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Announcement of the audited group results and cash dividend declaration
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 2012
The past year has been a challenging one, with the underwriting result being impacted by continued soft market conditions and the
deterioration of loss ratios in the property and motor portfolios. Property losses can be attributed to large fire claims, with motor
losses influenced by an escalation in repair costs and severe weather conditions experienced in the last quarter. We will continue
to invest in our customers and new technology to deliver on our strategy.
Chief Executive Officer, Edwyn ONeill
- International solvency improved to 68.7
- Net asset value per share unchanged at R165
- Final cash dividend of 200 cents per share declared, bringing the total to 300 cents for the year
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
for the year ended 31 December 2012
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Gross written insurance premium 3,766,534 3,890,028 (3%)
Insurance premium ceded to reinsurers (828,304) (912,495)
Net written insurance premium 2,938,230 2,977,533 (1%)
Net insurance premium earned 2,934,445 3,001,609
Reinsurance commission earned 146,366 163,249
Investment income 223,965 219,983
Other income 7,163 16,181
Net realised gains on available-for-sale financial assets 81,896 14,210
Gains on sale of business and associate 3,286
Net income 3,397,121 3,415,232 (1%)
Net insurance claims 2,202,655 1,977,622
Acquisition costs 586,011 623,568
Administrative and other operating expenses 608,095 578,608
Investment expenses 5,527 6,376
Impairment of available-for-sale financial assets 6,240 7,395
Expenses 3,408,528 3,193,569 7%
(Loss)/profit from operating activities (11,407) 221,663 (105%)
Finance costs (11,317) (28,200)
Share of profit in associates 1,090 333
(Loss)/profit before tax (21,634) 193,796 (111%)
Income tax 23,710 (69,231)
Profit for the year - attributable to the owners of the parent 2,076 124,565 (98%)
Earnings per share
Basic and diluted (cents) 17.0 1,022.7
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2012
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Profit for the year 2,076 124,565
Other comprehensive income
Exchange differences on translating foreign operations (4,582) 1,855
Realised gains on available-for-sale financial assets recycled through the statement
of financial performance (81,896) (14,210)
Impairment losses transferred to the statement of financial performance 6,240 7,395
Net unrealised gains on available-for-sale financial assets 139,621 25,724
Income taxation relating to components of other comprehensive income (20,132) (2,032)
Total comprehensive income for the year attributable to the owners of the parent 41,327 143,297 (71%)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2012
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Assets
Land, buildings and equipment 73,049 94,131
Intangible assets 50,433 56,424
Investments in associates 5,036 4,902
Financial assets 3,161,000 2,920,147
Prepayment of defined-contribution fund 141,065 142,300
Deferred acquisition costs 95,308 94,504
Reinsurance assets 908,562 585,910
Income taxation asset 5,284 19,652
Cash and cash equivalents 611,945 981,803
Total assets 5,051,682 4,899,773 3%
Equity and liabilities
Total equity 2,019,733 2,014,945
Deferred taxation liability 8,094 19,451
Employee benefit obligation 60,224 64,551
Financial liabilities held at amortised cost 109,292 183,831
Insurance liabilities 2,206,203 1,820,397
Deferred reinsurance commission 16,346 14,610
Trade and other payables 620,801 767,265
Provisions 10,989 14,723
Total equity and liabilities 5,051,682 4,899,773 3%
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 31 December 2012
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Share capital and premium 4,650 4,650
Translation reserve (39,635) (35,053)
Revaluation reserve 354,651 310,818
Statutory contingency reserve 34,656 314,095
Retained income 1,665,411 1,420,435
Balance at end of the year 2,019,733 2,014,945
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2012
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Cash effect from operating activities (141,573) (14,225)
- Cash flows from operations (358,894) (194,234)
- Dividend and interest income 212,648 206,783
Taxation refunded/(paid) 4,673 (26,774)
Cash effect from investing activities (191,707) (64,928)
Cash effect from financing activities (36,539) (12,180)
Net movement in cash and cash equivalents (369,819) (91,333) (305%)
Translation (losses)/gains on cash and cash equivalents (39) 682
Cash and cash equivalents at beginning of the year 981,803 1,072,454
Cash and cash equivalents at end of the year 611,945 981,803 (38%)
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.
