RMI raises dividend despite lower earnings


RMI raises dividend despite lower earnings

Published Date: 2019-03-12 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

RMI raises dividend despite lower earnings

A spike in mortality claims at Discovery and a normalisation of claims at OUTsurance resulted in an 8% decline in earnings.

Rand Merchant Investment Holdings has reported a drop in first-half earnings, partly due to a spike in large mortality claims at Discovery. An increase in the claims ratio of its short-term insurance operations and a big investment in new business growth activities at OUTsurance also affected its performance in the six months to end-December.

The investment holding company has a R56 billion portfolio consisting of stakes in life assurer MMI, financial services group Discovery, short-term insurer OUTsurance and UK-based short-term insurer Hastings. It also owns 100% of RMI Investment Managers and financial services incubator AlphaCode.

Last month, Discovery said all its businesses reported strong operating performances with the exception of Discovery Life due to the higher mortality claims. It said the business had now altered its reinsurance structures to improve large-claim volatility in the future.

Unlisted OUTsurance also reported lower earnings as claims rose due to natural peril claims in Australia and after an exceptionally benign period the year before.

It said MMI was making steady progress with a turnaround strategy introduced last September. The group has resumed its dividend payments following a R2 billion share buyback.

Overall, RMI reported an 8% decline in normalised earnings to R2.09 billion, while normalised earnings per share fell 9% to 137.2c. It's raised its interim dividend by 15% to 45c per share.

Its shares closed 3.1% down at R31.90.

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