Outsurance Group Limited · JSE:OUT
Outsurance — H1 2023 Earnings Presentation
37 slides from Outsurance's earnings presentation, Mar 22, 2023
Slide 1: Financial Results – 31 December 2022
OUTsurance Group Limited Financial Results – 31 December 2022 (unaudited)
Slide 2: Macro-economic trends
Macro-economic trends Inflation and interest rate environment impacting operational performance CPI Inflation Interest rates Exchange rates 8.0% 7.0% 7.0% 6.8% 7.8% 6.5% 7.2% 6.0% 16.65 5.9% 16.02 15.14 5.0% 14.05 14.04 4.5% 4.0% 3.8% 11.64 11.07 11.65 4.0% 3.1% 10.15 9.86 3.1% 3.0% 3.5% 3.5% 2.0% 1
Slide 3: Overview of key operational themes
Overview of key operational themes OUTsurance South Africa OUTsurance Personal OUTsurance Business OUTsurance Life Escalating premium inflation in Strong new Business performance in Focus on reaching profitability and the Funeral segment (including response to claims cost pressure. target margins in
Slide 4: Overview of key operational themes
Overview of key operational themes Youi Youi Direct Youi BZI Youi CTP Launch of CTP in South Australia on Significant premium inflation resulting Operational profit realised attributed 1 July 2022 contributing to higher from recent natural perils losses, to scale, better claims performance operating
Slide 5: Premium performance
Premium performance Product and channel diversification strategy contributing the strong premium growth Group gross written premium (R’million) Annualised new business premium written (R’million) 8.6% CAGR = 13.2% 17.4% 3 673 13 618 3 382 11 600 2 869 10 144 8 594 2 055 8 102 7 757 7 661 7 232 1 793
Slide 6: Group consolidated results overview
Group consolidated results overview OHL Group operating profit (R’ million) 656 786 949 1 219 1 487 1 695 1 620 1 508 1 766 1 142 1 894 888 CAGR = 11.2% 558 588 65.8% 472 348 363 196 1 178 170 22 1 139 1 137 1 148 1 145 27 1 023 972 1 006 927 757 759 ( 101) Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17
Slide 7: Group consolidated results overview
Group consolidated results overview Net retained natural perils losses as % of net earned premium 18.3% 13.2% 12.5% 12.5% 11.8% 9.6% 9.1% 9.0% 8.6% 8.1% 8.0% 7.8% 8.0% 8.0% 6.4% 6.4% 6.7% 5.7% 5.7% 6.7% 6.9% 5.7% 5.8% 4.3% 4.2% 4.7% 3.7% 3.5% 3.8% 3.7% Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 De
Slide 8: Investment in growth initiatives
Investment in growth initiatives Slowing strain from new initiatives Losses generated by growth initiatives as % of profits from mature business units • Total earnings strain from new initiatives is 450 30.0% 20.2% below the 10% appetite assisted by favourable 400 20.0% claims experience in mature o
Slide 9: Premium revenue and earnings diversification
Premium revenue and earnings diversification Short-term insurance activities – net earned premium Gross written premium Normalised earnings 44% 61% OUTsurance SA OUTsurance SA (Dec 21: 91%) (Dec 21: 47%) Gross written Normalised premium 56% earnings 39% Youi Australia Youi Australia (Dec 21: 53%) (D
Slide 10: Financial review
Financial review You always get something out.
