OUTsurance doubles dividend as earnings jump from Youi investment

OUTsurance doubled its ordinary dividend as its normalised earnings from continued operations increased by over 60% on the back of an earnings jump from Australian insurance company Youi Holdings.

OUTsurance (OGL) released its results for the year ended 30 June 2023 today, which revealed solid results for the insurer.

In December 2022, Rand Merchant Investment Holdings Limited (RMI) changed its name and started trading as OUTsurance Group Limited on the JSE. 

This formed part of the managed transition from RMI to OGL following the sale of the Group’s interest in Hastings in December 2021 and the unbundling of the Group’s interests in Discovery Limited and Momentum Metropolitan Holdings Limited to OGL shareholders in April 2022.

As of 30 June 2023, OGL owned an 89.8% equity stake in OUTsurance Holdings Limited (OHL) and 100% in RMI Investment Managers, which is invested in a selected group of independent boutique asset managers and a venture capital portfolio comprising investments in Entersekt, Prodigy Finance, Merchant Capital and Guidepost. 

In the 2023 financial year, OGL’s normalised earnings from continued operations increased by 62.1% to R2.88 billion, while its normalised earnings per share from continued operations increased by 62.1% to 187.7 cents per share.

The company’s growth was mainly driven by the performance of its Youi subsidiary, which delivered strong gross written premium growth of 31.4% and 21.5% in rand and Australian dollar terms, respectively.

The following factors also impacted the company’s South African short-term insurance operations:

  • Accelerating premium inflation contributed positively to the 8.8% growth in gross written premiums.
  • The claims performance for the year was impacted by increased load-shedding hours, a normalisation of motor claims frequencies to pre-pandemic levels, rising reinsurance costs, increasing motor theft experience and rising claims repair costs.
  • The cost-to-income ratio increased from 25.3% to 26.1%. The cost-to-income ratio for both the current and comparative periods was impacted by significant adjustments in share-based payment expenses following the impact of the profit realised on the Hastings disposal in December 2021 and the strong performance in the OGL share price since the listing transition in December 2022.

OUTsurance Life delivered gross written premium growth of 17.8%, with the Funeral segment’s gross written premium growing by 49.6%. 

The company also announced the acquisition of additional equity shares in Youi.

Earlier this year, OHL announced the acquisition of an additional 5.3% equity stake in Youi from Mr. Roos, a non-executive director of OHL and its listed parent company, OGL. 

The first 50% of his shareholding in Youi was acquired on 9 May 2023.

OHL has exercised its option to acquire the remaining 50% of the Youi shares owned by Roos by the end of October 2023 for a total cash consideration of AUS$42.5 million.

As of 30 June 2023, the total net asset value of Youi on 30 June 2023 was R5.88 billion and the

profit after tax for the year ended 30 June 2023 was R1.4 billion.

The company declared an ordinary dividend of 134.8 cents for the year, a more than 100% increase from the previous year’s dividend of 65.5 cents.

The company also declared a special dividend of 8.5 cents in cash.