Sharenet Sites 
Sharenet Sites
Announcement of the audited group results and cash dividend declaration for the year ended 31 December 2013
ZURICH INSURANCE COMPANY
Zurich Insurance Company South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number 1965/006764/06)
Share code: ZSA
ISIN: ZAE000094496
Income tax number: 9325210715
("Zurich" or "the Group" or "the Company")
ANNOUNCEMENT OF THE AUDITED GROUP RESULTS AND CASH DIVIDEND DECLARATION
FOR THE YEAR ENDED 31 DECEMBER 2013
COMMENTS
Premium volumes grew from R3.8 billion to R4.1 billion, an increase of 8%, of which 2% is attributed to rate increases and the balance to new business, resulting
from the Company's strategy of investing in systems and people in high potential growth segments and channels. Net earned premium has improved by 10% to
R3.2 billion from R2.9 billion in 2012 as a result of a change in mix in the portfolio and increased risk appetite and retention levels.
The underwriting result is a deficit of R455 million compared to a deficit of R258 million in the prior year. The general insurance result, inclusive of
attributable investment income, is a deficit of R372 million compared to a deficit of R169 million in 2012.
Claims expenses have increased by 16% to R2.5 billion (2012: R2.2 billion) due to an increase in frequency and severity of attrition losses in both the property
and motor portfolios. The impact of a deteriorating rand on the cost of specifically motor claims in 2013 has been significant and there is an expectation that
cost pressures from rand weakness will remain into 2014. The commercial portfolio suffered from worse than expected large property fires, and three significant
weather events in November 2013 exacerbated the overall portfolio performance.
Commissions increased by 27% to R559 million as a result of the introduction of binder fees payable to intermediaries. Operating expenses during 2013 were well
managed and contained with an increase of 4% to R573 million (2012: R550 million), despite the investment in people and systems in support of the growth strategy.
Attributable investment income decreased by 7% to R83 million (2012: R90 million) due mainly to lower interest rates. Net realised gains increased by 29% to
R106 million (2012: R82 million) due to the disposal of listed and unlisted investments during 2013.
Although the international solvency of the Group declined to 58% (2012: 69%), it is still in excess of targeted solvency levels of 45% to 50%. The balance sheet
remains strong with a net asset value of 153 cents per share (2012: 166 cents). The Company maintained its AA Global credit rating for 2013 and the surplus asset
ratio is still high at 1.9 (2012: 2.3).
Changes in Directorate
S Mered resigned as a Non-executive Director with effect from 1 January 2014.
P Manley was appointed as a Non-executive Director on 14 February 2014.
Audit
The audit report of the independent auditor, PricewaterhouseCoopers Inc., on the consolidated financial statements for the year ended 31 December 2013 contains an
unmodified audit opinion and is available for inspection at the Company's registered office together with the financial statements identified in the auditor's
report.
Compliance
The Group complies in all material respects with the King Report Code of Corporate Practices and Conduct and the Listings Requirements of the JSE Limited.
Cash Dividend Declaration No. 81
Notice is hereby given that the Directors have declared a gross final cash dividend of 200 cents per ordinary share, out of income reserves for the year ended
31 December 2013.
As there are no STC credits available to offset, the dividend will be subject to a dividend withholding tax at a rate of 15%, which will result in a net dividend
of 170 cents per share to those shareholders who are not exempt from the dividend tax.
The issued share capital at the declaration date is 12,179,500 ordinary shares.
The salient dates for the dividend will be as follows:
Declaration date: Friday, 14 February 2014
Last day to trade in order to participate in the dividend: Friday, 28 February 2014
Shares commence trading ex the dividend from the commencement of business on: Monday, 3 March 2014
Record date: Friday, 7 March 2014
Payment date: Monday, 10 March 2014
Share certificates may not be dematerialised or rematerialised between Monday, 3 March 2014 and Friday, 7 March 2014, both days inclusive.
