Rand Merchant Investment Details OUT Insurance pivot

Holding Rand Merchant Investment (RMI) says it is transitioning and rebranding from RMI to OUTsurance Group, following the separation of its investments in Discovery and Momentum Metropolitan and the sale of the group’s 30% stake in Hastings Group.

RMI is a JSE-listed holding company with significant investments in insurance, wealth management and fintech businesses, including AlphaCode.

“The financial year 2022 was really important in RMI’s eventful history,” the group said in a statement Thursday (September 22).

“Both strategically and structurally, important decisions were made to separate its holdings in two strong South African life insurance brands, Discovery and Momentum Metropolitan, to sell its investment in the lucrative UK market, Hastings, and not to continue with an active investment strategy and further geographical expansion but to undertake an orderly and managed transition towards a structure that represents an effective list of OUTsurance “.

RMI said it has unlocked significant shareholder value as a direct result of these strategic decisions in reporting financial results for the year ended June 2022.

As of June 30, 2021, RMI’s market capitalization was RMI 48 billion. One year later, on June 30, 2022, RMI’s market capitalization was RMI 42.6 billion, as a result of the unbundling process.

In addition to this, RMI said it paid a special dividend of R2.2 billion and a normal dividend of R1 billion. The group said its total return to shareholders since listing in 2011 was 453.5%.

The group recorded an ordinary dividend up 46% to 65.5 cents for the year, while special dividends amounted to 142 cents in cash.

Rationale for the OUTsurance transition

Over the past two years, RMI has said it has been evaluating the creation of a portfolio of unlisted, non-competing and collaborative assets in the short-term insurance industry.

He said he conducted a detailed country and company analysis to identify potential target investments and found no actionable investment opportunities that meet RMI’s expectations for asset quality, price and availability.

“The board of RMI has concluded that it is in the best interest of shareholders not to continue with the active investment strategy and has decided to undertake an orderly and managed transition to a structure that represents an effective listing of OUTsurance,” he said.

OUTsurance could, over time, drive international expansion independently if attractive opportunities arise.

The managed transition will be achieved by renaming Rand Merchant Investment Holdings Limited to OUTsurance Group Limited.

RMI’s investments in RMI Investments Managers and AlphaCode’s fintech portfolio will be managed by RMI Treasury Company Limited (a wholly owned subsidiary of RMI) and its investment in OUTsurance will remain under OUTsurance Holdings Limited.

The managed transition is expected to deliver the following key benefits for RMI shareholders:

  • Simpler operational structure offering a single access point to OUTsurance;
  • A cost-effective way to effectively complete OUTsurance’s initial public offering (IPO) and maintain group accountability credentials;
  • More concentrated OUTsurance management team with direct responsibility towards shareholders;
  • Higher dividend payout ratio;
  • A gradual reduction of holding and personnel costs at RMI until March 2023, after which the only remaining costs will be the costs associated with being a listed entity; Other
  • It enabled RMI to issue RMI 2.2 billion to shareholders as a special dividend.

looking forward

OUTsurance expects the global and local economic environment to remain volatile for the foreseeable future. The main strategic goal for financial year 2023 is to drive growth initiatives towards profitability and aim for margins, he said.

“The international expansion initiative is gaining momentum and a license application will be submitted in 2023, along with preparations for launch.”

The group said the transition to RMI’s listing in OUTsurance “is a significant undertaking” and should be substantially completed by December 2022.

“RMI Investment Managers’ point of view is that the portfolio is largely complete. However, they remain opportunistic and continue to explore adding affiliates to address additional exposure or under exposure in certain asset classes or to add further value to the portfolio, “the group said.

Read: RMI to list OUTsurance activities