RMI grows 7% despite OUTsurance weather claims

"Normalised earnings per share for the full-year were 169.50c compared with 159.50c in the previous period‚" RMI said on Thursday (12 September). RMI has an investment portfolio of insurance brands‚ including Discovery‚ MMI Holdings and OUTsurance.

The company holds an 83% stake in OUTsurance which was affected by violent hailstorms in Gauteng in the last quarter of last year. "As a result‚ the short-term insurance business experienced the most severe weather-related catastrophes in its history‚" RMI said.

However‚ OUTsurance recovered in the second half of the year‚ benefiting from the contribution of the maiden earnings from its Australian direct insurer brand Youi. Youi was established in Australia in 2008 and achieved sufficient scale to trade profitably for the first time this year.

Strong contributions

RMI's chief executive Peter Cooper said overall the insurer's second half was far better than the first half‚ despite interest rates and currency volatility as well as fragile consumer confidence.

OUTsurance contributed R990m - or 39% -to RMI's normalised earnings of R2.5bn. The strong performance of health and life assurer Discovery - in which RMI has a 25% shareholding - contributed 27%‚ or R699m‚ to normalised earnings.

RMI's 25% stake in life insurer MMI Holdings made up 31% of normalised earnings at R803m. Its 75% stake in specialist insurer RMB Structured Insurance added R70m - 3% - of normalised earnings.

RMI declared a dividend of 95c a share, an increase of 19% from the previous year's 80c.

"The discrepancy between the growth in dividends relative to the growth in underlying earnings was due to OUTsurance having paid out a larger than normal dividend‚" RMI said.

Though the company expects the difficult economic environment to continue in this financial year‚ it is expecting good organic growth.

This was due to Discovery's potentially strong future performance and MMI's shift of focus from its merger to looking for growth.

RMI was also positive about OUTsurance's prospects‚ as the subsidiary expects its life insurance products to gain further traction in SA‚ along with further growth from Youi in Australia.