No-one really associates the world of insurance with excitement or innovation. For most people, it is a dull but ultimately necessary thing that few want to dwell on beyond paying their monthly premium.
But Outsurance will certainly have a group of hardcore fans in the form of its investors; it is an undeniably solid business, with the share price currently up around 19% year-on-year. The company’s latest results also bestowed shareholders with a nice final dividend of 291.5c a share as well as a full-year special dividend of 117.8c a share.
Beyond that, there is more to celebrate for investors in the results: normalised earnings for the group increased by 18.5% to R5.6bn, and the return on equity (ROE) improved to 38.3%. The group managed to slim down costs and shrink its cost-to-income ratio to 27.5% from 31.9%.
“We thought it was a very good result,” says Keagan Higgins, an investment analyst at Anchor Capital. The South Africa business was “the standout” to him — normalised earnings for its local business grew 43.3% to R4.1bn.
Where Outsurance wobbled slightly were its international endeavours, namely its Australian business, Youi, and Outsurance Ireland. But Higgins is hesitant to group the two together. “Youi is already a large and profitable business. Earnings were down 6.7%, largely because Australia had a particularly bad year for natural peril claims, but the underlying business still looks healthy.”
Outsurance CEO Marthinus Visser points to the fact that Youi still did relatively well “despite the more elevated natural peril events, storm and flood type claims experienced over the course of the financial year”. On top of this, he says the earnings drop must be viewed in the context of “the stronger rand to the Australian dollar exchange rate, as well as the much lower premium inflation”.
This might be true, but Higgins points to the fact that there were other issues with the Australian business. “We would separate that from the compulsory third-party insurance business, where claims experience in New South Wales has been worse than expected. That is more of an execution and pricing issue.”
Overall, investors and analysts agree things could have been worse. “On the Youi numbers I was positively surprised,” says Radebe Sipamla, a portfolio manager at Mergence Investment Managers. Sipamla thought the end of Youi’s deal with the Australian underwriting agency Blue Zebra Insurance would have “had a more negative impact”. There was “a lot of gross underwritten premium that would’ve come under threat” with the exit, he says, “but you didn’t really see the impact of that coming through”.
Ireland, however, is a different story. While Outsurance is at pains to note it grew its gross written premium from €14m to €41m, the business lost R466m this year — up from R402m in 2025. It’s a meaningful loss, but management is not yet concerned. “In terms of Ireland, we always projected that financial 2026 will be the peak of the losses of the J-curve of that business,” says Visser. He says they are “very comfortable” with their progress in Ireland and are “still projecting a five-year break-even profile, so we’re looking towards April 2029”.
The fact that investors are not tearing their hair out is a huge vote of confidence in Outsurance. “It is deliberately still in the investment phase,” Higgins says. He believes things are “progressing as planned”.
Looking at the results overall, Sipamla says the company has “topped [his] expectations”, and he is not worried about its international endeavours. “I think it’s doing very well. Now if it can just sustain what it does.”
South African companies seem to follow a pattern of getting burnt when trying their hand at foreign expansion, often having to withdraw years later with millions of rand down the drain. But despite the surface-level look of Outsurance’s overseas businesses, the insurer looks like it might be getting it right.
“The bulk of our growth is actually coming from overseas,” says Visser. “If you look at our revenue, we’re now at a point where Australia accounts for 62.9%.”
Higgins agrees: “We think Youi is fairly compelling evidence that Outsurance can succeed outside South Africa. It is no longer a small offshore experiment. Even in a difficult claims year, it generated more than R2bn of earnings and continues to grow premiums strongly.”
And while Ireland is yet to break even, Higgins notes that monthly losses did start declining in the second half of the year. He trusts it is on track to become just as successful as any of Outsurance’s other businesses.
So why has Outsurance been able to attain success where it has delivered and retain investor confidence where it has yet to deliver?
“Why we’ve had success ... is that we’re very particular about the countries we expand to because we can’t apply our model or our strengths in any country,” Visser tells the FM. “We’ve seen many failures where companies go to countries for the wrong reasons. They go to the biggest one, or the one with the fastest-growing economy. But if the model is vastly different from where your strengths lie, then your odds of succeeding are extremely low.”
This is obvious to Higgins, who agrees that Outsurance’s strength comes from modelling its businesses on its South African business, rather than pursuing large overseas acquisitions. “They are effectively exporting the things they know how to do — direct distribution, disciplined pricing and underwriting, and a low-cost operating model — rather than buying an overseas business and hoping that they can fix it.”
Outsurance’s choice to go “the organic root” gives it far more control over setting up the business correctly, Sipamla says, pointing to things such as how underwriting is done, how policies are formulated, and the risks embedded in the business.
He is quick to note, however, that Outsurance has made mistakes in the past when it comes to overseas expansions. The company previously had an iteration of Youi in New Zealand, launched in 2014. But faced with a consolidated market and sluggish growth in written premiums, Outsurance decided to sell off Youi New Zealand in 2019 for R122m.
But the endeavour taught the company important lessons. “It’s very quick to shut it down if something isn’t working and when it does launch something it’s very disciplined at allocating capital and letting it scale up sufficiently and within budget,” says Sipamla.
He disagrees with the idea that Outsurance falls into the same bucket as other South African companies chasing growth overseas. “I think what happens with a lot of companies is that they’re not disciplined in terms of doing their due diligence before going into the markets,” he says.
In contrast, Outsurance was careful in picking out its markets, taking several years to “do the back work in terms of understanding markets around the world and seeing where it could do best”.
Visser notes that both Australia and Ireland were chosen due to their similarities to South Africa, which allowed Outsurance to apply its core skills. Additionally, it is picky in choosing where to expand so as not to overextend and lose focus by trying to be everywhere at once. “We would much rather be a podium player in three countries than at number five or six in six countries,” Visser says.
For now, Outsurance has no plans to expand further, given the amount of runway still left in Australia and Ireland. “Even in South Africa, there are still a lot of growth vectors for it to pursue,” says Sipamla. “On the business Outsurance side, on the life insurance side, and also on the funeral side — there’s a good runway for it to grow there.”
Slow and steady wins the race, they say, and management and investors alike seem to think this is the case for Outsurance. “It’s something you basically buy and hold,” Sipamla says of the investment case, “and that you add to whenever there are price dips and corrections in the stock price — given that it’s basically going to keep compounding and growing.”
