Ageas UK sees motor profit in 2018

Ageas UK’s motor book is expected to move into profit in 2018, according to chief executive Andy Watson (pictured).

The UK’s third largest motor insurer posted a net underwriting loss on its motor book of €24.7m for 2017 in its results announcement this morning. That compared with a loss of €167.7m in 2016.

“2017 saw a heavy negative impact from the Ogden rate cut,” Watson told Insurance Times. “But if you strip that out, the motor result is much more positive,” he said.

“And with that momentum we would expect motor to be profitable in 2018.”

According to Watson, the key to Ageas’s strategy on motor has been to prioritise margin over volume.

He said the company’s immediate response to the cut in the Ogden rate last February was to push up prices to protect margins.

“We took firm and decisive action,” he said. “We increased prices by 10% within a matter of weeks.”

He said that was a “robust” response to the Ogden change.

Ageas’s “clear pricing discipline” has impacted revenues in what Watson described as a “volatile, unpredictable and disruptive” motor market.

Motor inflows fell to €1.0bn in 2017 from €1.1bn in 2016, but the combined ratio in motor improved to 102.6% from 116.5%.

Excluding the impact of Ogden, the combined ratio would have been in profit in 2017 at 98.7%, improving from an ex-Ogden rate of 101.5% in 2016.

Ageas UK’s business as a whole reported a pretax profit of €34.7m for the year to December, compared with a prior year loss of €184.6m.

The overall underwriting result was a loss of €48.5m, an improvement from 2016’s loss of €195.4m.

But that included a hit of €46m in 2017 from the Ogden rate cut, on top of the €152.7m Ogden cost included in the 2016 results.

Watson said the Ogden impact will diminish going forward, as, “in the course of 2017, we have got our pricing right to account for Ogden”.