Commercial business drags down NIG results

The National Insurance and Guarantee Corporation (NIG) made a loss of £78.8m in 2010, a 25% increase on the £63.1m loss it made in 2009.

However, the deterioration came from NIG’s continuing commercial lines book rather than the discontinued personal lines business.

The loss from continuing operations for 2010 was £8.4m, compared with a profit of £12.7m in 2009. Discontinued operations, on the other hand, made a loss of £70.4m in 2010, a 7% improvement over 2009’s loss of £75.8m.

NIG placed its broker personal lines book, which made up a large part of its business, into run-off on 27 July 2010. The company said this was because it felt the business would be unable to sustain a sufficient level of profitable growth to meet future requirements.

The continuing business’s combined ratio worsened to 108% in 2010 from 102% in 2009, and the loss ratio increased to 70% from 62%.

NIG’s Companies House filing also reveals that the company received a £100m capital contribution from its parent, RBS Insurance Group, during the year. It received £130m in 2009.

RBS Insurance’s three other main underwriting units – Churchill, Direct Line and UK Insurance – turned profit to loss in 2010. Companies House filings reveal that Churchill made a loss of £53.3m in 2010 compared with a profit of £41.1m in 2009, Direct Line made a loss of £79.7m compared with a profit of £58m, and UK Insurance made a loss of £7.9m compared with a profit of £34.2m.

As previously reported, RBS Insurance as a whole made a £295m loss in 2010.