Good morning, everyone, and welcome to the 2021 Financial Year Results. I'm joined today here by Marthinus Visser, Group CEO of OUTsurance, and Jan Hofmeyr, who is Group CFO of OUTsurance. On the line to the U.K., and we're not missing the fact that they still regard us being on a red list, but nonetheless, Toby van der Meer, who's our Hastings CEO. Welcome, Toby, from the U.K. Today, we have quite a bit to cover. Most of you would have seen our announcement this morning. The topics that we want to cover today, first of all, I'll give you an overview of our strategic restructure that we announced today. I'll hand over to my colleagues to present OUTsurance's results for the year, followed by Toby for the Hastings results.
I'll wrap up looking at the RMI results, which you saw published on SENS this morning, and then we will have our customary Q&A sessions after that. Turning to our announcement today, it's obviously an important corporate restructuring that we've announced today. This diagram that you see sets out the current position on the top, which effectively is our current shareholdings or shareholders holding RMI, the listed group, and we set out the six big assets that we have, starting with Discovery 24.8%, Momentum 26%, OUTsurance, Hastings, et cetera. That picture you know well. What we've decided to propose to you today is firstly, to unbundle our stakes in Discovery and MMH.
In the process, value of around ZAR 30 billion will be distributed to our shareholders, and that will be indivisibly linked to a rights offer of up to ZAR 6.5 billion, which we will explain a bit later. Post the restructure, you see the picture that emerges in the blue section, whereas our current shareholders will, after the restructure, hold their proportionate holding in Discovery and MMH. RMI will continue to hold predominantly the two unlisted short-term insurers, OUTsurance and Hastings, and then our smaller holdings in AlphaCode and IMG, the asset management affiliates business. As always, it's important to understand the context, in which we took this decision to proceed with the restructure. This is quite a busy slide, but if you have time to look at it, our group was started in 1977, and we spent the first 20 years assembling assets.
Assembling and then building phenomenal assets. You see, in 1992, we acquired 77% of Momentum, which was an ailing business at the time. Discovery was formed in the same year, in 1992, 1993, by Adrian Gore and Barry Swartzberg. Today, we are, of course, announcing the unbundling thereof. This follows after the first unbundling of Discovery from FirstRand in 2007. We, of course, split RMH and RMI in 2010 to have a more focused banking and insurance play. As you recall, last year, we unbundled 34% in FirstRand through the RMH structure. I guess the first point of context is that this is not uncommon and that fortunately, we've been in a position where every time we've done these big corporate restructurings, significant value has been unlocked for shareholders. We certainly hope this is true this time around as well.
The second point of context is that we've had 30 years of fantastic relationship with MMH and Discovery. I want to pay tribute to two phenomenal market-leading management teams. We've grown very good professional and personal relationships, of course, with them over that three decade of relationship. Discovery was a founder-built group or is a founder-built group. We invested ZAR 10 million in Discovery in 1992, and the market cap of ZAR 84 billion represents 8,500 times our money in. What a phenomenal performance and well done to Adrian and Barry and their teams. In the case of MMH, RMB Holdings invested about a couple of hundred million in that business in 1992. You can see that market value has grown to ZAR 30 billion and well done similarly to Hillie and his team. Especially since he's come back from retirement to again take the reins at Momentum.
Before we go into the reasons why we do it, I think it's important to understand that this is not an exit from these two groups. Our shareholders are receiving their proportionate shareholding in these two groups. We are very proud of these two assets, and we are now giving our shareholders the freedom of choice on these shareholdings. I want to just play a quick clip from Hillie and Adrian, then we will proceed to talk about our rationale for the restructure.
In my time at Momentum Metropolitan, that is, since my return to the group three and a half years ago, I found RMI to be a very supportive shareholder.
Always very professional and conscious of governance demands. Never unreasonable. You somehow always knew where you stood to them . As a group, Momentum Metropolitan is very grateful that RMI had the patience to give us the opportunity to turn the business around. Of course, during the earlier era predating the formation of even RMI, I had the privilege to be part of the team that under the leadership of GT Ferreira and Laurie Dippenaar, build and improve many businesses. I will forever be grateful for what I learned from them. Herman Bosman and I were amongst the younger Turks at the time. Those shared experiences and the common language that developed certainly contributed to the good relationship we have today. On a personal note, I would like to thank Herman for always adding value during the many conversations we had.
Hi, this is Adrian Gore of Discovery. This is a very important announcement. After 30 years, we're saying goodbye to RMI. It has been the most wonderful, incredible relationship on behalf of Discovery and personally, I just express my deepest gratitude for decades of just incredible development, success, progress, and fun in the process. RMI has been a magical shareholder. Beside issues of capital and of challenge and of governance, I think the magic of RMI is deep friendships, deep trust, and the ability to give the businesses they invest in confidence that they can succeed and win and do well for society. It's just a remarkable quality. This started out, of course, with Laurie Dippenaar, Paul Harris, and GT Ferreira. Now with Herman Bosman as CEO. The friendship and the success have continued.
I've no doubt that whatever RMI do, they will do well and win and succeed and the companies they invest in will continue to do well. This has been a very important relation for us. Of course, we'll continue that relationship with the shareholders above and with the people involved. We say goodbye to RMI with a very deep sense of gratitude. Herman, to you, thank you and only best wishes and great success as you go forward.
Thank you very much. Turning to the reasons for our decision-making around this restructure. There's a longer-term reason which is really about wanting to be a specialist P&C player. We like the dynamics of this industry. The short-term industry has outperformed life assets and also forecast to continue that outperformance. We like the fact that it's capital light and cash generative. It's also something that we have a high level of influence and knowledge too. The question, of course, is does this mean that we are taking a decision against life insurance? I think I want to make it clear to MMH and Discovery, and we've had lot of discussions around this point. That this is much more of a pro-structural choice. We have a preference for unlisted assets. We want to own significant stakes.
