Group blames profit cut on performance of private car portfolio
Groupama Insurances pre-tax profits dropped to £5.4m for the first half of 2009 down from the £13.1m it reported last year. The group blamed the profit cut on the deterioration of the private car portfolio, which experienced rising claims inflation and some unprofitable schemes.
Its private car account represents about 30% of total revenues. Groupama added revenues were stable at £225.9m up slightly from the £224.7m it made in the first half of 2008. Personal lines revenues also remained flat for the second quarter of 2009 at £141.8m (2008: £141.2m).
Commercial lines, including fleet, fared slightly better with revenues moving up to £57.9m for 2009 up from the £54.7m Groupama made in 2008 in the same period.
"As I predicted, 2009 has been very challenging for Groupama. The growing level of claims inflation that we have seen in our personal motor book over the first half of the year has been significant. This is as a result of the continuing impact of credit hire and aggressive claims farming activities by direct writers and some brokers that have continued to drive up the number of injury claims. We have responded strongly and I am comfortable that we will soon be back on track,” said François-Xavier Boisseau, chief executive officer of Groupama.
"With the exception of private car our business has performed very well and there have been some sparkling performances from our household, motorcycle and small fleet accounts where we are building a growing reputation for excellence. This bodes well for the future.”
Boisseau added that he was disappointed that major commercial players were still not reacting to the ‘inadequate rating levels in the commercial market’ and that he was still seeing differential pricing for new business and existing customers. “There has again been plenty of talk in the market over the first six months of 2009 about increasing rates but very little action. This needs to change,” he said.