Slide 11: Financial Review
Financial Review Part 1: OGL and OHL consolidated results 40.4% of Group GWP 59.2% of Group operating profit Part 2: OUTsurance results (2021: 43.7%) (2021: 86.8%) Part 3: Youi results 56.2% of Group GWP 46.9% of Group operating profit (2021: 53.0%) (2021: 14.9%) Part 4: OUTsurance Life results 3.4%
Slide 12: Consolidated results overview
Consolidated results overview OHL Group OGL Group Grouping of RMI IMG, AlphaCode and surplus assets • Decreasing head office costs for OGL following the listing transition. Further cost reduction into H2 - 2023. • Higher earnings contribution from RMI IMG and AlphaCode portfolio companies. OUTsuranc
Slide 13: OHL Group consolidated results overview
OHL Group consolidated results overview • Excluding the prior year earnings R’ million Dec 2022 Dec 2021 % change contribution from the OHL Group’s Gross written premium 13 618 11 600 17.4% indirect investment in Hastings, the Group’s normalised earnings result is Annualised new business premium wri
Slide 14: OHL Group consolidated results overview
OHL Group consolidated results overview Drivers of normalised earnings Normalised earnings – movement analysis (R’ million) 18.2% growth in net earned premium Negative Operating expense Lower earnings impact of yield movement associated with movements includes R102 Hastings disposal million increase
Slide 15: Group consolidated results overview
Group consolidated results overview Investment income (R’ million) OUTsurance SA Youi Group 386 330 21 129 • Substantial increase in investment income at Youi 213 87 and interest income generated by OUTsurance 32 South Africa. • Equity gains in substantially lower compared to 44 H1-2021. 22 211 129
Slide 16: Group consolidated results overview
Group consolidated results overview OHL Group normalised earnings (R’ million) OHL Normalised ROE (%) 1 329 1 169 1 437 1 102 1 502 86 157 38.3% 66 36.6% 343 64 578 33.4% 32.9% 289 31.4% 210 98 29.7% 1 008 27.0% 27.9% 29.1% 883 893 940 924 25.5% 25.6% 22.9% 23.6% 22.0% Dec 18 Dec 19 Dec 20 Dec 21 De
Slide 17: Financial Review
Financial Review Part 1: OGL and OHL consolidated results 40.4% of Group GWP 59.2% of Group operating profit Part 2: OUTsurance results (2021: 43.7%) (2021: 86.8%) 56.2% of Group GWP 46.9% of Group operating profit Part 3: Youi results (2021: 53.0%) (2021: 14.9%) 3.4% of Group GWP <0% of Group opera
Slide 18: OUTsurance
OUTsurance OUTsurance key financial outcomes R’ million Dec 2022 Dec 2021 % change • Claims frequency on motor claims Gross written premium 5 505 5 064 8.7% normalised relative to a lower base in the Net earned premium 5 361 4 935 8.6% comparative half when pandemic related Operating profit 1 121 99
Slide 19: OUTsurance Personal
OUTsurance Personal OUTsurance Personal key financial outcomes • Low unit growth in the period. Premium growth is primarily driven by premium R’ million Dec 2022 Dec 2021 % change inflation to offset claims cost pressures. Gross written premium 4 311 4 045 6.6% • Excluding the FirstRand Homeowners b
Slide 20: OUTsurance Personal
OUTsurance Personal Gross written premium (R’ million) Key ratios (%) 6.6% 74.1% 73.6% 73.8% 75.3% 70.0% 68.8% 4 311 4 045 49.3% 51.6% 51.3% 52.4% 3 822 46.4% 48.3% 3 704 3 502 21.4% 21.3% 20.0% 20.1% 20.8% 20.8% Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Jun 19 Jun 20 Jun 21 Dec 21 Jun 22 Dec 22 Claims rat
Slide 21: OUTsurance Business
OUTsurance Business OUTsurance Business key financial outcomes Dec Dec • The OUTsurance Broker channel grew R’million 2022 2021 % change gross written premium by 42.3% to R617 million. Gross written premium 1 194 1 019 17.2% • Higher premium inflation was driven by Net earned premium 1 159 978 18.5%
Slide 22: OUTsurance Business