We don't want businesses which are competing with each other in our group. For those reasons, you can see how the choice to unbundle MMH and Discovery is probably quite natural in our evolution. The second reason for making this decision is a structural one. We have had many discussions with our shareholders around the direction of travel of regulation. You need to just read the beautiful ambit or preamble rather of the Competition Act to understand how there's a promotion of economic inclusivity and a deconcentration of the economy. We can see that our structure as it currently stands will not fit into that longer term. There's also a financial structure or capital structure consideration here. In the sense that we feel that we would like to have a lower gearing.
An asset base which is commensurate with our financial gearing, which is depicted there in the picture that we would want to come down from ZAR 11.8 billion of gross debt closer to a level of ZAR 6 billion of gross debt. That, of course, makes the rights offer that we are proposing understandable. We need to have to the extent that we are exiting certain assets through the unbundling or distributing them. We need to have a commensurate sized financial leverage. It also means that now that we're not invested in life insurance companies directly, that we can hold a reduced contingency buffer. Something that we introduced after the shock events of COVID and the halting of dividends from regulated entities.
Lastly, in line with the fact that our investment companies are so cash generative, we would also like to have a dividend payout ratio which is higher than it is at the moment. We are targeting 50% of free cash flow generated. That's the second reason. The third reason, of course, is the discount, something that we have also observed over a long period of time. This is an interesting graph. The dotted red line depicts par, i.e., market price is equal to underlying value. You could see that the blue line is our peers in South Africa, the likes of Remgro, PSG, Brait, Reinet, HCI. The yellow line is our own progression with this metric. You can see that until around 2016, most companies, most investment holding companies, have traded around par to their underlying value.
We saw a disconnect in the market arising, as you can see, that has been a continuing trend over the last five years. We are better off than our peers. Yesterday, we traded around a 29% discount, and you can see how that gap opens between ourselves and our peers. Nonetheless, we believe that this is something that is probably not going to revert to the historic trends of being close to par. For that reason, we see in the short term an opportunity to add value to our shareholders. Turning to some detail just to quickly touch on around the restructure itself. We have spoken to 72% of our shareholders. 65% of them are completely supportive of the restructure as we position it to you. The other one shareholder could not provide their support in time, but is verbally supportive of this.
We're very happy that 100% of the shareholders that we have spoken to are very comfortable with the direction we're taking. Our lending banks have also indicated that they are happy to continue lending to us along the lines suggested in the announcement. Our timing, just to touch on that quickly, we hope that this will be finalized by the end of April next year. This is a result of a couple of things, regulatory approvals, JSE processes, as well as waiting for our year-end or half-year results, December, which will be published in March. Over the next six months, we will be progressing this restructure. Lastly, just a point of governance. The two non-executive directors, myself and my colleague Lisa, will stay on the Discovery and MMH boards until at least the implementation of the restructure.
I wanted to address one or two questions we have had around the future RMI, which is something that we are very excited about, of course. Just to recap on the net asset value buildup. When you look at that, you can see that the two listed stakes, Discovery, MMH. Then Hastings, the value of Hastings, and then the updated 30 June 2021 value of OUTsurance of ZAR 35.4 billion. AlphaCode and asset management business has been revalued to ZAR 1.6 billion. Then we have the net debt number of ZAR 8.5 billion as of 30 June 2021. That brings us to a current, as of 30 June, net asset value of RMI of ZAR 66 billion. That per share is around ZAR 44. The unbundling would mean that you are being distributed the ZAR 20.8 billion and the ZAR 7.8 billion of Discovery and MMH based on the values we used here.
We are requesting the ZAR 6.5 billion rights offer from our shareholders, which will effectively leave RMI then with a net asset value of ZAR 44 billion. That compares to the market cap of RMI on Friday of ZAR 47 billion. You can see that there's a small gap of around there. It also presumes that shareholders would have received up to ZAR 30 billion of value in the process. The second lens we want to put on the new RMI is one around portfolio composition. I'm not going to dwell on this. I'll just focus on the last column on the right. There you see that at the moment, as things stand or will stand when the distribution takes place, OUTsurance will be 87% of portfolio, Hastings 13%, and our smaller businesses will comprise 1%. The industry will be 99% in P&C. That goes without saying.
Then our geographic fit or split would be two-thirds South Africa and then another third between Australia and the U.K. Our strategic positioning will try and be quite simple here. We want a focused and specialist company in RMI. Focused on P&C, first of all. Second, we will have a very strong bias for unlisted assets, which are globally relevant, but also difficult to access or impossible to access in other ways. We also want to have more predictable cash flows coming to you as shareholders, and on an enhanced basis when compared to the recent past. Lastly, the interesting bit that we want to leave with you is that we will be very disciplined and selective in creating a network of non-competing but collaborating local champions. What do we mean by that?
If you look across the world, in most countries, there's a local champion in short-term insurance. Short-term insurance is not dominated by international groups who are uber- successful in many countries. You always have the OUTsurance or the Quálitas in Mexico being the local champion. We think we would like to position ourselves as the partner to those local champions if there is an entry point. Then the important bit is that we want these local champions to form a network of cooperation. How does that look today? We will firstly just quickly look at the growth aspirations and the growth attractiveness of the group, and then I'll go into the collaboration. You will hear more from Marthinus and Jan, and then later from Toby, that we see strong growth in our existing business.
The first point to make around this is that we are extremely proud of the assets we have and the portfolio we have. We see strong growth potential in these businesses. I will leave it to the executives to explain that to you. When we look then at what the portfolio comprise at the moment is 5.2 million customers across these three jurisdictions, more than $2 billion of gross written premium and 187 actuaries and data scientists that we think can be better used or more effectively used across this non-competing group. We believe in the strong underpins of risk underwriting discipline. We are not chasing market share.