By order of the Board
Johannesburg
14 February 2014
Board of Directors
DD Mokgatle (Independent Non-executive Chairman), JE O'Neill (Chief Executive Officer),
P Bezuidenhout (Chief Financial Officer), JPM Deiss (Non-executive)
P Manley (Non-executive) - appointed 14 February 2014, S Mered (Non-executive) - resigned 1 January 2014,
MN Mbekeni (Independent Non-executive), SG Morris (Independent Non-executive),
JM Vice (Independent Non-executive) - appointed 23 January 2013
Transfer Secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001
Group Company Secretary and Registered Office
T Heydenrych
Zurich Insurance Company South Africa Limited
Registration number 1965/006764/06
15 Marshall Street, Ferreirasdorp,
Johannesburg 2001
(PO Box 61489, Marshalltown 2107)
Sponsor
RAND MERCHANT BANK
(A division of FirstRand Bank Limited)
1 Merchant Place, Cnr Fredman Drive and Rivonia Road, Sandton 2196
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the year ended 31 December 2013
Year ended Year ended
31 Dec 2013 31 Dec 2012
Rand thousands Audited Audited % Change
Gross written insurance premium 4,084,625 3,766,534 8%
Insurance premium ceded to reinsurers (856,203) (828,304)
Net written insurance premium 3,228,422 2,938,230 10%
Net insurance premium earned 3,230,185 2,934,445
Reinsurance commission earned 132,244 146,366
Investment income 217,682 223,965
Other income 4,417 7,163
Net realised gains on available-for-sale financial assets 105,609 81,896
Gains on sale of business and associate - 3,286
Net income 3,690,137 3,397,121 9%
Net insurance claims 2,553,317 2,202,655
Acquisition costs 691,666 586,011
Impairment of available-for-sale financial assets 4,989 6,240
Administrative and other operating expenses 662,122 608,095
Investment expenses 5,923 5,527
Expenses 3,918,017 3,408,528 15%
Loss from operating activities (227,880) (11,407)
Finance costs (20,469) (11,317)
Share of (losses)/profits in associates (3,832) 1,090
Loss before tax (252,181) (21,634)
Income taxation 88,057 23,710
(Loss)/profit for the year (164,124) 2,076
Earnings per share
Basic and diluted (cents) (1,348) 17.0
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2013
Year ended Year ended
31 Dec 2013 31 Dec 2012
Rand thousands Audited Audited % Change
(Loss)/profit for the year (164,124) 2,076
Other comprehensive income
Exchange differences on translating foreign operations 7,945 (4,582)
Realised gains on available-for-sale financial assets recycled to the statement of
financial performance (105,609) (81,896)
Impairment losses transferred to statement of financial performance 4,989 6,240
Net unrealised gains on available-for-sale financial assets 141,085 139,621
Income taxation relating to components of other comprehensive income 11,015 (20,132)
Total comprehensive (loss)/income for the year (104,699) 41,327 (353%)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2013
Year ended Year ended
31 Dec 2013 31 Dec 2012
Rand thousands Audited Audited % Change
Cash effect from operating activities 118,527 (141,573)
- Cash flows from operations (64,503) (358,894)
- Dividend and interest income 197,213 212,648
- Taxation (paid)/refunded (14,183) 4,673
Cash effect from investing activities (591) (191,707)
Cash effect from financing activities (36,539) (36,539)
Net movement in cash and cash equivalents 81,397 (369,819) (122%)
Translation losses on cash and cash equivalents (63) (39)
Cash and cash equivalents at beginning of the year 611,945 981,803
Cash and cash equivalents at end of the year 693,279 611,945 13%
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2013
Year ended Year ended
31 Dec 2013 31 Dec 2012
Rand thousands Audited Audited % Change
Assets
Land, buildings and equipment 56,217 73,049
Intangible assets 55,191 50,433
Investments in associates 5,637 5,036
Deferred taxation asset 102,463 -
Financial instruments 3,261,914 3,161,000
Prepayment of defined-contribution fund 127,694 141,065
Deferred acquisition costs 85,596 95,308
Reinsurance assets 657,987 908,562
Income taxation asset 11,610 5,284
Cash and cash equivalents 693,279 611,945
Total assets 5,057,588 5,051,682
Equity and liabilities
Total equity 1,869,252 2,019,733
Deferred taxation liability - 8,094
Employee benefit obligation 56,869 60,224
Reinsurance liability under cell management 68,292 109,292
Insurance liabilities 2,096,873 2,206,203
Deferred reinsurance commission 24,959 16,346
Income tax liability 1,874 -
Trade and other payables 893,646 620,801
Provisions 45,823 10,989
Total equity and liabilities 5,057,588 5,051,682
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31 December 2013
Year ended Year ended
31 Dec 2013 31 Dec 2012
Rand thousands Audited Audited % Change
Stated capital 4,650 4,650
Translation reserve (31,690) (39,635)
Revaluation reserve 406,131 354,651
Share-based payment reserve (9,243) -
Statutory contingency reserve 37,610 34,656
Retained income 1,461,794 1,665,411
Balance at end of the year 1,869,252 2,019,733 (8%)
NOTES
The Annual Financial Statements have been prepared under the supervision of the Chief Financial Officer, Pieter Bezuidenhout CA(SA), and have been audited by
PricewaterhouseCoopers Inc., in compliance with the requirements of the Companies Act, 71 of 2008, as amended. The report is available for inspection at the
Company's registered office.
