Wrap Text
Announcement of the unaudited Group results
for the six months ended 30 June 2015
Zurich Insurance Company South Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1965/006764/06) Share code: ZSA
ISIN: ZAE000094496 ("Zurich South Africa" or "the Group" or "the Company")
Announcement of the unaudited Group results
FOR THE SIX MONTHS ENDED 30 JUNE 2015
ZURICH REPORTS A CONSOLIDATED PROFIT OF R0.1 MILLION FOR THE PERIOD ENDED JUNE 30, 2015
The Company's turnaround strategy is progressing as planned and is reflected in the positive movement of the results when compared to the prior year.
The improvement in the loss ratio of 11% over the prior year is attributable to focused attention to claims cost control and underwriting initiatives that
were implemented in 2014.
The deliberate corrective underwriting action taken on unprofitable portfolios within the Personal and Commercial segments has impacted premium volumes
which increased by 1% to R1.97 billion compared to the prior year of R1.96 billion. Growth and retention strategies are beginning to take hold on selected
books of business. Net earned premium reduced by 12% to R1.4 billion from R1.6 billion in June 2014.
The underwriting result is a deficit of R108 million compared to a deficit of R199 million in June 2014. The general insurance result, inclusive of
attributable investment income, shows a loss of R58 million compared to a loss of R172 million in June 2014.
Claims expenses have decreased by 25% from R1.2 billion in June 2014 to R0.9 billion.
Net commission decreased by 4% as a result of a change in the business mix. Operating expenses during the period were well managed and contained, with an
increase of 6% to R329 million (June 2014: R310 million).
Attributable investment income increased by 9% to R50 million (June 2014: R46 million) due mainly to an increase in interest rates. The investment
portfolio remained stable with limited realised gains recorded.
International solvency improved from 55% to 65% due to lower premium volumes and is in excess of the targeted solvency levels of 45% to 50%. The net asset
value of the Company dropped by 1% from 149 cents to 147 cents. The surplus asset ratio increased to 1.8 (2014:1.7).
Shareholders are reminded of the notice convening The Scheme Meeting which will be held at the Company’s Registered Office at 10:00 on Friday, 4 September 2015
to consider and, if deemed fit, pass the resolutions required to authorise and effect the implementation of the scheme of arrangement as set out in the circular
posted to shareholders on Friday, 7 August 2015.
Changes in Directorate
JPM Deiss retired and accordingly resigned as a Non-executive Director with effect from 27 May 2015.
Dolly Mokgatle, Chairman of the Board said: "I would like to thank Joseph for his commitment, wisdom and unfailing support. The global insight he brought
to the Company during his tenure was of great value to each one of us."
Audit
The information set out in this announcement has not been audited or reviewed by the Company's auditors, PricewaterhouseCoopers Inc.
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.
Dividend
The Directors have decided not to declare an interim cash dividend for the six months ended 30 June 2015.
By order of the Board
Johannesburg
26 August 2015
Board of Directors
DD Mokgatle (Independent Non-executive Chairman), JE O'Neill (Chief Executive Officer), Y van Dyk (Chief Financial Officer),
C Molepe (Chief Operating Officer), P Manley (Non-executive), JM Vice (Independent Non-executive),
MN Mbekeni (Independent Non-executive), SG Morris (Independent Non-executive)
Transfer Secretaries
Computershare Investor Services (Pty) 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 six months ended 30 June 2015
Six months ended Six months ended % change Year ended
30 June 2015 30 June 2014 31 Dec 2014
Rand thousands Unaudited Unaudited Audited
Gross written insurance premium 1,967,902 1,957,483 1% 3,697,871
Insurance premium ceded to reinsurers (556,293) (350,219) (723,503)
Net written insurance premium 1,411,609 1,607,264 (12%) 2,974,368
Net insurance premium earned 1,422,972 1,609,048 (12%) 3,056,228
Reinsurance commission earned 38,759 51,823 99,724
Investment income 118,688 117,168 221,444
Other income 1,609 2,742 21,085
Net realised gains on available-for-sale financial assets 1,715 43,149 194,213
