OUTsurance delivers strong performance and identifies Ireland as new market for expansion
OUTsurance Group Limited, a growing, short-term insurance group operating across multiple geographies, has today reported its interim results for the six months ended 31 December 2022.
OUTsurance Group Limited (OGL) (formerly RMI Holdings Limited) [1]
• The earnings base of OGL has changed significantly since the disposal of Hastings in 2021 and the subsequent unbundling of interests in Discovery Limited and Momentum Metropolitan Holdings Limited in 2022. The Group’s earnings for the six month period is predominantly impacted by the performance of OUTsurance Holdings limited (OHL), the Group’s 89.7% subsidiary and owner of insurance interests
• Normalised earnings from continued operations up 77.7% to R1,317 million
• Interim dividend of 56.8 cents per share, compared to the prior interim dividend of 23.5 cents per share
OUTsurance Holdings Limited (OHL) (89.7% held subsidiary of OGL)
• Gross written premium increased by 17.4%, benefitting from higher premium inflation, a weaker Rand to Australian dollar exchange rate and the higher revenue contribution from new business initiatives
• Annualised new business premium growth expanded by 8.6% following a period of strong growth achieved over the 2022 and 2021 financial years
• Claims ratio reduced from 58.1% to 55.3% on account of more favourable weather-related claims experience in Australia and an improvement in the attritional claims ratios of the various growth initiatives
• Operating profit increase of 65.8% to R1,894m, attributed to the strong performances of Youi and OUTsurance
• 36.3% increase in normalised earnings. This increase was lower than the increase in operating profit because of lower gains on the equity portfolios as well as the fact that the comparative period still included some associate earnings from Hastings
• Cost-to-income ratio improved from 31.5% to 30.5%, attributed to the strong premium growth, improved economies of scale achieved in the growth initiatives and cost control within a higher inflationary environment
• Normalised ROE improved from 23.6% to 29.1% owing to strong earnings growth
• OUTsurance Holdings remains well capitalised with a solvency multiple of 2.3 compared to a target of 1.6, underlining the company’s resilience and claims paying ability
• Republic of Ireland identified as a new market opportunity for organic expansion; authorisation process has commenced, and if successful, planned market entry anticipated in 2024
Marthinus Visser, Chief Executive Officer, OUTsurance Holdings, said: “The Group’s growth initiatives, pricing discipline and focus on operational execution have allowed for a strong operational and financial performance despite the challenging macro-economic backdrop. Various headwinds had to be navigated including higher reinsurance costs, high claims inflation, a fast reset of vehicle accident claim frequencies and, in South Africa specifically, higher load-shedding, high vehicle theft and ongoing high storm and flood claims.
“Our strategic focus over the last four years has been to expand our insurance product and distribution capabilities and we look forward to driving these growth initiatives towards profitability and scale in 2023.
“In line with our long-term strategy for growth and diversification, we are delighted to have identified Ireland as a new market for expansion. Ireland’s motor and home insurance market is a strong strategic fit for OUTsurance with a growing insurance market, favourable distribution dynamics, historic market profitability and a familiar regulatory environment. The market entry is subject to obtaining a non-life insurance license from the Central Bank of Ireland.
“While the general economic outlook is tough, we remain optimistic about growth prospects given our low market share and growth potential in newly identified markets and channels.”
[1] OUTsurance Group Limited represents the consolidated performance of OUTsurance Holdings Limited coupled with head office costs and the financial performance of RMI Treasury Company where portfolio investments and the interest in RMI Investment Managers are retained.
