Newly listed short-term insurance group OUTsurance expects full-year profits to surge up to 45% on the back of increased earnings in its Australian operations Youi and a significant decrease in claims related to natural perils following fewer harsh weather events.
The company expects group normalised earnings to lift between 35% and 45% for the year to end June 2023, from 2 316 cents per share in 2022, the company said in a voluntary trading update on Wednesday.
Read: OUTsurance lists on the JSE, after rebrand from RMI
It expects earnings in its Youi business to jump between 220% and 250% from 413 cents per share last year, making it the unit with the highest growth within the group.
“This positive outcome is attributed to strong premium growth, a material decrease in natural perils claims incurred following more favourable weather exposure, and higher investment income attributed to the rising interest rate environment,” OUTsurance said.
During the previous reporting period, the insurer, whose core business is to provide home, vehicle, and business insurance, contended with multiple significant weather events in Australia.
The country was also at the low point of the interest rate cycle, resulting in lower investment income.
In contrast, operations in the South African short-term and life divisions will likely increase up to 10% and 15%, respectively, the company said.
The insurer has conducted a strategic review of its sub-scale OUTvest business and concluded that a restructuring is necessary, potentially including a disposal. OUTvest is the insurer’s subsidiary specialising in retirement investing.
“Client investments will not be affected by this decision. All client obligations will continue to be honoured without operational disruption,” OUTsurance said.
Load shedding and off-road-vehicle theft claims weigh on OUTsurance
OUTsurance doubles dividend, looks to expand to Ireland