Financial services

Profile: OUTsurance Group is a group of leading insurance and financial services providers, operating in two key markets. In 2024 OUTsurance Group entered a third market in Ireland. In South Africa, OUTsurance offers car, home, business, life, funeral and pet insurance. In Australia, Youi provides car, home, business and CTP (compulsory third party) insurance.

Corporate information

Sustainability measures

OUTsurance Group’s contribution to Remgro’s headline earnings increased by 21.6% to R1 080 million (2023: R888 million). On a normalised basis, which excludes certain anomalies, OUTsurance Group reported an increase of 20.3% in earnings. This increase is mainly due to a higher contribution from OUTsurance Holdings Limited, the most significant asset in OUTsurance Group, as well as a reduction in head office costs following the listing transition. OUTsurance Holdings’ normalised earnings increased by 15.7% mainly due to a good operational performance and investment income, notwithstanding higher natural perils claims at Youi, the large increase in the share-based payments expense and the startup-loss incurred by OUTsurance Ireland. The share-based payments expense is linked to the indexed performance of the OUTsurance Group share price, which creates volatility in the expense and consequently in the cost-to-income ratio.

OUTsurance Group is the listed entity in which Remgro has a 30.6% interest.

The primary business of OUTsurance Group is:

OUTsurance SA consists of two main operational segments, OUTsurance Personal and OUTsurance Business. OUTsurance SA delivered a strong operational performance within the context of a difficult economic climate and high inflation environment. Overall OUTsurance SA delivered 9.1% and 9.4% growth in gross written and net earned premiums respectively. Premium inflation was a large contributor to premium growth. The claims ratio improved from 52.5% to 49.8% with improvement seen in both the Personal and Business segments. Retained natural perils claims were in range with historic experience. The overall cost-to-income ratio of OUTsurance SA was impacted by a R256 million higher sharebased payments expense. This contributed 2.1% percentage points to the cost-to-income ratio which increased from 26.2% to 27.9%. OUTsurance SA achieved an operating profit of R2 678 million which is a 17.2% improvement on the prior period despite the higher share-based payments expense.

OUTsurance Life delivered a satisfactory financial performance with profitability benefiting from strong growth in the funeral segment and the discontinuation of the face-to-face channel which hampered prior year performance. Operating profit grew by 82% to R264 million. Similar to OUTsurance, OUTsurance Life also incurred significant additional costs linked to the higher sharebased payment expenses. If the elevated share-based payments expense and the discontinued face-to-face channel are ignored, OUTsurance Life achieved a Value of new business (VNB) margin of 10.3% compared to 9.3% in the prior year. Including these components OUTsurance Life achieved a VNB margin of 5.8%, compared to 1.9% in the prior year. This improvement is attributed to an increasing mix change towards a more profitable funeral business and pricing actions on underwritten business.

The Youi Group delivered impressive premium growth and operational efficiency for the year under review. Despite higher natural perils claims, Youi delivered a 6.1% improvement in operating profit and 12.1% growth in headline earnings. Youi’s reporting segments are aggregated as follows: Youi Personal which represents all personal insurance products sold via the Direct and BZI channels, Youi Business which represents business products sold and administered via the Direct and BZI channels, Youi CTP which represents the New South Wales and South Australia CTP markets. The Youi Group delivered 28.0% and 25.3% growth in gross written premium in rand and Australian dollar terms, respectively. The strong growth follows the higher inflationary environment and improved operational execution. The claims ratio increased from 55.9% to 61.6% owing to increased natural perils experience compared to the prior year. The movement in the claim’s ratio was negatively impacted by adverse reserving development, particularly on home claims incurred in the prior financial year. This adverse development is linked to reserve strengthening due to the rapid inflation experienced over the last 12 months and related uncertainty in setting claims estimates. The cost-to-income ratio decreased from 31.7% to 29.6%. This improvement is associated with a focus on supporting cost efficiency and the benefit of revenue growth.

OUTsurance Ireland commenced trading in April 2024 after receiving authorisation with effect 1 January 2024. The launch process is incremental and stepped up in line with confidence related to pricing and operational capacity. The business incurred a start-up loss of R180 million for the year compared to R56 million in the prior year.