To view the PDF file, sign up for a MySharenet subscription.

ZSA - Zurich Insurance Company South Africa Limited

Release Date: 02/08/2007 16:00
Code(s): ZSA
Wrap Text

ZSA - Zurich Insurance Company South Africa Limited Zurich Insurance Company South Africa Limited (Formerly South African Eagle Insurance Company Limited) (Incorporated in the Republic of South Africa) (Registration number 1965/006764/06) Share code: ZSA & ISIN: ZAE000094496 ("the Group") Announcement of the reviewed Group results and dividend declaration for the six months ended June 30, 2007 Highlights Insurance premium revenue up 14.6% Net asset value up 13.7% Headline earnings up 24.5% Rand thousands June 30, 2007 June 30, 2006 % Change Audited at December 31, 2006
CONDENSED INCOME STATEMENT Insurance premium revenue 2,183,457 1,905,852 14.6% 3,910,639 Insurance premium ceded to reinsurers 460,784 374,217 735,513 ----------------------------------------------------- Net insurance premium 1,722,673 1,531,635 3,175,126 ----------------------------------------------------- Net insurance premium revenue 1,707,879 1,495,576 14.2% 3,115,547 Reinsurance commission earned 61,627 62,615 138,032 Pension fund surplus 6,126 - 230,764 Other income - fee income 6,366 3,625 10,602 Investment income 100,463 95,197 202,224 Net fair value loss on assets held at fair value through income - 18,066 - 28,680 - 18,962 Net realised gains on financial assets - available-for-sale 35,489 68,425 71,334 ----------------------------------------------------- Income 1,899,884 1,696,758 12.0% 3,749,541 ----------------------------------------------------- Net insurance claims 1,233,774 1,074,935 14.8% 2,256,842 Gross acquisition costs 324,053 292,698 10.7% 609,307 Administrative and other operating expenses 164,248 160,872 2.1% 447,250 Investment expenses 1,778 2,250 3,594 ----------------------------------------------------- Expenses 1,723,853 1,530,755 12.6% 3,316,993 ----------------------------------------------------- Profit before tax 176,031 166,003 6.0% 432,548 Income tax expense 53,222 33,941 56.8% 105,666 ----------------------------------------------------- Profit after tax 122,809 132,062 - 7.0% 326,882 Minority interest 123 1,498 6,302 ----------------------------------------------------- Net profit attributable to members of the Company 122,686 130,564 - 6.0% 320,580 -----------------------------------------------------
Rand thousands June 30, 2007 June 30, 2006 % Change Audited at December 31, 2006 CONDENSED BALANCE SHEET Assets Property and equipment 63,607 61,827 68,476 Investments 1,120,253 982,662 14.0% 1,071,347 Intangible insurance assets - deferred acquisition costs 110,810 92,504 98,736 Retirement benefit fund surplus 74,020 - 230,764 Assets arising from reinsurance contracts 639,878 445,977 43.5% 605,614 Current assets 982,328 968,244 1,048,678 Cash and cash equivalents 1,497,550 1,431,247 4.6% 1,482,314 ----------------------------------------------------- Total assets 4,488,446 3,982,461 12.7% 4,605,929 ----------------------------------------------------- Equity and liabilities Shareholders` equity 1,850,668 1,627,485 13.7% 1,758,933 Minority shareholders` interest in subsidiaries 225 10,188 13,043 Employee retirement benefit obligations 14,270 41,695 179,924 Reinsurance commission 36,390 33,397 34,270 Deferred tax liabilities 56,382 5,754 99,451 Liabilities arising from insurance contracts 1,946,394 1,753,829 11.0% 1,920,676 Other liabilities 584,117 510,113 14.5% 599,632 ----------------------------------------------------- Total equity and liabilities 4,488,446 3,982,461 4,605,929 ----------------------------------------------------- Rand thousands June 30, 2007 June 30, 2006 Audited at December 31, 2006
CONDENSED STATEMENT OF CHANGES IN EQUITY Balance at beginning of year 1,758,933 1,511,949 1,511,949 Net changes in available-for-sale financial assets on disposal - 19,691 - 11,720 - 66,495 Revaluation of available-for-sale financial assets 61,806 83,729 131,253 Translation of foreign subsidiaries - 19,575 - 13,960 - 38,481 Net profit for the year 122,686 130,564 320,580 Dividends paid - 53,491 - 73,077 - 99,873 ------------------------------------------- Balance at end of period 1,850,668 1,627,485 1,758,933 ------------------------------------------- Rand thousands June 30, 2007 June 30, 2006 Audited at December 31, 2006
