Rapidly growing life assurance and financial services group, Assupol, reported strong results for the year ending 30 June 2015. The Group reported an impressive increase in its adjusted operating profit1 by 16%, compared to 2014. This in spite of headwinds from an ongoing slowdown in the South African economy and low investment market returns.
In the previous financial year a refinement of the reinsurance modeling boosted profits by R278 million. This was not repeated in 2015 as a result the 2015 net profit after tax of R463.3 million showed a decrease of 19%.
In 2014, 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 modeling. 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.
Commendable real growth
The Group operates through two focused wholly-owned subsidiaries – Assupol Life Ltd and Assupol Investment Holdings (Pty) Ltd. Assupol Life Ltd is an authorised financial services provider offering Funeral Cover, Life Cover, Savings Products and Retirement Annuities. Assupol Investment Holdings is an investment-holding company.
Commenting on the Group’s results and its outlook, Group Chief Executive Officer Rudi Schmidt said, “Exceptional growth in new individual policies sales was achieved. The value of new business grew by a commendable 70%. This was as a result of efficient expense management, a better than expected mortality experience and exceptional sales volumes. Assupol has more than 640 000 policies and this number increased by 11%.”
The price of the Group’s over-the-counter (OTC) traded shares also performed exceptionally well over the financial year with a 57% increase. An ordinary dividend of 38c per qualifying share has been declared, as well as a special dividend of 61c per qualifying share. The special dividend was as a result of actuarial releases relating to the positive mortality experience and the efficient management of expenses. The record date for participation in the dividend is 16 October 2015 and the dividend payment date is 23 October 2015.
Awarded efforts
One of the highlights for the Group was being awarded the “Best Life Assurer, Southern Africa 2015” award by Capital Finance International (CFI), a leading London-based business and finance magazine and online publication. It was nominated for this prestigious award by the International Finance Corporation, one of Assupol’s core shareholders.
In Schmidt said, “Although the 2016 financial year is expected to be just as challenging as 2015, Assupol is confident in achieving further real growth through its highly focused sales strategies, dedicated workforce, cost efficiency efforts, and plans to continue diversifying and growing its products and distribution channels.”
A strong year
A successful life insurer must identify and provide solutions for a unique set of client needs.
“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 Schmidt.
“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.
Results highlights
• Adjusted operating profit1 increased by 16%
• Return on equity achieved of 23%
• Value of new business grew by 70% to R180.9 million
• Group embedded value increased from R2.2 billion to R2.56 billion
• Capital adequacy ratio at 2.58 times
• Ordinary dividend increased by 26% to 38c per share
• Special dividend of 61c per share
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