and other operating
expenses 318,274 323,714 (1.7%)
Investment expenses 5,368 3,396
Primary policyholders" interest 5,287 12,268
----------------------
Expenses 2,656,982 2,389,497 11.2%
----------------------
Profit before tax 5 508,612 421,550 20.7%
Income tax expense 118,388 105,819 11.9%
----------------------
Profit after tax 390,224 315,731 23.6%
Minority interest 1,094 2,318
----------------------
Net profit attributable to members of
the Company 2 389,130 313,413 24.2%
----------------------
CONDENSED BALANCE SHEET
Assets
Property and equipment 55,104 55,322
Investments 6 1,008,223 894,474 12.7%
Deferred acquisition cost 134,200 123,220
Deferred tax assets - 10,131
Technical assets 529,013 424,001 24.8%
Current assets 1,113,133 911,023 22.2%
Cash and cash equivalents 1,017,528 1,148,212 (11.4%)
----------------------
Total assets 3,857,201 3,566,383 8.1%
----------------------
Equity and liabilities
Shareholders" equity 1,511,949 1,492,277 1.3%
Minority shareholders" interest in
subsidiaries 3,147 2,226
Retirement benefit obligation 43,069 83,578
Reinsurers" share of deferred acquisition
cost 46,738 56,985
Deferred tax liabilities 12,963 -
Technical provisions 1,724,832 1,525,840 13.0%
Other liabilities 514,503 405,477 29.5%
----------------------
Total equity and liabilities 3,857,201 3,566,383
----------------------
COMMENTARY
The financial results are pleasing and were supported by strong underwriting and
investment performances. Earnings per share increased by 24.2% and headline
earnings per share (which exclude realised gains on equities) decreased by 5.1%.
While the overall performance on most accounts was satisfactory, certain weather
related events and a number of fires late in the year adversely impacted the
fire account. An increase in the incidence of accidents and higher repair costs
also impacted the motor account. Corrective action will be taken in both these
areas.
A 10% increase in premium revenue reflected acceptable growth in highly
competitive market conditions, while still maintaining profitability.
The BEE transaction concluded during 2005 with the Royal Bafokeng Nation in
terms of the Financial Sector Charter ("the Charter") will benefit all
stakeholders as the Company seeks to explore new business opportunities and
leverage synergies with its new partner. In addition, the Company is
substantially compliant with the Charter in terms of its internal operations.
Investment returns for the year remained strong despite the payment of a
special dividend. The main drivers were a buoyant equity market enabling
further equity disposals, positive cash flows generated by operations and the
good performance of the bond portfolio.
The solvency margin remains satisfactory at 53%. The Directors have declared a
final dividend of 600 cents per share bringing the total normal dividend for the
year to 800 cents per share (2004: 650 cents per share).
The Company anticipates that underwriting surpluses should be maintained in
2006.
DIVIDEND DECLARATION NO. 68
1. The Directors have declared a final dividend for 2005 of 600 cents per
share (2004: 470 cents per share).
2. The dividend is payable in accordance with the following timetable:
Last day to trade in order to participate in the dividend: Friday, 31 March 2006
Shares commence trading ex the dividend from the commencement of business on:
Monday, 3 April 2006
Record date: Friday, 7 April 2006
Payment date: Monday, 10 April 2006
Shareholders may not dematerialise or rematerialise their holdings of shares in
the Company between Monday, 3 April 2006 and Friday, 7 April 2006, both days
inclusive.
22 February 2006
By order of the Board.
Bryanston
Board of Directors
MC South Chairman (Non-Executive)
NV Beyers Managing Director
DM Burton Executive
JPG de Rauville Independent Non-Executive
PT Martin Independent Non-Executive
SG Morris Independent Non-Executive
A Paas Non-Executive
DS Phiri Non-Executive
CN Zungu Executive
In compliance with Section 3.59 of the JSE Limited Listings Requirements, the
following information is disclosed:
Resignations from the Board during the year:
1. JM Carter (British) 9 May 2005
2. JL Pamensky 9 May 2005
3. GM Riddell (British) 10 May 2005
Appointments to the Board during the year:
1. DM Burton 10 May 2005
2. DS Phiri 10 May 2005
3. CN Zungu 10 May 2005
4. SG Morris 1 July 2005
5. A Paas (Finnish) 1 January 2006
Appointment of new Chairman:
MC South (British) 10 May 2005
Rand thousands 2005 2004
Restated
CONDENSED STATEMENT OF CHANGES IN EQUITY
Balance at beginning of year 1,494,503 1,200,830
Adoption of International Financial
Reporting Standards and changes in accounting
policies - -6,405
Net changes in available-for-sale financial
assets on disposal -162,863 -68,665
Revaluation of investments 171,529 137,971
Translation of foreign subsidiaries -16,392 -23,447
Net profit for the year 390,224 315,731
Dividends paid -361,732 -58,462
Exchange rate movement -173 -3,050
----------------------
Balance at end of year 1,515,096 1,494,503
----------------------
CONDENSED CASH FLOW STATEMENT
Cash retained from operating activities 141,571 298,568
----------------------
Cash generated from underwriting activities 197,269 313,425
Net increase in working capital -81,658 -47,097
Dividends, interest and rental received 164,737 157,351
Taxation paid -138,777 -125,111
----------------------
Dividends paid -361,731 -58,462
Cash effect of investing activities 89,476 18,985
----------------------
Net (decrease)/increase in cash and cash
equivalents -130,684 259,091
Cash and cash equivalents at beginning of year 1,148,212 889,121
----------------------
Cash and cash equivalents at end of year 1,017,528 1,148,212
----------------------
NOTES
1. Accounting policies
The condensed financial statements have been prepared for the first time in
accordance with International Financial Reporting Standards (IFRS).