CONDENSED CASH FLOW STATEMENT Cash retained from operating activities 96,234 366,301 498,275 -------------------------------------------
- Cash generated from operations - 108,286 155,793 220,046 - Net increase in working capital 166,754 161,049 146,711 - Dividends and interest income 100,463 95,197 202,224 - Taxation paid - 62,697 - 45,738 - 70,706 ------------------------------------------- Dividends paid - 53,491 - 73,077 - 99,873 Cash effect of investing activities - 27,507 120,495 66,384 -------------------------------------------
Net increase in cash and cash equivalents 15,236 413,719 464,786 Cash and cash equivalents at beginning of year 1,482,314 1,017,528 1,017,528 ------------------------------------------- Cash and cash equivalents at end of year 1,497,550 1,431,247 1,482,314 -------------------------------------------
NOTES 1. Accounting policies and basis of preparation The principal policies used in the preparation of the results for the period ended June 30, 2007 are consistent with those applied in the annual financial statements for the year ended December 31, 2006 and for the results for the six months ended June 30, 2006 in terms of International Financial Reporting Standards. Comparative information in the condensed cash flow statement has been amended to accommodate the enhanced disclosure in the current year. Rand thousands June 30, 2007 June 30, 2006 % Change Audited at December 31, 2006 2. Financial highlights Reconciliation between earnings and headline earnings Headline earnings 89,720 72,061 24.5% 262,041 After-tax adjustment for: Net realised surplus on disposal of investments, property and equipment 32,966 58,503 58,539 ----------------------------------------------------- Net profit attributable to members of the Company 122,686 130,564 - 6.0% 320,580 -----------------------------------------------------
Headline earnings per share (cents) 736.6 592.0 2,151.5 Earnings per share (cents) 1,007.3 1,072.0 - 6.0% 2,632.1 Ordinary dividends declared per share (cents) 260.0 220.0 650.0 Dividends paid per share (cents) 430.0 600.0 820.0 Number of shares in issue 12,179,500 12,179,500 12,179,500 Net asset value per share (cents) 15,194.9 13,362.5 13.7% 14,441.8 Solvency margin (%) 55.0% 54.0% 55.8% Combined ratio (%) * 97.2% 97.9% 97.3% Return on average equity (%) 18.2% 17.8% 19.6% * If the conversion costs relating to the conversion of the Pension Fund from defined benefit to defined contribution of R135 million were included at December 2006, the combined ratio would have been 101.5%. Segmental information June 30, 2007 June 30, 2006 December 31, 2006 Gross written premium Property 650,004 518,208 1,304,617 Transport 97,007 87,037 156,353 Motor 1,019,232 891,885 1,835,352 Engineering 280,678 209,020 349,087 Guarantee 829 1,015 1,593 Liability 56,425 97,728 103,802 Accident & Health 78,705 99,767 158,642 Miscellaneous 577 1,192 1,193 -------------------------------------------------- Total per income statement 2,183,457 1,905,852 3,910,639 -------------------------------------------------- Segmental revenue Property 478,546 502,078 974,091 Transport 72,854 59,843 125,291 Motor 952,710 789,340 1,740,531 Engineering 152,829 134,153 269,752 Guarantee 1,853 445 961 Liability 39,391 26,067 55,196 Accident & Health 55,823 45,237 86,729 Miscellaneous 228 1,028 1,028 Other 130,378 138,567 495,962 --------------------------------------------------
Total segmental revenue 1,884,612 1,696,758 3,749,541 -------------------------------------------------- Segmental result before tax June 30, 2007 June 30, 2006 December 31, 2006 Property 9,971 19,204 53,817 Transport 7,908 13,227 16,740 Motor - 11,305 - 38,244 - 52,340 Engineering 11,623 32,226 59,778 Guarantee 1,214 170 118 Liability 9,412 3,631 8,329 Accident & Health 19,651 - 1,211 - 12,333 Miscellaneous 130 683 88 Other 128,107 136,317 358,351 -------------------------------------------------- Total segmental result before tax 176,711 166,003 432,548 -------------------------------------------------- COMMENTARY Notwithstanding that the industry continues to operate in a competitive market, with an increased claims pattern, the Group