Major South African insurer shooting the lights out

OUTsurance released impressive results for the last six months of 2024, as the insurance giant benefited from significantly fewer natural peril claims and strong organic premium growth.

OUTsurance is one of South Africa’s largest insurance companies, operating in South Africa, Australia and Ireland.

In South Africa, OUTsurance offers car, home, business, life, funeral and pet insurance. 

In Australia, its Youi subsidiary provides car, home, business and CTP insurance, while OUTsurance Ireland offers car and home insurance.

The company released its results for the six months through December 2024 – the first half of its 2025 financial year – on Friday, 14 March.

These results revealed an impressive performance, with OUTsurance reporting normalised earnings growth of 52.9% to R2.16 billion.

The company attributed this growth to significantly fewer natural peril claims incurred by Youi and OUTsurance South Africa, with the insurer’s claims ratio having decreased from 59.1% to 53.0%.

Growth was also driven by strong organic premium growth of 17.4% and higher investment income.

OUTsurance’s insurance revenue rose by 16.9% in the period, while its investment income increased by 8.2% in the period.

The company said notwithstanding premium inflation, which has remained sticky over the last six months, its growth was supported by satisfactory organic growth across its operating segments.

The company’s operating profit grew by 58.8% to R2.84 billion, driven by its South African and Australian businesses.

OUTsurance South Africa grew its operating profit by 21% to R1.32 billion, while Youi grew by 154% to R1.57 billion, making it the largest contributor to the company’s profits during this period.

OUTsurance Ireland did not perform well, with its operating loss deepening by 284.38% to R246 million.

The company explained that this business incurred R218 million in normalised start-up losses during the six-month period, as OUTsirance Ireland only officially launched in May 2024.

It attributed the higher loss to an increased operational cost base post-launch and the onerous losses recognised for new insurance contracts issued.

However, the company said this business is performing in line with expectations.

These challenges in its Irish business did not significantly impede the company’s profitability, with profit for the period up 9.2% to R2.26 billion.

OUTsurance’s earnings per share also grew by 7.5% to 132.9 cents per share.

OUTsurance explained that, over the last two financial years, its premium revenue was significantly impacted by average premium inflation emanating from the post-pandemic wave of global inflation, industry-specific supply shortages and constrained reinsurance markets. 

However, looking ahead, the insurer expects that premium inflation will normalise in line with the trend of general inflation over the next twelve months. 

“In the long run, we do, however, expect premium inflation to be higher than CPI as a result of the effects of climate change, penetration of electric vehicles and increased technology penetration in new vehicle models,” it said.

“In response to the lower inflationary environment, interest rates and our investment income generation will be adversely impacted.” 

“These macroeconomic trends will, however, support a more favourable real growth outlook for the South African and Australian operations.”

OUTsurance declared an interim dividend of 88.6 cents per share, which is nearly 45% more than its interim dividend in the 2024 financial year.