Strong Earnings Despite Ireland Losses

South African insurance giant OUTsurance has reported a significant increase in profits for the first half of 2025, driven by fewer natural peril claims and strong premium growth. However, the group’s recently launched Ireland business continues to incur high startup losses, highlighting the challenges of expanding into new markets.

Key Financial Highlights

OUTsurance’s normalised earnings surged by 43.5% to R2.219 billion, up from R1.546 billion in the previous period. This growth was primarily fueled by:

• Fewer Natural Peril Claims: Both OUTsurance South Africa and Australia’s Youi benefited from a reduction in claims related to natural disasters.
• Premium Growth: Organic premium growth and higher investment income contributed to the strong performance.
• Cost Efficiency: Structural improvements in the cost base across operating segments further boosted profitability.

Despite these gains, the group faced significant expenses related to its Employee Share Option (ESOP) scheme, with share-based payments totaling R776 million for the final tranche, which vests in September 2025. This marks a sharp increase from the R342 million recorded in the prior period, driven by a 43.3% rise in the OGL share price.

Challenges in Ireland

OUTsurance Ireland, launched in May 2024, reported R218 million in normalised startup losses during the six-month period. The losses were attributed to:

• Operational Costs: Increased expenses related to marketing and infrastructure.
• Onerous Losses: Recognition of losses for new insurance contracts issued.

Excluding onerous losses, the operating loss for Ireland increased from R64 million to R181 million. Despite these challenges, the group remains optimistic about the Ireland business, stating that it is performing in line with expectations and is on track to break even through disciplined expansion.

Segment Performance

• OUTsurance South Africa and Youi: Both segments saw structural improvements in their cost bases and benefited from lower natural peril claims. The claims ratio dropped from 59.1% to 53.0%, reflecting better claims management and higher prior-year reserve releases.
• OUTsurance Life: Operating profit surged from R57 million to R185 million, driven by new business generation and cost efficiency.
• Overall Operating Profit: Increased by 58.8% to R2.839 billion, up from R1.788 billion in the previous period.

Dividend Increase

Reflecting its strong financial performance, OUTsurance increased its interim dividend by 44.8% to 88.6 cents per share, up from 61.2 cents in the prior period. Headline earnings per share also rose by 45.1% to 132.9 cents.

Looking Ahead

OUTsurance remains focused on driving growth and efficiency across its operations. The transition from the ESOP scheme to the new Conditional Share Plan (CSP) is expected to stabilize share-based payment expenses, providing a more predictable cost base moving forward.

While the Ireland business continues to face challenges, the group is confident in its ability to achieve break-even through incremental and disciplined expansion. With strong performance in its core markets and a clear strategy for growth, OUTsurance is well-positioned to maintain its leadership in the insurance industry.

Financial Summary

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