Sale gains and legal settlement proceeds mask lower profit in insurance and retail divisions
Ageas UK made a net profit of £94.7m in 2014, up 11% on the £85.2m it made in 2013.
The boost was mainly driven by capital gains from the sale of the Ageas Protect life business to AIG for £197m in August 2014 and the proceeds from a legal settlement benefiting the company’s retail division.
These positives offset a two percentage point increase in the insurer’s combined ratio to 99.8% (97.8%) and lower profits in Ageas UK’s core non-life insurance retail divisions.
This was caused in part by first-quarter weather losses, integration costs and some “large losses” in Ageas’s motor book.
Tesco Underwriting also made a loss.
Total income was flat at £2.1bn, as was non-life gross written premium at £1.8bn.
Ageas UK chief executive Andy Watson said: “In a year where the industry faced a number of challenges, I’m pleased to report that we’ve ended 2014 in good shape.
He added: I’m immensely proud of the continued recognition we receive from the industry and our customers and look forward to building on this in 2015.”
Insurance profit drop
Ageas UK’s non-life insurance business, Ageas Insurance, saw profit fall 15% to £59.1m in 2014 (2013: £69.5m).
The company said the dip reflected “some large losses” in its motor book and costs linked to the integration of Ageas Insurance and Groupama’s UK business, which it acquired in 2012.
The main cause for the two-point deterioration in the overall group combined ratio was the motor business, whose combined ratio worsened by 2.8 points to 99.7% (2013: 96.9%).
Ageas said it experienced a higher frequency of accident claims because of increased traffic volumes.
The household combined ratio increased slightly to 94.3% from 93.8% as benign weather in the rest of 2014 partly offset weather losses in the first quarter.
The commercial combined ratio, including commercial motor, returned to underwriting profitability in 2014, with the combined ratio improving by 2.6 points to 99.3% (2013: 101.9%).
But the commercial and special risks combined ratio, which excludes motor and includes integration costs, jumped 6.1 points to 110.3% (2013: 104.2%).
Profit in Ageas’s retail division, which includes the company’s broking businesses, saw its profit almost halve to £12.8m (2013: 23.3m).
Ageas said this was expected because of the investment it has made in the business to prepare it for future growth.
The changes have included merging the division’s seven legal entities into one, which is now complete, and investing in pricing, IT, data analytics and marketing.
Ageas Retail’s income was down 7% to £164.7m (2013: £177m), which the company said reflected “the tough and highly competitive environment.”
Watson said: “We continue to implement our growth and simplification strategy in our Retail business.”
Tesco Underwriting loss
Ageas’s share in Tesco Underwriting, a joint venture with Tesco Bank, produced a £1.8m loss for Ageas in 2014, compared with a £7m profit in 2013.
Ageas blamed the first quarter weather and competitive pressures in motor for the loss.