OUTsurance Shares Surge as Profits Jump and Special Dividend Announced
TLDR
- OUTsurance Group shares hit record high after reporting a 36% increase in full-year net income to 4.06 billion rand.
- Company announces a special dividend of 0.40 rand per share, complementing a total dividend of 1.74 rand, up by 29% from the previous year.
- CEO foresees a moderation in premium inflation over the next 12 months in South Africa and Australia, with improved inflationary and interest-rate prospects.
Shares of OUTsurance Group hit a record high after the South African insurer reported a 36% increase in full-year net income to 4.06 billion rand ($230 million) and announced a special dividend of 0.40 rand per share.
This complements a total dividend of 1.74 rand, marking a 29% increase from the prior year. The stock surged 8.9% to 55.99 rand in Johannesburg, its highest since the company took over the listing of Rand Merchant Investment Holdings Ltd.
The company's gross written premiums in the property and casualty business grew 21% to 33.2 billion rand, driven by inflation, high interest rates, and improved new business performance. CEO Marthinus Visser expects premium inflation to moderate over the next 12 months in South Africa and Australia, with a more favorable inflationary and interest-rate outlook.
Key Takeaways
OUTsurance benefited from better reinsurance markets, which helped contain cost increases after recent global events like the Russia-Ukraine war and South Africa’s 2021 riots and floods raised reinsurance costs. The company plans to simplify its business and capitalize on improving economic conditions in South Africa, where economic growth has been sluggish for a decade. OUTsurance is also focusing on its new business in Ireland, with plans to break even within five years, and will transition a 7.7% minority stake held by employees in its insurance business into shares of the holding company over the next 18 months.
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