RMI warns of tough year ahead in SA

Rand Merchant Investment Holdings (RMI), which owns Outsurance and has stakes in Discovery and MMI, has warned that 2019 is likely to be another difficult year for the South African economy with prolonged strike uncertainty in the gold mining sector, Eskom's woes and global headwinds.   

The group, headed by CEO Herman Bosman and chair Jannie Durand, said that the macroeconomic environment “is experiencing significant turbulence”.

“This year is shaping up to be another challenging one for the South African economy. Headwinds include a slowing global economy, Eskom — and other state-owned entity — challenges, adverse domestic weather conditions in the western maize-growing areas of the country, prolonged strike activity in the gold-mining sector and the uncertainty created by the upcoming national election,” RMI said.

The group said on Monday that its consolidated normalised earnings fell 8% to R2.1bn in the six months ended December.

The decline was mainly due to higher spend on “new strategic initiatives”, a “spike” in large mortality claims at Discovery, an increase in the claims ratio of the short-term insurance operations, and investments into Outsurance.

Despite lower earnings, RMI increased its interim dividend from 39c a share to 45c.

RMI's shares were 2.1% lower at R32.25 on Monday morning.

The group owns 25% of Discovery, 29.9% of UK-listed insurer Hastings, 27.3% of MMI, 89.1% of Outsurance, and all of RMI Investment Managers and AlphaCode.

RMI said it was looking at other potential investment opportunities, both in SA and abroad. 

hedleyn@businesslive.co.za