OUTsurance gets interest rate boost

OUTsurance expects a significant increase in earnings for the 2024 financial year, as the insurer benefited from high interest rates and favourable claims in South Africa.

OUTsurance released a trading update on Thursday, where it presented its earnings expectations for the financial year through June 2024.

The insurer said its normalised earnings for the current year were impacted by the following salient factors:

• Favourable claims experience in South Africa
• Increased investment income linked to higher interest rates in South Africa and Australia
• The impact of higher natural perils claims incurred in Australia compared to the comparative year
• A material increase in the cost of the South African Employee Share Option Scheme, following the increase in the OGL share price
• OUTsurance Ireland incurring more start-up losses, with trading commencing in May 2024
• The life insurance business delivering a much-improved operating result, following the impact of stronger growth achieved in the funeral market and the discontinuation of the face-to-face channel

From an operational point of view, OUTsurance said its Property and Casualty insurance gross written premium increased by more than 20%. 

Based on these factors, OUTsurance expects its normalised earnings – which excludes non-operational items and accounting anomalies – to increase by as much as 21%.

Furthermore, it expects normalised earnings per share to grow by as much as 25% and headline earnings per share to grow by up to 42%.

OUTsurance expects earnings per share to increase by between 32% and 42%.

The insurer explained that its earnings attributable to ordinary shareholders include R0.5 billion relating to the profit on sale of assets held for sale and the profit on sale and dilution of associates, which are excluded from headline and normalised earnings. 

It said the majority of this amount relates to the profit on the dilution of one of RMI Treasury Company Limited’s portfolio investments. 

Due to the dilution in shareholding, OUTsurance ceased the equity accounting of this investment in December 2023 and recognised it as a financial asset at fair value through other comprehensive income.

Below is an overview of the expected changes in OUTsurance’s earnings for the 2024 financial year.