The excellent underwriting performance reported in the second half of 2003 continued in the first half of 2004 with an underwriting profit of R105,7m up from R21,8m in 2003. Gross written premiums were marginally up on 2003 at R1 572m. This increase is considered satisfactory following the impact of the cancellation of unprofitable business in 2003 and the continued adherence to strict underwriting principles and appropriate product pricing.

All underwriting accounts performed satisfactorily with the motor account, in particular, now performing in line with other accounts. Claims continue to be closely monitored with controls over claims costs being improved following the introduction of motor vehicle assessment centres in Johannesburg, Cape Town and Durban.

The absence of major weather related events, the presence of a lower inflationary environment and stable crime rates have enabled pricing to be held at current levels while maintaining the improved level of underwriting performance.

Investment income at R64,4m is R9,3m lower than 2003 due to lower interest rates and the impact of an
AC133 adjustment of R8,5m in respect of unrealised losses on the Company’s bond trading portfolio. The equity disposal programme previously agreed upon continues with the surplus of R23,0m (2003: R5,7m) arising on the disposal of investments.

Headline earnings have increased by 71.3% to 940.0 cents per share (2003: 548.7 cents per share). The solvency margin is 49.7% compared to 47.1% at the end of 2003 and 41.5% at 30 June 2003.

While the Directors are confident regarding the Company prospects for the remainder of the year, it should be noted that short term insurance results can fluctuate and therefore figures for the first six months are not necessarily indicative of the year-end result.