Willem Roos and Howard Aron
Joint chief executive officers, OUTsurance Holdings
OUTsurance is a direct personal lines and small business short-term insurer. As pioneers of the OUTbonus concept, it has grown rapidly by applying a scientific approach to risk selection, product design and claims management.
Youi, its direct personal lines initiative in Australia, and its South African direct life insurance business have gained significant traction during the year.
OUTsurance’s business model is built on a philosophy of scientific underwriting and pricing, innovative product design,
a robust and efficient information technology platform and a high performance culture driven by great people. It
believes in a client-centric strategy of providing value for money insurance products and awesome client service.
The group is committed to sustainable relationships with all its stakeholders. Examples of OUTsurance’s involvement in
the community include the pointsmen project where pointsmen help to alleviate traffic congestion at high-traffic
intersections, and the staff helping South Africa OUT project where hundreds of OUTsurance employees volunteer their
time and efforts in order to make a difference in the lives of less fortunate South Africans through various projects.
The OUTsurance group produced an excellent financial performance for the year to June 2012. The performance was driven by a very favourable claims environment in South Africa and a significant improvement in the start-up loss incurred by Youi.
Operationally, new business volumes in the South African personal lines business endured significant pressure due to
the tough economic climate and increased competition. Business OUTsurance showed good premium growth which
can be attributed to an investment in the in-house agency force.
Youi gained significant traction in the year under review and delivered an impressive operational performance with
excellent new business volumes and a satisfactory improvement in claims experience.
In May 2012, the OUTsurance group decided to dispose of its 50% interest in Momentum Short-term Insurance to
the MMI Holdings group which owns the other 50%. The rationale behind this decision is for the group to focus
its resources on its core direct delivery channel. The completion of the transaction is subject to certain suspensive
OUTsurance reported normalised earnings of R1 157 million, a 33% improvement on the restated earnings of
R871 million reported for 2011.
Outsurance’s normalised earnings were specifically adjusted for:
|•||the impact of the once-off recognition of a deferred tax asset relating to Youi’s assessed loss; as well as|
|•||the change in the profit sharing arrangement with FirstRand concerning the Homeowners Cover business in 2011.|
During the 2012 financial year, OUTsurance revised the accounting policy governing the accounting for non-claims
bonuses. The change in the measurement basis of the non-claims bonus provision has resulted in a significant reduction
in the provision for non-claims bonuses. As a result of the change in the accounting policy, prior year earnings have
been restated to reflect the new basis.
Our agreement to sell an effective interest of 6.5% in the ordinary share capital of OUTsurance to the management
team of OUTsurance for a purchase consideration of R531 million was implemented with effect from 1 April 2012. RMI
Holdings facilitated the transaction by providing term funding to the management group for part of the purchase
RMI Holdings included R1 010 million of OUTsurance’s earnings in its normalised earnings (2011: R220 million for the
For an indepth review of OUTsurance’s performance, RMI Holdings’ shareholders are referred to www.outsurance.co.za.