Group overview

OUTsurance Group

The OUTsurance Group conducts short-term insurance activities through direct short-term insurer OUTsurance (wholly-owned) and Momentum STI (a 50:50 joint venture with the Momentum Group). Youi, its direct personal lines initiative in Australia, is still in start up phase.

Overview

Considering the prevailing economic conditions, the South African operations of OUTsurance produced excellent results and grew operating profit by 28% to R941 million.

After accounting for the start up losses of some R100 million at You. Insured, group operating profit grew by 19%. This, together with relatively flat investment income (up 3,5%) resulted in headline earnings increasing by 14% to R654 million, on which it paid a 1,6 times covered dividend. OUTsurance generated a 43% return on equity.

Business unit review

Even though the insurance industry experienced reduced underwriting profits, Personal OUTsurance continued to produce strong results. New business volumes proved to be resilient in the face of a significant slowdown in new vehicle sales, underlining the robust nature of the lowcost direct business model and scientific risk selection. The business unit continued to achieve excellent client service levels and sound profitability.

OUTsurance successfully launched the selling of vehicle credit-life policies and is planning to market fully underwritten risk life products directly to consumers during 2010.

Momentum STI provides personal and commercial insurance products through the broker distribution network of the Momentum Group. Momentum STI produced its maiden profit during the financial year and plans to focus on its commercial insurance offering in future.

OUTsurance launched You.Insured (“Youi”), an on-line personal insurance offering, in Australia during August 2008. Youi incurred costs of R87 million during the financial year, all of which has been expensed against current income. To date, Youi has performed in line with expectations.

Due to the significant start-up losses that Youi is expected to incur, FRSTIH is likely to show lower earnings for the next financial year.