OUTsurance Group Limited (JSE: OUT) has emerged successfully in 2023, marking its fourth consecutive year in positive strides within the market. This impressive feat aligns with the company’s remarkable surge, boasting a 34.63% year-to-date increase, underpinned by robust business performance. The short-term insurer showcases resilience, amplifying its success through the fiscal year ending June 2023.
Despite challenges posed by power cuts, amplified claims inflation, vehicle theft, and reinsurance costs, OUTsurance delivered a standout performance. Notably, its Australian operations proved pivotal, mitigating adverse impacts on its financial standing. The fiscal report highlights a remarkable 21.1% surge in gross written premiums, soaring to R28.5 billion, fuelled by organic growth, escalating premium inflation, and currency fluctuations benefiting the company’s position.
The financial landscape brightened further as operating profit soared to R4 billion, marking an impressive 42% surge from the previous year. Earnings followed suit, witnessing a substantial 40% growth, totalling R3.2 billion. Such remarkable achievements were bolstered by a strategic reduction in net claims ratio and significant premium growth, positioning OUTsurance as a standout performer in navigating challenges while accelerating its upward trajectory.
OUTsurance’s share price portrays a compelling narrative through its recent price action, reflecting an uptrend trajectory persisting above the 100-day moving average. Notably, a pivotal support level emerged at R39.05 per share, catalyzing a noteworthy surge in the stock’s value. However, the ascent met resistance at the R46.00 per share level, coinciding with overbought RSI conditions preceding a downturn.
Presently, the share price teeters within reach of the 61.80% Fibonacci Retracement Golden Ratio, a critical juncture. A decisive breach below this level, accompanied by substantial downside volume, might indicate sustained bearish pressures. Such a scenario could redirect focus toward the R39.05 per share mark as a potential downside interest point.
Conversely, if the Golden Ratio holds as a sturdy intermediate support, a reversal could transpire, signalling renewed upward momentum. In this case, optimistic traders will likely eagerly eye the R46.00 per share level, anticipating an upside breakthrough should market sentiment tilt favourably.
OUTsurance shines as a standout performer, outpacing the JSE Top 40 with a resilient 34.63% year-to-date surge. Its robust fiscal performance, marked by a remarkable increase in gross written premiums and substantial profit growth, underscores its adeptness in navigating challenges. The stock’s technical trajectory, depicting an uptrend with pivotal support and resistance levels, reflects a delicate interplay between potential downside pressures and optimistic prospects for an upside breakthrough.
Sources: OUTsurance Group Limited, Reuters, Moneyweb, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.