Ageas posts a solid set of nine-month results 

Briefing by content director Saxon East

Brexit dominates the news today, as Theresa May’s hugely controversial deal faces the gauntlet of cabinet and parliament.

Back in the world of insurance, a press release from Ageas today caught the eye of those in our world. 

The insurer released its nine-month results with profits zooming back up to £73.6m for the nine months so far this year, compared to £19.3m in the same period last year.

It has remained disciplined in motor and enjoyed good underwriting profits.

Home is a smaller book in underwriting loss territory; there appears to be a market wide issue on home with fierce competition and claims from the harsh winter hitting profits. 

Both Hiscox and Hastings have shown the effects of a tough market in their results. 

Overall, the Ageas results are good news for brokers as they want key insurer partners to remain stable and healthy.

Brokers have seen numerous insurers leave their markets, including some of the most established players such as RSA on personal-brokered motor.

Ageas is a significant carrier for personal lines brokers to place their business.

It is well-capitalised and a respected brand that customers can feel comfortable with as a home. 

Reserve releases 

Some brokers may note there was a pretty significant reserve release in Ageas results, counting 8.3% towards the combined ratio.

Often reserve releases catch the eye, with some feeling that it is sometimes used by insurers as a dark art to flatter results.

But there is nothing wrong with reserve releases, per se. 

In reality, as long as insurers are prudently releasing reserves, this is simply the way insurance business is done.

It’s important to remember, as former Admiral chief executive Henry Engelhardt was keen to point out, that it all balances out.

If an insurer reserves conservatively on a particular year, that will feed through into a higher combined ratio on that year.

If it then turns out that the claims run off favourably,  the insurer can have the benefits of an improved combined ratio in the following year, or years, via the releases.  

The real controversy around reserve releases is if an insurer releases more heavily to time with certain beneficial circumstances.

Alternatively, insurers can under-estimate claims for certain years and find they have released too much reserve on those years. 

There is nothing to suggest Ageas has any of those issues. 

Ageas is weighted more heavily towards brokers, than direct, and there has been significant disruption in distribution.

Combine this with Ogden and falling prices, and it’s clear the market has been a challenging place. 

Perhaps today’s results indicate Ageas has come through those choppy market conditions and is in a happier place.