OUTsurance doubles dividend despite load shedding hit

OUTsurance announced solid financial results on Wednesday (22 March), despite the consequences of rolling blackouts.

OUTsurance Group Limited announced its Unaudited Interim Results Circular and Cash Dividend Declaration for the six months ended 31st December 2022.

The group’s normalised earnings from continuing operations grew by 77.7% – rising to over R1.3 billion.

In addition, its normalised earnings per share from continuing operations was 86 cents – again increasing by 77.7%.

The ordinary dividend per share was 56.8 cents per share – marking an over 100% increase from 23.5 cents per share in 2021.

Despite the ordinary dividend per share growing significantly, load shedding negatively affected the group’s performance.

Load shedding continued to hurt property-related claims, particularly for more extensive load shedding over the reporting period. It said that the implementation of a larger excess for power surges and dip claims has somewhat mitigated the rising claims cost.

OUTsurance Personal – the most significant contributor to group profitability and shows a low earnings volatility profile – said that an increase in its claims ratios is directly attributable to motor claims normalisation, wetter weather conditions, higher repair cost inflation, an increase in vehicle theft for high-value off-road vehicles, and load shedding.

As reported by News24, OUTsurance plans to pull cover for grid failure soon as it is no longer an unforeseen event.

OUTsurance South Africa CEO Danie Matthee said that if a grid collapse did take place, it would be impossible for an insurer to cover all related losses as they lack the necessary capital.

Outlook 

The group expects macroeconomic uncertainty – particularly in South Africa due to load shedding, service delivery and governmental fiscal challenges – to limit economic progress and confidence.

It said that its business model has previously proven to be resilient against macroeconomic cycles and that pricing discipline will be maintained to ensure target profit margins are achieved and elevated inflation is managed.

It added that the higher interest rate environment will likely remain a positive feature in the second half of the financial year – mainly in its Australian operations, where interest rates grew rapidly in the last 12 months.

The group said that its expansion into the Republic of Ireland presents an opportunity to diversify its long-term growth and leverage a business model into a new and growing market.

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