Outsurance Group Limited · JSE:OUT
Outsurance — FY2023 Earnings Presentation
37 slides from Outsurance's earnings presentation, June 2023
Slide 1: Financial Results 30 June 2023
OUTsurance Group Limited FINANCIAL RESULTS 30 June 2023
Slide 2: Agenda
Agenda • Strategic and operational update – Marthinus Visser • Financial review – Jan Hofmeyr • IFRS 17 – transitional impact – Jan Hofmeyr • Outlook – Marthinus Visser OUTsurance Group Limited Financial Results 2023 2
Slide 3: Strategic and operational review
Strategic and operational review
Slide 4: Strategic update
Strategic update Achieved in 2023 Focus for 2024 Product and • 21.1% growth in Group gross written premium • Steer new initiatives to sustainable profitability channel • 17.2% growth in new business premium written expansion • Incremental expansion of OUTsurance Brokers • Significant reduction in J-
Slide 5: Strategic update
Strategic update Achieved in 2023 Focus for 2024 Positive • 561 new employment opportunities impact on • Expansion of solar capacity at Youi HQ • 321 new suppliers added to our network suppliers, • Incorporation of environmental measure in STI societies and • Level 1 BBBEE achieved by OUTsurance inc
Slide 6: Macro-economic trends
Macro-economic trends Inflation and interest rate environment impacting operational performance CPI Inflation Interest rates Exchange rates 7.4% 8.3% 6.8% 6.0% 17.56 6.1% 4.9% 15.70 15.80 15.28 5.4% 4.5% 13.90 4.8% 4.1% 11.99 10.54 11.44 11.09 3.8% 10.11 3.8% 3.5% 2.2% 1.3% 1.6% 0.9% 0.3% 0.1% (0.3%
Slide 7: Overview of key operational themes
Overview of key operational themes OUTsurance South Africa OUTsurance OUTsurance OUTsurance Personal Business Life Achieved monthly profitability for Strong premium and operating profit Rising premium inflation in response OUTsurance Business Brokers in line to claims cost inflation performance driv
Slide 8: Overview of key operational themes
Overview of key operational themes Youi Youi Youi Youi Compulsory Third Direct Blue Zebra (BZI) Party (CTP) High premium inflation on account of Operational profit realised on account claims cost inflation, vehicle claim of improved scale and pricing action frequency reset and allowance for to impro
Slide 9: Premium performance
Premium performance Product and channel diversification strategy contributing to the strong premium growth Group gross written premium (R’million) Annualised new business premium written (R’ million) +21.1% CAGR = 11.9% +17.2% 28 499 8 268 23 532 7 052 20 570 5 756 17 455 16 135 15 027 14 908 14 754
Slide 10: Operating profit performance
Operating profit performance 10-year history demonstrating a strong 7.8% CAGR Operating profit (R’million) CAGR = 7.8% +41.5% • As new initiatives reach economies of scale, the operating profit 4 068 contribution from the large growth investment made will accelerate 3 509 3 317 3 234 3 173 3 159 • I
Slide 11: Natural perils exposure
Natural perils exposure Significant reduction in natural perils losses Net retained natural perils losses as % of net earned premium 22.5% 19.6% 17.5% • Significant reduction in natural perils losses incurred by Youi following fewer natural 13.1% 13.2% 12.2% 12.4% 12.5% events and no large catastrop
Slide 12: Earnings profile – impact of growth investment and natural events
Earnings profile – impact of growth investment and natural events Losses generated by growth initiatives as % of profits from Impact of growth initiatives and natural perils exposure on mature business units operating profit 18.0% 900 18.0% 5 000 800 16.0% 4 500 14.0% 700 13.0% 14.0% 4 000 600 12.0%
Slide 13: Premium revenue and earnings geographical diversification
Premium revenue and earnings geographical diversification Normalised earnings contribution from Youi increased from 18% to 39% Gross written premium Normalised earnings OUTsurance SA (2022: 82%) 61% OUTsurance SA (2022: 47%) 42% Gross Normalised Youi Australia written 58% Youi Australia (2022: 18%)
Slide 14: Premium revenue product diversification
Premium revenue product diversification Enhanced product diversification enabled by growth initiatives Business non-motor (2022: 9%) Business (2022:2%) 9% Business motor 4% (2022: 12%) 14% Personal non-motor 43% (2022:43%) Personal motor 50% Sales Sales (2022: 52%) 27% Personal non- Personal motor 5
Slide 15: Financial review
Financial review OUT SURANCE
Slide 16: Financial Review
Financial Review Part 1: OGL and OHL consolidated results 39% of Group GWP 55% of Group operating profit Part 2: OUTsurance results (2022: 44%) (2022: 73%) Part 3: Youi results 58% of Group GWP 45% of Group operating profit (2022: 53%) (2022: 22%) Part 4: OUTsurance Life results 3% of Group GWP 3% o
Slide 17: OGL Group consolidated results overview
OGL Group consolidated results overview R’ million 2023 2022 % change •1 OGL’s earnings base changed Normalised earnings from continued operations 2 875 1 773 62.2% significantly after the unbundling and sale of its historic interests in Discovery, OUTsurance Holdings (89.8% interest) 2 924 2 039 39
Slide 18: OHL Group consolidated results overview
OHL Group consolidated results overview R’ million 2023 2022 % change Gross written premium 28 499 23 532 21.1% Net earned premium 24 468 20 197 21.1% Operating profit 4 068 2 874 41.5% Normalised earnings 3 238 2 316 39.8% Claims ratio 53.6% 56.1% Insurance cost-to-income ratio1 30.6% 30.4% Combine
