Registrar of Short-term Insurance

Transcription

1 N i n t h A n n u a l R e p o r t o f t h e Registrar of Short-term Insurance 2006

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3 CONTENTS TABLE PAGE Report by the Registrar of Short-term Insurance Names and addresses of registered short-term insurers LIoyd s approved correspondents Policies for which short-term insurers were registered Name changes of short-term insurers Individual market share: Primary market Analysis of gross premiums: Primary market Review of overall business Gross underwriting results: Total business Net underwriting results: Total business Property business Transportation business Motor business Accident and health business Guarantee business Liability business Engineering business Miscellaneous business Reinsurance of total premiums Assets: Domestic and foreign Liabilities: Domestic and foreign Business placed with LIoyd s underwriters Contact information a a 33 8b 34 8c 35 8d 36 8e 37 8f 38 8g 39 8h Short-term Insurance

4 REPORT BY THE REGISTRAR OF SHORT-TERM INSURANCE TO FINANCIAL THE MINISTER STATEMENTS OF FINANCE I, the Registrar of Short-term Insurance, hereby submit the ninth annual report in terms of section 5 of the Short-term Insurance Act, 1998 (Act). The text of the report, as well as the information contained in tables 1 to 4, relate to the period 1 January 2006 to 31 December Tables 5 to 11 contain figures for short-term insurance companies with financial years ending during Table 12 (Lloyd s business) is, however, for the 2006 calendar year. 1. Industry Overview 1.1 General Gross premiums of primary insurers in the short-term insurance industry grew by 12.5% in 2006 compared to a 14.2% increase in 2005 and an increase of 12.1% in The increase in 2006, similar to the previous year, is mainly attributable to increases in the values of residential property, which is the second largest class of business underwritten by the short-term insurance industry, inflationary adjustments to premiums and the growth in credit in the household sector where credit insurance policies are issued as protection for credit arrangements. Underwriting results (where underwriting profit is expressed as a percentage of net premiums) for the primary short-term insurance industry showed a decrease from 8.9% in 2005 to 8.4% in 2006, with all classes of business showing underwriting profits. The only significant natural disaster reported during the 2006 calendar year was the storms and related floods in the KwaZulu-Natal province. This natural disaster only occurred in the latter part of A number of claims relating to this event were only reported in the first quarter of The following challenges continue to face the short-term insurance industry: Effective management of costs Compliance with existing regulatory requirements and proposed changes to regulatory requirements Increased competition because of the number of new entrants into the market International financial reporting standards (IFRS), i.e. IFRS 4 - the possible impact of the proposals in Phase 2: Valuation of insurance contracts Availability of adequate and reliable data Impact of the National Credit Act Increase in the cost of motor vehicle parts Demarcation between the health insurance business and the business of a medical scheme Effective capital management, i.e. a focus on cost effective use of capital. The short-term insurance industry will face other challenges in the future, such as the possible legislative changes focusing on a riskbased capital approach. Operating profit, which includes investment income, expressed as a percentage of net premiums was 28.5% in 2006 compared to 22.2% in Surplus assets as a percentage of net premiums of primary insurers decreased from 70.2% in 2005 to 66.6% in The financial years of short-term insurers do not end on the same date and may cover periods other than 12 months. 2 Short-term Insurance

5 REGISTRAR OF SHORT-TERM INSURANCE 1.2 Financial summary Summary of the results of the primary short-term insurance industry: Primary insurers Change Change 04 to to 06 R million R million R million % % Gross premiums written Income: Net premiums written Investment income Total Expenditure: Claims paid Management expenses Commission Total Underwriting profits (12.2) 10.7 Underwriting profits plus investment income Assets Liabilities Summary of the short-term business of reinsurers: Reinsurers Change Change 04 to to 06 R million R million R million % % Gross premiums written (9.2) (7.0) Income: Net premiums written (18.8) 4.2 Investment income Total (15.1) 7.1 Expenditure: Claims paid (32.5) (8.7) Management expenses Commission (41.3) 44.6 Total (29.1) 3.0 Underwriting profits Underwriting profits plus investment income Assets Liabilities Short-term Insurance 3

6 REGISTRAR OF SHORT-TERM INSURANCE 1.3 Investment spread The table below reflects the total investment spread for the short-term insurance industry, excluding Sasria Limited (Sasria): Kinds of assets R million % R million % R million % Shares Stocks Debentures and mortgages Cash and deposits Fixed assets Outstanding premiums Debtors Total Surplus asset ratio The table below gives an indication of the financial strength of the short-term insurance market, expressing net surplus assets as a percentage of net premiums written by those primary insurers that submitted unaudited quarterly reports as at 31 December 2004, 31 December 2005 and 31 December 2006, excluding Sasria: Number of insurers Surplus asset ratio % Below 15% Between 15% and 20% Between 20% and 25% Between 25% and 30% Between 30% and 40% Between 40% and 50% Between 50% and 100% Above 100% All insurers with surplus asset ratios below 25% 2 have been investigated and corrective measures have been implemented. 2 This ratio is made up of the 15% solvency margin and the 10% contingency reserve. 4 Short-term Insurance

7 REGISTRAR OF SHORT-TERM INSURANCE 1.5 Primary insurance Analysis of gross premiums per policy type These diagrams illustrate the composition of the gross premiums per policy type of primary insurers, excluding Sasria, during 2005 and 2006: 2005 Total R million 2006 Total R million Property 32% Transportation 2% Property 32% Transportation 3% Miscellaneous 14% Engineering 4% Miscellaneous 13% Engineering 4% Liability 4% Guarantee 3% Motor 37% Liability 3% Guarantee 2% Motor 38% Accident & health 4% Accident & health 5% Results The following graph shows how underwriting results and operating results (which includes investment income) of primary insurers have fluctuated over the past fourteen calendar years. The figures exclude Sasria: Results as percentage of net premiums written Percentage Operating Underwriting Short-term Insurance 5

