Johannesburg - Financial services investment holding company Rand Merchant Investment Holdings (RMI) yesterday announced an 8-percent rise in normalised earnings to R3.34 billion for the year to June, from R3.1bn with OUTsurance at the forefront of the group’s earnings.
RMI’s investments include Discovery, MMI Holdings, OUTsurance Holdings, RMB-SI Investments, RMI Investment Managers and Merchant Capital Advisory Services.
The chief executive, Herman Bosman, said: “Our ambition is to optimise, diversify and modernise our portfolio... Since our listing in March 2011, we have achieved an annual compounded return to shareholders of 33.1 percent.”
Income for the year jumped 20 percent to R14.08bn, from R11.7bn compared with the same period last year.
Profit attributable to equity holders decreased by 10 percent to R3bn, from R3.3bn reported last year.
Challenging times
Headline earnings per share from continuing operations were 8 percent lower at 197.6c per share as compared with 215.5c per share last year.
RMI acknowledged the challenging times faced by the South African economy. But with such a great performance from insurance company, OUTsurance, RMI was confident about its business in the year ahead.
“OUTsurance was again the strongest performer in our established portfolio due to the significant improvement in the contribution from the Youi group and exceptional results from the South African operations.
“Discovery’s 7-percent increase in normalised earnings was driven by the performance of its three established South African businesses of Discovery Health, Discovery Life and Discovery Invest, as well as VitalityLife in the UK.
“MMI recorded a disappointing 16 percent decrease in normalised earnings, mainly as a result of lower underwriting profits, muted equity investment growth affecting asset-based fees and discretionary margin releases, as well as operational challenges in certain non-life businesses,” Bosman said.
The OUTsurance results were impressive with normalised earnings increasing by 43 percent to R1.99bn, driven mainly by a significant improvement in car insurer Youi’s profitability and pleasing results from the South African operations. Gross premium revenue grew by 18 percent to R14.8bn, of which the Australasian operations contributed half.
OUTsurance also recorded growth in annualised new business volumes of 3 percent to R4bn with the claims ratio decreasing from 55.5 percent to 54.4 percent due to a significant improvement in the claims ratio of Youi Australia, where large weather-related catastrophe claims were included in the comparative number.
Discovery’s normalised earnings were up 7 percent to R1.08bn ,while MMI’s earnings were down 16 percent to R805m. The board declared a final dividend of 65c per share payable out of income reserves.
RMI believed that its investee companies had appropriate strategies in place to continue producing resilient operational performances in the future.
The share price was down yesterday in line the JSE all share index. It closed 1.95 percent lower on the day at R42.78.
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