Ageas UK returns to profit in Q1

Insurer Ageas UK made a profit before tax of £3.8m in the first quarter of 2011, compared with a loss of £3.2m in the same period last year.

The insurer made a loss of £25m loss for the full 2010 year.

The Q1 2011 result includes acquisition costs for Castle Cover, bought in March this year, of £800,000 and £12.8m of prior-year escape of water claims from the severe weather at the end of 2010.

“In the first quarter, Ageas UK has delivered a strong combination of high levels of growth coupled with improving profit performance,” Ageas UK chief executive Barry Smith said in a statement.

However, the company’s combined ratio, though improved, is still above 100%. The Q1 2011 combined ratio, including business written through the Tesco Bank partnership, fell to 106% from 110.2% in Q1 2010. The combined ratio for the motor business, including Tesco, came close to breakeven, at 100.3% versus Q1 2010’s 111.8%.

The combined ratio for Ageas Insurance Limited – Ageas UK’s non-life operations excluding the Tesco business – was 104.6% in Q1 2011 (Q1 2010: 110.2%). The higher-than-anticipated prior-year escape of water claims added 17.5 percentage points to the household combined ratio in the quarter.

Although the motor combined ratio including Tesco business was still above 100%, the motor ratio for Ageas Insurance Limited alone was 97.3% in Q1 2011 – an improvement of 14.5 percentage points on Q1 2010’s motor ratio.

Ageas UK’s total non-life gross written premiums (GWP) increased 74.5% to £402.2m. At Ageas Insurance Limited alone, GWP increased 16.7% to £269m thanks to increases in both commerciaol and personal lines.

In personal lines, Ageas Insurance Limited’s household book grew 43.5% to £82.8m from £57.7m, while private car and travel GWP remained flat at £117.4m and £13.3m respectively.

Commercial lines GWP increased 23.6% to £48.2m.

The underwriting partnership with Tesco Bank, of which 50.1% is owned by Ageas, wrote £133.2m of gross premium in Q1 2011, bringing the total written since its launch last October to £219.8m.

Ageas UK’s retail broking operations, which include RIAS, Kwik Fit, Ageas Insurance Solutions and now Castle Cover, saw revenue increase 98.1% to £50.8m. The division made a profit of £4.7m, up slightly on Q1 2010’s £4.4m.

Ageas Q1 2011 highlights in £m (compared with Q1 2010)

• Total pre-tax profit: +3.8 (-3.2)
• Non-life division pre-tax profit: +3.9 (-5.3)
• Total combined ratio: 106% (110.2%)
• Non-life division combined ratio: 104.6% (110.2%)
• Retail broking profit: 4.7 (4.4)