8 REGISTRAR OF SHORT-TERM INSURANCE Underwriting results by type of business The bar chart below indicates how the underwriting results, as a percentage of net premiums, per type of policy for primary insurers have fluctuated over the past three calendar years. The results exclude Sasria: Property Transportation Motor Accident & health Guarantee Liability Engineering Miscellaneous 1.6 Reinsurance Results This graph shows how underwriting results and operating results (which include investment income) of short-term reinsurers have fluctuated over the past fourteen calendar years: 50 Results as percentage of net premiums written Percentage Operating Underwriting 6 Short-term Insurance

9 REGISTRAR OF SHORT-TERM INSURANCE Underwriting results by type of business This bar chart compares the underwriting results as a percentage of net premiums per type of policy for reinsurers (most reinsurers report in three classes only): Property Transportation Miscellaneous ECONOMIC TRENDS IN THE INSURANCE INDUSTRY 2.1 Contribution to gross domestic product This graph shows the contribution by the long- and short-term insurance industries to the GDP from 1994 to 2006 (previous years percentages are sometimes adjusted by the South African Reserve Bank in their benchmarking and annual revision exercises): Percentage of GDP Source: South African Reserve Bank Short-term Insurance 7

10 REGISTRAR OF SHORT-TERM INSURANCE 2.2 The market capitalisation of the insurance sector on the JSE Limited The market capitalisation of the short-term insurance sector on the JSE Limited (JSE) amounted to R28.4 billion on 31 December 2006, or 0.56% of the total market capitalisation of the JSE. When Sanlam was listed on the JSE in December 1998 it contributed R19 billion to market capitalisation. When Old Mutual was listed on the JSE in July 1999 it contributed R45 billion to the market capitalisation. Both companies are long-term insurers. The graph shows the market capitalisation of the combined long- and short-term insurance sectors on the JSE since June 1995, as at 30 June each year until June 2004 and then from December 2004 as at 31 December each year: 300 R billion Jun Dec Source: JSE 3. REGULATORY AND POLICY DEVELOPMENTS 3.1 Advisory committee The Advisory Committee on Short-term Insurance is a statutory committee appointed by the Minister of Finance to investigate and advise on matters relating to the short-term insurance industry. The committee held two meetings during the period under review. 3.2 Lloyd s business The Act authorises Lloyd s underwriters to carry on short-term insurance business in South Africa through Lloyd s correspondents. The authorisation of the correspondents is the responsibility of the Lloyd s Representative Office in South Africa. Lloyd s correspondents do not submit individual returns to the Financial Services Board (FSB) (Insurance division). The reporting function has been consolidated and one return is submitted by the Lloyd s Representative Office in South Africa. Lloyd s conducted business in all eight classes and the total gross premium income amounted to R1.5 billion (2005: R1.4 billion), making them the ninth largest insurer in South Africa. 3.3 Micro-insurance A working group comprising representatives from the FSB and National Treasury has been constituted to determine the way forward for the regulation of micro-insurance, which includes assistance business and short-term insurance business. The National Treasury has appointed Genesis: Analytics as the consultants and they have been tasked to draft a discussion paper on micro-insurance. It is envisaged that this discussion paper will be circulated to all interested stakeholders for comments, after which plans will be put in place for the future regulation of micro-insurance. 8 Short-term Insurance

11 REGISTRAR OF SHORT-TERM INSURANCE The International Association of Insurance Supervisors (IAIS) issues globally accepted principles, standards and guidance papers for insurance regulation and supervision. The IAIS through its Implementation Committee has expressed support for insurance markets in establishing a sound insurance supervisory system. In order to give practical support the IAIS created a joint working group to address the issues of micro-insurance. One member of the Insurance division took part in a workshop arranged by the IAIS on micro-insurance in Hyderabad, India from 31 August 2006 to 2 September The objective was to share experience of providing micro-insurance products to low income earners, to look at the regulatory barriers to insurers accessing these markets and to develop an IAIS guidance paper on micro-insurance. Visits to low income rural insurance projects which encompassed health insurance, asset insurance and life insurance formed part of the programme. 3.4 Commission regulation The decapping of commissions was not reconsidered during the year. We will continue to discuss with stakeholders whether to proceed with the proposed decapping of commissions. The outcome of the commission debate in the long-term insurance industry might also inform decisions on the future commission structures within the short-term insurance industry. 3.5 Road Accident Fund The total liabilities of the Road Accident Fund (RAF) as at 31 March 2006 exceeded its assets by R18.4 billion, which places the RAF in a technically insolvent position. The table below reflects the financial position of the RAF over the past five years: 31 March 2002 months 31 March March March March 2006 R million R million R million R million R million Total assets Total liabilities Surplus assets (11 125) (15 430) (18 557) (19 851) (18 368) The board of directors and management of the RAF developed a strategic plan in September 2005 which incorporates a detailed rescue plan for the RAF and which was approved by the Minister of Transport on 10 January The RAF is in the process of implementing elements of the rescue plan. According to the Chief Executive Officer s Report in the Annual Report of the RAF for the financial year-end 31 March 2006 the results of the rescue plan will only be realised during the period from 2008 to Financial condition reporting In December 2006 the Insurance division together with the Actuarial Insurance team of the FSB circulated an Issues Paper on the Proposed Financial Condition Reporting to all registered short-term insurance companies for comments. The purpose of this paper was to inform the short-term insurance industry of the proposed method of statutory financial reporting that would be required in South Africa in the future. This method is called Financial Condition Reporting (FCR). The paper describes FCR and the methods of calculating a short-term insurer s insurance liabilities and capital adequacy requirement (CAR). By introducing FCR, the FSB is following a risk-based regulatory approach that is becoming more acceptable internationally. Some of the countries that have already adopted a risk-based regulatory approach are Australia, UK, USA, Germany, Canada, Holland and Switzerland. Short-term Insurance 9

