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FIRSTRAND -Outsurance Interim Results For The Six Months Ending 31 December 2004

Release Date: 09/02/2005 08:00
Code(s): FSR
Wrap Text

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 Date: 09/02/2005 08:00:07 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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