Outsurance Group Limited · JSE:OUT
Outsurance — H1 2024 Earnings Presentation
31 slides from Outsurance's earnings presentation, February 2024
Slide 1: Unaudited Interim Financial Results 31 December 2023
OUTsurance Group Limited UNAUDITED INTERIM FINANCIAL RESULTS 31 December 2023
Slide 2: Agenda
Agenda 1. Operational review – Marthinus Visser 2. Financial review – Jan Hofmeyr 3. Outlook – Marthinus Visser OUTsurance Group Limited 2
Slide 3: Operational review
Operational review OUT SURANCE
Slide 4: Macro-economic trends
Macro-economic trends Inflation and interest rate environment impacting operational performance CPI Inflation Interest rates Exchange rates 20.19 8.3% 18.22 8.2% 18.13 7.… 7.0% 17.95 6.5% 18.30 5.9% 7.2% 15.72 17.01 16.00 5.5% 5.1% 4.4% 4.0% 4.6% 3.8% 14.70 3.5% 3.1% 3.1% 4.0% 14.00 12.46 4.1% 3.5%
Slide 5: Overview of key operational themes
Overview of key operational themes OUTsurance South Africa OUTsurance OUTsurance OUTsurance Personal Business Life Premium inflation continued to Continued strong new business Persistent high inflation a primary positively drive the growth in the performance in the Funeral driver in premium growth.
Slide 6: Overview of key operational themes
Overview of key operational themes Youi Youi Youi Youi Personal Business CTP Elevated claims inflation continues to drive high premium growth, Emerging opportunity for growth. BZI particularly in Home. channel (via Steadfast) activated in April 2023 with satisfactory Improving claims ratio and prici
Slide 7: Premium performance
Premium performance Inflation and good organic growth drive large increase in premium P&C Gross Written Premium (R'million) P&C Annualised new business premium written (R’million) 16 110 22.5% 10 year - CAGR = 12.9% +38.8% 13 153 4 814 11 213 9 832 10 059 8 214 3 469 7 738 7 404 7 298 7 648 3 163 6
Slide 8: Natural perils exposure
Natural perils exposure Significant increase in natural perils claims following storm events in Australia Net retained natural perils losses as % of net earned premium 2024 Accident year - working claims ratio (excluding natural perils) 18.3% 15.1% 14.5% 12.5% 12.5% 11.8% 11.3% 51.9% 50.3% 49.5% 9.6
Slide 9: Earnings profile – impact of growth initiatives
Earnings profile – impact of growth initiatives Reduced earnings strain from new initiatives and investment in Ireland ramping up Operating losses generated by growth initiatives as % of profit from mature business units (R'million) 700 25.0% 600 20.2% 20.0% 500 • Appetite for new venture losses is
Slide 10: IFRS transition / Financial review
IFRS 17 transition Financial review
Slide 11: IFRS 17 transition
IFRS 17 transition First time adoption of IFRS 17 – limited impact on Group’s earnings profile OUTsurance Youi Group OUTsurance Life Group PAA approach PAA approach General model Material transitional impact due to differential treatment of risk • Group earnings are predominantly from P&C activities
Slide 12: Impact of share-based payments expense
Impact of share-based payments expense OUTsurance Share Price • The OUTsurance SA operation utilised Share Options as a long-term 60 incentive (LTIP) prior the the listing transition. H1 – FY 2024 • In 2023, new LTIP’s were converted to Conditional Share Plan Awards 55 (CSP) which are less geared th
Slide 13: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results Part 3: Youi Group results Part 4: OUTsurance Life results Part 5: Dividend and capital position OUTsurance Group Limited 13
Slide 14: OGL Group consolidated results overview
OGL Group consolidated results overview Key performance outcomes Dec Dec R’ million 2023 2022 % change Normalised earnings 1 411 1 404 0.5% Normalised ROE 21.6% 23.0% Normalised earnings per share 92.1 91.6 0.5% • Improved earnings of OGL are attributed to Diluted normalised earnings per share 90.6
Slide 15: OHL Group consolidated results overview
OHL Group consolidated results overview OHL Group normalised earnings (R’ million) OHL Group normalised ROE (%) 1 169 1 437 1 102 1 599 1 546 36.9% 36.0% 35.1% 86 505 589 31.2% 343 30.2% 29.8% 30.3% 66 64 27.0% 210 98 1 100 1 008 1 012 940 26.1% 893 24.9% 23.2% 23.6% (2) (59) Dec 19 Dec 20 Dec 21 De
