Increase in claims hit Chartis as combined ratio worsens
Chartis UK posted a fall in pre-tax profit to £83m, down from £324.3m (excluding restructure) in 2008, in its full year results for 2009.
The insurer's 2008 pre-tax profit including restructure costs was £176.9m.
Underwriting result was down £165.3m, resulting in a loss of £80.9m (2008: £84.4m profit).
Chartis UK's combined operating ratio deteriorated from 91.7% (excluding restructure) to 105.8%.
It said the the increase in the combined ratio was driven by an increase in the loss ratio of 8.4 percentage points and an increase in the expense ratio of 5.7 percentage points.
The insurer's result included gross written premiums of £2.17bn, a decrease of 5% compared with 2008 when it wrote £2.28bn (excluding restructure).
Chief executive Lex Baugh said: "This was a difficult year, with the market continuing to suffer from overcapacity and the weak economy contributing to lower demand. At the same time, the problems faced by our parent company, AIG, caused some concern among our clients and brokers in the early part of the year.
"I would like to thank our people for their hard work and dedication, which helped us to overcome these challenges and achieve excellent levels of client retention.We are grateful to our clients and brokers for their support."
He added: "We experienced more large excess casualty claims than usual and, as would be expected given our market leadership, the global financial crisis generated additional financial lines claims. We also saw higher claims in our trade credit portfolio and a significant rise in claims from one of our largest personal accident schemes.
"We have taken steps to return this scheme to profitability. Our fleet and commercial combined portfolios performed poorly and we achieved rate increases in these classes on the back of continuing losses.
"We expect this upward trend in rates to continue. In other classes, rates continue to fall. Our focus on profit and our underwriting discipline meant that we chose not to compete at unprofitable rates and we will continue to walk away from such business."