As insurers reveal their results for 2007, it seems that while firms have been hit by last year’s flooding the credit crunch is yet to bite. Ellen Bennett reports.
Nearly a year after the floods and insurers are starting to feel the effects.
The worst hit, including Groupama, AXA and Aviva-owned Norwich Union, were quick to point out that without the floods, they would have returned much healthier profits.
Groupama, for example, said that its combined operating ratio would have been 98.5%, rather than the actual 101.8%, had it not been for the floods.
Chief executive Francois-Xavier Boisseau went further, claiming that the market had missed a key opportunity to raise rates after the floods,
and predicting an even tougher year ahead in consequence.
Boisseau said Groupama had delivered a strong bottom line performace but pointed to a backdrop of “extremely competitive market conditions, continuing consolidation among the UK’s insurance intermediaries and some of the worst flooding for many years”.
But it was not all bad news. The global credit crunch has been keeping many people in financial services awake at night, but has not yet impacted on insurers’ results.
Aviva was keen to point out that its balance sheet had not been affected by the fallout from the US subprime debacle.
But given AIG’s recent $5bn dollar writedown, and the likelihood of similar to follow at other companies, subprime could loom large in next year’s results.
For the Lloyd’s insurers, though, times are still good. Beazley and Amlin were the top performers among those companies which released their results this week, with an extremely impressive 60%
and 30% rise in profits respectively.
While the composite insurers suffered from the weather in the UK, the Lloyd’s firms celebrated a year without any major global catastrophes.
Profit before tax up 60% to 138.5m pounds
GWP 780.5m pounds
The company delivered excellent results across the board. Our Lloyds underwriters delivered very good returns as rates in most of our lines of business began to fall from historic highs. Our claims staff continued to win praise for service as well as industry awards.
Andrew Beazley, Beazley group chief executive.