michelle

MICHELLE CALITZ

Executive Head: Finance

“To balance the safeguarding of the capital our shareholders entrust to us against the objective of achieving a satisfactory return on it; keeping abreast of and complying with SAM, IFRS, Income tax, VAT and other relevant legislation; and continuously improving and refining the value and quality of our service to clients are top priority for us.”

Financials

INCOME STATEMENT HIGHLIGHTS (R’000) 31 Dec 2011 31 Dec 2010 31 Dec 2009
GWP 2 246 165 2 140 71 2 034 887
PROMOTER NET INCOME AFTER TAX 27 469 37 013 39 748
BALANCE SHEET HIGHLIGHTS (R’000) 31 Dec 2011 31 Dec 2010 31 Dec 2009
TOTAL SHAREHOLDER FUNDS (Including cell-owner capital) 789 708 733 457 780 979
TOTAL ‘PROMOTER’ SHAREHOLDER FUNDS 154 957 127 488 238 799
STATUTORY SOLVENCY 31 Dec 2011 31 Dec 2010 31 Dec 2009
CENTRIQ INSURANCE COMPANY LIMITED 31.0% 30.1% 32.9%
NOVA RISK PARTNERS LIMITED 157.3% 140.5% 198.4%
CENTRIQ LIFE INSURANCE COMPANY LIMITED (Capital adequacy ratio) 6.04 5.57 4.97
 

F2011 Financial Review

GROWTH

F2011 Gross Written Premiums advanced 5% against an industry growth level recorded of 5% (PWC Insurance Industry Analysis, dated March 2012 – Short Term insurance statistics). The South African short-term insurance market is currently experiencing soft market conditions, contrary to global trends which have been more impacted upon by the largest ever level of natural catastrophe losses in 2011. The South African soft market conditions are however not in conflict with the relative good net underwriting results being achieved (Warning: be aware of averages though!) and so competitive forces are well at work as market players have room to move on their rates in order to maintain and grow market share.

PROFITABILITY

Centriq’s Promoter Net Income After Tax fell in 2011, after we booked two material losses, relating to a book of health-care and warranty business respectively. We believe we have taken the worse-case scenario into account on both these books of business. But for these two unfortunate net underwriting losses booked, the group would have achieved a significant increase in our net profits, which mainly reflected a good net underwriting account on the balance of our portfolios, in particular the motor and liability classes. 

ROE

Capital management and resulting return on equity is actively managed in the business. A more efficient capital structure was implemented during 2010 and which resulted in an increase of our ROE in 2010, returning a more respectable ROE of 19%. Despite the profitability decreasing in 2011, the ROE for 2011 increased due to a capital reduction at the end of 2010. 

SOLVENCY

The two main trading licences within the group, being Centriq Insurance Company Ltd (Short-term company) and Centriq Life Insurance Company Ltd (Life company) are both sufficiently capitalised as reported, with solvency levels well above the statutory minimum levels of 15% for short-term insurers (excl. contingency reserve of 10%) and 1 x CAR for life companies.