12 REGISTRAR OF SHORT-TERM INSURANCE FCR is favoured because it requires each insurer to calculate risk capital that depends on the underlying risk of its business. This will allow insurers to make more efficient use of capital when they manage the underlying risk. FCR will aid insurers in their risk management. This is because the method requires insurers to implement sound risk management strategies and to use the report and models that accompany the method in the day-to-day running of their business. This will result in a better understanding of an insurer s risks by its management, its board and the FSB. The FSB s preferred approach to calculating risk capital and liabilities is through the use of an Internal Model because, of all the options that insurers have, it is the most accurate in calculating risk capital. To aid companies that will not be in the position to build their own Internal Model by the time that FCR becomes a requirement, a Prescribed Model has been developed. The Prescribed Model is based on the recalibration of the financial data for the whole short-term industry. Another option that companies have to calculate their risk capital and liabilities is the Certified Model. Many of the features of this model are the same as those of the Prescribed Model. However, individual insurers will be able to change some elements of the Prescribed Model to meet their specific circumstances. The diagram below summarises FCR, its requirements and the methods that can be used to calculate liabilities and risk capital. 3.7 Insurance group supervision The Insurance division continues to perform reviews on insurance groups with the cooperation of the management of insurers. The reviews are performed annually, except in the case of the five larger groups where reviews are quarterly. The Insurance division is continuing with research into the introduction of a formal approach to insurance group supervision. International developments are closely monitored. 3.8 Risk-based supervision During the period under review the Insurance division implemented its risk-based supervision framework. Initial risk assessments were done on all registered insurance companies. Staff was trained in 2006 and will undergo further training during the course of the following year to ensure continuous improvement in the supervision process. 3.9 Cross border operations The Insurance division conducted a survey to establish the extent of cross border operations of registered insurers with a view to- Monitor the group operations of insurance companies Identify those jurisdictions with which the FSB may need to cooperate Assess the key risks to insurance companies. Insurers were requested to provide information on their global activities and business conducted within the SADC region for their financial years ending in The information included reinsurance business conducted on a cross border basis. Fair value of assets Fair value of admissible assets Excess assets Free assets CAR Min R10mil PM,CM or IM Liabilities Best estimate + Prescribed margins PM,CM or IM Financial Condition Report Risk Management Use in day-to-day running of business The annual statutory return will be amended to provide for this information Registrations, run-offs and dormant insurers, transfers and name changes New insurers registered, run-offs of business and dormant companies are indicated in table 3 of this report. Licences were issued to five new insurance companies during the review period and one licence was cancelled. 10 Short-term Insurance

13 REGISTRAR OF SHORT-TERM INSURANCE The liabilities of Pick n Pay Insurance Company Limited were substituted for that of Guardrisk Insurance Company Limited. The office expressed its satisfaction that the policyholders were aware of the nature of the substitution and that they have signified their consent thereto in writing. Number % Black Female White Female 6 13 Black Male White Male 6 13 Name changes of insurers are indicated in table 4 of this report. 4. DIRECTIVES AND INFORMATION LETTERS ISSUED 4.1 Directives This Insurance division issued no directives during the period under review. 4.2 Information letters The Insurance division issued the following information letters: Executive Officer Rob Barrow (Registrar of Short-term Insurance) Deputy Executive Officer: Insurance Mashudu Munyai (Deputy Registrar of Short-term Insurance) Subject Number Issue date Cross-border operations of insurance companies 1/2006(LT&ST) 10 April 2006 Service level commitments by the Registrars of Long-term and Short-term Insurance 2/2006(LT&ST) 20 December 2006 Head: Insurance Prudential Suzette Vogelsang Head: Insurance Compliance Jacky Huma Head: Insurance Registration and Policy Patrick Ward 5. GENERAL INFORMATION 5.1 Staff of the Insurance division of the Financial Services Board As at 31 December 2006 the staff complement of the Insurance division was as follows: Deputy Executive Officer 1 Heads of departments 3 Managers 6 Analysts 24 Specialist Analysts 2 Specialists 3 Administrative staff 6 Short-term Insurance 11

14 REGISTRAR OF SHORT-TERM INSURANCE 5.2 Curatorship of South Union Reinsurance Company Limited (previously Zimbabwe Reinsurance Corporation SA Limited) South Union Reinsurance Company Limited was placed under final curatorship on 5 October The reason was to protect policyholder interests following the company s inability to submit annual statutory returns, their need for additional capital to continue business, high loss ratios resulting from bad underwriting practices, rapid business growth, questionable corporate governance principles, unreliable financial data and doubtful inter-group loans made by the company. The curator submitted his fifth report to Court on 26 October The curatorship was extended to 30 June The reasons for extending the curatorship were mainly the following: The company has still not recovered all amounts due to it by related and/or associated companies The company must still dispose of its property assets The liabilities of the company still exceed its assets T he total amount due by the company pursuant to its participation under the various reinsurance treaties is not yet known The company has paid no significant amounts to its insurance claimants. The shareholders of Sure have approached the FSB with a request for the lifting of the curatorship. In August 2005 the FSB advised the shareholders of the conditions which would have to be fulfilled prior to the lifting of the curatorship order. Amongst these conditions is the recapitalisation of Sure in order to place it in a financially sound condition. The shareholders of Sure have submitted documents in support of the request. The request for lifting of the curatorship has also been discussed with the curator and a decision will be made subsequent to a meeting with the curator at the end of June Alleged contraventions of the Act Inspections No inspections were requested during the period under review. The following table gives a breakdown of the cases that were inspected during 2005 and 2006: Activity Number of cases* In progress 1 0 Finalised 1 0 Total 2 0 * May include cases relating to prior years Prosecutions No matters were referred for prosecution during the period under review. The following table gives a breakdown of the cases that were referred for prosecution during 2005 and 2006: Activity Number of cases* In progress 1 0 Finalised 0 0 Reopened 0 0 Total 1 0 * May include cases relating to prior years. 5.4 On-site visits The Insurance division continues to conduct on-site visits. The visits focus on the various risk areas of insurers and include the following: Counterparty risk Market and balance sheet risk Insurance risk Operational risk Liquidity risk Strategic risk Group and contagion risk Legal and regulatory risk. 12 Short-term Insurance