Profit on sale of subsidiary 4,530 - -
Net income 1,588,273 1,823,930 (13%) 3,592,694
Net insurance claims (932,111) (1,236,335) (2,257,670)
Acquisition costs (308,196) (332,215) (652,197)
Administrative and other operating expenses (331,097) (312,613) (617,929)
Investment expenses (2,700) (2,333) (6,094)
Impairment of available-for-sale financial assets (5,513) - (16,791)
Loss on sale of associate - - (3,426)
Expenses (1,579,617) (1,883,496) (16%) (3,554,107)
Profit/(loss) from operating activities 8,656 (59,566) 38,587
Finance costs (10,540) (7,944) (17,374)
Share in associates - (83) 263
Profit/(loss) before tax (1,884) (67,593) 21,476
Income taxation 1,998 27,564 20,045
Profit/(loss) for the year 114 (40,029) 41,521
Earnings per share basic and diluted (cents) 1 (329) 341
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the six months ended 30 June 2015
Six months ended Six months ended % change Year ended
30 June 2015 30 June 2014 31 Dec 2014
Rand thousands Unaudited Unaudited Audited
Profit/(loss) for the year 114 (40,029) 41,521
Other comprehensive income
Exchange differences on translating foreign operations 2,942 - 214
Realised gains on available-for-sale financial assets
recycled to the statement of financial performance (1,715) (43,149) (194,213)
Impairment losses transferred to statement of financial performance 5,513 - 16,791
Net unrealised gains on available-for-sale financial assets 3,669 78,000 54,449
Income taxation relating to components of other comprehensive income (4,353) (19,138) 27,976
Total comprehensive income/(loss) for the year 6,170 (24,316) (125%) (53,262)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2015
Six months ended Six months ended % change Year ended
30 June 2015 30 June 2014 31 Dec 2014
Rand thousands Unaudited Unaudited Audited
Cash effect from operating activities 33,983 (154,422) (123,594)
- Cash flows from operations (71,393) (270,372) (331,238)
- Dividend and interest income 108,146 109,224 204,071
- Taxation refunded/(paid) (2,770) 6,726 3,573
Cash effect from investing activities (114,839) (6,981) (3,268)
Cash effect from financing activities - (24,359) (24,359)
Net movement in cash and cash equivalents (80,856) (185,762) (56%) (151,221)
Translation losses on cash and cash equivalents 786 114 (45)
Cash and cash equivalents at beginning of the year 542,013 693,279 693,279
Cash and cash equivalents at end of the year 461,943 507,631 (9%) 542,013
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
Six months ended Six months ended % change Year ended
30 June 2015 30 June 2014 31 Dec 2014
Rand thousands Unaudited Unaudited Audited
Assets
Land, buildings and equipment 37,148 45,694 43,282
Intangible assets 100,957 57,054 85,740
Investments in associates - 5,555 -
Financial instruments 3,533,333 3,466,870 3,127,451
Prepayment of defined-contribution fund 92,861 112,155 109,573
Deferred acquisition costs 81,373 91,767 75,229
Reinsurance assets 894,716 584,438 617,634
Deferred taxation asset 154,818 113,155 150,344
Income taxation asset 184 1,157 3,496
Property classified as held for sale - - 2,920
Cash and cash equivalents 461,943 507,631 542,013
Total assets 5,357,333 4,985,476 4,757,682
Equity and liabilities
Total equity 1,794,861 1,813,709 1,792,536
Employee benefit obligation 44,493 42,919 68,795
Reinsurance liability under cell management 24,134 72,911 24,048
Insurance liabilities 2,198,460 2,122,982 1,985,184
Deferred reinsurance commission 32,616 27,919 29,348
Income tax liability 787 413 -
Trade and other payables 1,255,601 888,542 848,735
Provisions 6,381 16,081 9,036
Total equity and liabilities 5,357,333 4,985,476 4,757,682
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 30 June 2015
Six months ended Six months ended % change Year ended
30 June 2015 30 June 2014 31 Dec 2014
Rand thousands Unaudited Unaudited Audited
Share capital and premium 4,650 4,650 4,650
Translation reserve (28,534) (31,690) (31,476)
Revaluation reserve 314,248 421,844 311,134
Share based payment reserve (12,183) (16,111) (8,338)
Statutory contingency reserve 41,617 38,854 38,761
Retained income 1,475,063 1,396,162 1,477,805
Balance at end of the year 1,794,861 1,813,709 (1%) 1,792,536
NOTES
These Group results have been prepared under the supervision of the Chief Financial Officer, Yulandi van Dyk, CA (SA), in compliance with the requirements
of the Companies Act.