IFRS 1: First-time Adoption of International Financial Reporting Standards has
been applied. Comparative information for 2004 has been restated.
The adoption of IFRS 4: Insurance Contracts had an impact on the presentation of
assets and liabilities in respect of insurance contracts at 31 December 2005.
The Group"s comprehensive consolidated financial statements for the year ended
31 December 2005 will present all additional disclosures required by this
standard.
Rand thousands 2005 2004 % Change
Restated
2. Financial highlights
Net profit attributable to members
of the company 389,130 313,413 24.2%
After-tax adjustment for:
Net realised surplus on disposal of
investments, property and equipment,
after tax -153,654 -65,266 135.4%
----------------------
Headline earnings 235,476 248,147 (5.1%)
----------------------
Headline earnings per share (cents) 1,933.4 2,037.4 (5.1%)
Earnings per share (cents) 3,195.0 2,573.3 24.2%
Ordinary dividends declared per
share (cents) 800.0 650.0 23.1%
Special dividend declared per
share (cents) - 2,300.0
Dividends paid per share (cents) 2,970.0 480.0
Number of shares in issue 12,179,500 12,179,500
Net asset value per share (cents) 12,414 12,252 1.3%
Solvency margin (%) 52.9% 57.0%
Combined ratio (%) 94.3% 92.8%
Return on equity (%) 28.3% 28.9%
3. Effect of adoption of IFRS and changes in accounting policies
The Group has re-evaluated its presentation for insurance cells following the
implementation of IFRS4: Insurance Contracts. The results of insurance contracts
underwritten in cells where the risks and rewards accrue to the cell owner are
no longer included in Group profit.
Property and equipment have been accounted for in accordance with IAS 16.
The depreciable amount of property and equipment is now cost less
residual value. In addition, the useful lives of assets have been reviewed at
the balance sheet date.
Operating lease expenses are now spread evenly over the lease period in
accordance with IAS 17 and are no longer expensed as paid.
The effect of the above changes on profit for the year ended 31 December 2004 is
as follows:
Effect of
adoption of
IFRS and
As Reported changes in
under SA accounting
GAAP policies IFRS
R000 R000 R000
Net insurance premium earned 2,644,891 (72,982) 2,571,909
Net insurance claims and
acquisition expenses (2,097,988) 47,869 (2,050,119)
Profit before tax 461,536 -39,986 421,550
Taxation 109,214 -3,395 105,819
Profit after tax 352,322 -36,591 315,731
Rand thousands 2005 2004
Restated
4. Investment income
Interest and rental income 146,778 137,170
Dividends 28,634 20,181
-------------------------
Total investment income 175,412 157,351
-------------------------
5. Profit before tax after (crediting)/charging
Depreciation 14,302 15,368
Loss on disposal of property and equipment 636 170
6. Investments
Investment properties 10,946 19,491
Investment in associates 20,560 19,710
-------------------------
Listed 17,243 9,710
Unlisted 3,317 10,000
-------------------------
Originated loans 7,087 8,387
Available-for-sale investments 539,972 523,976
-------------------------
Ordinary shares
Listed 447,198 478,871
Unlisted 36,168 36,534
Preference shares
Listed 1,804 1,165
Unlisted 51,788 1,925
Government and other interest bearing
securities 3,014 5,481
-------------------------
Trading investments 429,658 322,910
-------------------------
Total investments 1,008,223 894,474
-------------------------
7. Segmental analysis
7.1 Business segments
Risk
Commercial Financing Personal Other Total
R000 R000 R000 R000 R000
2005
Gross insurance premium
revenue 2,433,181 230,596 845,894 - 3,509,671
Insurance premium ceded
to reinsurers 481,923 144,320 20,031 - 646,274
-------------------------------------------------------
Net insurance premium
revenue 1,951,258 86,276 825,863 -
2,863,397
Change in provision for
unearned premium (34,709) (16,971) 395 - (51,285)
-------------------------------------------------------
Net insurance premium
earned 1,916,549 69,305 826,258 - 2,812,112
Investment income - 6,087 - 169,325 175,412
Fair value adjustment on
trading investments - - - 5,138 5,138
Net realised gains on
disposal of investments - - - 172,932 172,932
-------------------------------------------------------
Income 1,916,549 75,392 826,258 347,395 3,165,594
-------------------------------------------------------
Net insurance claims 1,244,003 56,300 602,067 - 1,902,370
Acquisition expenses 295,513 (1,140) 129,030 - 425,683
Administrative and other
operating expenses 257,244 2,491 58,539 - 318,274
Investment expenses - 675 - 5,368 5,368
Primary policyholders"
interest - 5,287 - - 5,287
-------------------------------------------------------
Expenses 1,796,760 65,218 789,636 5,368 2,656,982
