Allianz Cornhill's personal lines book slipped further into the red in the first quarter of 2006.
Chief executive Andrew Torrance defended the performance of the book, which reported a combined ratio of 103.6%.
He said: "The underwriting performance is in line with our plan. If we have to go through short term pain for longer term gain...then so be it."
In 2005, the company reported a combined ratio in home and motor lines of 101.5%, up from 95.9% a year earlier.
In the first quarter of 2005, the combined ratio was 99%.
Torrance said premium rate increases were required in the current environment of static motor premiums. But he said the insurer would want to see a general move across the market before committing.
In commercial lines, gross written premiums were £246m, compared to £265.5m in 2005, while the combined ratio slipped to 95.5% from 93.3%.
Torrance said the market was "very competitive" and was likely to remain that way throughout 2006, although better prospects were expected for 2007.
The combined ratio for the speciality operation improved to 92.9% from 93.7%, aided by a good performance from the animal health business.
Overall, pre-tax profit fell to £48.7m in the first quarter from £50.5m in 2005, while the combined ratio climbed to 96.6% against 94.7% in 2005.