Afre profits decline in 4 months to April

Afre reported a decline in profitability in the four months to April but the group is on course to post a surplus at the end of the financial year, CE Doug Hoto told the AGM this morning.

Gross Premium Written had grown 14% to $33.59 million over the comparable year ago period but there had been a decline in the retrocession due to the capitalisation which had strengthened the balance sheet of direct writers.

Net Premium Written rose 19% to $29.53 million and the Net Earned Premium was up 18% to 28.41 million .  Hoto said rental income was up 12% bringing the group's total income to $31.499 million , an increase of 18%.

However claims, which increased 44% much more than the growth in the topline to $14.732 million and management expenses at $10.13 million (2012: $9.03 million ) saw the group report a 23% drop in the technical profit to $4.53 million .

Hoto singled out two main concern areas; the health insurance following a significant increase of $1.5 million in the period, which would however taper off towards end of year and the conservative view the group had taken on reserves for all the outstanding claims.

He said management expenses were mainly made up of systems costs incurred during the period but the group was looking at dealing with that this year.

"We still expect a significant outturn at F13 and we are not too worried about the four month results. At least we have ensured there are no shocks to the way the business moves and therefore there can only be a smooth movement of surplus going forward."

Investment income was up 224% to $4.716 million while there was a big change in the policyholder reserves.

The pre-tax line dropped 17% to $4.13 million while the bottom-line was down 14% to $4.05 million mainly because of the adjustment of the unusual item taken on last year.  

At the AGM, shareholders approved the proposal to rename and rebrand Afre as First Mutual after a consultant had found the current brand had low visibility in the market and lacks clear association with its subsidiaries. Outgoing chair Innocent Chagonda said the new name will emphasise stability and inspire confidence.

Shareholders also approved the establishment of a 5% employee share option scheme as well as a buy back scheme.  Directors fees for the past audit were set at $153 404 while auditors fees were approved at $518 878. Chagonda said a third of the fees relate to the 2011 audit which was paid for in 2012.