Mutual&Federal Interims, etc
OLD MUTUAL PLC
17 August 1999
OLD MUTUAL PLC
Mutual & Federal Insurance Company Ltd
Interim Results
Old Mutual is the largest southern African life assurance and
financial services group. Its shares were listed on the London,
Johannesburg, Malawi, Namibia and Zimbabwe stock exchanges on 12th
July 1999.
Mutual & Federal Insurance Company Limited ('Mutual & Federal'), the
South African general insurance group, in which Old Mutual plc ('Old
Mutual') has a 51% holding, has today issued financial results for
the six months ended 30th June 1999. The full text of the Mutual &
Federal announcement is attached.
Commenting on Mutual & Federal's results, Mike Levett, Chairman and
CEO of Old Mutual and Deputy Chairman of Mutual & Federal, said:
'These results reflect the highly competitive conditions in the
general insurance market at the current time. However, Mutual &
Federal is in a very strong position to benefit from an upturn in the
underwriting cycle and has done well to produce a 39% rise in net
asset value per share compared to 31 December 1998.'
Issued by:
Investor Relations
Old Mutual plc
London
Notes to Editors:
Old Mutual plc will be announcing the interim results for the whole
of the Old Mutual group for the period ended 30th June 1999 on
Tuesday 7th September 1999.
Mutual & Federal is separately quoted on the Johannesburg and
Namibian Stock Exchanges.
Old Mutual consolidates the results of Mutual & Federal in its own
figures. As of June 30th 1999 the group had a stake equivalent to
51% of the common equity of Mutual & Federal.
Mutual & Federal Insurance Company Limited
Group interim report for the half year ended 30 June 1999 and
dividend announcement
Six months ended 12 months to
INCOME STATEMENT 30/06/99 30/06/98 31/12/98
Unaudited Unaudited
R'm R'm R'm
Gross premiums 1,463.6 1,427.6 2,727.5
Net premiums 1,284.1 1,241.0 2,366.8
Underwriting (deficit) / (61.0) 70.4 60.9
surplus
Investment income 125.2 132.8 270.2
Income before taxation 64.2 203.2 331.1
Taxation 1.1 41.1 56.2
63.1 162.1 274.9
Minority shareholders / share (0.5) 2.2 4.4
of associate
Net income / headline 62.6 164.3 279.3
earnings
Transfer to contingency 3.8 13.6 17.4
reserve
58.8 150.7 261.9
As at As at As at
BALANCE SHEET 30/06/99 30/06/98 31/12/98
Unaudited Unaudited
R'm R'm R'm
Share capital 98.1 96.6 97.0
Non-distributable reserve* 3,127.7 2,362.7 1,781.2
Contingency reserve 237.5 229.9 233.7
Distributable reserve 1,409.1 1,378.5 1,403.2
Total shareholders' interest 4,872.4 4,067.7 3,515.1
Interest of outside
shareholders in subsidiaries 12.1 12.4 10.7
Deferred taxation 0.6 (2.4) (0.1)
4,885.1 4,077.7 3,525.7
Fixed assets 41.0 39.2 40.4
Investments at market value 5,471.8 4,938.9 4,270.6
Ordinary shares 4,276.5 3,952.8 3,578.3
Government stock 142.4 22.4 131.0
Other 1,052.9 963.7 561.3
Current assets 818.2 602.6 680.9
Debtors 418.2 262.4 296.6
Bank balances 238.6 169.3 240.2
Other 161.4 170.9 144.1
Total assets 6,331.0 5,580.7 4,991.9
Less: Current liabilities and 1,445.9 1,503.0 1,466.2
provisions
Claims outstanding 895.8 866.7 846.0
Provision for unearned 384.2 401.7 353.3
premiums
Other 165.9 234.6 266.9
4,885.1 4,077.7 3,525.7
Headline earnings per share 26.0 68.4 116.2
(cents)
Ordinary dividend per share 22.0 18.0 54.0
(cents)
Special dividend per share 13.0 13.0
(cents)
Net asset value per share 2,026 1,693 1,462
(cents)
Number of shares in issue
- at period end 240 501 124 240 300 624 240 357 224
- weighted average 240 460 227 240 230 340 240 284 894
* prepared in accordance with
SA GAAP
Mutual & Federal Insurance Company Limited
Group interim report for the half year ended 30 June 1999 and
dividend announcement
CHANGE IN ACCOUNTING POLICY
The accounting policy has been changed with regard to unusual or
abnormal claims which may arise from time to time. Provision for
these items was previously included in a catastrophe reserve, but
this is no longer permitted in terms of Generally Accepted Accounting
Practice. This provision has accordingly been reversed to retained
income and the prior year figures have been restated to recognise
this change in accounting policy.
COMMENTS
The deterioration in the short-term insurance market continued during
the first half of 1999 and the significant decline in the
underwriting result reflects the difficulties encountered. Short-
term insurance products are substantially under-priced at present and
competition within the industry has made appropriate increases in
rates difficult to achieve. The motor account performed poorly due to
a continued high incidence of theft and hijackings, but more
particularly due to the increasing cost of vehicle repairs and a
sharp increase in the incidence of collisions. The fire account
continues to be affected by an inordinate number of fires, inadequate
rating levels and a disturbing trend towards fraudulent claims and
arson.
Expenses have been tightly controlled and decreased by 3% in 1999 in
comparison to 1998.
During the six months share investments recovered strongly as
reflected in the 39% increase in net asset value per share. The
company took advantage of low equity prices during the second half of
1998 to purchase equities which resulted in a reduction in interest
bearing investments. Investment income therefore declined during the
first six months of 1999 despite higher levels of interest rates.
The solvency margin (being the ratio of net assets to net premiums)
also improved and was in excess of 200% at 30th June 1999.
It should be noted that short-term insurance results fluctuate and
the outturn for the first six months is not necessarily indicative of
the likely results for the remainder of the year.
YEAR 2000 COMPLIANCE
In 1997 the company implemented a strategy under the direction of
senior management and the Board to achieve Year 2000 compliance
throughout all its business operations. All components of the
information technology have now been comprehensively tested and found
to be substantially compliant. The business systems of the company's
major trading partners are being constantly monitored. A continuity
plan is in progress to ensure that the company is protected against
all external failures and will be in place shortly.
DECLARATION OF DIVIDEND (NUMBER 59)
An interim dividend of 22 cents per share (prior year a second
interim dividend of 18 cents per share) has been declared payable to
shareholders registered in the books of the company at the close of
business on 3 September 1999. The transfer books and register of
members of the company will be closed from 4 September 1999 to 10
September 1999 both days inclusive, and dividend cheques will be
posted to shareholders on or about 4 October 1999.
On behalf of the Board
K T M Saggers (Chairman) B Campbell (Managing Director)
Registered Office: 19th Floor, Mutual & Federal Centre, 75 President
Street, Johannesburg 2001
Transfer Secretaries: Mercantile Registrars Limited, 11 Diagonal
Street, Johannesburg 2001
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