15 REGISTRAR OF SHORT-TERM INSURANCE The majority of insurers reported the following top five risks (not ranked) in their annual statutory returns: Compliance risk Credit risk Operational risk Insurance risk Market risk. 5.5 Consumer complaints This Office received 103 complaints (2005: 154) during the period under review and 100% of these were resolved. Consumer complaints can be broadly categorised as follows: Premium refunds/other premium complaints 1% Consumer complaints Claims disputes 42% 5.7 Involvement in international developments Southern African Development Community The Committee of Insurance, Securities and Non-banking Financial Authorities (CISNA) was established in June It consists of the regulatory authorities of capital markets, retirement funds, collective investment schemes, insurance companies and providers of intermediary services from the Southern African Development Community (SADC) countries. The secretariat for CISNA is located at the FSB. The main objectives of CISNA can be summarised as addressing the three principal challenges namely: market development, market harmonisation and systemic stability in the SADC region. During the year under review CISNA met at the Victoria Falls in Zimbabwe on 27 and 28 April 2006 and in Ezulwini, Swaziland on 26 & 27 October The Zimbabwe meeting focused on the projects identified during the special CISNA meeting held in South Africa in August 2004, updates on the activities of the Committee of SADC Stock Exchanges, FIRST Initiative s SADC training programme and understanding the operation of hedge funds and the regulation thereof. Alleged Act contraventions 5% The Swaziland meeting focused on the progress made with the Finance and Investment Protocol and the harmonisation of the regulatory frameworks of CISNA. Policy not received/ understood 4% Other/poorr service 48% The SADC Finance and Investment Protocol was approved and signed by member states at the summit in Maseru, Lesotho on 17 August Inducements The Insurance division became aware of and had identified certain practices as inducements. This prompted the division to conduct an industry-wide investigation to determine the prevalence of such practices. The division will analyse the results and decide on the way forward. One specific practice involves a long-term policy. The FSB held discussions with the company and made it clear that aspects of the benefits constitute an inducement. The company did not share the FSB s view and it was agreed that the company could seek a declaratory order from the courts. At the time of writing the report the outcome was not known Memoranda of Understanding The FSB is party to a number of bilateral Memoranda of Understanding (MOU s) with international supervisors. A list of these supervisory authorities is available on the FSB website Membership of international associations The FSB is a member of the International Association of Insurance Supervisors (IAIS), the African Insurance Organisation (AIO) and of the Association of African Insurance Supervisory Authorities (AAISA). FSB staff members serve on the executive committees of IAIS and AAISA respectively and also act as secretary-general and treasurer of AAISA. Short-term Insurance 13

16 REGISTRAR OF SHORT-TERM INSURANCE The FSB attended the general assembly and executive committee meetings of the AAISA that were held in Cape Town, South Africa in May The objectives of the AAISA is to promote cross-border co-operation and sharing of information, assisting in the establishing, monitoring and developing of African insurance supervisory authorities, enhancing of standards of supervision on the African continent and discussion of issues of mutual concern. 6. CONCLUSION I, the Registrar, wish to record my appreciation for the cooperation this Office received from insurers and representative bodies of insurers, intermediary associations and consumer forums, as well as the auditing and actuarial professions. The close working relationship with the National Treasury is much appreciated. Membership of these international associations provides opportunities to participate in the formulation of principles, implementation of standards and focusing attention on the special needs of emerging market countries. Through its membership of the IAIS, the FSB is also committed to the sharing and transfer of knowledge to other emerging market jurisdictions in Africa. r j g barrow Registrar of Short-term Insurance 16 November 2007 The FSB s staff members are continuously involved in the ongoing work of the IAIS, including the hosting of an annual training seminar for African Insurance Supervisors. A training session on capital adequacy and risk assessment was hosted from 27 to 30 November The FSB hosted the programme and the IAIS funded the training. Twentyseven delegates from fifteen African countries attended the training seminar. The IAIS Annual Conference took place in Beijing, China from 18 to 21 October The Deputy Executive Officer in his capacity as member of the Executive Committee of the IAIS, also attends the subcommittee meetings that are held three times a year Liaison with foreign supervisors The FSB is in regular contact with international supervisors, responds to numerous queries from abroad and liaises with Interpol in the policing of global financial fraud and crime. 14 Short-term Insurance

17 TABLE 1 - REGISTERED SHORT-TERM INSURERS NAMES AND ADDRESSES** AS AT 31 DECEMBER 2006 Primary insurers POSTAL ADDRESS 1 Absa Insurance Company Limited P O Box 421 Johannesburg Absa Insurance Risk Management Services Limited P O Box 421 Johannesburg Ace Insurance Limited P O Box 1192 Saxonwold AECI Captive Insurance Company Limited Private Bag X21 Gallo Manor Aegis Insurance Company Limited P O Box 3881 Tyger Valley African General Insurance Company Limited P O Box Marshalltown Agre Insurance Company Limited P O Box Marshalltown Agri Risiko Spesialiste Beperk Private Bag X15 Brandhof AIG South Africa Limited P O Box Braamfontein AIM Insurance Limited P O Box 2130 Parklands Alexander Forbes Insurance Company Limited P O Box Sandton Allianz Insurance Limited P O Box Marshalltown Attorneys Insurance Indemnity Fund P O Box Sandton Auto and General Insurance Company Limited P O Box Johannesburg Aviation Insurance Company Limited P O Box 6777 Johannesburg Bensure Insurance Underwriters Limited P O Box 3315 Randburg Centriq Insurance Company Limited P O Box Northlands CGU Insurance Limited P O Box 1120 Johannesburg Coface South Africa Insurance Company Limited P O Box 1657 Sunninghill Compass Insurance Company Limited P O Box Birnam Park Constantia Insurance Company Limited P O Box 3518 Cramerview Corporate Guarantee (South Africa) Limited P O Box 2878 Randburg Credit Guarantee Insurance Corporation of Africa Limited P O Box 125 Randburg Customer Protection Insurance Company Limited P O Box 122 Bedfordview Densecure (Pty) Limited P O Box 8322 Hennopsmeer Dial Direct Insurance Limited P O Box 109 Auckland Park Emerald Insurance Company Limited Suite 354 Private Bag X51 Bryanston Enpet Africa Insurance Limited P O Box Sandton Escap Limited P O Box 1091 Johannesburg Export Credit Insurance Corporation of SA Limited P O Box Sunnyside 0132 Short-term Insurance 15

