Gross premium income grew by 8.1% (2008: 21.7%) to R2.9 billion (2008: R2.6 billion). The commercial portfolio, which represents 69% of total premiums, grew by 10.7% and the personal portfolio by 16.2% following rating adjustments and real growth in the portfolio. Risk Financing contracted following deliberate action by management.

The underwriting result declined to a deficit of R24.5 million from a surplus of R10.8 million during the same period in 2008 and the general insurance result (inclusive of attributable investment income) declined from R65.6 million to R30.7 million.

The first half of 2009 saw a continuation of the tough economic conditions that have impacted the industry. Claims at R1.7 billion are up 11% on 2008 (R1.5 billion). While the fires in Gauteng and Cape Town contributed to the cost of claims, the major concern remains the motor book where losses have remained stubbornly high despite continued corrective action being taken.

Total investment income was most satisfactory in the current market environment and follows further rebalancing of the investment portfolio. Dividend and interest income increased by 77% to R140.6 million and was unaffected by the losses suffered on the bond portfolio last year. The sale of equities realised gains of R23 million (2008: R97 million).

The Group’s balance sheet and cash flows remain strong. At 43.1%, the solvency ratio remains within the target range as set by the Board. Net asset value decreased by 1.4% to R154.38 per share at the end of the period.

Having regard to the 29.6% decrease in earnings per share, the underwriting loss and ongoing uncertainty regarding the performance of the motor portfolio as well as volatility in investment markets, the Directors have decided to further strengthen the solvency of the Company by not declaring an interim dividend.

The Board recognises the cyclical nature of short-term insurance results and investment markets and cautions that the results for the six months are not necessarily indicative of the outcome for the remainder of the year.

Changes in Directorate
The Board welcomed Pieter Bezuidenhout as an Executive Director. Claudia Dill a Non-Executive, Non-Independent Director resigned on 19 August. Nichol Beyers will retire as Chief Executive Officer and Executive Director on 5 October 2009 and, subject to regulatory approval, will be replaced by Gavin (Guy) Munich.

Compliance
The Group complies in all material respects with the Listings Requirements of The JSE Limited and the King Report Code of Corporate Practices and Conduct.

By order of the Board

15 September 2009
Johannesburg