Outsurance flags earnings growth

Insurer Outsurance will report growth in interim earnings, driven by the sale of some assets.

The company said on Thursday it expected to report headline earnings per share of 86.8c96c for the six months to December, compared with a restated 92.3c in the previous comparative period.

Included in the company’s earnings calculation for the period is an amount of about R500m relating to the profit on sale and dilution of associates, which is excluded from headline and normalised earnings.

The majority of this amount relates to the profit on dilution of one of the portfolio investments of RMI Treasury Company. As a result of the dilution, the group ceased its equity accounting treatment of this investment in December 2023 and recognised the investment as a financial asset at fair value through other comprehensive income.

The group told shareholders that it had changed its accounting policies, which has had an impact on how it makes certain calculations, in particular, to the measurement approach for its life insurance operations.

The Outsurance Group owns an 89.8% stake in Outsurance Holdings and 100% in RMI Investment Managers. The primary source of revenue is insurance premiums and the group services 2.8-million policies.

The group considers normalised earnings — which excludes non-operational items and accounting anomalies — as the key indicator of its operational performance.

Normalised earnings for OHL were driven by the impact of higher natural perils claims incurred compared with the comparative period, most prominently in Australia. There was also a material increase in the cost of its SA employee share option scheme, after the increase in the share price over the current period.

Outsurance’s Ireland operation continued to incur more start-up losses during the period and expenses escalated as the business “is operationalising for the launch phase”.

The life insurance business delivered “a much-improved operating result, following the impact of stronger growth achieved in the funeral market and favourable yield movements compared to the comparative period.”

Shares in Outsurance were down 0.24% on Thursday at R41.41. The stock is up 14.65% over the past 12 months.