If you look at, for example, the combined ratio of OUTsurance around 76%, Youi 88%, and Hastings 93%, I think that's testament to the fact that we want to target a risk underwriting as the first important metric of our business. We want the group to collaborate. OUTsurance, as you know, has a 600-person call center in Centurion for Hastings, and they use that technology. We are deeply involved with brand building and the technology and science around that across the group. Sampo and Hastings have also embarked on a detailed study of the reinsurance needs for Hastings. Lastly, Hastings, for example, has been very cooperative and very helpful in assisting the bodily injury business that Youi is building in Australia.
You can pick up that between these three groups, plus then our new partner, Sampo, we believe that there's a lot of benefit that can be achieved by making this a non-competing but cooperative group. Lastly, just on the cash generation in the group. We are very fortunate that both Hastings and OUTsurance have a very high payout ratio and dividend yield. I won't go into the numbers, but you can see that this is a business that produces a lot of cash. The question, of course, to you is what will RMI do with that cash to the extent we don't pay out everything? We are targeting a dividend payout ratio of 50% of our free cash flow. That will immediately or naturally result in higher dividends going forward. The remaining cash will be used for three purposes, main.
The first one is to support portfolio businesses and expansion. The second one would be to optimize our capital structure and probably reduce our debt a bit more. Lastly, selectively in a disciplined way, we'll also look at further investment activity. If we can't have investment opportunities that meet the criteria, which we'll explain over the page, excess cash will be paid to you as special dividends. What is the expansion that we would contemplate? First of all, you heard that we want to further evaluate the concept around the local champions and whether they are appropriate entry into this as an investment theme. We want that to be in a geographically expanded way, and we will continue to assess markets which has the metrics or markets that have the metrics that we are interested in.
This we could do directly or via one of the existing portfolio companies. Just a point on South Africa, it is not excluded per se as an investment destination. If you refer to our comments around not wanting to be competitors or have competitors in the same group, you can see how South Africa would find its relevance in our portfolio. The life stage expansion, one has to realize that not all the companies which are the incumbents in the markets are the ones which will be the local champions going forward. Short-term is a very dynamic market, so I think we would have to have the flexibility to also target earlier stage investments through insurtech. That is something that, again, we could do in collaboration with Hastings, Youi, and OUTsurance. The investment activity that we would look at assessing would be assessed in a triangle of three factors.
The one factor is, of course, the strategy which you see in the middle there. I am not going to repeat that. We want to make sure that any investment will be strategy fit. Then again, we want to have two other disciplines around it. The first one is capital policy, capital structure. We want our leverage ratio not to go beyond investment grade. You see the reference to a leverage ratio of less than 2.5x . We also want new investments to be accretive within three years of investment. On the financial side, we remain targeting a portfolio return of 15%. Again, we want EPS accretive investments within three years. I guess the message here is that on the one hand, we are extremely happy with the current portfolio, but we will be selective and disciplined in our aspirations going forward.
With that, I will hand over to Marthinus and Jan to provide you a sense of OUTsurance's financial results for the year. Thank you.
Good afternoon, everyone. Thank you very much for the opportunity to speak to you about the OUTsurance Group's financial results for the financial year 2021. To give you a bit of context, our net earned premiums grew by 11.6%. If you look at our earnings growth, one could split that up. Firstly, the underwriting profits grew by 5.5%, operating profits 2.6%, and normalized earnings 15.3%. Now, normally one would expect earnings to grow in line with premium growth. The reason for the lag of the 5.5% compared to the 11.6%, there is two very good explanations for that. The most material one is our investment in our new ventures, our new products and channels, which we will elaborate on a bit more later on. That supported the strong growth, and that investment was a quite significant 13% of operating profit in this last financial year.
That explains the gap from 11.6%- 5.5%. Our operating profit was up 2.6%, and the reason why that was lower than the 5.5% is just the low yield environment we currently find ourselves in. We earned lower investment income on our technical reserves. Normalized earnings was up a strong 15.3%, and the tailwind there was really the strong equity market returns, but we also had stronger results from Hastings resulting in that 15.3% normalized earnings growth. If you look at the group's ROE, that increased to 25.6%, supported by the stronger earnings, and dividends increased by 9.9% with a high payout ratio there. New business written increased by a very strong 36% to a new record high level, and gross written premium increased by 18%.
That 36% benefited from strong growth from our core units of OUTsurance Personal and Youi Direct, but also from strong contributions from our new ventures, which we'll also elaborate on. A point worth flagging is maybe just the role of the exchange rate here as well. At the start of the financial year, the rand was pretty weak, over ZAR 12 to the U.S. dollar, and that recovered somewhat through the course of the year. It's now at ZAR 10.7. One just has to take note of the impact of that and the tailwind which that could cause. That 18% is probably a bit higher than what we would have expected. I think a 15% growth would have been a more normal growth rate there. Looking at our strategy to expand product and channels.
OUTsurance business returned to double-digit growth by the end of the financial year, which was very satisfactory because, at the end of the first quarter, we were down to low single digits, because of the impacts of COVID. That certainly was quite a good recovery being made there. Youi's Blue Zebra relationship continues to make a significant contribution despite the once-off renewal effect coming to an end at the end of March 2021. Just as a reminder, that relates to the transfer of the Zurich book. Fortunately, new business volumes improved so much that we managed to maintain the new business run rate in the last quarter of the financial year. Youi's CTP product, launched in December 2020 and so far it's been a real success. We've made incremental improvements and that run rate has also improved.
An important strategic objective for us is also diversification in light of climate change, and as such, products which aren't correlated to your normal catastrophes is also important for us, and that is why the CTP bodily injury product is quite relevant for us. Lastly, OUTsurance Life, also generated stronger growth, supported by our funeral cover and our new life face-to-face strategy. Looking at the next slide. If you look at normalized earnings and operating profit. Again, if you just take a high-level look at that graph, it seems pretty flat. The fact is, our premium growth from 2017 to 2019 was relatively flat, but you can see the premium growth accelerated. Typically, over time, one would expect bottom line to reflect the same growth pattern.
