20091228
allafrica

Johannesburg — UNDERWRITING profit margins in short-term insurance are in the low single-digit range, indicating rising claims and poor investment returns, says Glenrand MIB chairman Dudu Kunene.

These factors were likely to put pressure on premium pricing in coming months, he said in his annual report. Glenrand reported a turnaround last year, and its share price over five years appears to have bottomed at 62c in the middle of this year, from as high as 383,22c in July 2005. It traded at 103c last Wednesday.

A R46,5m profit was reported for financial 2009 versus a R82,1m loss the previous year.

CEO Andrew Chislett said the group aimed for a profit margin before tax of 20% by the end of financial 2010 and improved profit. He said the cost base remained too high, and some expected cost cuts had not materialised. Many property leases were restructured, and cost cutting would get attention next year.

In the risk-services division, client retention remained good, but fees were under pressure as clients had to cut expenditure. The commercial insurance market remained soft, negatively affecting commissions earned.

In the specialist division, the credit and political risks operation gained new business despite a 25%-35% decrease in declared values received from most clients.

Premium rate increases were expected to take hold next year.