Insurer incurred £20m of flood claims in Q4 and could incur a further £20m for this year
Ageas UK is expecting its commercial combined operating ratio (COR) to come in closer to 100% in 2014, after reporting a commercial COR of 104.2% in 2013.
Speaking to Insurance Times following the release of Ageas UK’s results this morning, Ageas UK chief executive Andy Watson also revealed that his company incurred £20m of flood claims in the fourth quarter of 2013, and could expect a further £20m from the continued flooding in January and February this year.
Ageas’s 2013 commercial COR was 5.7 percentage points better than 2012’s 109.9%, but Watson said the company would continue to take action to improve it.
He said: “In our plans for 2014 we would see further improvement and would have that COR down to where we are really happy with it.
“We would expect to have a COR around 100 during the course of 2014.”
Ageas improved its commercial COR during 2013 by two main actions: focusing on profitable broker relationship and boosting prices.
Watson said that his company boosted commercial rates by between 4% and 8% during the year depending on business line, and added that the commercial remedial efforts would follow a similar line in 2014.
Ageas had a solid year overall in 2013, reporting a 2.8% boost in profit, a 5.2% increase in gross written premium and a 1.4 point improvement in its COR to 98.4%.
Part of the reason for the improvement was more benign weather claims in the first nine months of the year.
However, the fourth quarter was blighted by storms and flooding. Watson estimates that Ageas’s claims bill from the weather was £20m.
He said that it was too early to give a precise estimate for claims from the continued flooding this year, but commented: “A very early assessment would be around £20m in January and February.”
He added: “It is very early days. We have still got customers with flooded properties, and we are struggling to get access to some properties.”
In common with other insurers, Ageas UK suffered declines in personal lines motor and home rates in 2013.
Watson said that Ageas’s motor rates had fallen just over 7% during the year, while home prices were down 3.5%.
However, he pointed out that the drops were smaller than the industry-wide falls recorded by pricing indices.
Industry-wide, motor rates are believed to have fallen by between 9% and 14%, while the AA index indicates that home rates have dropped by about 8.5%.
Watson said: “In our two core products of home and motor during the course of 2013 we witnessed decreasing prices in both of those products.
“We have maintained, we believe, our discipline, both in pricing and underwriting, so while we have seen our average premiums for both motor and household decrease, we think they have decreased by less than is more coming within the market.”