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OUTsurance

March 4, 2024
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New addition to the portfolio!!!

 

Short-term insurer OUTsurance has taken over the JSE listing of its former parent Rand Merchant Investment Holdings (RMI), the investment holding company that has rebranded under the name of its biggest asset. The collapse of the RMI holding company structure has been in the making since at least 2021 when the group announced the unbundling of its stakes in Discovery and Momentum Metropolitan. RMI also sold its 30% stake in UK insurer Hastings, leaving only OUTsurance.

 

We all know the brand OUTsurance, so in this article I am going to break down the numbers only (June 2022). 82% of OUTsurances revenue comes from South Africa through the OUTsurance brand and 18% from the Youi brand in Australia.

 

Before we dive into the numbers, remember that insurance is one of the expenses households tend to cut when they need to decrease living costs. They should not, but they do what they need to in order to survive, so 2023 might be a tricky year for OUTsurance.

 

INCOME STATEMENT

  • The Group delivered 14.4% growth in gross written premiums. The strong growth is attributed to the continued investment in the Groups strategy to expand its product range and distribution channels. The Groups overall new business premium growth increased by a pleasing 22.5%.
  • The Groups claims ratio increased from 52.6% to 56.1% due to natural disaster claims in Australia and loadshedding related claims in SA.
  • The operating profit of the Group was down 35% due to the massive expenses increase in  the natural catastrophe event to A$30 million from A$10 million in the 2021 financial year.
  • OUTsurance Life made a loss due to higher COVID-19 related death claims. A prudent COVID-19 reserve is being maintained to allow for adverse mortality and lapsation linked to the pandemic.
  • The rising inflation and interest rates are the main factors that can slow down OUTsurances growth plans. The group has various operational and financial growth projects to increase customer retention, customer experience and a more scientific manner of underwriting.

 

BALANCE SHEET

  • Cash of R2.4 billion
  • External debt (excluding contract liabilities) of R72 million
  • Debt to Equity ratio a very low 0.63%
  • Return on equity a decent 22%
  • Dividend per share 48.7 centS

 

Disclosure: I have opened a small position in OUTsurance in December and will be buying regularly as I keep an eye on the numbers. 

 

Disclaimer: Nothing in this article should be seen as financial advice. Everything stated is for educational purposes only. Always do your own due diligence.

 

 


 


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