Retail restructure begins as unit profit more than halves to £6.7m
Ageas UK made a net profit of £26.3m in the first half of 2014, down 46% on the £49.1m it made in the same period last year.
The combined operating ratio (COR) was 100.7% – 4.4 percentage points worse than the 96.3% recorded in the second half of 2013.
Total non-life gross written premium for the first half was almost flat at £940.4m (H1 2013: £936.5m).
The main cause for the drop in profit was the weather claims Ageas incurred in the first quarter of 2014, which pushed the insurer into a £4.6m loss for that quarter and produced a COR of 106.1%.
In the second quarter of 2014 alone, the company fared much better. It made a profit of £30.8m, up 4% on the £29.7m it made in the second quarter of 2013.
The second quarter COR was a profitable 95.5%.
Ageas UK chief executive Andy Watson said: “Following the impact of the severe weather events on the first quarter result, I’m pleased to report that we have recovered well in the second quarter.
“The fact that this recovery has been achieved against tough market conditions shows that Ageas continues to be in good shape.”
He added: “The motor market remains competitive and challenging, but our focus is on profitable growth through a disciplined underwriting approach. At the same time, responding to the very competitive market conditions, action is being taken to improve expenses and build long term growth within our retail business.”
Insurance Times revealed in May that Ageas was planning to overhaul its retail business by merging its seven legal entities into one.
Ageas announced that the restructuring has already begun, with brokers RIAS and Castle Cover being merged with Ageas Retail Limited at the end of July.
The company plans to merge the other brands by the end of the year.
The news comes as the retail division’s profit more than halved to £6.7m in the first half of 2014 (H1 2013: £14.5m) as revenues fell 9% to £84.6m (H1 2013: £93m).
Ageas said the retail drop reflected “tough and highly competitive environment leading to lower volumes and squeezed margins”.
Tesco Underwriting loss
Ageas also revealed that its Tesco Underwriting joint venture with Tesco Bank had generated a £1.4m loss for the company in the first half of 2014, compared with a £1.7m profit in the first half last year.
Ageas said this was a result of weather claims.