Youi Australia’s profit fell 80% to 51 million rand ($5.32 million) in the year to June 30 due to large catastrophe claims, according to its South African parent Rand Merchant Insurance.

“Australia experienced the worst weather conditions in terms of frequency of natural catastrophe events in the past decade, which resulted in a significant increase in the claims ratio and a reduction in profit from...Youi,” the annual report says.       

Youi Australia incurred total claims of 963 million rand ($100.49 million) for catastrophes.

After reinsurance recoveries and premiums to reinstate reinsurance, the net impact of catastrophe events was 405 million rand ($42.26 million).

The combined operating ratio deteriorated to 100.9% from 91.6% the previous year.

Despite the profit drop, Rand Merchant Insurance says Youi Australia continued to grow market share, and gross written premium rose 34% to $572 million.

Youi Australia has 1750 staff and 978,000 policies written, and contributed 44% to group premium revenue, up from 39% the previous year.

“The growth and profitability of our Australian business remains the group’s key strategic growth initiative,” the report says.

“Coupled with this is the establishment of a leading short-term insurer in the New Zealand marketplace. We believe the growth opportunities available in the Australasian market present the group with good growth potential over the medium term.”

Youi New Zealand began operations as a personal lines direct insurer last November.

“We are pleased with the performance of the business to date, which is in line with our expectations,” the report says.

Costs associated with a large marketing budget and call centre in Auckland resulted in start-up losses of 130 million rand ($13.56 million) for the year.