Youi has announced a strategic review of its participation in the broker distribution channel where it partners with the underwriting agency Blue Zebra Insurance (BZI). The two firms underwrite underwrite car, home and commercial insurance products in this broker channel.
The review was announced by South African parent company OUTsurance Group in its investor presentation on Friday for its half year FY24 financial results.
“The strategic review was prompted by Youi’s desire to focus more attention and capital on its core business which is its own direct channel that offers much needed competition in Australia’s personal lines insurance market,” said the presentation document.
Youi first entered the broker market with BZI in 2020 and owns a minority interest in the company.
The results document said “Youi Group delivered a satisfactory operational and financial performance for the six months under review” with “good organic growth” in its direct channel.
In contrast with the broker channel, directly sold insurance contributed more than 90% of operating profit, according to the results document, and 85% of gross written premium (GWP).
Colin Fagen (main picture right side; Nathaniel Simpson, CEO Youi, left side), CEO of Blue Zebra, reached out to Insurance Business to explain the Youi announcement.
“This [announcement] has led to both of us reviewing our positions and they're expecting to finalize their review probably by the end of this month,” said Fagen. “It could lead to them moving away from the channel, or changing the nature of its association with Blue Zebra, or maintaining the status quo.”
He said Blue Zebra is also reviewing its position.
“We're looking at potential new capacity and actually what's coming from the discussions we've had so far is opportunities for new products to be delivered by Blue Zebra as well.”
Fagen said it is “not necessarily” the end Youi’s relationship with his agency.
“We've known that they're reviewing their capital position, that they've traditionally been a direct market participant, more than an intermediated participant,” he said. “They’ve been talking for a while [about this], so this is not a short-term surprise.”
Fagen said Youi’s half year results show that his firm made a profit for them.
“We're producing a reasonable return for them but they have fairly strong targets with respect to the expected return on capital,” said the CEO.