There's obviously the J- curves of the new ventures, and that is the main factor explaining the relatively flat earnings over the last five years. We have another slide to specifically highlight the materiality of that investment in the new channels. Then another factor contributing there was just that 2017 and 2018 were relatively benign years in terms of catastrophe experience at Youi. That also resulted in quite favorable reinsurance premiums. 2020 was a completely different story, though, with the bushfires and all the floods, and that experience spilt over into 2021 in the form of sharply increased reinsurance premiums. Those were the two main factors affecting normalized earnings. We do expect the upward pattern that we see in premium to follow as those new ventures move through their J- curves.
If you look at gross written and net earned premium, you see a bit of a lag there, and that is quite typical. Firstly, when you grow fast, earned premium tends to lag written premium, but it will catch up over time. There's also the once-off increase in Youi's reinsurance premium. Fortunately, that's now in the base, going forward, that would also be less material. Then on some of our new ventures, we have quota share arrangements just out of prudence while we learn the new channels, and those would be reduced over time. In the long run, we do expect gross written and net earned to be much more closely linked to each other. If you look at the normalized earnings drivers for 2021, noteworthy is the strong premium growth there, also a material factor, as highlighted before, was the equity market returns. Diversification.
As highlighted, the exchange rate is very material in this, for 2021, we had sort of a 50/50 split between foreign and local in terms of gross written premium and sort of one-third of our bottom-line earnings came from our foreign entities. If you look at the next slide. There at the top, you can see the important illustration of the investment in the new ventures. You can see it went from almost zero back in 2017 and 2018 up to fairly material amounts, circa ZAR 500 million on a group level. We expect that investment to have peaked now, as such, in the coming years, those ventures should come through their J- curves and the profitability should follow. Dividend. If you look at the dividend, you can see there the dividend over time, quite high payout ratio and quite a strong dividend yield from our business.
If you look at ROE, improved performance there on the back of the stronger earnings. Important also just to split it there between our operational ROE, which is a very strong 33.4%, and our overall ROE, the difference is really just the investment we made in Hastings. If you look at the solvency, you'll see that at a group level, our solvency ratio is marginally lower. The two main reasons is just the Youi reinsurance structure which changed, and we'll elaborate on that, as well as just the delisting of Hastings, which had a small impact there. If we move on to the outlook. The various growth initiatives will continue to drive strong top-line growth over the near term. Also in our core businesses, we see quite strong growth. Premium inflation in non-motor businesses, especially strong, driven by climate change impact on those claim types.
The proliferation of solar panels on roofs, all those things drive strong average premium growth in the non-motor side. We also pointed out that one should just note the impact of the exchange rate. Through the cycle, we believe that sort of 15% growth on the group level for the next three, four years to be achievable. As we all know, growing top line is one thing, growing bottom line is another thing. There's strong focus from the management team to translate the new initiative premium into the bottom-line growth as these move through their J- curves over the next three years. In terms of our existing businesses, those margins are sort of at optimized levels. We expect the top line and bottom line growth to be largely in line for those businesses. An important thing to highlight is just our systems modernization and service digitalization.
It continues to be a key strategy to enable awesome service, cost leadership, and future agility. That definitely also supported the cost ratio improvement, which we saw on our Personal Lines book in South Africa. Maybe a last material point to highlight is just the Youi reinsurance program for 2022. It's quite different to the 2021 program, and that was largely a spillover from the severe 2020 claims experience, but also COVID, which had an impact on the market as a whole. As such, our catastrophe retention per event has increased has increased to ZAR 30 million for the first two events and ZAR 15 million for the next two, as opposed to ZAR 10 million per event in prior years. If we were to have four events, the retained loss will increase by ZAR 50 million.
In order to mitigate that, fortunately, we were able to negotiate a much stronger aggregate cover. That aggregate perils cover now attached at only ZAR 60 million. We've got cover to the value of ZAR 70 million. Also to note this, because of the higher retention, our reinsurance expense for 2022 will also be lower, which should also allow net premium and gross written to be closer. What will the impact be? Why are we making a fuss about this? This is just to manage expectations because the profit emergence through the year might be different. If we were to have two very large catastrophes early in the financial year, the half year results may not look that strong. Because after two events you basically engage the aggregate cover, the next six months should be quite profitable.
Overall, we expect full year results to be largely unaffected, but half year results we're flagging potential higher volatility. That is in a nutshell the OUTsurance results. Thank you very much.
Good afternoon, everybody. Sorry, we're just checking that I was on and showing successfully after some technical problems this morning. Thank you everybody for your time. I just wanted to give you a brief overview of the background Hastings, our H1 results, and some of the initiatives that we're working on. In terms of a quick recap, many of you will be familiar with our business model, but we are very much a challenger brand that is taking on the big traditional incumbent insurance companies in the U.K., particularly in motor and home insurance. We differentiate ourselves by our focus on digital and price comparison websites, and underpinning that, our use of data. If I was an insurtech, I might talk in this context about big data and advanced machine learning.
Those are all things we've been doing for a number of years, underpinning our ability to attract good drivers, price them appropriately, and optimize the claims costs, which we've been doing for the last five or 10 years. Another part of our business model is very low cost, high digitalization, and that gives us also the benefit of high customer retention rates. Our financial model is relatively simple for an insurance company. We make our income from a combination of underwriting activities and the generation of retail income, and that makes us a highly cash generative business model, which we use to reinvest in the business and pay hopefully attractive dividends. Turning though to our H1 results. We have a good track record of delivering volume growth. Customer numbers, we started 10 years ago at just under 1 million, now at 3.1 million.
