The country’s second-biggest short-term insurer, Mutual & Federal, on Monday reported a 93% increase in headline earnings per share from 124 cents to 239 cents per share for the six months ended June.
Headline earnings for the half-year increased from R303-million to R593-million.
This was on the back of a 10% growth in gross premiums from R3,59-billion to R3,96-billion.
The group declared an interim dividend per share of 40 cents — a 60% increase on the 25-cent dividend declared for the previous comparable half-year.
“The underwriting surplus was most satisfactory and the favourable result in the commercial division reflects the relatively low level of commercial and industrial claims.
“This outturn was also positively influenced by the results of Credit Guarantee Insurance Corporation (CGIC), which, with effect from January 1 2005, have been consolidated for the first time,” the group said.
However, it said the profitability in the personal division declined sharply due to increased claims following adverse weather conditions and downward pressure on premium levels.
“This decline in profitability was most noticeable in the motor account, which was impacted by an increase in the incidence of motor-vehicle accidents.”
The 10% growth in premiums was influenced by the inclusion of CGIC. Excluding CGIC, the growth in net premiums was 5%.
The generally low levels of premium growth reflect the intense levels of competition as some insurers seek to gain market share with no regard to profitability, the group said.
Interest income increased following favourable cash flows while investment gains increased substantially following an improvement in the value of listed equities. The net asset value per share increased by 8% to 1 614 cents, while the solvency margin (the ratio of net assets to net premiums) remained strong and was more than 55% at the end of the period.
Looking ahead, the group said: “Although certain sectors of the insurance environment remain profitable, the high levels of competition will continue to place pressure on underwriting margins and growth.
“It should furthermore be noted that underwriting performance fluctuates and the results for the first six months are not necessarily indicative of the outturn for the remainder of the year.” — I-Net Bridge