Departing chief financial officer Jan Hofmeyr presented OUTsurance Group’s full-year results to June and highlighted that overseas operations are the core of the company’s growth story.
The group, which runs in South Africa, Australia and Ireland, serves more than 4.3 million policies and employs over 8 000 staff. South Africa delivered the strongest performance with normalised earnings (profit after stripping one-off items) of R4.2 billion, a rise of 43.3 percent. The Australian arm, Youi, posted revenue of R2.1 billion, down 6.7 percent, after higher payouts for storm and flood damage.
Australia’s upside and downside
Hofmeyr argued that Australia still holds major growth potential because the country has about 19 million cars on the road compared with South Africa’s 12 million, yet only four million are insured. In other words, the insured-car base in Australia could be five times larger than today. He described Youi’s full-year profit as “material”, meaning it is sizable enough to support further expansion.
He also warned that the Australian market is more volatile, with claims driven by natural disasters rather than theft or accidents. That volatility explains the recent dip in earnings but does not, in his view, diminish the long-term opportunity.
OUTsurance’s experience contrasts with several South African firms that have struggled abroad, for example, Woolworths’ loss-making venture in Australia and Spar’s write-offs in Europe. The insurer’s ability to generate profit overseas makes it an outlier.
In Ireland, the business is still loss-making, with a 15.9 percent increase in losses to R466 million. The Irish unit aims to break even by the financial year ending 2029, after losses peaked in the first half of the year and began to fall.
The group paid a special dividend of 87.5 cents per share on top of an ordinary dividend of 170.8 cents, bringing the total payout for the year to 291.5 cents per share.
Overall, the spread across three countries provides a buffer against local shocks. For owners of small and medium enterprises, the takeaway is that expanding into markets with larger vehicle pools can unlock growth, but the exposure to climate-related claims must be managed carefully.
Why an insurer’s earnings move with the weather
The contrast Hofmeyr draws between the South African and Australian books is a contrast between two different kinds of risk, and it explains more about short-term insurance than the earnings figures do. Motor theft and collision claims arrive steadily. They vary with crime rates and traffic volumes, but they arrive in a pattern an actuary can price with reasonable confidence, because a bad month is followed by an ordinary one.
Catastrophe claims do not behave that way. A storm or a flood produces years of claims in a week, across thousands of policies in the same postcodes, because the event that damaged one house damaged the whole suburb. That concentration is the problem: the ordinary logic of insurance depends on losses being independent of one another, and a natural disaster makes them simultaneous instead.
Insurers manage this with reinsurance, which is insurance bought by insurers, capping exposure to any single event by passing the tail of it to a larger balance sheet. Reinsurance costs money every year and pays out rarely, so it lowers average earnings in exchange for surviving the bad years intact. An insurer in a catastrophe-exposed market carries more of that cost, which is one reason the same underwriting skill produces a lumpier result in one country than in another.
What makes an insurance business travel well
South African companies have a mixed record abroad, and insurance is one of the few categories where the odds are structurally better. A retailer exporting a format has to win over shoppers whose tastes, incomes and habits it does not know. An insurer is exporting a pricing engine and a claims operation, and the discipline that makes those work, charging enough for the risk and settling claims efficiently, is not especially country-specific.
What does not travel is local knowledge of the risk itself. Knowing which suburbs flood, which vehicles get stolen and which repairers inflate a quote takes years of claims data to acquire, and until an entrant has it, it is pricing partly blind against incumbents who are not. That is the usual explanation for why a foreign insurance venture loses money for an extended period before it turns, and why a stated break-even target is a data-accumulation timeline as much as a commercial one.