OUTsurance Business Gross written premium (R’ million) Key ratios (%) 99.3% 95.2% 99.3% 98.0% 17.2% 86.3% 89.8% 1 194 63.1% 57.4% 63.1% 60.1% 56.9% 1 019 52.5% 829 770 648 33.8% 36.2% 37.8% 36.2% 37.9% 32.9% 2018 2019 2020 2021 2022 Jun 19 Jun 20 Jun 21 Dec 21 Jun 22 Dec 22 Claims ratio Cost-to-inco
Slide 23: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results 40.4% of Group GWP 59.2% of Group operating profit (2021: 43.7%) (2021: 86.8%) 56.2% of Group GWP 46.9% of Group operating profit Part 3: Youi results (2021: 53.0%) (2021:14.9%) 3.4% of Group GWP <0% of Group operat
Slide 24: Youi
Youi Youi Australia key financial outcomes • High premium inflation experienced in response to higher claims inflation, increased natural perils losses R’million 2022 2021 % change coupled with higher reinsurance costs and retention. Gross written premium 7 648 6 149 24.4% • Youi Direct grew gross w
Slide 25: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results 40.4% of Group GWP 59.2% of Group operating profit (2021: 43.7%) (2021: 86.8%) Part 3: Youi results 56.2% of Group GWP 46.9% of Group operating profit (2021: 53.0%) (2021: 14.9%) 3.4% of Group GWP <0% of Group opera
Slide 26: OUTsurance Life
OUTsurance Life • The Funeral segment grew gross written premium by 60.0%, driven by strong new business flows from the Shoprite R’million 2022 2021 % change partnership. Gross written premium 465 386 20.5% • Significant changes in the shape of the yield curve since June 22, was the Operating loss (
Slide 27: OUTsurance Life
OUTsurance Life Gross written premium (R’ million) Embedded value (R’ million) 847 1 182 1 267 1 389 1 453 1 500 30.0% 24.8% 25.0% 518 20.5% 465 572 1 250 20.0% 629 621 386 1 000 6.0% 19.5% 15.0% 10.0% 312 935 12.3% 750 421 274 818 5.0% 250 638 500 0.0% 561 -5.0% 426 250 -10.0% (11.4%) - -15.0% Dec
Slide 28: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results 40.4% of Group GWP 59.2% of Group operating profit (2021:43.7%) (2021:86.8%) Part 3: Youi results 56.2% of Group GWP 46.9% of Group operating profit (2021:53.0%) (2021:14.9%) Part 4: OUTsurance Life results 3.4% of
Slide 29: Capital and balance sheet
Capital and balance sheet Solvency ratios • Youi is adopting a new target capital range of 1.6 to 1.9 times with an adjustment to the capital framework which is Dec June SCR ratio (times) 2022 2022 Target more responsive to the circumstances that changes the operational capital requirement. OUTsuran
Slide 30: Capital and balance sheet
Capital and balance sheet OGL interim dividend declared per share - cents OHL interim dividend – R’million 100.0 75.0% 1 400 85.1% 90.0% Post the listing transition the 66.7% 80.3% 90.0 pay-out ratio of OGL will 65.0% 80.0% 1 200 70.6% 80.0 closely align with OHL 65.3% 64.5% 70.0% 55.0% 1 000 70.0 6
Slide 31: International expansion
International expansion You always get something out.
Slide 32: International expansion
International expansion Organic greenfield strategy to enter the Ireland market in 2024 • The Group has a stated objective to seek an international expansion opportunity to provide long-term growth and diversification. • The Republic of Ireland has been identified as a suitable market that meets our
Slide 33: Outlook
Outlook You always get something out.
Slide 34: Group outlook
Group outlook Operational outlook for remainder of FY 2023 • Global macro economic uncertainty and challenging local conditions in South Africa. • Inflation globally and locally expected to remain elevated for the foreseeable future. • Higher interest rates are positive for the Group’s earnings base
Slide 35: Q&A
Q&A You always get something out.
Slide 36: Thank you
Thank you Contact: InvestorRelations@out.co.za https://group.outsurance.co.za/
Slide 37: 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