Prospects

The macro environment will remain challenging during the 2013 financial year. The global economy is likely to register below average growth and will continue to face significant downside risk.

Economic activity in South Africa will remain under pressure. GDP growth is currently expected to be 2.5% for the 2013 financial year, and although interest rates are expected to remain flat for the rest of the year, there is downside risk if economic growth slows further.

Growth in insurance new business volumes will remain largely dependent upon the economic environment, including a recovery in employment and stronger disposable income levels.

All of the groups in which RMI is invested face both opportunities and threats posed by the highly regulated environment in which they operate, including evolving capital regimes as well as the national health insurance and social security reform proposals.

Both OUTsurance and RMBSI foresee that the exceptionally favourable claims experience of the recent past can be expected to normalise in future. Consequently the group’s earnings growth may be muted.

Notwithstanding such uncertain and fragile environment, RMI believes that our investee companies have appropriate strategies in place to unlock superior shareholder value over time.