Avior Financials | Investec | Transaction Capital | Outsurance | RMI NAV

In this week's Avior Financials note:

Investec's H1 '20 (to Sep '19) pre-close guidance was disappointing but not unexpected in challenging conditions for earnings growth. In our view, the Group's prospects for improved profitability in FY '21f and ‘22f remain intact.

We had a pre-close meeting with Transaction Capital. Management has maintained its guidance for high teen's earnings growth. We provide our meeting notes.

The JSE Ltd's trading statistics (to 13 Sep ‘19) show a -12.7% y/y decline in cash equity value traded YTD.

In order to retain clients following two years of benign motor claims in SA, OUTsurance conceded with renewal premium increases below CPI. Additional marketing campaigns and investment into intermediated distribution increased new business premiums 27.5% y/y. Aggregate premium growth of 7.5% y/y for SA and 5.3% y/y for Youi (in AUS$) was insufficient to offset a marginal rise in the claims ratio to 51.1% (FY'18: 49.8%) and a 16% y/y increase in marketing and administrative costs. OUTsurance remains attractively priced based on our updated discount to NAV model.

In our insurance curiosity corner we explore the ethics of genetic testing for life insurance based on Investec Life's latest partnership with DNAFit.