The figures are down but we’re back on track for growth, says UK GI chief executive
The drop in Aviva’s UK general insurance premiums and profits in the first half of 2010 hides an improved underlying performance, says division chief executive David McMillan.
UK general insurance net written premium, excluding the group’s captive Aviva Re and agencies in run-off, was £1.94bn, down 5% on the £2.05bn reported in the first half of 2009.
But McMillan pointed out that, compared with the second half of 2009, net written premium was up 7%. “Our business is returning to growth,” he said. “Our top line has been growing for the past two quarters, reflecting strong momentum right across our business.”
McMillan said that in the first half of 2010 there were good levels of retention in the commercial business, with increased new business rates and 100,000 more policies sold in the direct business. “Our corporate risk business has also made a good start,” he added.
Aviva suffered a £1.1bn drop in general insurance net written premium in 2009 as a whole, as a result of previous UK general insurance chief Igal Mayer’s ill-fated decision to push up rates. Net written premium hit a low point of £1.8bn in the second half of 2009.
Aviva’s general insurance operating profit fell 7% to £229m in the first half of 2010 from £247m in the same period of 2009. However, McMillan said the decline masked a strong underlying performance.
The first-half 2009 profit was boosted by £88m of prior-year reserve releases, while only £32m was released in the first half of this year.
The operating profit excluding the reserve releases, which Aviva refers to as the current-year operating profit, was £197m in the first half of 2010, a 24% increase on the £159m made in the same period last year. McMillan pointed to the one-point improvement in combined ratio, to 98% from 99%, as further evidence of better performance.
McMillan said the new corporate risks unit and specialty lines were seen as growth drivers. He hoped that the new corporate risks division would add 20% this year to the £250m book of large commercial risks business the company already had.
“We are well on track to do that,” he said. “The launch of the business has had a great response from brokers. They are now seeing us start to recruit serious capability from the market, and that will continue.”
He also saw opportunities in personal lines as rates hardened. “We have been working very hard to rebuild our presence in broker personal lines. We are starting to send direct prices through the software houses directly into brokers,” he said. “That is going really well and hopefully will be an engine of growth for us over the next few years.”