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 2012 are
consistent with those applied in the Annual Financial Statements for the year ended 31 December 2011.
2.Financial highlights
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Profit for the year 2,076 124,565 (98%)
Adjusted for:
Losses on disposal of property, plant and equipment 664 683
Gains on disposal of available-for-sale financial assets (81,896) (14,210)
Gains on sale of business and associate (3,286)
Impairment of available-for-sale financial assets 6,240 7,395
Tax effect 14,612 1,207
Headline earnings (61,590) 119,640 (151%)
Headline (loss)/earnings per share (cents) (505.7) 982.3
Earnings per share (cents) 17.0 1,022.7
Ordinary dividends declared per share (cents) 200 200
Dividends paid per share (cents) 300 100
Number of shares in issue 12,179,500 12,179,500
Net asset value per share (cents) 16,583 16,544
Surplus asset ratio 2.3 2.3
International solvency margin (%) 68.7 67.7 2%
Combined ratio (%) 108.8 97.9 (11%)
3. Segmental information
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Gross written insurance premium
Property 1,404,988 1,391,949
Transport 114,951 134,608
Motor 1,667,837 1,733,932
Engineering 323,154 355,940
Guarantee 84 (2,250)
Liability 110,701 106,411
Accident and health 144,819 169,438
Total insurance premium income 3,766,534 3,890,028 (3%)
Net income
Property 953,845 948,487
Transport 83,982 122,468
Motor 1,623,315 1,682,462
Engineering 265,390 257,706
Guarantee 679 (1,467)
Liability 75,169 73,917
Accident and health 78,431 81,285
Investment income and other 316,310 250,374
Net income 3,397,121 3,415,232 (1%)
General insurance result
Property (161,115) (54,868)
Transport 6,754 54,401
Motor (151,919) (7,202)
Engineering 22,288 22,115
Guarantee 108 20,695
Liability 4,478 (3,444)
Accident and health 21,093 30,597
Net underwriting result (258,313) 62,294 (515%)
Attributable investment income 89,770 80,549
General insurance result (168,543) 142,843 (218%)
4. Gross written premium by company
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Zurich Insurance Company South Africa Limited 3,403,040 3,488,464
Zurich Insurance Company Botswana Limited 248,433 223,123
Zurich Risk Financing SA Limited 113,981 177,052
Zurich Life SA Limited 1,080 1,389
Total insurance premium income 3,766,534 3,890,028 (3%)
5. Supplementary income statement
Year ended Year ended
31 Dec 2012 31 Dec 2011
Rand thousands Audited Audited % Change
Gross written insurance premium 3,766,534 3,890,028
Insurance premium ceded to reinsurers (828,304) (912,495)
Net written insurance premium 2,938,230 2,977,533 (1%)
Net insurance premium earned 2,934,445 3,001,609
Net insurance claims (2,202,655) (1,977,622)
Net commission incurred (439,645) (460,319)
Operating expenses (550,458) (501,374)
Net underwriting result (258,313) 62,294 (515%)
Attributable investment income 89,770 80,549
General insurance result (168,543) 142,843 (218%)
Impairment of available-for-sale financial assets (6,240) (7,395)
Non-technical expenses (57,638) (77,234)
Other investment 134,418 127,748
Investment expenses (5,527) (6,376)
Net realised gains on disposal of investments 81,896 14,210
(Loss)/profit before tax (21,634) 193,796 (111%)
Income tax 23,710 (69,231)
Profit for the year 2,076 124,565 (98%)
COMMENTS
The profit for the year is R2.1 million compared to a profit in the prior year of R124.6 million. The underwriting result is a deficit of
R258.3 million compared to a surplus of R62.2 million in the prior year. The general insurance result, inclusive of attributable investment
income, shows a deficit of R168.5 million compared to a surplus of R142.8 million.
