RMI’s contribution to Remgro’s headline earnings for the year under review increased to R1 041 million (2016: R888 million).

The underlying investments of RMI (with percentage interest in brackets) include Discovery (25.1%), MMI Holdings (25.7%), OUTsurance (88.5%), Hastings (29.9%), RMI Investment Managers (100%), AlphaCode and its first two next-generation investments, Merchant Capital (25.1%) and Entersekt.

Discovery services the healthcare funding and insurance markets in South Africa, the United Kingdom, United States of America, China, Australia and Singapore. MMI was formed from the merger of Metropolitan and Momentum, focusing on long-term insurance, short-term insurance, asset management, healthcare administration and employee benefits. OUTsurance is a direct personal lines and small business short-term insurer and has also expanded into Australia and New Zealand under the Youi brand. RMI Investment Managers continues to build out its portfolio of affiliate asset managers as it looks to identify, partner and grow world-class asset managers, while Merchant Capital is launching new products and partnerships to further entrench itself into the SME segment. The interest in Hastings, which is a UK-listed short-term insurer, was acquired on 1 March 2017.

RMI’s reported headline earnings from continuing operations for its year ended 30 June 2017 increased by 18.9% to R3 480 million (2016: R2 927 million). However, RMI believes that normalised earnings more accurately reflect operational performance, and therefore headline earnings are adjusted to take into account non-recurring items and accounting anomalies. RMI’s normalised earnings for the year under review increased by 16.4% to R3 897 million (2016: R3 348 million).

Discovery’s contribution to normalised earnings increased by 8.2% to R1 167 million (2016: R1 079 million). The increase was driven by the performance of its three established South African businesses, as well as VitalityLife in the United Kingdom. Overall earnings growth was strained by the increased finance charges due to funding of new business acquisition cost. MMI’s contribution to normalised earnings increased by 1.4% to R816 million (2016: R805 million) due to the impact of weak investment market returns over the past two years on asset-based fees and the negative underwriting experience on group disability business.

Normalised earnings from OUTsurance increased by 25.7% to R2 092 million (2016: R1 664 million),mainly due to favourable claims experience across the group. The cost-to-income ratio improved from 26.2% to 25.8%, primarily due to efficiency gains from Youi and OUTsurance Life. There was also a significant reduction in the start-up loss at Youi New Zealand. Hastings’ contribution to normalised earnings since its acquisition amounted to R246 million.