18 TABLE 1 - REGISTERED SHORT-TERM INSURERS NAMES AND ADDRESSES** AS AT 31 DECEMBER 2006 Primary insurers POSTAL ADDRESS 31 Federated Employers` Mutual Assurance Company Limited Private Bag X87109 Houghton Ferrosure (South Africa) Insurance Company Limited P O Box Lynnwoodridge Fidelity Insurance Limited Private Bag X54 Bryanston First Central Insurance Limited Private Bag X2900 Houghton Firstrand Insurance Services Company Limited P O Box Sandton FNB Credit Guarantee Limited P O Box Benmore General Accident Insurance Company SA Limited P O Box 6451 Cresta Gerling General Insurance of SA Limited P O Box 66 Saxonwold Global Insurance Company Limited P O Box 421 Johannesburg Guardian National Insurance Company Limited P O Box 3881 Tyger Valley Guardrisk Insurance Company Limited P O Box Sandton Hollard Insurance Company Limited, The P O Box Houghton Home Loan Guarantee Company P O Box 23 Auckland Park Indequity Specialised Insurance Limited P O Box 5433 Weltevredenpark Infiniti Risk Solutions Limited P O Box 206 Howard Place Intermediaries Guarantee Facility Limited P O Box Braamfontein Investec Specialised Insurance Limited P O Box Sandton Khula Credit Guarantee Limited P O Box Sunnyside Kingfisher Insurance Company Limited P O Box Sandton Legal Expenses Insurance Southern Africa Limited P O Box 6144 Weltevredenpark Lion of Africa Insurance Company Limited P O Box 100 Parklands Lombard Insurance Company Limited P O Box 2740 Parklands Lloyd s underwriters* P O Box Sandton 2146*** 54 McSure Limited P O Box 794 Durban Momentum Short-term Insurance Company Limited Private Bag X6784 Centurion Monarch Insurance Company Limited P O Box 43 Woodstock MUA Insurance Company Limited P O Box Tokai Mutual & Federal Insurance Company Limited P O Box 1120 Johannesburg Mutual & Federal Risk Financing Limited P O Box 1120 Johannesburg Natsure Limited P O Box Hatfield Short-term Insurance

19 TABLE 1 - REGISTERED SHORT-TERM INSURERS NAMES AND ADDRESSES** AS AT 31 DECEMBER 2006 Primary insurers POSTAL ADDRESS 61 Nedcor Insurance Company Limited P O Box 1144 Johannesburg Nedcor (SA) Insurance Company Limited P O Box 1144 Johannesburg Nedgroup Insurance Company Limited P O Box 1144 Johannesburg New National Assurance Company Limited P O Box 1610 Durban Nova Risk Partners Limited P O Box Northlands Old Mutual Health Insurance Limited P O Box 172 Howard Place Outsurance Insurance Company Limited P O Box 8443 Centurion Pick n Pay Insurance Company Limited P O Box Claremont Pinnafrica Insurance Limited P O Box Sloane Park Rand Mutual Assurance Company Limited P O Box Marshalltown Regent Insurance Company Limited P O Box 674 Edenvale Relyant Insurance Company Limited P O Box Greyville Renasa Insurance Company Limited P O Box Craighall Resolution Insurance Company Limited P O Box 1115 Bromhof RMB Specialised Lines Limited P O Box Benmore RMB Structured Insurance Limited P O Box Benmore Sabsure Limited P O Box 1099 Johannesburg Safire Insurance Company Limited P O Box Dorpspruit Sage Specialised Insurances Limited P O Box 9745 Johannesburg SAHL Insurance Company Limited P O Box 3918 Durban Santam Limited P O Box 3881 Tyger Valley Sasguard Insurance Company Limited P O Box 20 Huguenot Sasria Limited P O Box 7380 Johannesburg Saxum Insurance Limited P O Box 1634 Houghton Sentrasure Limited P O Box 1120 Johannesburg Shoprite Insurance Company Limited P O Box 215 Brackenfell South African Eagle Insurance Company Limited P O Box Marshalltown South African Eagle Risk Financing Limited P O Box Marshalltown South African Reserve Bank Captive Insurance Company Limited, The P O Box 427 Pretoria Southern Insurance Association Limited P O Box 7400 Centurion 0046 Short-term Insurance 17

20 TABLE 1 - REGISTERED SHORT-TERM INSURERS NAMES AND ADDRESSES** AS AT 31 DECEMBER 2006 Primary insurers POSTAL ADDRESS 91 Standard Insurance Limited P O Box Braamfontein Sunderland Marine (Africa) Limited First Floor ICR House Alphen Office Park Constantia St Paul Insurance Company South Africa Limited P O Box 2242 Saxonwold Truck and General Insurance Company Limited P O Box Bryanston Unitrans Insurance Limited P O Box Bryanston Unity Insurance Limited P O Box Johannesburg Westchester Insurance Company (Pty) Limited P O Box Sandton XL Insurance Company Limited P O Box 198 Strathavon 2031 Reinsurers 99 African Reinsurance Corporation (SA) Limited P O Box 3013 Houghton Central Reinsurance Corporation Limited P O Box Marshalltown General Reinsurance Africa Limited P O Box 444 Cape Town Hannover Reinsurance Africa Limited P O Box Johannesburg Imperial Reinsurance Company Limited P O Box Parkview Munich Reinsurance Company of Africa Limited P O Box 6636 Johannesburg Saxum Reinsurance Limited P O Box 1634 Houghton South Union Reinsurance Company Limited (in curatorship) P O Box 1198 Crown Mines Swiss Re Africa Limited P O Box Parkview 2122 * Lloyd s underwriters are authorised to carry on short-term insurance business in terms of the Short-term Insurance Act, 1998 (Act No. 53 of 1998). ** The most recent addresses appear in the table. *** The address of the Lloyd s Representative Office in South Africa. 18 Short-term Insurance

