Clientele increases new business to record high

FINANCIAL services company Clientele grew its new business to what it says was a record level of R638.2m for the full year to June, in a tough economic climate.

The value of new business increased by 111%, while diluted headline earnings per share grew 4%, from 89.57c to 93.53c, Clientele said yesterday.

Headline earnings were muted by the costs associated with acquiring the new business as well as a fair-value adjustment Clientele had to make due to exposure it had to African Bank Investments Limited (Abil). Last week, Abil was placed under curatorship.

Clientele, which has a market capitalisation of R5.5bn, offers financial services products including life insurance and hospital, funeral and investment products, to the public through direct channels.

According to Clientele’s website, it is the only company listed on the JSE that has increased its profits every year for the past 15 years up until last year. The 2014 results continue the tradition.

Clientele’s long-term insurance unit continued to be the major contributor to overall performance, accounting for 86%, or R550.6m, of the group’s R638.2m of new business.

The unit generated R283.4m of net operating profit for the year, an increase of 10% from the previous year’s R257m.

Clientele Legal, which provides legal cover, increased net profit by 35% in the year to R40.8m from the previous year’s R30.1m, despite higher acquisition costs related to growing new business.

Clientele’s investment contracts segment reported a R13.9m net loss for the year, compared with a R5.1m profit last year. This division was particularly hard hit by the effect of the fair-value adjustment of zero-coupon fixed deposits in Abil, Clientele said.