Newly JSE-listed insurer OUTsurance expects to report a more than 70% drop in earnings for the six months to the end of December 2022, after the consolidation of its operations following the unbundling from its interests in the insurance industry.

OUTsurance recently completed its transition and rebrand from Rand Merchant Investment Holdings (RMI). RMI previously owned the majority of OUTsurance and was positioned in the market as an active investor in financial services businesses.

It had shareholdings in insurance companies Discovery and Momentum Metropolitan but later unbundled them as part of the transition and jointly held a 30% stake in UK-based short-term insurer, Hastings, which it subsequently sold off.

On Thursday, the OUTsurance group said it expects earnings per share from continuing and discontinued operations to be more than 70% lower than the period prior, at 287.6 cents per share.

The update was OUTsurance’s first since its rebrand and JSE listing in December.

It said normalised earnings per share from continuing and discontinued operations would decrease 20%, or more than 25.1 cents per share, compared to 125.5 cents per share, which excludes the profits from its sale of Hastings.

The financial results of its previous investee companies were treated as discontinued operations, and the proceeds from the sale of Hastings were used to settle the group’s outstanding preference share debt.

OUTsurance said profits from the sale of Hastings were to the tune of R4.7 billion, also excluded from its earnings, however, was R5.7 billion relating to interests in Hastings.

Excluding profits from the sale of Hastings, normalised earnings are expected to rise 20%, the company said, partly boosted by increased premiums and lower weather-related claims.

More favourable weather conditions during the period, which followed adverse weather events such as the KwaZulu-Natal floods of 2021, contributed to the decline in claims.

“This positive outcome is attributed to strong premium growth, a material decrease in natural perils claims incurred following more favourable weather exposure and higher investment income attributed to the rising interest rate environment,” the company said in the voluntary trading update.

Its earnings were also impacted by a significant increase in its Australian insurance operation’s earnings.

Its shares were flat at lunch time on Thursday, at 0.06% to R34.72.