OUTsurance Group saw strong premium growth in the six-month period stimulated by good organic growth. Photo: Supplied
OUTsurance Group (OGL), an insurance group operating across South Africa and Australia, plans to open a new business in Ireland in the next three months.
“We look forward to a successful market entry of OUTsurance Ireland and are on-track to ensure that systems and processes, pricing and customer service are streamlined to form a foundation for a successful business,” CEO Marthinus Visser said yesterday.
He said in an online event that there were already 60 people employed in Ireland and processes were under way to test the systems and establish the necessary infrastructure for a direct business to satisfy regulators in that country, such as call centres.
He said the company was following much the same model they had used in setting up their successful Youi Insurance operation in Australia 15 years ago, and significant and sufficient capital had been provisioned for the new business for the estimated five years it would take to reach break-even in Ireland.
The group’s exposure to the new business in Ireland was relatively low and estimated at about three months of group operating profit. Ireland’s growing carpool, economy and population represented strong structural long-term growth opportunities.
Additionally, exposure to northern hemisphere climate change risk represented a diversification from the group’s current risk exposure as both its main operating subsidiaries were exposed to southern hemisphere climate change risks.
Visser said if the business in Ireland was successful, the longer-term returns would be far better than if they had tried to enter the market through inorganic growth, such as by acquisition.
OGL saw strong premium growth in the six-month period stimulated by good organic growth.
OGL holds an 89.8% interest in subsidiary OUTsurance Holdings, owner of the various insurance interests. The interim earnings reflected the first-time adoption of IFRS 17, which resulted in a significant change in the accounting policies and in particular, the measurement approach for the Life insurance operation.
Operating results lagged the prior year due to more severe storm events experienced in Australia, although this represented more of a normalising of weather compared with the previous year, when the weather patterns were very benign, Visser said.
Also impacting operating results was an increased share-based payments’ expense linked to the strong performance, and once-off value unlock of the OUTsurance share price since the listing transition in December, 2022.
Normalised earnings were up 0.5% to R1.41 billion. Normalised return on equity reduced to 21.6% from 23%. The interim dividend was up 7.7% to 61.2 cents a share; supported by a higher dividend pay-out ratio for Youi and a resumption of dividend payments by OUTsurance Life.
Visser said over the past year they had taken significant actions to simplify the portfolio of products and channels to ensure their growth strategy was focused to where return on capital could be optimised.
He said despite claims volatility due to natural perils, the group delivered “strong interim performance” and they were optimistic OUTsurance was well positioned for meaningful growth over the long term.
Property and Casualty gross written premium increased 22.5% to R16.11bn, benefiting from good execution, the high-inflation environment and new business initiatives.
Property and Casualty delivered 38.8% new business premium growth. Operating profit fell 10.7% to R1.79bn, primarily due to the impact of increased natural perils claims in Australia, and higher share-based payments’ expense.
Total Investment income increased by 47%, benefiting from the higher interest rate environment.
The group remained well capitalised, Visser said.
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