A great track record of growing our customer base every year, even in a competitive cyclical market. Profit before tax in the first half of the year, up 20%, underpinned by a very strong calendar year loss ratio of 63.4%. Again, good numbers in the half year, but also a great track record over the last five or 10 years. The balance sheet also remains very strong. The solvency capital ratio at 170% at the 30th of June. The market environment is, as always, in the U.K., a choppy one. Premiums came down quite a lot during the first quarter of the year, continuing the trend from the back end of last year. That stabilized in the second quarter.
I suppose overall, I would say that all of these premium dynamics seem to be largely rational, in line with claims dynamics, because of course, during this time we've also seen lower claims costs because of COVID. You might also be familiar with the whiplash reforms in the U.K. market, which are government initiatives designed to reduce the cost of small bodily injury claims, and they are looking like they will reduce those bodily injury claims going forward. Hence, these price changes seem to be consistent with the same loss ratios across the industry as previously. Having said all of that, of course, claims have been subdued because of COVID during 2019 and the first part of the year. As we have gone into the second quarter, we have seen, in line with lockdown restrictions being eased, driving activity starting to return to more normal levels.
Overall, we're very pleased with good continued financial momentum in the first half of the year. As we look ahead, we are also building out our capabilities. I'll talk more about these in a second, but over the last year, we've delivered a significant number of new capabilities, continued that trend in the first half of this year. I won't go through them now in detail, but happy to take questions on these because, of course, it is these changes that we're trying to deliver ahead of our competitors that will ultimately make us continue to be able to grow and do so profitably. One example I did want to just touch on briefly, because it's one area where we are now significantly ahead of others in the industry, is the advancements we've made on the mobile app.
We were one of the first mainstream U.K. insurance providers to launch one and now have one of the most highly used and highly rated apps in the country. 1.7 million logins in the first half of the year, up 70% on the year before. That's supporting a number of commercial opportunities, the most obvious one being the reduction in old world call center costs, enabled by more customers dealing with us digitally. Also, it is supporting our customer service results overall. That's supporting our retention rates. We also see new opportunities to use the mobile app to collect more data from customers, including, for example, their location and their driving behavior, all of which are a potential platform for product development or improving the loss ratio as we look ahead.
One example there of an area where we are investing heavily and are confident that it will pay back in terms of attractive returns and a better customer experience. I suppose the backdrop here is that we've taken Hastings from a small company to a medium-sized one. At 3.1 million customers, given a marketplace of around 50 million policies to go after across car and home insurance, we really are only mid-sized. We are setting out over the next few years to become one of the market leaders. They would typically now have around 6 million policies and be making significantly higher profits at over GBP 600 million from the U.K. insurance activities versus our last reported numbers for the full year last year at GBP 131 million.
You can see there the size of the opportunity for Hastings, even just in U.K. car and home insurance, is a very significant one, and we believe that our focus on price comparison websites, coupled with our technology and change capabilities, give us an ability to become one of those market leaders. That don't mean we can't sit on our laurels, however. We've built up some great capabilities, but need to continue to evolve those. We have six very clear areas identified where we are investing to build even more market-leading capabilities. I'll give you a flavor in a second of a few of those. All underpinned by, of course, a strong cultural focus on the right colleague environment, culture more generally, focus on customers, and also our broader ESG actions, which again, I'm happy to take questions on later.
I said I'd give you a flavor of some of the things we're working on. In total, we have 27 different projects in flight right now to build out some of the capabilities that I've talked about. Again, they are in these six clearly identified priority areas, pricing, customer retention, claims, digitalization of the business model, growing in home insurance, and testing out some new propositions. I'm happy to talk to any of these projects. We're very passionate about them internally. I guess to give you a flavor, in home insurance, at the right-hand side of this page, you see we have only 300,000 policies right now, less than 1% market share.
If we can grow our capabilities there over the next few years and gain the same market share as we already have in car insurance, given the use of price comparison websites at home, no reason to believe we can't, that would mean an additional 2 million policies and an opportunity of over GBP 400 million of premium. On the right-hand side, we are launching, as one example again, our multi-car proposition in the next few weeks. Some of our competitors generate approximately 20% of all of their new business through multi-car. It's one of the capabilities we've not yet launched, should give us the ability to increase our new business volumes and have an even better customer proposition as we look ahead.
In particular, also including the ability for our existing customers to bring more than one vehicle to us, but also to attract new customers who might currently have a multi-car policy elsewhere. I suppose all of these initiatives are underpinned by something that Herman has already referenced, which is this opportunity to compare ideas and capabilities with the partners and shareholders who are now part of our network. With RMI and OUTsurance, we already have a very good history and embedded capabilities, including in pricing, call center, and leveraging some of OUTsurance's capabilities in South Africa. We have a pipeline of other things that we're working on together between the teams in the respective jurisdictions.
Similarly, with Sampo, who joined our shareholders towards the back end of last year, we've established a similar framework leveraging the learnings we have with the RMI and OUTsurance and focusing there in particular on pricing claims and digital. I guess to give you just one example of that, Sampo and If their main subsidiary are experts in new vehicles. A significant portion of the business they underwrite in the Nordics is newer vehicles, electric vehicles, those sorts of things, an area where we don't have much expertise. You can see that the behavior of electric vehicles, albeit there'll be nuances in each jurisdiction, the impact that has on frequencies and severities and pricing, there are probably some consistencies and learnings. One example of what we're working on with them.
There's also already reference that now that we have bigger shareholders and Hastings is more profitable and larger, we've had an opportunity to completely look at our reinsurance programs with a fresh pair of eyes. We're talking to the reinsurance partners right now with a view to potentially changing the reinsurance structures from the 1st of January onwards to take more risk and premiums onto the Hastings balance sheet and capturing an attractive return on capital as a result of that. I suppose I focused this afternoon on some of the initiatives and capabilities that are under our control, things we can influence, the projects we can invest in. When I zoom out a bit, there are also some very significant market changes happening, not just competition, premiums, claims dynamics.
