Access America 2005 Annual Report Download - page 11

ratio of 96.1% (+ 0.3 points or 95.8%
compared to the previous year).
Investments and financial results
At December 31st, 2005 the group's
financial investments amounted to
537.1 million euros (2004: 467.2
million euros). The relatively high
amount of cash and cash equivalents
(159 million euros or + 16.6%
compared to the 136 million euros
in 2004) is caused by the positive
cash flow in 2005, and the inverse
yield curve in the UK, which lead our
subsidiary to invest in short-term
papers.
Ordinary results of the investment
income increased to 23.3 million
euros (2004: 18.4 million euros) as
market interest rates recovered.
This increase was also due to a
higher investment portfolio on fixed
interest securities and short term
deposits. The realised result with
3.2 million euros (previous year: loss
of 11.5 million euros) returned to a
normal level after an exceptional
loss due to the sale of the Group’s
participation in a French subsidiary
in 2004. The accountancy result
was marginal in 2005 as the write-up
participations of a South American
subsidiary boosted the 2004 write-
ups’ result. Unrealized gains and
losses on exchange rates amounted
to 3.7 million euros thanks to a
re-evaluation of the U.S. and
Australian dollars against the Swiss
franc. In total, the described effects
tripled the financial result in 2005 to
30.5 million euros (2004: 10.1 million
euros).
Result before and after tax, and
return on equity
Despite a higher administration
expenses ratio, which included
exceptional non-recurrent items,
the strong increase in net earned
turnover (+9.3%), and modest
growing claims and commissions
ratios resulted in a stable net
operating result of 45.6 million euros,
up 2% compared to the 44.6 million
euros registered in 2004. Thanks to
the higher financial result and the
absence of an exceptional result
(2004: 3.2 million euros), profit
before taxes attained 76.1 million
euros (2004: 51.5 million euros,
+ 47.8%). Deducting the taxes on
profits of 27.0 million euros (2004:
27.8 million euros), which returned
to a normal level, profit after taxes
doubled to47.8 million euros
compared to the previous year’s
23.1 million euros (+ 107%).
Correspondingly, the return on
equity throughout the twelve-month
period ending December 31st, 2005,
was substantially higher (+93%) at
16.8%, up from 8.7% in 2004.
Changes in Group structure
2005 saw several changes in the
Group’s structure. These include
an increase or decrease in
shareholder stakes, and the sale
or closing of companies. Details
of these operations can be found
in the chapter “Notes of the
consolidated financial statements”,
starting on page 23 of this report.
19
All our lines of business posted
growth: +11 % in vehicle assis-
tance, +9 % in travel insurance
sales and +30 % in healthcare
services.
“
“
Turnover (Premium and Service
Revenue)
Mondial Assistance Group
achieved +11% growth in turnover
(gross written turnover, both
insurance premiums and service
fees), reaching 1,220.5 million
euros throughout the twelve-month
period ending December 31st, 2005.
The more favorable market condi-
tions within the three main lines of
business - travel insurance, vehicle
assistance and healthcare services
- helped generate this growth.
In the European market where new
vehicle sales were virtually stagnant
in 2005 (+ 0.7%), the need for
sophisticated automotive assistance
nevertheless led to an 11% growth
in turnover, primarily in Europe
and Brazil. Automotive assistance
represents 44% of total Group
turnover.
Travel insurance sales increased by
9% to reach an overall 45% share
of total turnover. This continued
positive development (compared
to previous years) can mostly be
attributed to the strong demand for
travel insurance in North America
and Asia, and the enhanced
prescription of e-commerce products
in North America and Europe.
The third line of business, healthcare
services, continues to expand. It
increased its turnover by 30% in
2005 for a current 6% of the
Group’s overall sales.
From a geographical perspective,
sales development was particularly
strong in certain markets, and all
regions registered growth. Turnover
increased in the Asia–Pacific region
by + 43% compared to 2004, the
Americas by + 29%, Europe (excluding
France) by + 7% and France with a
modest increase of 3%.
The fluctuation of currency
exchange rates also affected the
Group’s turnover in 2005, resulting
in a positive net increase of 16.0
million euros this year, (this was
mostly due to fluctuations of the
Brazilian Real, and the Australian
and Canadian Dollars), compared to
a hypothetical situation at constant
exchange rates in 2004.
Claims and Expenses
The claims ratio (including internal
claims administration costs, net of
reinsurance) in the insurance busi-
ness increased slightly to 61.9%
(2004: 61.6%), while claims reserves
were up by 4.1% to 131.4 million
euros. This development reflects
the resurgence in the travel insurance
activity: as travel insurance generates
claims with a longer run-off period
and higher average costs than assis-
tance activities, the ratio of claims
reserves to premiums, or claims paid,
is thus higher in travel insurance
than in assistance insurance.
Compared to 2004, Mondial
Assistance Group’s reported global
commission ratio (gross of reinsur-
ance) modestly increased to 17.5%
(both for insurance and service
activities).
Overall, operating entities maintained
efficient control of expenses despite
the powerful growth in turnover.
Nevertheless, general expenses
increased by 11.2% to 455 million
euros (2004: 409 million euros) due
to exceptional non-recurrent items.
Although claims and commissions
developed positively in an environ-
ment marked by a heavy increase
in premiums, the higher expenses
lead to a slightly worse combined
18
Review of operations
for the year 2005
Annual closing December 31st, 2005
Consolidated accounts