Major South African insurer takes big Australian hit

The devastating impact of a tropical cyclone in Australia will see OUTsurance take a major hit through its Australian subsidiary, Youi.

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 informed shareholders on Monday, 31 March 2025, that its Australian subsidiary will see an overall net loss due to Cyclone Alfred.

Cyclone Alfred was a severe tropical cyclone that earlier this year ravaged South East Queensland and the New South Wales North Coast in Australia. 

Reuters recently reported that the Australian Treasury expects costs from Cyclone Alfred to be about AUS$1.2 billion (R14 billion), shaving off a quarter of a percentage point from its GDP in the March quarter.

OUTsurance explained that although the ultimate losses from Cyclone Alfred remain uncertain, the majority of the incurred losses are expected to fall within a reinsurance claim window.

This window is allowed for by the Australian Cyclone Reinsurance Corporation’s coverage of the event. 

However, the insurer estimated that Youi’s exposure to residual losses outside of this claims window and, therefore, its overall net loss from the event will be between AUS$10 million (R116 million) to AUS$15 million (R174 million).

Unrelated to this loss, OUTsurance also provided an update on Youi’s underwriting activities in Australia.

Youi entered Australia’s broker distribution channel in partnership with Blue Zebra Insurance in 2020 and underwrites car, home and commercial insurance products through a Managing General Agent (MGA) arrangement.

However, over the past few months, Youi has been performing a strategic review of its participation in this broker distribution channel.

This review was prompted by a desire to focus more attention and capital on Youi’s core direct distribution channel, which offers much-needed competition in the Australian market. 

“Shareholders are advised that this strategic review has been completed with a decision to exit the MGA arrangement and, therefore, the broker distribution channel,” OUTsurance announced. 

“Youi will cease to underwrite new business through Blue Zebra Insurance’s platform with effect from 1 July 2025.”

“The in-force book will subsequently run off over a period of 12 months to 30 June 2026.”

The insurer explained that Youi’s exit allows Blue Zebra Insurance to obtain new underwriting partners to position the company for the future. 

“Youi wishes to thank Blue Zebra Insurance and its management for the partnership and wishes the company well for its future success,” it said.

Youi is now in the process of negotiating the disposal of its 36.9% interest in Blue Zebra Insurance to existing shareholders in this business.