Slide 16: Operational performance – Property and Casualty
Operational performance – Property and Casualty P&C key performance outcomes P&C operating profit contribution Dec Dec R’ million 2023 2022 % change Gross written premium 16 110 13 153 22.5% (3.9%) Net earned premium 13 761 11 357 21.2% Annualised new business premium written 4 814 3 469 38.8% 37.7%
Slide 17: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results Part 3: Youi results Part 4: OUTsurance Life results Part 5: Dividend and capital position OUTsurance Group Limited 17
Slide 18: OUTsurance
OUTsurance OUTsurance key financial outcomes Dec Dec • Premium growth supported by premium R’ million 2023 2022 % change inflation. Gross written premium 6 051 5 505 9.9% • Improved claims ratios despite persistent Net earned premium 5 896 5 361 10.0% themes of rising repair costs, loadshedding and
Slide 19: OUTsurance Personal
OUTsurance Personal Grosswritten Gross written Operating Operatingprofit profit Combined ratio Combined ratio premium premium +18.1% + 8.9% 74.8% 73.0% 1 304 4 695 20.5% 4 311 20.6% 1 104 • Excluding the HOC book in run-off personal lines gross written premium increased by 9.8%. • The claims ratio r
Slide 20: OUTsurance Business
OUTsurance Business Gross Grosswritten written Operating profit Combined Operating profit Combined ratio ratio premium premium 1 194 1 356 119 175 90.7% 88.1% +47.9% + 13.6% • Inflationary conditions have provided positive premium growth 216 202 for the Direct channel. 33.6% 32.4% • OUTsurance Broke
Slide 21: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results Part 3: Youi results Part 4: OUTsurance Life results Part 5: Dividend and capital position OUTsurance Group Limited 21
Slide 22: Youi Group
Youi Group Youi Group key financial outcomes R’million 2023 2022 % change Gross written premium 10 059 7 648 31.5% Net earned premium 7 865 5 996 31.2% Operating profit 619 905 (31.6%) • Gross written premium growth accelerated by Personal 610 945 (35.5%) 31.5% in Rand and 25.6% in Australian Dollar
Slide 23: Youi Group
Youi Group Gross written Operating profit (R’m) Combined ratio premium (R’m) 7 648 10 059 905 619 86.6% 94.4% • Significant premium inflation prompted by increasing claims + 31.5% repair costs and reinsurance cost inflation over the last two years. 15 358 30.0% 9 170 531 • In AUD, gross and net earn
Slide 24: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results Part 3: Youi results Part 4: OUTsurance Life results Part 5: Capital and balance sheet OUTsurance Group Limited 24
Slide 25: OUTsurance Life
OUTsurance Life Dec Dec R’million 2023 2022 % change • Underwritten Life’s operating profit benefitted from the Accounting measures discontinuance of the face-to-face initiative since July 2023. Operating profit 57 (15) >100% • The Central segment contains excess share-based payments Underwritten li
Slide 26: Financial Review
Financial Review Part 1: OGL and OHL consolidated results Part 2: OUTsurance results Part 3: Youi results Part 4: OUTsurance Life results Part 5: Dividend and capital position OUTsurance Group Limited 26
Slide 27: Capital and dividends
Capital and dividends All operating units in strong solvency positions OGL dividend declared per share - cents 120.0 66.4% Dec Jun 62.0% SCR ratio (times) 2023 2023 Target 100.0 60.0% 80.0 OHL Group 2.2 2.2 1.5 37.2% 40.0% Property and casualty 60.0 61.2 56.8 insurance 40.0 16.8% 18.7% 20.0% 45.0 OU
Slide 28: Outlook
Outlook
Slide 29: Group outlook
Group outlook Operational outlook for remainder of FY 2024 • Elevated premium inflation is expected to persist in South Africa and Australia in the near term. • We forecast that interest rates have peaked and will likely show a gradual decline starting in 2024. Investment income continues to benefit
Slide 30: 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 31: Thank you
Thank you Contact: InvestorRelations@out.co.za https://group.outsurance.co.za/