Assupol reports record profit and declares maiden dividend

Core profit also rises sharply on greater cost efficiencies.

Pretoria-headquartered long-term insurance group Assupol produced exceptional results for the year ended 30 June 2014, with its net profit soaring by 113% to R570.5 million on the back of a once-off gain from its revised reinsurance modelling.

The group, whose main subsidiary is 101 year-old Assupol Life Limited, reported a 9% rise in net premium income to R1.64 billion. The capital adequacy ratio increased to 272% from 197% in 2013.

Assupol’s profit surge through the half a billion rand mark was mainly due to a refinement made to its reinsurance modelling. This resulted in an increase in net assets of R278 million.

On a sustainable basis, net earnings also grew strongly, showing an 18% rise, while the group’s return on equity was a healthy 35%. Group embedded value increased by 32% to R2.24 billion.

A maiden dividend of 30c per ordinary share has been declared, as well as a special dividend of 48c per ordinary share. The record date for participation in the dividend is 24 October 2014 and the dividend payment date is 31 October 2014. This pay-out will also greatly benefit the Assupol Community Trust, which owns 25.2 million Assupol shares.

“We were able to produce record results from our core business activities, assisted mainly by a rise in individual policy sales and a focus on improving cost efficiencies,” said Rudi Schmidt, CEO of Assupol Holdings. “This is a strong endorsement of our business model, our dedicated staff and our efficient systems that we were able to show strong growth in a very challenging economic environment,” added Schmidt, citing low economic growth, pressure on disposable incomes and the recent industrial actions as major adverse influences.

“While it is important to note that 2014’s bumper net profit will not be repeated in 2015, we are confident that our core, sustainable earnings will continue to grow in line with our improved strategies for leveraging our products through expanding our distribution models,” added Schmidt.

Assupol’s core market is government employees, but is also making inroads into the private sector through its portfolio of products which include innovative funeral plans, life insurance and retirement annuities.