1. Accounting policies and basis of preparation
The financial results have been prepared in accordance with International Financial Reporting Standards, the preparation and disclosure requirements
of IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited and the requirements of the South African Companies Act, 71 of 2008.
The principal policies used in the presentation of the audited results for the year ended 31 December 2013 are consistent with those applied in the Annual
Financial Statements for the year ended 31 December 2012.
2. Financial highlights
Year ended Year ended
31 Dec 2013 31 Dec 2012
Rand thousands Audited Audited % Change
(Loss)/profit for the year (164,124) 2,076
Adjusted for:
(Gains)/losses on disposal of property, plant and equipment (611) 664
Gains on disposal of available-for-sale financial assets (105,609) (81,896)
Gains on sale of business and associate - (3,286)
Impairment of available-for-sale financial assets 4,989 6,240
Impairment of associate 5,124 -
Restructuring provision 38,470 -
Tax effect 7,169 14,612
Headline earnings (214,592) (61,590) 248%
Headline losses per share (cents) (1,761.9) (505.7)
Earnings per share (cents) (1,348) 17.0
Ordinary dividends declared per share (cents) 200 200
Dividends paid per share (cents) 300 300
Number of shares in issue 12,179,500 12,179,500
Net asset value per share (cents) 15,348 16,583 (7%)
Surplus asset ratio 1.9 2.3
International solvency margin (%) 57.9 68.7 (16%)
Combined ratio (%) 109.6 108.8 1%
3. Segmental information
Gross written insurance premium
Property 1,535,451 1,404,988
Transport 140,669 114,951
Motor 1,777,580 1,667,837
Engineering 334,396 323,154
Guarantee 23,947 84
Liability 138,496 110,701
Accident and health 134,086 144,819
Total insurance premium income 4,084,625 3,766,534 8%
Net income
Property 1,056,990 953,845
Transport 105,449 83,982
Motor 1,763,907 1,623,315
Engineering 261,641 265,390
Guarantee 15,899 679
Liability 80,855 75,169
Accident and health 77,688 78,431
Investment income and other 327,708 316,310
Net income 3,690,137 3,397,121 9%
General insurance result
Property (208,999) (161,115)
Transport (19,084) 6,754
Motor (262,532) (151,919)
Engineering (1,758) 22,288
Guarantee (26,731) 108
Liability 28,580 4,478
Accident and health 35,197 21,093
Net underwriting result (455,327) (258,313) 76%
Attributable investment income 83,372 89,770
General insurance result (371,955) (168,543) 121%
4. Gross written premium by company
Zurich Insurance Company South Africa Limited 3,805,906 3,403,040
Zurich Insurance Company Botswana Limited 237,265 248,433
Zurich Risk Financing SA Limited 41,268 113,981
Zurich Life SA Limited 186 1,080
Total insurance premium income 4,084,625 3,766,534 8%
5. Supplementary income statement
Gross written insurance premium 4,084,625 3,766,534
Insurance premium ceded to reinsurers (856,203) (828,304)
Net written insurance premium 3,228,422 2,938,230 10%
Net insurance premium earned 3,230,185 2,934,445
Net insurance claims (2,553,317) (2,202,655)
Net commission incurred (559,422) (439,645)
Other operating expenses (572,773) (550,458)
Net underwriting result (455,327) (258,313) 76%
Attributable investment income 83,372 89,770
General insurance result (371,955) (168,543) 121%
Impairments (4,989) (6,240)
Non-technical expenses (84,932) (57,638)
Other investment income 110,009 134,418
Investment expenses (5,923) (5,527)
Net realised gains on disposal of investments 105,609 81,896
Loss before tax (252,181) (21,634)
Income tax 88,057 23,710
(Loss)/profit for the year (164,124) 2,076
www.zurich.co.za
Date: 14/02/2014 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
