OUTsurance Group Limited (OGL)

OUTsurance Group Limited, a growing insurance group operating across South Africa and Australia, today reported its interim results for the six months ended 31 December 2023.

OGL holds an 89.8% interest in subsidiary OUTsurance Holdings Limited (OHL), the owner of the various insurance interests.  Earnings reflect the first-time adoption of IFRS 17, which resulted in a significant change in the accounting policies of the Group and in particular, the measurement approach for the Life insurance operation.

The results for the six-month period reflects a strong premium growth profile stimulated by good organic growth and the high inflationary environment. Operating results lagged the prior year due to more severe storm events experienced in Australia. Also impacting operating results was an increased share-based payments expense linked to the strong performance and once-off value unlock of the OUTsurance share price since the listing transition in December 2022.

OGL Financial Highlights:

• Normalised earnings up 0.6% to R1,411 million
• Normalised return on equity reduced to 21.6% from 23%
• Interim dividend up 7.7% to 61.2 cents per share; supported by a higher dividend pay-out ratio for Youi and a resumption of dividend payments by OUTsurance Life

Marthinus Visser, Chief Executive Officer, OUTsurance Holdings, said:

“Over the last year we have taken significant action to simplify our portfolio of products and channels to ensure that our growth strategy is focused to where we can optimise our return on capital. We are continuing to invest in our core businesses where we see a good runway for organic growth and profitable market share expansion. Our teams are focused on cost optimisation as a core ingredient to maintain target margins and achieve premium competitiveness.

Despite natural perils causing claims volatility, we have delivered a strong performance and are optimistic and believe the OUTsurance Group is well positioned for meaningful growth over the long term. We look forward to a successful market entry of OUTsurance Ireland over the next quarter and are on-track to ensure that systems and processes, pricing and customer service are streamlined to form a foundation for a successful business. We are well positioned to leverage real growth opportunities in Australia and in South Africa where elevated premium inflation is expected to persist.”

OHL Financial Highlights

• Property and Casualty gross written premium increased by 22.5% to R16 110 million, benefitting from good operational execution, the high inflationary environment and the contribution made by new business initiatives.
• Property and Casualty delivered 38.8% new business premium growth, aided by an accelerated new business trend and the higher inflationary environment.
• Operating profit decreased by 10.7% to R1 788 million, primarily attributed to the impact of increased natural perils claims in Australia and higher share-based payments expense.
• The combined ratio increased from 83.5%% to 90%, attributed to higher retained natural perils claims incurred by Youi, the effect of the higher share-based payments expense and the start-up costs incurred to launch OUTsurance Ireland.
• Total Investment income increased by 47%, benefitting from the higher interest rate environment.
• Normalised earnings decreased by 3.3% to R1 546 million.
• Normalised ROE reduced to 26.1% from 30.2% in the comparable period.
• OUTsurance Holdings remains well capitalised with a solvency multiple of 2.2 compared to a target of 1.5, underlining the company’s resilience and claims paying ability.