21 TABLE 2 - LLOYD S APPROVED CORRESPONDENTS AS AT 31 DECEMBER 2006 NAME POSTAL ADDRESS 1 Abrina 872 (Pty) Limited t/a Global Consulting Solutions P O Box 8538 Edleen Absa Brokers (Pty) Limited P O Box 3992 Randburg Admiral Liability Acceptances (Pty) Limited P O Box Parkview African Independent Brokers Private Bag X7 Selcourt African Motor Underwriters (Pty) Limited P O Box 2847 Parklands Airborne Insurance Consultants (Pty) Limited P O Box 1768 Morningside Alexander Forbes Financial Services (Pty) Limited P O Box Sandton Alexander Forbes Management Service (Pty) Limited P O Box Sandton Alexander Forbes Personal Services (Pty) Limited t/a Meridian P O Box Menlo Park Alexander Forbes Risk Services (Pty) Limited P O Box Sandton Anderson Insurance Brokers (Pty) Limited P O Box 2548 Fourways Aon Re (Africa) (Pty) Limited P O Box 2130 Parklands Aon South Africa (Pty) Limited P O Box 1874 Parklands Associated Insurance Brokers (Pty) Limited t/a Capital Risk Serv P O Box Sandton B n B Sure (Pty) Limited P O Box 4047 Randburg Baronscourt SA (Pty) Limited P O Box 130 Cramerview Bell Price & Associates (Pty) Limited P O Box 3953 Cape Town Benfield Greig SA (Pty) Limited P O Box Marshalltown Bloodstock & General Insurance Intermediaries (Pty) Limited P O Box 39 Nottingham Road Businessure Specialist Underwriters (Pty) Limited P O Box Glenstantia Camargue Underwriting Managers (Pty) Limited Postnet Suite 250 Private Bag X4 Bedfordview Carl Greaves Brokers (Pty) Limited P O Box 4164 Old Oak CGM Insurance Brokers CC P O Box Roosevelt Park Cooper Gay Africa Financial Services (Pty) Limited P O Box Sandton Daly s & Associates (Pty) Limited P O Box 1342 Cape Town Delphisure Group Insurance Brokers (Pty) Limited P O Box 3388 Tygerpark Dennis Jankelow & Associates (Pty) Limited P O Box Bryanston Devereux Marine CC 18 Orchard Heights Newlands Dexdata (Pty) Limited P O Box Johannesburg DMKC Insurance Brokers (Pty) Limited P O Box Tokai 7966 Short-term Insurance 19

22 TABLE 2 - LLOYD S APPROVED CORRESPONDENTS AS AT 31 DECEMBER 2006 NAME POSTAL ADDRESS 31 Econorisk (Pty) Limited P O Box 3428 Rivonia Eikos Risk Applications P O Box Craighall Equine Insurance Brokers (Pty) Limited P O Box Avondale Rd FGA Insurance Brokers (Pty) Limited P O Box Craighall First Equity Risk Management Services t/a Expanded Risk Consulting CC P O Box Bryanston Flightsure Aviation Brokers (Pty) Limited P O Box 5072 Halfway House General & Professional Liability Acceptance (Pty) Limited t/a GLPA P O Box 2667 Fourways GIB Insurance Brokers P O Box 3211 Houghton Glencairn Insurance Brokers (SA) (Pty) Limited Postnet Suite 105 Private Bag X11 Birnam Park Glenrand MIB Limited P O Box 2544 Randburg G M Thomas & Associates P O Box Malvern Goldfield Insurance Administration CC P O Box 619 Randburg Goss & Company Insurance Brokers P O Box 430 Mooi River Hamford (Pty) Limited P O Box Centurion Health & Accident Underwriting Managers (Pty) Limited P O Box 324 Rivonia Heritage Insurance Brokers (Pty) Limited Private Bag X11 Benmore Interactive Trading (332) (Pty) Limited/ t/a RMIS P O Box 1773 Pinegowrie International Marine Insurance Managers SA (Pty) Limited P O Box 347 Plumstead Investec Insurance Brokers (Pty) Limited P O Box Sandton Kapara Insurance Brokers P O Box 2812 Houghton Kiln SA (Pty) Limited P O Box 3304 Rivonia Leppard & Associates (Pty) Limited t/a SCS Underwriting Managers P O Box 2730 Houghton Longsmith Reinsurance Brokers International (Pty) Limited No 7 Abbotswold Saxonwold M R Woollam & Associates (Pty) Limited P O Box 1384 Pietermaritzburg Manwood Underwriters (Pty) Limited Postnet Suite 31 Private Bag X75 Bryanston Manny Garrun & Sons (Pty) Limited P O Box Norwood Marsh SA (Pty) Limited Private Bag X14 Benmore Multirisk Managers (Pty) Limited P O Box 254 Pinegowrie Nacora Insurance Brokers (Pty) Limited P O Box 2141 Saxonwold Paladin Underwriting Managers (Pty) Limited P O Box 613 Rondebosch Short-term Insurance

23 TABLE 2 - LLOYD S APPROVED CORRESPONDENTS AS AT 31 DECEMBER 2006 NAME POSTAL ADDRESS 61 Praesidio Risk Managers (Pty) Limited P O Box 337 Cramerview Prestmarine International (Pty) Limited P O Box 231 Bedfordview Proficient Marketing CC t/a Promark Insurance Brokers P O Box 147 Maitland Ram International Insurance Brokers (Pty) Limited P O Box 506 Isando Reinsurance Solutions (Brokers) (Pty) Limited P O Box Sandton City Safari & Tourism Insurance Brokers (Pty) Limited P O Box 250 Umhlanga Rocks Shield Financial Services P O Box 2294 Houghton Southern Cross Underwriters P O Box 1113 Pinegowrie Stalker Hutchinson & Associates (Pty) Limited P O Box Northlands Standard Bank Insurance Brokers (Pty) Limited P O Box Braamfontein Staple Hall Risk Solutions (SA) Limited t/a SIPA P O Box 2667 Fourways Steve Slatter Insurance Brokers (Pty) Limited 17 Lynn Avenue Glenashley Durban Thebe Risk Services P O Box 667 Johannesburg Thomson Credit Insurance Consulting (Pty) Limited P O Box 3211 Houghton T.I.V. Insurance Brokers CC P O Box Tokai Tradeforth Six (Pty) Limited t/a Abelard Underwriting Agency P O Box Bryanston Universal Acceptances (Pty) Limited P O Box 190 Witkoppen Vunani Dougall Insurance Brokers (Pty) Limited P O Box Greyville Willis South Africa (Pty) Limited P O Box Northlands 2116 Short-term Insurance 21