Premium volumes have dropped by 3% to R3.77 billion compared to the prior year (2011: R3.89 billion), impacted by a continuation of soft
market conditions and by the decision to run off the cell captive operation, Zurich Risk Financing SA Limited. Premium volumes in 2013 are
expected to be strengthened through the delivery of a focused growth strategy flowing through from 2012, and this is already yielding results.
Claims expenses have increased by 11% to R2.2 billion (2011: R1.98 billion) in a year characterised by some of the largest and most volatile
fire and weather events this company has seen in many years. While the impact was mainly in the property and motor portfolios, all lines of
business were affected.
Operating expenses increased by 10% to R550.5 million (2011: R501.4 million) as the Company positioned itself for various growth initiatives.
Attributable investment income at R89.8 million (2011: R80.5 million) is higher than the prior year due to continued strong working capital management.
The financial position has remained stable as evidenced by the net asset value per share at R165 (2011: R165 per share) and the international
solvency which is 68.7% (2011: 67.7%). In addition, the Company has maintained its AA credit rating.
Changes in Directorate
Edwyn ONeill was appointed Chief Executive Officer on 21 May 2012 succeeding Guy Munnoch who retired from the Company. Pieter Rörich resigned
as a Non-executive Director with effect from 25 May 2012. Dolly Mokgatle, a member of the Board since 2007, was appointed to the position of Chairman
following Gerard de Rauville's retirement on 1 November 2012. John Vices appointment to the Board as an Independent Non-executive Director was
confirmed on 23 January 2013.
Audit
The audit report of the independent auditor, PricewaterhouseCoopers Inc., on the consolidated financial statements for the year ended 31 December 2012
contains an unmodified audit opinion and is available for inspection at the Companys registered office together with the financial statements identified
in the auditors report. The audit report of the same independent auditor on the summary consolidated financial statements, which were derived from the
audited consolidated financial statements, also contained an unmodified opinion and is available for inspection at the Companys registered office together
with the summary consolidated financial statements identified in the auditors report.
Compliance
The Group complies in all material respects with the King Report on Corporate Governance in South Africa and the Listings Requirements of the JSE Limited.
Cash Dividend Declaration No. 79
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 2012.
The Company has utilised secondary tax credits amounting to 200 cents per share. The gross dividend is therefore not subject to local dividend tax. The
resultant net dividend amount is 200 cents per share for 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: Wednesday, 6 February 2013
Last day to trade in order to participate in the dividend: Friday, 22 February 2013
Shares commence trading ex dividend from the commencement of business on: Monday, 25 February 2013
Record date: Friday, 1 March 2013
Payment date: Monday, 4 March 2013
Share certificates may not be dematerialised or rematerialised between Monday, 25 February 2013, and Friday, 1 March 2013, both days inclusive.
By order of the Board
Johannesburg
6 February 2013
Board of Directors
JPG de Rauville (Independent Non-executive Chairman) retired 1 November 2012, DD Mokgatle (Independent Non-executive Chairman),
GRC Munnoch (Chief Executive Officer) retired 20 May 2012, JE ONeill (Chief Executive Officer) appointed 21 May 2012,
P Bezuidenhout (Chief Financial Officer), JPM Deiss (Non-executive), S Mered (Non-executive), PC Rörich (Non-executive) resigned 25 May 2012,
JM Vice (Independent Non-executive) appointed 23 January 2013, MN Mbekeni (Independent Non-executive), SG Morris (Independent Non-executive)
Transfer Secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001
Group Company Secretary and Registered Office
G Kostopoulos
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
www.zurich.co.za
7 February 2013
Date: 07/02/2013 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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