Commentary on results
(For the year ended 31 December 2009)
Operational and strategic update
The effects of the 2008 global financial markets crisis continued into the early parts of 2009. Despite synchronised efforts by major governments to ward off the effects of risk aversion, mass de-leveraging occurred and placed significant liquidity pressure on the markets in early 2009. Subsequent to the first quarter, markets started to respond to the combined state remedial measures and cautious optimism led to some recovery in most major world equity markets for the remainder of 2009.
Although South Africa returned to positive real GDP growth in the third quarter of 2009, consumers’ disposable incomes remain under pressure.
Group BEE normalised headline earnings for the 2009 year ended at R135 million compared to the reported first half loss of R1 207 million.
The year can be characterised by the cost of de-risking the balance sheet in the first half and the impact of a significant decline in policyholder persistency. The group however returned to profitability in the second half of the year, mainly due to persistency not deteriorating and improved financial markets.
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