24 TABLE 3 - POLICIES FOR WHICH SHORT-TERM INSURERS WERE REGISTERED AS AT 31 DECEMBER 2006 TRANSPORTATION PROPERTY MOTOR MISCELLANEOUS LIABILITY ACCIDENT & HEALTH GUARANTEE ENGINEERING Primary insurers 1 Absa Insurance Company Limited X X X X X X X X 2 Absa Insurance Risk Management Services Limited X X X X X X X X 3 Ace Insurance Limited X X X X X X X X 4 AECI Captive Insurance Company Limited X X X X X X X X 5* Aegis Insurance Company Limited X X X X X X X X 6* African General Insurance Company Limited X X X X 7 Agre Insurance Company Limited X X X X X X X X 8* Agri Risiko Spesialiste Beperk X 9 AIG South Africa Limited X X X X X X X X 10* AIM Insurance Limited X X X X X X X X 11 Alexander Forbes Insurance Company Limited X X X X X X X 12 Allianz Insurance Limited X X X X X X X X 13 Attorneys Insurance Indemnity Fund X X 14 Auto and General Insurance Company Limited X X X X X X X X 15* Aviation Insurance Company Limited X X X 16 Bensure Insurance Underwriters Limited X 17 Centriq Insurance Company Limited X X X X X X X X 18* CGU Insurance Limited X X X X X X X X 19 Coface South Africa Insurance Company Limited X 20 Compass Insurance Company Limited X X*** X X X X X X 21 Constantia Insurance Company Limited X X X X X X X X 22 Corporate Guarantee South Africa Limited X X X X X X X X 23 Credit Guarantee Insurance Corporation of Africa Limited X 24 Customer Protection Insurance Company Limited X X X X X X 25 Densecure (Pty) Limited X X X X X X X X 26 Dial Direct Insurance Limited X*** X*** X*** X X X X*** 27 Emerald Insurance Company Limited X X X X X X X X 28 Enpet Africa Insurance Limited X X X X X X X X 29 Escap Limited X X X X X X X X 30 Export Credit Insurance Corporation of SA Limited X 22 Short-term Insurance

25 TABLE 3 - POLICIES FOR WHICH SHORT-TERM INSURERS WERE REGISTERED AS AT 31 DECEMBER 2006 TRANSPORTATION PROPERTY MOTOR MISCELLANEOUS LIABILITY ACCIDENT & HEALTH GUARANTEE ENGINEERING Primary insurers 31 Federated Employers` Mutual Assurance Company Limited X 32 Ferrosure (SA) Insurance Company Limited X X X X X X X X 33 Fidelity Insurance Limited X X X X X X 34* First Central Insurance Limited X X X X X X X X 35 Firstrand Insurance Services Company Limited X X X X X X X X 36 FNB Credit Guarantee Limited X X X X 37* General Accident Insurance Company South Africa Limited X X X X X X X X 38 Gerling General Insurance of South Africa Limited X X X X X X X X 39 Global Insurance Company Limited X X X X X X X X 40* Guardian National Insurance Company Limited X X X X X X X X 41 Guardrisk Insurance Company Limited X X X X X X X X 42 Hollard Insurance Company Limited, The X X X X X X X X 43 Home Loan Guarantee Company X 44 Indequity Specialised Insurance Limited X X X X X X X X 45** Infiniti Risk Solutions Limited X X X 46 Intermediaries Guarantee Facility Limited X 47* Investec Specialised Insurance Limited X X X X X X X X 48 Khula Credit Guarantee Limited X 49 Kingfisher Insurance Company Limited X X X X X X X X 50 Legal Expenses Insurance Southern Africa Limited X 51 Lion of Africa Insurance Company Limited X X X X X X X X 52 Lombard Insurance Company Limited X X X X X X X X 53**** Lloyd s underwriters X X X X X X X X 54 McSure Limited X X X X X 55 Momentum Short-term Insurance Company Limited X X X X X 56 Monarch Insurance Company Limited X X X 57 Mua Insurance Company Limited X X*** X X*** 58 Mutual & Federal Insurance Company Limited X X X X X X X X 59 Mutual & Federal Risk Financing Limited X X X X X X X X 60 Natsure Limited X X X X X X Short-term Insurance 23

26 TABLE 3 - POLICIES FOR WHICH SHORT-TERM INSURERS WERE REGISTERED AS AT 31 DECEMBER 2006 TRANSPORTATION PROPERTY MOTOR MISCELLANEOUS LIABILITY ACCIDENT & HEALTH GUARANTEE ENGINEERING Primary insurers 61* Nedcor Insurance Company Limited X X 62 Nedcor (SA) Insurance Company Limited X X X X X X X X 63 Nedgroup Insurance Company Limited X X X X X X X X 64 New National Assurance Company Limited X X X X X X X X 65 Nova Risk Partners Limited X X X X X X X X 66* Old Mutual Health Insurance Limited X X 67 Outsurance Insurance Company Limited X X X X X X X 68* Pick n Pay Insurance Company Limited X X X X X X X X 69 Pinnafrica Insurance Limited X X X 70 Rand Mutual Assurance Company Limited X X X 71 Regent Insurance Company Limited X X X X X X X X 72 Relyant Insurance Company Limited X X X X X X 73 Renasa Insurance Company Limited X X X X X X X X 74** Resolution Insurance Company Limited X X X X X X 75** RMB Specialised Lines Limited X X X X X X X 76 RMB Structured Insurance Limited X X X X X X X X 77 Sabsure Limited X X X X X X X X 78 Safire Insurance Company Limited X X X X X X X 79 Sage Specialised Insurances Limited X X X X X 80** SAHL Insurance Company Limited X 81 Santam Limited X X X X X X X X 82 Sasguard Insurance Company Limited X X X X X X X 83 Sasria Limited X X X X X X X X 84 Saxum Insurance Limited X X X X X X X X 85* Sentrasure Limited X X X X X X X 86 Shoprite Insurance Company Limited X X X X 87 South African Eagle Insurance Company Limited X X X X X X X X 88 South African Eagle Risk Financing Limited X X X X X X X X 89 South African Reserve Bank Captive Insurance Company Limited, The X X X X X X X X 24 Short-term Insurance

