OUTsurance Group Limited (OGL) has reported a strong operational performance, driven by premium growth, an improved claim ratio, and higher investment income.
The JSE-listed insurer operating in South Africa, Australia, and Ireland this week released its results for the year to the end of June.
The group recorded a 33.7% increase in normalised earnings for the year, reaching R4.728 billion, up from R3.536bn the previous year. This growth translated into a 32.8% rise in normalised earnings per share to 306.2 cents from 230.6 cents.
The operating profit for OUTsurance Holdings Limited (OHL), in which OGL holds a 92.3% interest, rose by 25.7% to R6.047bn, bolstered by enhanced profitability across most operating units despite a larger share-based payment expense linked to a 68.7% increase in OGL’s share price over the financial year.
A key driver of performance was the 16.8% growth in property and casualty gross written premium (GWP), which climbed to R38.782bn. This increase was fuelled by organic growth in the Youi Direct and OUTsurance SA segments, alongside premium inflation.
However, this growth was tempered by the rand’s 4.2% appreciation against the Australian dollar, which negatively affected the rand-denominated value of premiums from Youi’s operations. Additionally, the contraction of gross written premium from Youi’s broker channel book, Blue Zebra Insurance (BZI), currently in run-off, contributed to this dynamic.
The claims ratio improved from 56.8% in the prior year to 53.6%, a result of favourable natural perils experience and disciplined underwriting practices. This improvement enhanced overall profitability across the group’s operations.
Normalised investment income saw a 49.1% increase to R2.29bn, driven by organic growth in investable assets and favourable equity market conditions. The normalised return on equity strengthened to 36.4% from 30.7% in the previous year, reflecting efficient capital utilisation.
Segmental performance
Segmental performance highlighted varied outcomes across OGL’s diverse markets.
OUTsurance SA delivered a 32.4% rise in normalised earnings to R2.928bn, while the Youi Group in Australia achieved a 45.5% jump to R2.29bn.
OUTsurance Life produced the strongest growth, with operating profit surging 65.9% to R438 million, propelled by reduced expenses, new business momentum in the direct and funeral segments, and favourable yield movements.
In contrast, OUTsurance Ireland, in its first full year of operations following its launch in May 2024, recorded R269m in GWP but incurred operating losses of R448m, up from R218m the previous year.
OGL said these losses were in line with expectations, with the 2025 and 2026 financial years anticipated to reflect the largest start-up losses on the path to breakeven, which is targeted for the 2029 financial year.
Shareholder returns
Shareholders benefited from a 36.2% increase in the full-year ordinary dividend to 237.6 cents per share, comprising a final dividend of 149 cents per share. Additionally, a special dividend of 33.1 cents per share was declared, attributed to proceeds from the sale of Youi’s 37% stake in BZI and the ongoing monetisation of non-core assets. This special dividend marks a reduction from the 40 cents per share paid the previous year.
After accounting for a 20% dividend withholding tax, the net ordinary dividend stands at 119.2 cents per share, and the net special dividend at 26.48 cents per share for non-exempt shareholders.
Strategic developments
OGL said it is advancing its structural simplification by monetising non-core assets held within the RMI Treasury Company, a legacy of its former parent RMI. This process includes rolling up the 7.25% minority interest in OHL to the OGL level through the issuance of new shares, with OHL set to house only the group’s South African assets moving forward.
The group also entered into total return swaps as a partial hedge against share-based payment liabilities tied to the Employee Share Option Scheme, with a market exit of the backing OGL shares planned post-vesting on 23 September 2025.
OUTsurance’s entry into the Irish market in 2023, offering car and home insurance, has been a focal point of the group’s geographical diversification strategy. Despite the widened losses, the segment gained traction, and the group anticipates a gradual reduction in the onerous loss allowance as the business scales.
OUTsurance Life’s growth is further supported by a joint venture with Shoprite since 2020, leveraging more than 800 in-store sales staff to sell funeral policies, although its direct sales strategy limits broader market share expansion beyond the current 3%.
