OUTsurance GROUP LIMITED
Investment Analysis: OUTsurance Group Limited (OUT)
Date: 12 January 2026 Analyst Role: Senior Equity Analyst, JSE Current Price: ~R67.15
Step 1: Data Gathering & Source Verification
Primary Reporting Periods Used:
- Annual Financial Statements: Year Ended 30 June 2025.
- Interim Results: Note that the interim results for the six months ended 31 December 2025 are pending (expected March 2026). Therefore, the analysis relies on the full-year 2025 audited results.
Source Documents:
- 2025 Annual Results Announcement: PDF Link
- Latest SENS Announcements: SENS Portal
- 06 Jan 2026: Secondary listing on A2X.
- 15 Sep 2025: Dividend declaration (Final & Special).
Step 2: Metric Extraction
- Market Cap: R103.8 Billion
- Dividend Yield (L12M): 4.03%
- Calculation: Interim (88.6c) + Final (149.0c) + Special (33.1c) = 270.7c total distribution per share.
-
Yield: 270.7c / 6715c.
-
Liquidity Check: High Liquidity.
-
Status: The stock trades significant volumes daily (e.g., >2 million shares traded on Jan 12, 2026). It faces no liquidity risk and is a constituent of major indices.
-
P/E Ratio: 21.9x
-
Based on HEPS of ~306 cents.
-
Net Asset Value (NAV): 940 cents per share
- Note: While provided, P/E and Embedded Value are superior metrics for valuing this insurer compared to NAV.
Step 3: Operational & Strategic Analysis
Business Overview: OUTsurance Group is a leading direct-to-consumer insurer operating primarily in South Africa (Short-term & Life) and Australia (via its subsidiary, Youi). It has recently expanded into Ireland. The group is known for its "OUTbonus" model and highly efficient, data-driven underwriting.
Performance Trend (FY2025):
- Expanding: The group delivered a robust set of results for FY2025.
- Normalised Earnings: Increased by 33.7% to R4.7 billion.
- Gross Written Premium (GWP): Up 16.8%, driven largely by Youi (Australia) and strong organic growth in SA.
- Margins: The claims ratio improved to 53.6% (from 56.8%), benefiting from a more benign weather environment compared to the previous year's flooding events.
Sector Context: Climate Change & Weather Patterns: The South African short-term insurance sector is currently sensitive to the frequency of catastrophe events (floods/hail). While FY2025 saw a "benign" weather period aiding margins, the long-term trend of severe weather events remains a structural risk that is pushing up reinsurance costs and premiums for consumers.
Step 4: The Verdict
Bull Case (Why Buy): The "Youi" Engine: The Australian subsidiary, Youi, is no longer just a startup but a significant profit driver, delivering faster growth than the mature South African operation. With the broker channel (Blue Zebra) runoff issues largely resolved and premium inflation high in Australia, Youi offers hard-currency earnings growth that few other JSE insurers can match.
Bear Case (Why Sell): Valuation Premium: Trading at a P/E of ~22x, OUTsurance is priced significantly higher than its local peers (Sanlam, Old Mutual, Santam typically trade at 10xâ15x). The market has priced in "perfection" and high growth rates. Any operational slipâparticularly in the new Irish venture or an uptick in weather claimsâcould lead to a sharp multiple contraction.
Fair Value Estimate: R60.00 â R65.00
- Rationale: While the quality is undeniable, the current price of R67.15 reflects a premium to our fair value derived from a 18x forward earnings multiple.
Final Rating: HOLD
- Summary: OUTsurance is a "quality compounder" and arguably the best-run insurer on the JSE. However, the current valuation leaves no margin of safety for new entrants. Existing shareholders should hold for the dividend and Youi growth, but new capital should wait for a pullback to the low R60s.