Results for the six months ended 30 June 2008 Message from Chief Executive Officer Nick Beyers
The Board approved our half year results on 28 August, and the salient figures are given below. Full details, as published in the press, are contained in the attached leaflet.
Rand thousands
Insurance premium revenue
R2,656,792
Net profit attributable to members of the Company
R151,186
Investment income
R122,717
Total assets
R5,123,481
Solvency margin (%)
49.1
Although the industry continues to operate in a competitive market, Zurich showed strong premium growth with premium revenue rising by 21.7% compared to the same period last year. This is because of our robust business strategy and ability to adapt to tough trading conditions.
The first six months saw a higher incidence of claims and increased claims costs on the property and motor accounts. Also, two severe, unseasonal floods in KwaZulu Natal in March and June negatively affected the underwriting result.
Despite corrective action having been taken on the motor account, which in some cases included premium increases of more than 20%, the result continued to be impacted negatively due to an increase in the incidence of accidents and crime related losses. Motor repair costs, including the cost of repairing imported vehicles, continued to escalate well above inflation. We will continue to take all the steps necessary to limit the effect on the underwriting result.
Gains on the disposal of available-for-sale investments were higher than the previous period as the Group continued to rebalance its equity portfolio in line with its investment strategy.
While net profit after tax was up by 23.1%, headline earnings were 28.5% lower compared to the same period last year, mainly as a result of the reduced underwriting result, as well as the unrealised losses on the Group’s bond portfolio.
The Group’s balance sheet remains strong with cash resources of approximately R2 billion (R1.5 billion: 2007), representing a R400 million improvement since December 2007.
Although we expect the challenges which we encountered in the first six months to persist for the remainder of the year we are confident that we will weather this storm. Insurers are used to coping with adversity and we will successfully navigate our way through this cycle, just as we have done before.
In closing, I’d like to thank you again for your loyalty and continued support.