Slide 19: OHL Group consolidated results overview
OHL Group consolidated results overview OHL Group normalised earnings (R’ million) OHL Group normalised ROE (%) 2 634 2 411 2 779 2 316 3 238 37.1% 251 1248 33.4% 243 74 32.9% 196 632 591 357 29.7% 29.8% 556 27.9% 1 896 1 885 1 990 1 800 25.5% 25.6% 1 659 22.9% 22.0% Jun 19 Jun 20 Jun 21 Jun 22 Jun
Slide 20: OHL Group consolidated results overview
OHL Group consolidated results overview Drivers of normalised earnings Normalised earnings – movement analysis (R’ million) 21% growth in total income • R208 million increase in Lower earnings broker commission linked to associate • R200 million higher share disposals based-payments expenses Positiv
Slide 21: Financial Review
Financial Review Part 1: OGL and OHL consolidated results 39% of Group GWP 55% of Group operating profit Part 2: OUTsurance results (2022: 44) (2022: 73%) 58% of Group GWP 45% of Group operating profit Part 3: Youi results (2022: 53%) (2022: 22%) 3% of Group GWP 3% of Group operating profit Part 4:
Slide 22: OUTsurance key financial outcomes
OUTsurance OUTsurance key financial outcomes R’ million 2023 2022 % change Gross written premium 11 160 10 253 8.8% • Premium growth supported by premium Net earned premium 10 939 9 994 9.5% inflation Operating profit 2 244 2 109 6.4% • Claims performance impacted by the effect of OUTsurance Persona
Slide 23: OUTsurance Personal
OUTsurance Personal Gross written Operating profit Combined ratio premium 73.8% 75.1% +3.6% + 6.9% 2 224 21.1% 2 146 20.8% 8 722 8 161 • Excluding the HOC book in run-off personal lines gross written premium increased by 8.1% R’ million • Operating profit grew by a slower 3.6% on account of R’millio
Slide 24: OUTsurance Business
OUTsurance Business Gross written Operating profit Combined ratio premium (%) 2 091 2 438 57 256 98.0% 90.2% + 16.6% + >100% • OUTsurance Business more than doubled operating profit 385 379 • OUTsurance Brokers is now the largest channel for commercial 1 301 business representing 53.4% of GWP 37.9%
Slide 25: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results 39% of Group GWP 55% of Group operating profit (2022: 44%) (2022: 73%) 58% of Group GWP 45% of Group operating profit Part 3: Youi results (2022: 53%) (2022:22%) 3% of Group GWP 3% of Group operating profit Part 4:
Slide 26: Youi
Youi Youi Australia1 key financial outcomes R’million 2023 2022 % change Gross written premium 16 399 12 481 31.4% Net earned premium 12 725 9 499 34.6% Operating profit 1 836 617 >100% Personal2 1 848 700 >100% Business2 59 (10) >100% CTP (71) (73) 1.4% Investment income 365 13 >100% Headline earni
Slide 27: Youi
Youi Impressive growth in premium and operating profit Gross written Operating profit Combined ratio premium 12 481 16 399 617 1 836 93.8% 87.5% + 31.4% + >100% • Significant premium inflation prompted by increasing claims costs and reinsurance cost inflation over the 837 last two years 2 886 33.5%
Slide 28: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results 39% of Group GWP 55% of Group operating profit (2022: 44%) (2022: 73%) Part 3: Youi results 58% of Group GWP 45% of Group operating profit (2022: 53%) (2022: 22%) 3% of Group GWP 3% of Group operating profit Part 4:
Slide 29: OUTsurance Life
OUTsurance Life R’million Embedded value (R’ million) 2023 2022 % change Gross written premium 940 798 17.8% 1 309 1 541 1 813 Net earned premium 804 704 14.2% 3 000 22.0% 2 750 17.7% Operating profit 102 107 (3.7%) 17.7% 2 500 17.0% Underwritten life 192 177 8.5% 2 250 2 000 Funeral (incl Shoprite)
Slide 30: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results 39% of Group GWP 55% of Group operating profit (2022: 44%) (2022: 73%) Part 3: Youi results 58% of Group GWP 45% of Group operating profit (2022: 53%) (2022: 22%) Part 4: OUTsurance Life results 3% of Group GWP 3% o
Slide 31: Capital and dividends
Capital and dividends Solvency ratios OGL dividend declared per share - cents 250.0 71.8% 80.0% SCR ratio (times) 2023 2022 Target 200.0 56.6% 60.0% OUTsurance 1.6 1.7 1.3 150.0 41.2% 8.5 40.0% 142 134.8 OUTsurance Life 3.2 3.0 1.5 100.0 22.3% 110 19.4% Youi Group 2.3 2.3 1.6 - 1.9 20.0% 50.0 65.5 4
Slide 32: IFRS transition
IFRS 17 transition IFRS 17 transition
Slide 33: IFRS 17 transitional impact
IFRS 17 transitional impact IFRS 17 applicable from the 2024 financial year Item Group OUTsurance Youi OUTsurance Life • Earnings is predominantly from • Large transitional impact short-term insurance business • Limited impact on earnings recognition pattern Key outcomes • Pattern of earnings recogn
Slide 34: Outlook
Outlook
Slide 35: Group outlook
Group outlook Well positioned for profitable organic growth across all business units • Current interest rates and inflation levels will contribute to earnings momentum • The Group is well positioned for profitable organic growth across all business units • Pricing discipline to maintain target marg
Slide 36: Forward-looking statement disclaimer
Forward-looking statement disclaimer This presentation contains statements about the OUTsurance Group that are or may be forward-looking statements. All statements, other than statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements are
Slide 37: Thank you
Thank you Contact: InvestorRelations@out.co.za https://group.outsurance.co.za/