Youi Australia first-half operating profit slipped 68.8% to $15 million following a higher number of catastrophe claims and a change in reinsurance arrangements, while its partnership with Blue Zebra helped drive premium growth.

“The significant increase in the claims ratio from 53.4% to 62% is due to the extent of natural catastrophe events experienced, which included the Melbourne earthquake and various hail and flood events,” South African parent OUTsurance says in its interim financial results.

The impact of the events was amplified by reinsurance changes that lifted the per event attachment point to $30 million, compared to $10 million in the previous financial year.

But the company says it also has aggregate cover of $70 million once retained natural losses for the year exceed $60 million, and it reached that level in January.

“We therefore expect a favourable claims ratio performance from Youi in the second half of the financial year,” OUTsurance says.

Gross written premium (GWP) increased 26.1% to $555 million, supported by its Blue Zebra Insurance (BZI) partnership and its expansion in compulsory third party (CTP) in NSW.

The company says new business flows from BZI were bolstered by the inclusion of product on the Steadfast platform, and Youi will be increasing its interest in BZI from 4% to 34% this month.

“This investment represents a strategic stake in Youi’s fastest growing new business channel,” OUTsurance says.

Youi’s CTP offering is performing “in line with expectations” and following a recent licence approval, will be expanded to SA next financial year.

A cost-to-income ratio increase from 32.5% to 34.9%. was associated with product and channel growth initiatives, broker commission paid to BZI and the ongoing cost of regulatory and systems transformation projects.

Overall, the OUTsurance group reported 14.4% growth in GWP while operating profit declined 35.3%.

“In addition to customer growth, premium inflation is increasing in response to the global inflationary pressures and the impact of recovering claims frequencies on motor risks,” it says.

“Property premiums have shown significant upward inflation, particularly in Australia where premiums are impacted by recent natural perils event patterns and the increased cost of reinsurance. We expect premium inflation to remain at elevated levels in the near term.”