Alexander Forbes plans are paying off
Financial services group Alexander Forbes’s profit from continuing operations before nontrading items rose 9% to R1.1bn in the year to March 31, as the group continued to switch to selling to individuals directly rather than via other institutions.
Pretax profit increased 11% to R303m in the year. Operating income from continuing operations ”” net of direct product costs ”” increased 12.5% to R4.4bn.
The group results are published to provide further information about the financial results of listed Alexander Forbes Preference Share Investments, which holds a 26.5% interest in the Alexander Forbes Group.
CE Edward Kieswetter said the strategic focus of growing into the individual clients market segments progressed during the year, with revenue in the client segment rising 12% across the group. He said that over five years, the strategy was to even out the 70-30 split between institutional and individual-derived business.
Top line revenue grew across all the continuing operations in the year, a trend expected to continue in the 2014 financial year, said Mr Kieswetter.
The group’s taxed profit from continuing operations turned around sharply to R75m in the past year compared with a R80m loss the previous year. But a R175m loss from discontinued operations dragged the group into a R100m loss for the year. The headline loss per share improved to 4c from 31c a year before.
"Clearly we are starting to see fruits from our turnaround strategic review that we started three-years ago," said Mr Kieswetter.
A number of "expressions of interest" had been received for certain of Alexander Forbes’ businesses, particularly the cell captive insurer Guardrisk.
The short-term insurance broking activities in Africa were disposed of in the previous financial year, and a sale of the only material property and casualty and risk services entity was concluded after the year-end.
The group’s umbrella retirement fund, the Alexander Forbes Retirement Fund, saw strong net new inflows to the retail administration platform and assets under management increased 23% to R40bn as at March 31.
At Investment Solutions, assets under management and administration at year-end came to R238bn, 22% up on the previous year. Trading profit increased 12% to R327m.
Guardrisk’s income from operations rose 12% to R348m and trading profit grew 9% to R141. It said new business had grown in the corporate risk service divisions and there had been organic growth in the life and volume and affinity divisions.
Alexander Forbes Insurance reported a 15% rise in gross written premiums to R1.1bn, while net operating income increased 6% to R307m. At AfriNet, the firm through which the group manages its operations in Africa outside South Africa, revenue rose 19% to R202m and trading profit rose 36% to R38m. This growth was due to initiatives to strengthen existing operations through better market positioning, deeper multiproduct penetration, introduction of new products and stronger governance and control measures," said Mr Kieswetter.
The International Financial Services division ”” comprising the consulting actuarial partnership of Lane Clark & Peacock and the independent pension trustee, Alexander Forbes Trustee Services ”” reported 4% of income growth to £93m, while trading profit increased 27% to £14m.
Revenue growth in the UK and Europe were affected by the economic environment and pressure on charge-out rates.