1. Accounting policies and basis of preparation
The condensed interim financial results for the six months ended 30 June 2015 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, as amended. The principal policies used in the presentation of the unaudited results for the
period ended 30 June 2015 are consistent with those applied in the Annual Financial Statements for the year ended 31 December 2014.
Six months ended Six months ended % change Year ended
30 June 2015 30 June 2014 31 Dec 2014
Rand thousands Unaudited Unaudited Audited
2. Financial highlights
Profit/(loss) for the year 114 (40,029) (100%) 41,521
Adjusted for:
(Gains)/losses on disposal of property, plant and equipment (4,541) 459 13
Gains on disposal of available-for-sale financial assets (1,715) (43,149) (194,213)
Loss on sale of associate - - 3,426
Impairment of available-for-sale financial assets 5,513 - 16,791
Tax effect 199 7,166 31,750
Headline loss (429) (75,553) (99%) (100,712)
Headline loss per share (cents) (4) (620) (827)
Earnings per share (cents) 1 (329) 341
Ordinary dividends declared per share (cents) - - -
Dividends paid per share (cents) - 200 200
Number of shares in issue 12,179,500 12,179,500 12,179,500
Net asset value per share (cents) 14,737 14,891 (1%) 14,718
Surplus asset ratio 1.8 1.7 2.0
International solvency margin (%) - annualised 64.6 55.4 17% 60.3
Combined ratio (%) 107.6 112.4 (4%) 111.5
3. Segmental information
Gross written insurance premium
Property 749,912 687,253 1,345,337
Transport 66,598 73,444 131,090
Motor 738,901 870,087 1,579,920
Engineering 210,713 151,508 316,879
Guarantee 10,431 16,907 30,568
Liability 100,238 91,119 174,839
Accident & Health 91,109 67,165 119,238
Total insurance premium income 1,967,902 1,957,483 1% 3,697,871
Net income
Property 453,025 522,510 988,098
Transport 42,275 50,300 95,367
Motor 713,130 860,155 1,617,758
Engineering 135,503 127,313 262,503
Guarantee 12,037 15,452 27,026
Liability 29,692 37,347 74,907
Accident & Health 76,069 47,795 90,293
Investment income & other 126,541 163,058 436,742
Net income 1,588,273 1,823,930 (13%) 3,592,694
General insurance result
Property (34,378) (83,696) (153,932)
Transport 9,588 (11,351) (32,989)
Motor (56,872) (100,526) (163,897)
Engineering 4,020 (16,313) 8,430
Guarantee (24,389) 862 (1,691)
Liability 6,280 (3,017) (4,400)
Accident & Health (12,312) (3,509) (2,901)
Net underwriting results (108,063) (217,550) (50%) (351,380)
Attributable investment income 49,849 45,839 85,823
General insurance result (58,214) (171,711) (66%) (265,557)
4. Gross written premium by Company
Gross written insurance premium by Company
Zurich Insurance Company SA Limited 1,874,393 1,837,397 3,484,869
Zurich Insurance Company Botswana Limited 82,187 99,380 177,326
Zurich Risk Financing SA Limited 8,468 17,707 29,878
Zurich Life SA Limited 2,854 2,999 5,798
Total insurance premium income 1,967,902 1,957,483 1% 3,697,871
5. Supplementary income statement
Gross written insurance premium 1,967,902 1,957,483 3,697,871
Insurance premium ceded to reinsurers (556,293) (350,219) (723,503)
Net written insurance premium 1,411,609 1,607,264 (12%) 2,974,368
Net insurance premium earned 1,422,972 1,609,048 3,056,228
Net insurance claims (932,111) (1,236,335) (2,257,670)
Net commission incurred (269,437) (280,392) (552,472)
Other operating expenses (329,487) (309,871) (597,466)
Net underwriting result (108,063) (217,550) (50%) (351,380)
Attributable investment income 49,849 45,839 85,823
General insurance result (58,214) (171,711) (66%) (265,557)
Impairments (5,513) - (16,791)
Other investment income 62,828 63,302 115,705
Investment expenses (2,700) (2,333) (6,094)
Net realised gains on disposal of investments 1,715 43,149 194,213
Profit/(loss) before tax (1,884) (67,593) 21,476
Income tax 1,998 27,564 20,045
Profit/(loss) for the year 114 (40,029) 41,521
Web address
www.zurich.co.za
28 August 2015
Date: 26/08/2015 05:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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