JOHANNESBURG - OUTsurance was a star performer for financial services investment holding company, Rand Merchant Investment Holdings (RMI) year results, by reporting a 25% increase in normalised earnings due to favourable claims experience across the group.
OUTsurance achieved a return on equity of 33.7% and a combined ratio of 79% for the year to end June.
OUTsurance provides short and long term insurance products in South Africa and short term insurance products in Australia, New Zealand and Namibia. Overall RMI delivered 18 percent increase in normalised earnings from continuing operations to R3.9 billion while headline earnings per share (Heps) was up by 18 percent to 263.6 cents a share. The group declared a dividend of 118c, maintaining last year’s dividend.
RMI is an investment holding company with minority interests in listed companies, which include Discovery (25.1 percent), MMI (25.7 percent) and Hastings (30 percent) a disruptive UK short-term digital insurer.
RMI chief executive Herman Bosman said the group is pleased with how its portfolio weathered tough market conditions, which included the first recession since the 2008 global financial crisis in South Africa.
“Our results again prove the resilience of our strategy of investing in businesses that can deliver superior earnings and dividend growth over the long term. In the last five years, we have seen annual growth in earnings of 10.6 percent and 9.3 percent in dividends,” Bosman said.
Other investments saw Discovery’s increasing its normalised earnings by 8 percent, driven by the performance of its three established South African businesses of Discovery Health, Discovery Life and Discovery Invest, as well as VitalityHealth in the UK. MMI maintained its normalised earnings of R3.2 billion from the prior year.
RMI included normalised earnings of R246 million from Hastings for the four months from March to 30 June. Gross written premiums increased by 28 percent and earnings by 22 percent. Citadel’s equity analyst Victor Von Reiche said given that these three businesses (Discovery, MMI and Hastings) recently reported results, the big unknown was the operational performance of OUTsurance and more specifically, from Youi the Australian operation.
“We think that, on balance, this was a good set of numbers from OUTtsurance. Good cost management and strong underwriting margins in Australia drove the result, while growth in gross written premiums was slightly softer than expected. Earnings from South African operations were largely in line with expectations, while start-up losses from the New Zealand Youi operation narrowed materially, which was a pleasing result,” Von Reiche said.
He added that growth in normalised earnings of 18 percent at group level was a solid performance in the current environment and “we think the fact that the dividend was maintained was also a strong positive signal, given the expectation of a dividend cut due to concerns around current debt levels.”
- BUSINESS REPORT