Results for the year ended December 31, 2008 Message from Chief Executive Officer Nick Beyers
The Board approved our year-end results on March 24, 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
R5,316,490
Net profit attributable to members of the Company
R210,457
Total assets
R5,467,010
Solvency margin (%)
42.6
While the industry continues to operate in a competitive market, we showed strong premium growth with premium revenue rising by 20.8% compared to the same period last year.
The year was characterised by both a higher incidence of claims and increased claims costs on the property and motor accounts. The frequency and intensity of unseasonal storms negatively affected the underwriting result. In spite of corrective action taken on the motor account, particularly in personal lines which included premium increases of more than 20%, the result continued to be impacted negatively due to an increase in the number of accidents and crime related losses. Motor repair costs, including the cost of repairing imported vehicles, continued to escalate well above inflation mainly due to currency depreciation. In response to this, we have implemented actuarial rating which will improve our risk selection and pricing. This, combined with an increased focus on portfolio management in the personal lines segment, are intended to improve the underwriting result in 2009.
In addition to the expected normal inflationary increases, the apparent expense ratio deterioration from 2007 to 2008 was mainly due to a non-recurring pension benefit surplus taken in 2007.
Despite our conservative equity strategy, where we limit overall exposure to equities, we had to account for a diminution in the value of our equity portfolio in line with the market, as well as the impairment of certain equities. As expected we saw an increase in investment returns on our bond and cash portfolios.
The balance sheet and cash flows remained strong and even though the net asset value declined, mainly due to the significant drop in equity markets in the current year, the solvency at 42.6% remained within the range targeted by the Group.
The decrease in the effective tax rate from 30.9% to 21.3% was mainly due to a larger component of both non-taxable dividend income and non-taxable dividend gains.
I’d like to take this opportunity to thank you, our business partners, for your loyalty and continued support.
