OUTsurance hails overseas operations as key growth story

Insurance firm OUTsurance Group makes nearly two-thirds of its revenue from overseas, mainly Australia, and sees growth potential there, its departing CFO Jan Hofmeyr said when releasing full-year results to June.

The group operates in South Africa, Australia and Ireland, serving over 4.3 million policies with more than 8 000 employees.

South Africa delivered the strongest results for the year with normalised earnings of R4.2 billion, up 43.3%. Australia’s division Youi group fell 6.7% to R2.1 billion – due to payouts related to storm and flood damage.

But the group sees major growth potential in Australia with Hofmeyr explaining that Australia has 19 million cars on the road versus South Africa’s 12 million, of which only four million are insured. He called Youi’s full-year profit “material”. 

Read:
OUTsurance earnings set to surge as SA underwriting improves
OUTsurance rides SA growth to profit gain

Explaining the drop in earnings Down Under to media, Hofmeyr said: “Australia is more volatile because claims there are more driven by natural disasters like floods and storms, rather than theft or accidents.”

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OUTsurance bucks the overseas trend

Many South African companies have struggled abroad, particularly in Australia – though not all the firms were in financial services.

Woolworths famously lost billions there, paying R21 billion for retailer David Jones in 2014 and selling it for R1.5 billion eight years later, after years of losses.

Retailer Spar lost money in its divisions in Poland and Switzerland, forcing sales. FirstRand is selling its entire UK banking and finance unit, Aldermore Group, to exit the UK and Europe after a major regulatory crackdown on vehicle financing, and large losses.

Hofmeyr said: “OUTsurance is unusual in that we’ve done really well overseas, and that’s created lots of potential for future growth.”

OUTsurance Ireland is growing its car and home insurance market, but its losses increased 15.9% to R466 million.

Monthly losses peaked in the first half of the financial year and started falling in the second half. OUTsurance Ireland aims to break even by financial year 2029.

Read:
OUTsurance’s half-year earnings flat, amid higher natural disaster claims
Bloody nose for Spar as Europe write-offs top R7.5bn
FirstRand to exit UK as car-loan charges hit R16.8bn

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OUTsurance share price

The group paid a special dividend of 87.5 cents after delivering strong results bringing the total special dividend to 117.8 cents per share.

Additionally, it paid an ordinary dividend of 170.8 cents per share, making the full-year dividend 291.5 cents per share. 

OUTsurance summarised its results as thanks to its “spread across three countries supported by steady growth, backed by strong profits in South Africa, continued success in Australia, and progress building Ireland’s business”.

OUTsurance Group Limited financial highlights:

Normalised earnings increased by 18.5% to R5.6 billion.
Normalised earnings per share increased by 18.3% to 362.2 cents.
Normalised return on equity improved to 38.3%.

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