£26m investment loss drags profits down to just £8.4m

Co-operative Financial Services has announced profit before tax of £147m (2007: £155.4m), with general insurance profits slashed to £8.4m from £67.1m last year on a claims ratio of 69.2% (from 64.3%)

The Co-op said insurance improved in the second half but made investment losses of £26m.

The Co-op said: “Sales volumes increased significantly in 2008 whilst retention rates also improved, reflecting the strength of the brand and the significant investment made in customer service improvements. At the same time The Co-operative Insurance continued to broaden its distribution capabilities through the launch of the motor insurance product onto two further aggregator sites ‘Go Compare’ and ‘Compare the Market’. Both these sites have witnessed strong sales performance and plans are in place to develop this channel further.

“February 2008 also saw the launch of a new modular motor insurance product within the customer contact centre and on The Co-operative Insurance website. The new product allows customers to tailor their insurance to their individual needs.

“This change in the distribution mix, combined with a lower risk customer profile led to the Gross Written Premium (GWP) planned decrease of £18.4m to £394.4m. The General Insurance claims ratio at 69.2% was broadly in line with expectations and compared to 64.3% in 2007. A number of initiatives were launched through 2008 aimed at improving operational efficiency, including a review of best practice in terms of case estimating and an on-going challenge to improve speed of settlement.

“The major investment within our general insurance business has had a positive and significant impact on customer satisfaction levels. At December 2008, the General Insurance customer satisfaction score stood at 78.5%, an increase of 3.1% compared to December 2007 (75.4%). This is a major achievement and places The Co-operative Insurance amongst the highest ranking performers within its sector.”

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