achieved an improvement in the underwriting result for the current period compared to that for the corresponding six months last year. Premium revenue increased by 14.6% compared to 2006, which reflects satisfactory growth in a competitive market. This was achieved notwithstanding the negative impact of reductions in premium revenues from its Zimbabwean subsidiary. The first six months were characterised by both a higher incidence of claims and increased claims costs on the property and motor accounts and, the effects of severe flooding in Kwa-Zulu Natal in late March, affected the account. In spite of corrective action taken on the motor account, which included premium increases of more than 20%, the result continues to be impacted negatively due to an increase in the incidence of accidents and crime related losses. Motor repair costs, including the costs of repairing imported vehicles, continue to escalate well above the official inflation rate. The Group will, however, continue to take the steps necessary to limit the effect on the underwriting result. Gains on disposal of available-for-sale investments were lower at R35.4 million (2006 R68.4 million). Headline earnings of R89.7 million were 24.5% higher compared to the same period last year. Earning per share of 1,007 cents, however, were 6.0% lower, mainly as a result of an increased tax charge and reduced gains on the disposal of available-for-sale financial assets. Liquidity is satisfactory, the cash flow from operations is positive although reduced as a result of a significant increase in claims payments. The proposed conversion of the pension fund from a defined benefit fund to a defined contribution fund was successfully completed with all members opting for the conversion. This has led to a significant decrease in both the retirement obligations and the surplus attributable to the Group as this surplus was utilised to settle the obligations. Therefore, other than a small number of post retirement medical aid obligations totalling R14.2 million, there are no further post retirement obligations. The solvency margin increased marginally to 55% but remains above the stated policy of maintaining solvency within the 40% to 50% range. Given the strong solvency position, the Directors have declared an interim dividend of 260 cents per share, an increase of 18%. Gerard de Rauville was elected as Chairman of the Board on May 9 and, with effect from August 1, the Board welcomes both Chris Cron and Ms Mandiza Mbekeni as Directors. Al Paas resigned as a Director during the period under review. While the Directors are confident regarding the Group`s prospects for the remainder of the year it should be noted that underwriting as well as investment performance fluctuates and, therefore, results for the first six months are not necessarily indicative of the year-end result. DIVIDEND DECLARATION NO. 72 1. The Directors have declared an interim dividend for 2007 of 260 cents per share (2006: 220 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, August 17, 2007 Shares commence trading ex the dividend from the commencement of business on: Monday, August 20, 2007 Record date: Friday, August 24, 2007 Payment date: Monday, August 27, 2007 Shareholders may not dematerialise or rematerialise their holdings of shares in the Company between August 20, 2007 and August 24, 2007, both days inclusive. August 1, 2007 By order of the Board. Bryanston Board of Directors JPG de Rauville Independent Non-Executive Chairman NV Beyers Chief Executive Officer DM Burton Executive CJ Cron Non-Executive MN Mbekeni Independent Non-Executive SG Morris Independent Non-Executive DS Phiri Non-Executive CN Zungu Executive Auditors The Company`s external auditors, PricewaterhouseCoopers Inc, have reviewed the financial announcement. 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 Group company secretary and registered office Tracy Pitman Zurich Insurance Company South Africa Limited (Formerly South African Eagle Insurance Company Limited) Registration number 1965/006764/06 The Braes 193 Bryanston Drive Bryanston, 2021 Sponsor RAND MERCHANT BANK, (A division of FirstRand Bank Limited) Date: 02/08/2007 16:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

Share This Story