27 TABLE 3 - POLICIES FOR WHICH SHORT-TERM INSURERS WERE REGISTERED AS AT 31 DECEMBER 2006 TRANSPORTATION PROPERTY MOTOR MISCELLANEOUS LIABILITY ACCIDENT & HEALTH GUARANTEE ENGINEERING Primary insurers 90* Southern Insurance Association Limited X X 91 Standard Insurance Limited X X X X X X 92** Sunderland Marine (Africa) Limited X X X X 93* St Paul Insurance Company SA Limited X X X X X X X X 94* Truck & General Insurance Company Limited X X X X X X 95 Unitrans Insurance Limited X X X X X X X X 96 Unity Insurance Limited X*** X*** X X X X X X*** 97* Westchester Insurance Company (Pty) Limited X X X X X X X X 98* XL Insurance Company Limited X X X X X X X X Reinsurers 99 African Reinsurance Corporation (SA) Limited X X X X X X X X 100* Central Reinsurance Corporation Limited X X X X X X X X 101 General Reinsurance Africa Limited X X X X X X X X 102 Hannover Reinsurance Africa Limited X X X X X X X X 103 Imperial Reinsurance Company Limited X X X X X X X X 104 Munich Reinsurance Company of Africa Limited X X X X X X X X 105* Saxum Reinsurance Limited X X X X X X X X 106 South Union Reinsurance Company Limited (in curatorship) X X X X X X X X 107 Swiss Re Africa Limited X X X X X X X X Total * Run-off of business as well as dormant companies during the period under review. ** New insurers registered during the period under review. *** New policies included in the registration of insurers during the period under review. **** Lloyd s underwriters are authorised to carry on short-term insurance business in terms of the Short-term Insurance Act, 1998 (Act No. 53 of 1998). Short-term Insurance 25

28 TABLE 4 - NAME CHANGES OF SHORT-TERM INSURERS UP TO 31 DECEMBER 2006 PREVIOUS NAME CHANGED NAME EFFECTIVE DATE 1 AGF (Southern Africa) Insurance Limited Emerald Insurance Company Limited 13/05/ AI Insurance Company Limited AIG South Africa Limited 09/02/ Allianz Risk Transfer Limited Santam Risk Finance Limited 13/03/ BOE Insurance Company Limited Nedinsurance Company Limited 13/08/ CGU Risk Finance Limited Cougar Risk Finance Limited 21/06/ Cigna Insurance Company Limited Ace Insurance Limited 02/11/ Cologne Reinsurance Company of South Africa Limited, The General & Cologne Re Africa Limited, The 01/06/ Commercial Union Insurance of SA Limited CGU Insurance Limited 03/09/ Commercial Union Risk Finance Limited CGU Risk Finance Limited 11/10/ Concord Insurance Company Limited Cigna Insurance Company Limited 23/03/ Denel Versekeringsmaatskappy (Edms) Beperk Densecure (Edms) Beperk 01/06/ Fedgen Insurance Limited Fedsure General Insurance Limited 04/10/ First National Insurance Company Limited Outsurance Insurance Company Limited 08/02/ General & Cologne Re Africa Limited, The GeneralCologne Re Africa Limited 21/10/ GeneralCologne Re Africa Limited General Reinsurance Africa Limited 11/06/ Gerling Global Reinsurance Company of SA Limited Saxum Reinsurance Limited 08/12/ Guardian Insurance Company Limited Alexander Forbes Insurance Company Limited 18/09/ HMS Insurance Company Limited Fedsure Health General Insurance Limited 03/02/ Hollandia Reinsurance Company Limited Hannover Reinsurance Africa Limited 27/03/ Lion of Africa Insurance Company Limited, The Lion of Africa Insurance Company Limited 08/03/ Lombard Waarborg Versekering Maatskappy Beperk Lombard Insurance Company Limited 05/05/ Maritime & General Insurance Company Limited Quantum Insurance Company Limited 05/06/ Mercantile and General Reinsurance Company of SA Limited Swiss Re Life and Health Southern Africa Limited 31/10/ Munich Reinsurance Company of SA Limited Munich Reinsurance Company of Africa Limited 25/08/ * Nasionale Versekeraars Beperk Natsure Limited 19/09/ NBS Insurance Company Limited BoE Insurance Company Limited 11/10/ * Nedinsurance Company Limited Nedgroup Insurance Company Limited 14/09/ Outsurance Insurance Company Limited Outsurance Holdings Limited 08/02/ Outsurance Holdings Limited Firstrand STI Holdings Limited 09/11/ Phoenix Assurance of South Africa Limited Mutual & Federal Risk Financing Limited 03/08/ Short-term Insurance

29 TABLE 4 - NAME CHANGES OF SHORT-TERM INSURERS UP TO 31 DECEMBER 2006 PREVIOUS NAME CHANGED NAME EFFECTIVE DATE 31 Prefsure Limited Relyant Insurance Company Limited 02/02/ PSG Insurance Company Limited PSG Vantage Limited 26/10/ PSG Vantage Limited Indequity Specialised Insurance Limited 24/01/ Quantum Insurance Company Limited RMB Structured Insurance Limited 13/03/ * Ritesure Limited Infiniti Risk Solutions Limited 28/03/ * Santam Risk Finance Limited Centriq Insurance Company Limited 14/09/ Sentraboer (Koöp) Beperk Sentrasure Beperk 17/03/ Sentraoes Beperk Agri Risiko Spesialiste Beperk 07/04/ Sentraoes (Koöp) Beperk Sentraoes Beperk 08/01/ South African Special Risks Insurance Association Sasria Limited 05/11/ Stanbic Insurance Limited Standard Insurance Limited 05/11/ Suid-Afrikaanse Nasionale Mediese Fonds Beperk Sanlam Health Risk Management Limited 30/03/ Swiss Re Southern Africa Limited Swiss Re Africa Limited 04/11/ Swiss South African Reinsurance Company Limited Swiss Re Southern Africa Limited 23/01/ Universal Healthcare Insurance Company Limited Universal Insurance Limited 28/01/ Winterthur Insurance Company Limited XL Winterthur International Insurance Company Limited 04/12/ XL Winterthur International Insurance Company Limited XL Insurance Company Limited 21/05/ Zimbabwe Reinsurance Corporation SA Limited South Union Reinsurance Company Limited 15/04/2004 * Name changes during the period under review. Short-term Insurance 27