OUTsurance gives investors a ‘special’ R600 million dividend

Outsurance has seen its profits jump, with the group declaring more than R600 million in special dividends.

In its financial results for the year ended 30 June 2024, the group said that the iRFS 17 insurance method has changed the reporting and presentation of the financial results of the insurance activities, which primarily affects the life insurance operation.

OUTsurance’s South African operations saw several improvements, with the group declaring a substantial special dividend.

The OUTsurance Holdings Limited (OHL) Group’s normalised earnings increased 15.7% to R3,830 million.

The strong earnings results were due to strong operational performance and investment income results, notwithstanding the higher natural perils claims at Youi, the large increase in the share-based payments expense for the year, and the startup loss incurred by OUTsurance Ireland.

OUTsurance Ireland officially launched in May 2024 and incurred a R180 million in startup losses for the year.

The Irish company also follows a measured approach to the launch phase, performing in line with expectations.

In the Property and Casualty results, gross written premiums grew by a robust 20.5% due to elevated inflation and good new business performance by Youi and OUTsurance SA operations.

The claims ratio increased from 54.3% to 56.8%, attributed to Youi’s higher natural perils claims and contribution to the group’s claims ratio.

OUTsurance SA, however, delivered improved claims ratios due to pricing discipline and a further improvement in claims experience in the OUTsurance Broker book.

Annualised new business also increased by 30.4% from a higher base achieved in 2023, driven by strong operational execution and higher premium inflation in our core direct channels.

OUTsurance Life also delivered much-improved operating results, reflecting more robust growth in the funeral segment and the discontinuation of the face-to-face initiative.

“The Central and Treasury Company showed a significant improvement in profitability. This improvement is attributed to stronger earnings from the portfolio investments and the effect of the first full year of reduced head office expenses following the listing transition,” said the group.

“Higher interest rates earned on surplus financial assets also contributed positively. The current directors’ valuation of the Treasury Company portfolio investments is between R1.8 billion and R2.2 billion, after the impact of the special dividend.”

Financials

The group said that earnings to ordinary shareholders for the financial year amounted to R4,061 million, or 265.5 cents per share (2023: R2,980 million, or 194.5 cents per share).

Headline earnings amounted to R3,525 million or 230.4 cents per share (2023: R2,963 million or 193.4 cents per share).

The group’s total dividend rose from 133.4 cents per share in 2023 to 241.4 cents per share in 2024.

The group declared a special dividend of 40 cents per ordinary share as part of the total dividend – far higher than the 8.5 cps special dividend declared in 2023.

With the group having 1,537,535,862 ordinary shares, the group would have paid R615 million in special dividends to shareholders.

Outlook

“From a South African perspective, we enter the 2025 financial year with renewed optimism concerning the prospects of economic progress in the country underpinned by the Government of National Unity,” said the group.

“A more vibrant economy that grows the middle class could reverse the absence of real growth in the insurance market over the last decade.”

“We are excited about the organic growth prospects of Youi supported by a stable Australian economy, low current market share, growth momentum and a growing insurance market.”

The group is also set to modernise its system and simplify its structure, with the latter’s strategy including selling its portfolio of non-core portfolio investments.

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