File image: IOL
File image: IOL

Investment income decline hits Indequity earnings

By Sandile Mchunu Time of article published May 6, 2020

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DURBAN - JSE-listed specialised insurance company Indequity Group yesterday reported a decline in its interim earnings due to a decline in investment income as a result of the Covid-19 pandemic.

The group said its earnings per share (Eps) for the six months to end March declined by 39.5percent to 24.77 cents a share, down from 40.94c compared to a year earlier, while it also reported an investment loss of R2.86million during the period compared to an investment income of R1.74 reported last year.

Indequity’s total income also declined by 9.37percent to R29.50m, down from R32.55m reported same time last year.

“The decrease in investment income is due to a significant decrease in the market value of US-listed equities as a result of the Covid-19 pandemic, with the Dow Jones Index closing more than 18percent lower as at the end of March 2020, than as at the end of September 30, 2019,” the group said.

It added that its investment in US dollar-based investments continued to serve as a hedge against depreciation in the value of the rand.

Indequity’s net insurance premium earned amounted to R32.24m, up by 5.08percent compared to R30.68m earned a year earlier, with the group stating that a disciplined underwriting approach again delivered positive results for its core operations.

“Indequity’s core operations continued to deliver increased earnings during the period. However, a decrease in investment income in comparison to the previous corresponding period resulted in an overall decrease in the group’s basic earnings per share,” the group said.

Its profits after tax also declined by 42.34percent to R2.71m, down from last year’s profit of R4.70m, while headline earnings per share (Heps) fell by 39.5percent to 24.77c, down from last year’s Heps of 40.94c.

The group did not declare a dividend and has decided to preserve cash to deal with the Covid-19 outbreak.

Last year, the board declared a capital distribution out of share premium of 15.72c per Indequity ordinary share, and 2.63c per Indequity A class preference share.

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