Ageas’s UK chief executive thinks that there is too much capacity in the market and is looking forward to the acquisition of Groupama UK

Barry Smith, Ageas

Q: How do you feel about Ageas’s performance at the nine-month stage?

A: We are pleased with the profit evolution and the development of the business overall. We can see strong profit drivers in motor - private car and commercial vehicle. We still think the commercial and domestic property market is underpriced.

Q: Ageas’s revenue growth is flattening out. Why?

A: It is linked to where we see profits and the attractiveness of different products. At the beginning of the year, we priced in a significant increase on the property account because of our view on increased cost of events. Likewise, we think commercial in general is underpriced. Looking at where our profits come from, why would we stimulate growth when we think the prices under-represent the true risk price?

Where we see the profit, growth makes sense, and motor would be one of those examples”

Barry Smith, Ageas UK

We are not just looking at how we grow the top line, but at where we see sustainable quality of earnings. In contrast, our motor book has increased by 15% over the same period last year. Where we see the profit, growth makes sense, and motor would be one of those specific examples.

Q: Your commercial combined ratio for the nine months was 105.4%. Is the market improving?

A: I don’t think so. We have strong products, good broker feedback on our service and electronic processing, but there is still capacity that we can’t compete with because the prices need to be increased.

Q: What effect will the Groupama UK acquisition have on future results?

A: We haven’t bought Groupama yet - we still need FSA approval, which should happen in the next few weeks. We are on track to complete as we said we would. We are genuinely excited by the dialogue we have had with Groupama.

We do think that out of acquiring Groupama, we will be able - with their Optima and Exclusively brands - to offer more products to the brokers. Groupama has good products and some very good electronic processes. We are encouraged by the prospect of being able to help the brokers even more with greater choice of products underwritten by Ageas.

We are keen to get on with the acquisition and excited by the prospects.

Q: Any update on getting a rating for the group?

A: We will review that in due course. What is encouraging is that Standard & Poor’s has already given a clear signal to the market that, on a public-information basis, it expects to move the Groupama rating automatically to BBB.

This highlights the strength of the balance sheet of Groupama in the UK, which is what chief executive François-Xavier Boisseau and his team have been saying, and it also highlights the added strength that we can bring to that company. It is good news, very encouraging and should allay the concerns that brokers may have had in the past.