Motor underwriting performance improves but other lines worsen
Ageas UK made a net profit of £27.1m in the first half of 2016, down 8% on the £29.5m it made in last year’s first half.
The company said the drop was caused by flash floods and storms in June, as well as weather-related claims in the first quarter. By contrast, there was a lack of weather claims in the first half of 2015.
Ageas UK H1 2016 key figures
|H1 2016||H1 2015||change (%/points)|
|Gross written premium (£m)||922.3||881.3||4.7|
|Net profit (£m)||27.1||29.5||-8.1|
|Total COR (%)||100.1||98.6||1.5|
The June flash floods added two percentage points to Ageas UK’s combined operating ratio, pushing it over the 100% break-even mark to 100.1% (H1 2015: 98.6%).
The home insurance portfolio was particularly badly hit by the weather claims. Its CIR jumped by 14.7 percentage points to 101.7% (H1 2015: 87%).
On a more positive note, gross written premium increased 5% to £922.3m (H1 2015: £881.3m), mainly from growth in the motor book.
The company also enjoyed a 6% increase in its share of the profits from Tesco Underwriting, a joint venture home and motor insurer with Tesco Bank, to £3.4m (H1 2015: £3.2m)
Ageas UK chief executive Andy Watson said: “Despite the impact of the flash floods and storms in June, and the weather related claims in the first quarter, we’ve continued to deliver a strong and profitable performance predominantly as a result of further increasing the number of motor customers we insure year on year.
“We’re also pleased to see the benefit of new schemes in the broker channel in both household and commercial lines.”
Ageas UK H1 2016 COR by line
|H1 2016||H1 2015||change (points)|
|Accident and health||106.3||103.8||2.5|
|Commercial and special risks||107.7||97.9||9.8|
Underwriting performance in motor, Ageas UK’s biggest business line, improved in the first half of 2016. Its COR improved by 5.3 percentage points to 97.9% (H1 2016: 103.2%) thanks to price increases and a lower expense ratio.
However, the underwriting performance of the insurer’s other business lines worsened. As well as the weather-related hit to the home business, the commercial and specialty lines COR returned to underwriting loss with a COR of 107.7% (H1 2015: 97.9%).
Ageas said this was because the 2015 result benefited from “significant” reserve releases, and a hit in 2016 from the performance of an MGA scheme that was put into run-off in the second quarter.