Rate increases improve Q3 non-life combined ratio
Belgian insurer Ageas’s UK operation made a net profit of £16.6m for the first nine months of 2010, down 50% on the £32.2m it made in the same period last year.
The company said the 2010 year-to-date profit was hit by severe weather in January, poor private car performance and lower investment yields. The result was also impacted by £7.7m of start up costs for the insurance partnership with UK supermarket Tesco and the recent acquisition of broker Kwik Fit Insurance Services.
The nine-month combined ratio for Ageas UK's non-life operations, Ageas Insurance Limited, increased slightly to 104.9% in 2010 from 104.6% in 2009. However, this was an improvement on the 106.5% combined ratio Ageas’s UK non-life operations posted for the first half of 2010. The combined ratio for the third quarter alone improved to 102%, which the company attributed to continuing management actions and rate increases.
“These results demonstrate that we continue to grow and progress right across the business, strengthening our position in our chosen markets," said Ageas UK CEO Barry Smith in a statement. "Notwithstanding a tough 2010, our performance has improved quarter by quarter which is really encouraging."
He added: "With regard to recent developments, the addition of Kwik Fit Insurance Services has bolstered our already strong retail operations and we have also started trading with Tesco Underwriting on time and to plan."
Ageas's group results reveal that UK non-life profits fell 57% to of €9.1m (£7.84m) in the first nine months of 2010 from the €21.3m it made in the same period last year. Non-life net profit for the third quarter alone was €7m, which Ageas said was helped by further improvement in operational performance and rate increases, particularly in motor.
Ageas UK's non-life gross written premiums (GWP) for the first nine months of 2010 were £703.9m, up 14% over the same period in 2009.
In personal lines, private car premiums were up 4% to £346.4m in the first nine months of 2010 from £332.3m in the same period last year. Ageas said there is a need for further rate strengthening but progress is encouraging.
Personal household GWP increased 17% to £177.2m from £151.7m and travel GWP increased 15% to to £44.5m from £38.6m. Ageas said apart from the escape-of-water claims at the beginning of 2010, the household book is performing well. However, it added that the travel account is still disappointing, with rate increases across the market lagging behind claims cost experience.
Commercial GWP surged 35% to £119.7m from £88.5m, which Ageas attributed the rapid growth to its strategy to increase products and capability in the small-to-medium-sized enterprises (SME) market and a “strong alignment” to brokers’ needs.
Ageas UK's broking operations, comprising RIAS, the recently-acquired Kwik Fit Insurance Services and Ageas Insurance Solutions, delivered a 32% increase in total inflows to £96m. The company attributed this to good customer retention, portfolio growth, add-on revenues, growth in partnership income and the addition of Kwik Fit Insurance Services, which contributed £17.6m to the total.