Zurich reports earnings rise

Johannesburg - Insurance Group Zurich on Wednesday reported headline earnings per share of 711.1 cents per share for the six months ended June 30 versus 526.4 cents earlier.

The group saw a 35% increase in headline earnings to R86.6m, while earnings per share were down 29%, from 1 241.3 cents to 873.8 cents.

Zurich's gross premium income up 8.1% to R2.9bn, with the commercial portfolio, which represents 69% of total premiums, increasing by 10.7% and the personal portfolio by 16.2% following rating adjustments and real growth in the portfolio, the group said.

Risk Financing contracted following deliberate action by management. "The underwriting result declined to a deficit of R24.5m from a surplus of R10.8m during the same period in 2008 and the general insurance result (inclusive of attributable investment income) declined from R65.6m to R30.7m," it said.

"The first half of 2009 saw a continuation of the tough economic conditions that have impacted the industry. Claims at R1.7bn are up 11% on 2008. While the fires in Gauteng and Cape Town contributed to the cost of claims, the major concern remains the motor book where losses have remained stubbornly high despite continued corrective action being taken," Zurich said.

The group said its balance sheet and cash flows remained strong. "At 43.1%, the solvency ratio remains within the target range as set by the Board. Net asset value decreased by 1.4% to 154.38 rand per share at the end of the period."

Zurich pointed to the 29.6% decrease in earnings per share, the underwriting loss and ongoing uncertainty regarding the performance of the motor portfolio as well as volatility in investment markets, contributing towards a decision to further strengthen the solvency of the company by not declaring an interim dividend.

"The board recognises the cyclical nature of short-term insurance results and investment markets and cautions that the results for the six months are not necessarily indicative of the outcome for the remainder of the year," Zurich concluded.

- I-Net Bridge