The rating adjustments that were necessary following the events of September 11 last year in order to ensure appropriate pricing levels have continued for the first six months of this year. Quality capacity is available only at a premium and the company has benefited from the ever-growing demand for insurers that are considered to be financially stable.

These factors, together with the continuing market consolidations and inflationary increases in sums insured, have resulted in the company achieving a growth in gross written premium of 23% in 2002.

The underwriting account shows a profit of R4,9 million (2001 – loss of R16,6 million) in spite of the poor performance of the motor account where we have seen the average cost of repairs escalate by more than 17,2% as a result of the impact of the weaker rand on imported parts and increased labour costs.

Remedial action for the remainder of the year will include further rating increases on selected under-performing portions of this business, the separation and centralisation of our personal lines book from our commercial business and a continued focus on our group scheme business, as well as improved management of our claims processes.

In addition, our preference to write fire and allied risks following the re-rating of business to realistic levels is leading to a better balance of our overall portfolio.

Investment income was marginally lower at R64,8 million (2001 – R68,2 million). This reduction was due to the decline in dividend income where we benefited from special dividends amounting to R6,3 million in 2001.

The exceptional item of R14 million is as a result of the cancellation of software licences and IT outsourcing agreements for the Golden Eagle 'e-commerce' business to business solution where a more cost effective long term alternative was identified.

The surplus on disposal of investments of R48,9 million (2001 – R55,3 million) is due to the continuing programme of disposals of equities to re-balance the portfolio of investments.

The solvency margin stands at 47,3% down from the 2001 year end of 53,9% due to the substantial growth in premium income in the period.