OUTsurance's dividend has been doubled despite the impact of load shedding

OUTsurance reported strong financial results on Wednesday (March 22), despite the effects of rolling blackouts.

OUTsurance Group Ltd has released its Unaudited Interim Results Circular and Cash Dividend Declaration for the six months ending December 31, 2022.

The group’s normalised profits from ongoing operations increased by 77.7% to more over R1.3 billion.

Moreover, its normalised profits per share from continuing operations were 86 cents, up 77.7%.

The regular dividend per share was 56.8 cents, an increase of more than 100% from 23.5 cents per share in 2021.

Notwithstanding a considerable increase in the ordinary dividend per share, load shedding had a detrimental impact on the group’s business.

Load shedding continued to harm property-related claims over the reporting year, particularly for more severe load shedding. According to the company, the establishment of a higher excess for power surge and dip claims has helped to minimise escalating claims costs.

OUTsurance Personal, the group’s largest contributor to profitability and with the lowest earnings volatility profile, stated that an increase in its claims ratios is directly attributable to motor claims normalisation, wetter weather conditions, higher repair cost inflation, an increase in vehicle theft for high-value off-road vehicles, and load shedding.

According to News24, OUTsurance intends to discontinue coverage for grid collapse as soon as it is no longer an unanticipated incident.

According to OUTsurance South Africa CEO Danie Matthee, if a grid failure occurs, insurers will be unable to cover all linked damages due to a shortage of cash.

Outlook

The organisation anticipates macroeconomic uncertainty to hinder economic development and confidence, notably in South Africa owing to load shedding, service delivery, and governmental fiscal issues.

It stated that its business model has previously demonstrated resilience to macroeconomic cycles, and that price discipline would be maintained to guarantee goal profit margins are met while rising inflation is handled.

It also stated that the higher interest rate environment will most certainly continue to be a beneficial aspect in the second half of the fiscal year, namely in its Australian businesses, where interest rates have risen fast in the previous year.

According to the company, its entry into the Republic of Ireland represents a chance to diversify its long-term growth and leverage a business model into a new and developing market.