Zurich Insurance Company South Africa’s year-end results

Zurich Insurance Company South Africa Limited (Zurich) announced that profit before tax was maintained at a similar level as was achieved in the previous year.

Gross premium income rose an expected 12.5%. CEO Nick Beyers said: “This increase was achieved despite a reduction in the contribution received from our Zimbabwean subsidiary due to currency devaluation. The growth in premium, although slightly lower than in the period to June 2007, is still satisfactory in a challenging market.”

In 2007, the Group benefited from a net pension fund surplus of R43 million including related investment income (2006: R97 million, after accounting for a R133 million expense of conversion from a defined benefit to a defined contribution pension fund).

The increase in both the number and the quantum of claims continued into the second half of the year. This resulted in an increase in claims of some 15%. The main area of concern remains the motor book.

“Corrective action continues to be taken on the motor account. The implementation of a revised procurement policy, an actuarial rating structure, disciplined underwriting and the cancellation of poor performing business will be our focus for 2008,” Beyers said.

While expenses increased by 11%, after allowing for the effects of the offering in respect of the Pension Fund conversion to employees, the expense ratio improved to 9.6% (2006: 10%).

Investment income showed an increase of R42 million which reflected the enhanced interest rates received by the Group on funds deposited at institutions. The through income fair value adjustment continued to show a loss. This was offset by the increase in realised gains on the disposal of equities held as available-for-sale. Investment related income therefore increased over 2006 levels by 16.4%.

The Group’s balance sheet remains strong with an increase in net asset value of 8%. Solvency is satisfactory at 53.2% and, having taken this into consideration, a final dividend of 440 per share was declared bringing the total normal dividend for the year to 700 per share (2006: 650 cents per share).

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