Outsurance Group Limited · JSE:OUT
Outsurance — RMI Holdings — H1 F2021 Earnings Presentation
21 slides from Outsurance's earnings presentation, Mar 17, 2021
Slide 1: RMI Investor Presentation: 1H F2021 Results and Portfolio Update
17 March 2021 RMI INVESTOR PRESENTATION 1H F2021 RESULTS AND PORTFOLIO UPDATE
Slide 2: Agenda
OPTIMISE DIVERSIFY AGENDA MODERNISE 1 RMI A IMPRESSIONS OF THE PORTFOLIO B FINANCIAL HIGHLIGHTS C IMPORTANT MILESTONES D OUTLOOK 2 A CLOSER LOOK AT OUTSURANCE 3 Q&A
Slide 3: RMI
DIVERSIFY 1 RMI
Slide 4: Impressions of the Portfolio
A IMPRESSIONS OF THE PORTFOLIO Key medium term strategic focus areas 1 Important role in the COVID environment 2 Robustness i. Discovery has played a key role in COVID management and i. Market positions proved resilient, and in some cases gained supporting the healthcare system, including playing an
Slide 5: Financial Highlights: Operating fundamentals remain sound
B FINANCIAL HIGHLIGHTS Operating fundamentals remain sound Normalised operating profit (Rm) +19% -31% -119% +17% 4 507 3 792 o Amid a challenging economic 1 766 backdrop, underlying operating 1 508 1 286 performance resilience 890 596 o MMH’s performance reflects a higher Covid-19 provision and -119
Slide 6: Prudent reserving for claims experience
B FINANCIAL HIGHLIGHTS Prudent reserving for claims experience Excess deaths and higher claims experience… 15 030 5 311 4 300 1 395 Discovery MMH o Second wave has had significant impact on Discovery and MMH’s Excess deaths / number of claims Claims paid (R'm) target markets, resulting in increases
Slide 7: Demand for protection products is increasing
B FINANCIAL HIGHLIGHTS Demand for protection products is increasing New business volumes and gross written premiums positive across portfolio +18% +14% +3% +10% o Strong demand for funeral, 29 992 health and protection products 26 234 at MMH and Discovery o Strong growth in gross written 19 645 17 8
Slide 8: Hastings produced a strong set of results
B FINANCIAL HIGHLIGHTS Hastings produced a strong set of results, with growth in GWP and an improvement in the combined ratio Key ratios 98% o Full year gross written premium growth driven by strong policy count growth 93% 87% 89% o Lower loss ratio reflecting favorable frequencies 87% o Increase in
Slide 9: Important Milestones: Prudence and preservation
C IMPORTANT MILESTONES 1 Prudence and preservation o Conservative and accurate provisioning re mortality o Capacity to support life businesses o No capital raisings (save for one fintech investment) 8
Slide 10: Capital Structure and Cash Dividend
2 CAPITAL STRUCTURE AND CASH DIVIDEND Important to balance dividend production, capacity to make new investments and ability to reduce debt over time KEY OBJECTIVES WE ARE TARGETING: o Medium-term financial capacity planning has the following objectives in mind (ranked in order of priority): o Gradu
Slide 11: Important Milestones
C IMPORTANT MILESTONES 3 Unlisted PNC exposure in partnership with global powerhouse 4 Growth at OUT, YOUi and Hastings 5 Retention at Hastings 6 Cost ratio at OUTsurance personal lines 7 Operational strength at Discovery 8 Continuing recovery at MMH 9 Exceptional financial performance in asset mana
Slide 12: New Approach to Valuation
10 NEW APPROACH TO VALUATION Unlisted portfolio becoming more material • Current market valuations differ materially from our own assessment of intrinsic value • Going forward, given the large unlisted portion of the portfolio, we will review the approach to disclosure and align disclosure regarding
Slide 13: Outlook
DIVERSIFY 4 OUTLOOK
Slide 14: Looking Ahead Across Our Geographies
D LOOKING AHEAD ACROSS OUR GEOGRAPHIES What will we be focused on in the medium-term? o Impact of premium deflation o Regulatory changes o Whiplash reform o FCA industry review o Sampo partnership o Investment in regulatory and compliance o Impact of catastrophes and consequently reinsurance pricing
Slide 15: A Closer Look at OUTsurance
OPTIMISE DIVERSIFY MODERNISE
Slide 16: Slide 16
Slide 17: 1H F2021 Results | Snapshot
1H F2021 RESULTS | SNAPSHOT OUTsurance delivers a strong set of results for the six months under review Group performance Commentary o Normalised earnings up 23%: benefitted from R’m 19-Dec 20-Dec % change the recovery in the investment markets allowing normalised earnings growth to be higher than O
Slide 18: 1H F2021 Results | Snapshot
1H F2021 RESULTS | SNAPSHOT OUTsurance delivered a strong set of results for the six months under review Gross written premiums (group) Normalised earnings (group) 18% 10 144 8% (9%) 23% 1 437 4% 8 594 1 461 (12%) 7 666 7 988 1 329 312 91 1 169 274 222 18 250 31 177 67 235 5 181 68 70 406 3 740 375
Slide 19: 1H F2021 Results | OUTsurance SA and Youi
1H F2021 RESULTS | SNAPSHOT OUTsurance SA Youi GWP (R’m) o OUT Personal: Unit growth GWP (R’m) o Youi Direct: Ongoing strong remained robust but low unit growth supported by robust 4 651 5 181 4 474 premium inflation limited overall lapse experience. 4 150 premium growth. o Youi BZI: Transfer of exi
Slide 20: New Initiatives | OUTsurance SA
NEW INITIATIVES | OUTSURANCE SA Positive traction across all initiatives o OUTsurance Brokers has scaled to 500 tied-agents with new business growth accelerating. The channel realised an operating loss of R103 million compared to a loss of R99 million for the comparative six months. o OUTsurance Bus
Slide 21: New Initiatives | Youi
NEW INITIATIVES | Youi Positive traction across all initiatives o Youi CTP launched in New South Wales as planned in December 2020. o New business volumes are in line with expectations. o This cover presents Youi with amore attractive customer proposition where customers acquire comprehensive and CT