Youi says its business in Australia has been “severely impacted” by the recent bushfire catastrophe, with first-half operating profit down 21.7% to $36 million from a year earlier.

The results include an allowance for $35 million in gross incurred bushfire claims and an associated reinsurance recovery of $14.5 million, thereby producing a net anticipated loss of $20.5 million for all claims incurred before December 31.

Including the November hailstorm in the Sunshine Coast, which cost the insurer $9.5 million, Youi says the Australian business incurred $31 million in net catastrophe losses in the December half.

The South African-owned insurer expects earnings in the second half to also be affected.

“The bushfires continued to rage subsequent to [December 31] albeit at a lower severity,” parent group Outsurance Holdings says. “The estimated net loss for bushfire claims subsequent [December 31] is $4 million.”

The combined ratio worsened to 90.5% from 86.9%, and the claims ratio deteriorated 1.7 percentage points to 57.9%.

Gross written premium increased 6% to $372 million while headline earnings fell 25% to $24 million.

Youi’s New Zealand arm was recorded as a “discontinued operation” in the results, after the business was sold to Tower Insurance for NZ$12.6 million ($12.3 million) during the period.

“This disposal allows the Youi Group to free up a large amount of capital and allocate resources to Youi Australia’s strategic growth plan,” Outsurance says.