They will of course, always have an impact on the trading results over the next three, six, or 12 months. If I look slightly more longer term, the FCA's review of pricing practices in particular, whiplash reform also to some extent, will potentially reshape the market in very significant ways. I suppose in particular with the FCA's review of renewal pricing practices, it may mean that those players across the industry who have built up very significant back books of customers who are often overpriced, and those back books are a significant contributor to their overall profitability. Those sorts of players may struggle as we look ahead, and that may impact the competitive dynamics in quite a significant way.
Hastings is very well-positioned, I would say, given we don't have those sorts of back books and could therefore have a tailwind at some point over the next few years, depending on how this plays out. I suppose overall, when I combine all of this, we have good financial momentum. In the first few months of this year, building on a great track record. We're very pleased with the progress internally on our projects and initiatives, a great conveyor belt of change underway and following into next year. With the support of the new shareholders, we can continue to invest, but also take advantage of these market changes that look like they will disrupt the incumbents even more so, or continuing the trend of the disruption caused by price comparison websites over the last few years.
Let me pause there and hand back to Herman, and I'll be available for questions shortly. Thank you very much.
Yes. Thank you, Toby, and thanks to Marthinus and Jan. Just to consolidate the conversation today, as you know already, we've reported normalized earnings up 15%, mostly from three very positive sources, OUTsurance and Hastings, and then also our asset management business, which contributed significantly to that. The funding and holding company cost, it is, as we set out there, it's 1.5% or 1.2% of market cap. Importantly, the holding company expenses is around 22 basis points, which we think is a very competitive and totally efficient way that we look at the holding company at 22 basis points. We are keeping our dividend the same as the previous period is at ZAR 0.225 a share. To just conclude, I think you would have seen that our strategic focus is and has changed slightly.
We think about the focus we want to bring around the P&C portfolio and adding value to our geographically diversified businesses. We want to make it possible for these businesses to collaborate, partly because they're not competitors in their respective markets. Of course, we want to grow these businesses in this model that we explained to you, but also being able to provide you with attractive returns, both from a capital point of view and then a dividend point of view. That concludes the formal presentation. I will move to look at the questions we've received. I will just start with the back end with Roger Williams asking Toby, then I'll leave Toby to just think about it quickly. Roger, your question is, "Toby, your claims ratio has improved dramatically. Is this a planned strategy? If so, what is the targeted long-term claims ratio?
How much revenue growth do you expect from Hastings' new initiatives?" Then we'll start chronologically. We had a question from Charles Boles asking Marthinus about the impact of autonomous cars on the portfolio, and maybe, I think Toby should also comment from a Hastings side. So I'll hand over to Marthinus to take that question.
Thank you, Charles. Yes, the impact of autonomous vehicles is a risk that we've been flagging and worrying about as a business for quite some time. That was one of the main driving forces behind our current strategy of selling a wider set of products through a wider set of distribution channels, so that we become less reliant on car insurance only. So that is why, for example, Blue Zebra is very much more non-motor or home insurance based. Also, much of our face-to-face channels also give us stronger penetration into commercial insurance, where you also have a larger non-motor component. Even our CTP venture is giving us some diversification there. So overall, we think the strategy of diversification will definitely help to mitigate this. But I think what's also important to note is just that in the non-motor space, we're expecting real growth.
If you look at climate change, that is driving higher claim frequencies in the non-motor space. We also saw things like solar panels. The average claim sizes for houses with solar panels in a hailstorm is 50% higher than those without it. We do expect real growth in the non-motor side, supporting the diversification strategy. If you just look at the latest information coming through on autonomous vehicles, I think the timelines have shifted a little bit. Sort of completing that last 5% of autonomy is clearly quite difficult. You also need quite strong support in terms of infrastructure and legislation from the different countries to allow autonomous vehicles to operate. We also don't foresee all our markets adopting them at the same rate because of this strong requirement on infrastructure.
If you consider electric vehicles, which will probably precede autonomous vehicles, we see that as largely neutral. We don't see this as negative at all. If you look at average claim size, initially it's actually a bit higher. As these vehicles gain volume, we actually expect it to be very much in line with what we're currently seeing. That said, these timelines, to replace an entire vehicle fleet in a population is probably more like a 20-year window. It does take time. What we might see similar to the tobacco industry, that you almost get fewer people investing and less competition, and as such, it might also provide some opportunity to incumbents. Overall, we're not that concerned about it, and we feel our diversification strategy is positioning us well.
Some of the motor premium is also likely to shift from personal lines to commercial lines because you're probably going to have liability premium for OEMs if the vehicle makes an accident. People's going to sue the OEM. With our strategy of becoming stronger in face-to-face, we also have stronger access to commercial insurance. All that premium wouldn't be gone to us. I hope that answers your question on how we see the threat of self-driving cars.
Thanks, Marthinus. Toby, maybe I suggest that you take your part of the autonomous cars answer with the one that you had on your claims ratio. I'll take two technical questions. One from [Louis Krier], who's asking, "What are the tax implications of the unbundling?" [Sean Brains], "Why have you not sold ZAR 6.5 billion worth of MMI or MMH or Discovery?" The two questions are linked around the mechanism that we use here. The tax question, Louis, we will provide the detail in the circular. To the extent that there is capital gains tax payable, and to the extent that we have a disqualified shareholder as defined by Section 46, someone holding more than 5% and a corporate and/or pension fund. Someone would have to then typically pay capital gains tax before distributing the net to shareholders.
