'We're not known as cheapest in the market, which helps us' says MD Ward
Lower overall claims and limited exposure to the UK general insurance pricing cycle helped specialist legal expenses insurer Abbey Protection to grow profits and revenue in the first half of 2010, says managing director Chris Ward.
Abbey posted a pre-tax profit of £4.7m for the six months of 2010, up 11% on 2009. Profit after tax increased 10.7% to £3.4m from £3.1m.
Total revenues grew 5.4% to £17.3m from £16.4m. Within this, intermediary, advisory and other income was up 6.5% to £10.2m from £9.6m, while premiums written through Abbey’s reinsurance subsidiary, Ibex Re, increased 8.6% to £7.2m from £6.7m.
“We don’t suffer from cyclicality like a lot of the general insurance market,” Ward said. “And we are not known as the cheapest in the market, which helps us.”
He added that there was also strong demand for Abbey Protection’s core products – legal and tax protection insurance.
“Despite what every incoming government says about doing away with bureaucracy, they can’t help themselves but invest new rules and regulations, and the EC does its best to keep civil servants in jobs for dozens of years,” said Ward. “The demand for what we offer will be there …”
He said that recession-fuelled lay-offs increased employment-related claims between 10% and 11%, but this was offset by a cut in tax claims related to HMRC investigations. As a result, Ibex Re’s claims ratio fell to 63.3% in the first half of the year from 67.7% in the same period last year.
Abbey cedes all the business it underwrites to Brit Insurance. With the exception of the after-the-event and specialist tax planning insurance, which Brit retains, 90% of the business is then ceded to Ibex Re. The arrangement enables Abbey to offer clients rated insurance capacity through Brit but retain much of the underwriting risk.
Abbey aims to grow its profit 10% each year. “We have basically achieved that at the half year and we would be surprised if we weren’t to maintain that sort of increase for the full year,” Ward said.
The company was also looking for acquisitions, but only if they added value and made strategic sense. “We looked at a few in the past year and none has fit those criteria,” he said.