Reviewed Group results for the year ended 31 December 2006
Johannesburg, February 26, 2007. Short term insurer SA Eagle, a 73.6% owned subsidiary of the Swiss based Zurich Group posted satisfactory year-end results today.
The financial results declined in line with market expectations,
mainly as a result of weakened underwriting performance. Earnings
per share decreased by 17.6% and headline earnings per share
(which excludes realised gains on investments and property
and equipment) increased by 11.3%. The headline earnings per
share includes the income on the net pension fund surplus of
R98 million and the tax effect thereon of R28 million. If these
amounts were excluded the headline earnings per share would
decrease by 18.3%.
Despite the competitive market, premium revenue grew by 11.4%
to R3,910.6 million (2005: R3,509.7 million).
Investment returns for the year were highly satisfactory
and dividend income increased as a result of special dividends
from listed equities. Investment income also increased to R202.2
million (2005: R136.0 million) in line with higher interest
rates and improved cash flow.
According to Managing Director, Nick Beyers, the softening
insurance cycle has continued to place pressure on underwriting
performance. The Group, however, is focusing on selective growth
while managing overall profitability. “The underwriting
result has been significantly influenced by an increase in
the number of claims and the escalation in the claims value
across all classes of business. Adverse weather conditions
including storms in the Eastern and Western Cape also contributed
to an increase in claims,” he said.
The motor account, in particular, has been negatively impacted
by an increase in the incidence of vehicle accidents and hijackings.
Beyers said: “Continuous corrective action is being taken
to address the profitability of this account. This includes
the implementation of a new rating formula resulting in better
risk selection and more appropriate pricing.”
Solvency improved to 55.8% (2005: 52.9%) remaining above
the Group stated policy of maintaining solvency in the 40%
to 50% range. In line with current dividend policy, the directors
declared a final dividend of 430 cents per share bringing the
total dividend to 650 cents per share (2005: 800 cents per
share).
Zurich Financial Services Group (Zurich) is an insurance-based
financial services provider with a global network of subsidiaries
and offices in North America and Europe as well as in Asia
Pacific, Latin America and other markets. Founded in 1872,
the Group is headquartered in Zurich, Switzerland. It employs
approximately 55,000 people serving customers in more than
120 countries.