In our case, we do not have a capital gains tax liability. We will not be having such liability on the net between MMH and Discovery. Sean, your question. For Section 46 unbundling, you have to have a 25% minimum. The moment we sell or if we sold a Discovery or an MMH, of course, you would then not be able to avail yourself of Section 46. Commercially, there are three important reasons why we did not want to move away from Section 46 and pre-sell some Discovery or MMH. The first one is, in this process, we are not making an investment choice on your behalf. We are passing the baton of ownership of these two shares to you to make the decision whether and in what proportion you would want to sell the shares.
Firstly, it's the freedom of choice and the investment decision that we are leaving with our shareholders. Secondly, the moment you move away from Section 46, first of all, we would have sold the shares into what would probably be a discount in a book build of sorts. Secondly, we would have incurred dividend withholding tax of between ZAR 750 million and ZAR 1 billion before distributing a dividend in specie to you of the residual. All in all, it did not make commercial sense to move away from Section 46. Another question from Charles Boles is around why pay a year-end dividend and then do the capital raise. Charles, I think simply a matter of leaving of choice. First of all, it's the end of the previous era.
I think we want to continue on that basis and then reward shareholders with a dividend before they have to take a decision to invest in the rights issue. I know that may not be 100% efficient, but you can see how that again leaves the freedom of choice in the hands of shareholders. [Marius Strydom] is asking, are there Sampo assets that you would like to invest in? I would not necessarily think that to be the case right now, [Marius]. I think more importantly, you're asking the questions whether we would want to JV with Sampo in other countries, new territories. It is something that we would consider. As I mentioned, we have a great relationship with Sampo, and so far it's been a very good partnership.
I think as we sharpen our focus and enter into further discussions with Sampo, anything is possible, but there's certainly no discussion of that sort underway. The question from Jared, why raise capital at a discount to follow the Discovery rights offer? Jared, I think it's important that for us as a 30-year partner to Discovery, that we support them while being shareholders, and part of that support is supporting them in their possible capital raise. That, again, may not be completely efficient or commercial, but relationship trumps commerciality here. I'm just scrolling through. Mike Christelis, asset management and AlphaCode don't seem to fit. Are you exploring options? We are not exploring options to exit these businesses at this stage. The businesses are in their formation stage. They are having great traction and showing promise.
In line with our track record of being a supportive and long-term shareholder, Mike, we will not fast track or prematurely exit these assets, just for the sake of it. We understand that they do not fit in 100% with our strategy, but they are small enough, yet promising enough, not to cause any alarm at this stage. Question from [Warrick]. If we focus on the P&C growth, is there an argument for OUTsurance becoming the primary investment vehicle? OUTsurance at the moment is obviously the dominant part of the portfolio, and it will probably remain such for a long period of time. We do see a lot of excitement around this network of local champions. [Warrick], I guess the short answer is no, but it's not categoric. I think we will see how the portfolio evolves and what role every part thereof plays.
Maybe I'll hand over to Toby while I look at the other questions. Toby, the question was around your target claims ratio, and maybe just your thoughts on autonomous cars, please.
Thank you, Herman. Actually, let me just first say that I certainly regard it as one of the roles for Hastings to link back into the previous questions, to make OUTsurance a much smaller part of the overall RMI portfolio as we hopefully grow top line and bottom line. Autonomous vehicles very quickly, not much to add to what Marthinus has already said. That we think that is an important trend for us to consider over the next 10, 20, 30 years and are staying close to what motor manufacturers are doing in particular. By the way, the Sampo relationship helps there because they have a very strong working relationship with Volvo. That's a good vehicle for staying close to where motor manufacturers might be headed on all of this.
In the near term, those trends are still quite far away, our focus is more, frankly, on electric vehicles, on newer vehicles being introduced and the technology that might be in them, rather than the much longer-term impact of autonomous vehicles. The claims ratio, we are of course, very pleased with the 63.4% loss ratio we published in the half year results. Just to remind you, our previous target for the loss ratio was in the 75%-79% range. We updated that last year to guide towards a loss ratio below 76%. A more ambitious objective. You can, of course, see that the half year number of 63.4% is well below that. I would just say that's a half year number, of course, impacted both by COVID and our underlying initiatives.
As we look ahead, we will of course continue to invest in the loss ratio, but also keep an eye on the trade-off between that and growth. We're very confident about the improvements we're making. At this point, not ready to guide towards any different loss ratio than the below 76% we've already guided to. Of course, you can see that there is some headroom between our current performance and that level, which we will use to figure out the best course of actions as we look ahead. In terms of revenue growth, you also referenced that. We do see and are confident about the outlook to continue to grow our policy counts. Premiums, I guess, will be a bit more dictated by market competition and claims trends.
A bit difficult to give guidance on what the GWP outlook is, but certainly we're confident about our ability to grow and do so profitably over the next three to five years. Hence the investment program that I've talked about. Herman, back to you.
Thank you, Toby. There's another question from Nick Kruger. Welcome back, Nick. I haven't seen you and heard from you for a while. You're asking a question about reinsurance. Marthinus is going to take the question on reinsurance as well as the one on the J- curve, where the J- curve is in terms of the new products. A question from Lonwabo. We're going to go over to Marthinus soon. There's a question for Jan. How do you plan around your spending? How much on new initiatives and new growth versus the current cash production of the business? Something around that, Jan, if you could answer that. Michael Matlala is asking around total CGT liability for RMI. The answer is zero. We do not have a CGT liability for these distributions. Michael, you're also asking is the [ZAR 6.5 billion] rights offer pre or post?
Michael, the reality is, although we considered many permutations, the two stakes in MMH and Discovery act as collateral for our borrowings. Our lenders first want to see that we have the money in the bank, so to speak, before releasing the collateral. There is a bit of inefficiency, but unfortunately, there's no other way of doing it by first raising the [ZAR 6.5 billion] , having that at our disposal, and then the banks will allow us to release the, or will release the collateral, and we will be doing the distribution. Let's hand over to Marthinus and then Jan on their questions, please.