-------------------------------------------------------
-------------------------------------------------------
Profit before tax 119,789 10,174 36,622 342,027 508,612
-------------------------------------------------------
Risk
Commercial Financing Personal Other Total
R000 R000 R000 R000 R000
Restated Restated Restated Restated Restated
2004
Gross insurance premium
revenue 2,280,254 149,366 761,523 - 3,191,143
Insurance premium ceded
to reinsurers 469,711 85,994 14,325 - 570,030
-------------------------------------------------------
Net insurance premium
revenue 1,810,543 63,372 747,198 - 2,621,113
Change in provision for
unearned premium (51,996) 1,633 1,159 - (49,204)
-------------------------------------------------------
Net insurance premium
earned 1,758,547 65,005 748,357 - 2,571,909
Investment income - 5,178 - 152,173 157,351
Fair value adjustment on
trading investments - - - 11,682 11,682
Net realised gains on
disposal of investments - - - 70,105 70,105
-------------------------------------------------------
Income 1,758,547 70,183 748,357 233,960 2,811,047
-------------------------------------------------------
Net insurance claims 1,124,925 37,023 513,695 - 1,675,643
Acquisition expenses 249,671 8,116 116,689 - 374,476
Administrative and other
operating expenses 264,962 6,367 52,385 - 323,714
Investment expenses - 626 - 3,396 3,396
Primary policyholders"
interest - 12,268 - - 12,268
-------------------------------------------------------
Expenses 1,639,558 63,774 682,769 3,396 2,389,497
-------------------------------------------------------
-------------------------------------------------------
Profit before tax 118,989 6,409 65,588 230,564 421,550
-------------------------------------------------------
The segment assets and liabilities at 31 December 2005 are as follows:
Risk
Commercial Financing Personal Other Total
R000 R000 R000 R000 R000
Technical assets 329,684 124,345 74,984 - 529,013
Deferred acquisition costs 85,676 28,427 20,097 - 134,200
Non-current assets - - - 633,669 633,669
Current assets, including
cash and cash equivalents - 211,800 - 2,348,519 2,560,319
-------------------------------------------------------
Total assets 415,360 364,572 95,081 2,982,188 3,857,201
-------------------------------------------------------
Technical provisions 1,234,636 226,518 263,678 - 1,724,832
Reinsurers" share of
deferred acquisition cost 25,932 14,723 6,083 - 46,738
Non-current liabilities - - - 56,032 56,032
Other liabilities - 7,013 - 507,490 514,503
-------------------------------------------------------
Total liabilities 1,260,568 248,254 269,761 563,522 2,342,105
-------------------------------------------------------
The segment assets and liabilities at 31 December 2004 are as follows:
Risk
Commercial Financing Personal Other Total
R000 R000 R000 R000 R000
Restated Restated Restated Restated Restated
Technical assets 297,016 66,365 60,620 - 424,001
Deferred acquisition cost 88,512 16,579 18,129 - 123,220
Non-current assets - - - 633,534 637,017
Current assets, including
cash and cash equivalents - 157,693 - 2,224,452 2,382,145
-------------------------------------------------------
Total assets 385,528 240,637 78,749 2,857,986 3,566,383
-------------------------------------------------------
Technical provisions 1,143,506 148,522 233,812 - 1,525,840
Reinsurers" share of
deferred acquisition cost 41,622 6,838 8,525 - 56,985
Non-current liabilities - - - 83,578 83,578
Other liabilities - 6,795 - 395,199 405,477
-------------------------------------------------------
Total liabilities 1,185,128 162,155 242,337 478,777 2,071,880
-------------------------------------------------------
7.2 Geographical segments
South Africa Foreign Total
R000 R000 R000
2005
Gross insurance premium revenue 3,293,113 216,558 3,509,671
Total assets 3,695,791 161,410 3,857,201
Total liabilities 2,263,465 78,640 2,342,105
Total capital expenditure 21,907 438 22,345
Profit before tax 477,302 31,310 508,612
South Africa Foreign Total
R000 R000 R000
Restated Restated Restated
2004
Gross insurance premium revenue 2,989,263 201,880 3,191,143
Total assets 3,374,230 192,153 3,566,383
Total liabilities 1,965,362 106,518 2,071,880
Total capital expenditure 16,371 3,326 19,697
Profit before tax 388,658 32,892 421,550
Auditors
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 2004 (Pty) Limited
70 Marshall Street
Johannesburg, 2001
Registered office
South African Eagle Insurance Company Limited
Registration number 1965/006764/06
SA Eagle House
The Braes
193 Bryanston Drive
Bryanston, 2021
Sponsor
RAND MERCHANT BANK
(A division of FirstRand Bank Limited)
Date: 23/02/2006 05:00:13 PM Produced by the JSE SENS Department
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