Thank you very much, Herman. Maybe first, Lonwabo's question around the J- curves. As we indicated, we invested around 13% of our operating profit in the new ventures. We expect that 13% pertaining to these specific ventures to go down to zero over the next sort of two and a half years as these ventures move through their J curves. However, this is slightly related to the question for Jan as well, we don't intend not to ever have any new ventures again. We'll probably have other new ventures, because if you look back at 2017, 2018, we were probably under-investing, and that was part of the reason for our growth, which came to a halt. That's why we always want to continue investing in new ventures to sustain the growth over time.
We're probably comfortable with a number around sort of 10% there in the long run. We're slightly over that at the moment, but still quite comfortable. Maybe worth pointing out, say, for example, our OUTsurance brokers or tied agents, as we call them. I mean, we now have about 530 of them. We believe in incremental validations. Should that, over time, prove to be viable at a higher level, we might even invest more there over time as well. For now, I mean, we are focused to get to break even on that venture and get them through their J- curve. I hope that gives you a bit of context around the J- curves of the new initiatives. To get to Nick Kruger's question around the impact of the violence in KZN and the impact on reinsurance markets.
I can only agree with you that the international reinsurance markets would be more reluctant to participate because of the claims experience and the risk of it happening again. It's not that unusual if you consider that where you have very peculiar risks in countries, a lot of the time the government has to step in and bear the brunt of it. I mean, if you look at earthquake in New Zealand or floods in Florida, whenever something is outside the appetite of the reinsurance markets, the government has to step in. I think in this case, the share of the government's probably just going to increase and the international reinsurance markets decrease because of this. Hopefully that answers your question. Thanks.
Just a bit more expansion on the J-curve question. We generally set an appetite around 10% of operating profit of our established businesses to determine the sort of growth profile of emerging businesses or new startups in a group. We've exceeded that 10% threshold over the last two years, where we've collectively over the last two years spent roughly ZAR 1 billion in startup losses associated with those ventures. That is led by our insurance business, where in the last year, we generated an operating loss of ZAR 267 million, which is a significant investment. Also supported by the appetite around the expansion of that broker force, given the success that we've had in penetrating that market. The other reason for exceeding that 10% threshold is the timing of the BZI opportunity as well as the CTP opportunity, which came about.
As you know, BZI incepted in March 2020, and CTP was launched to the New South Wales market in December 2020. Marthinus mentioned how we step through these J- curves over the next two years. We believe that monthly profitability for the OUTsurance Brokers business can be achieved in 2023 calendar year. Similarly, CTP as well as BZI should also start printing monthly profitability in the 2023 calendar year. We do have what we think is quite a short timeframe to moving out of the deepest part of the J- curve that we currently find ourselves in.
Thank you, Jan. There is a question from Charles Boles around the Hastings option increasing our stake to 40%. Charles, firstly, we don't see it as specifically a strategic question. What I mean with that is it's not going to change our strategic positioning vis-à-vis the company or Sampo. For us, it's all about being a financial transaction or financially oriented decision. It's very interesting that there are quite a few very important regulatory changes, and the impact of which we're not certain about happening in the U.K. right now. Whiplash reform, which Toby mentioned, as well as much more importantly, the renewal pricing review that kicks in on the 1st of January. I guess we're going to leave it as late as possible based on the performance to date and especially the reserve buildup and the profitability that we've seen from the business. It's very promising.
You can imagine the potential impact that these two regulatory changes may have on the market. We're going to leave it as late as possible before making a decision there. [Jack Conradie] is asking a question. "Congratulations. It's a great transaction. With the attractive organic growth prospects available to OUTsurance and Hastings, do any shareholders actually want more M&A at the holding company level?" [Jack], as always, it's a tale of two cities. I do get comments from one or two shareholders saying, "Please just pay through the dividends and don't try and invest." Similarly, I get comments from shareholders. I had a couple of calls this morning saying, "A very interesting international group that can be assembled. Please continue investing." I don't know. What we tend to do is relatively easy.
We take the heat from the 60-odd% shareholders sitting around our boardroom table as a start. As always, we're very happy to engage in conversations with you, too, so that you can share your views with us on the topic. There's never one right answer. We tend to have to operate in these shades of gray, which we're very comfortable to do. You can see where management has positioned the company very selectively, very disciplined, and looking at carefully adding geographies to what we have at the moment. We have [Tim Acker]. "Are RMI buybacks one of the options to consider?" Yes. "Does the answer depend on the size of the discount?" Yes. Tim, I guess, we've had this conversation in the past.
I think when we think of our excess or surplus cash, we would rank it in terms of our investment opportunities, of which dividends and buybacks and surplus or special dividends would all have a ranking order, and we will assess it. Having said that, in the past, we've also shared with you that one has to be careful about share buybacks. It unfortunately tends to be a moment of hubris, which is not where we want to be. We understand the financial calculations around that. Thank you for your comment. Roger Williams, "Does RMI get any management fees from Hastings? As it appears you are transferring IP." The answer is no. I think we work on the basis that it is in the best interest of everybody to contribute, but also to the extent that they expect to receive.
For example, the body injury pricing model or risk model that we received from Hastings for experimenting or going into the CTP market in Australia came free of charge. I think we want to really incentivize our companies to work together on a, call it, a free transfer basis. It may, on a given year, not be completely balanced as far as the swings and roundabouts are concerned, but in the longer term, it should work out to be mutually beneficial to everybody. I tried to work through the questions as they came in. If I did miss you, that's certainly not by design. Please just repost your question. We'll give it another couple of minutes and then I think we'll call it a day. It's been a long call. Thank you for your participation.
Let's wait for another minute to get another question if there are any. Right. Nothing more. Thank you very much. We look forward to engaging with you as we go on this journey over the next six months. If there are any questions to us, please just post them on this or write to us directly. Thank you very much for your time today.